Amid the pandemic, inbound tourists have vanished from Hokkaido’s Niseko area, which has turned into an internationally popular resort. This is the first story in a series titled Niseko gears up for a post-COVID era, which examines how the local tourism industry, domestic and foreign developers and investors are preparing for the end of the pandemic.
Developers began construction of a new hotel in the Kutchan town’s Hirafu district, a central part of Hokkaido’s Niseko resort, back in Aug. 17, when the prefecture was being hit by the fifth wave of the pandemic with daily cases topping 400.
Owned by Wu Wei Yin Shi, a Macao-based catering services company making its debut in the Japanese market, the hotel will have four stories above ground and one below with a total of eight guest rooms, with plans to open by the 2022 ski season.
Although it’s still uncertain when the pandemic will come to an end, the Hanwha Group, a Korean conglomerate, and a Malaysian company also kicked off development on projects of their own around the Hirafu-zaka street, part of the main street in the Hirafu district, earlier this year. Another large-scale project by a Hong Kong developer, which had been left untouched for more than five years, has started as well.
But why is Niseko so attractive to investors even though there are no foreign visitors?
“It’s because investors have no doubt that, once the pandemic settles down, tourists will come back to Niseko,” says an official at a company in charge of the Wu Wei Yin Shi construction project.
Other investors and developers share the same view, which is driving them to further development of the Niseko area.
‘It will be too late’
Izumikyo, a Sapporo-based real estate agency that owns a stretch of land in Hirafu, is among the group of companies that started construction in May — a year later than originally planned.
“With more people getting vaccinated, visitors to Japan are likely to return for the winter season next year,” Izumikyo President Yoshio Nishimura said.
While he also mentioned a risk that the pandemic might last longer than expected, “if we just wait until it settles, it’ll be too late. We will have to pay interest and taxes anyway, so we can’t wait for years.”
However, in contrast to the influx of investment, the situation is more dire for the local tourism businesses.
According to a survey by the Niseko Promotion Board, a group advocating for travel in the towns of Kutchan, Niseko and Rankoshi, the number of overnight guests in the three towns from May 2020 to April dropped to 55.6% from the same period the year before — the lowest since 2006, when it started conducting the survey.
Changing business models
While many hotels, inns and restaurants have given up on continuing their businesses, some companies have changed their business model to survive.
One of them is Kutchan-based car rental company Peak Niseko Car Rental. Last winter, the company’s sales were just 10% of what it had gained during the winter season in a normal year.
The company then shifted its business to offering rental cars from airports to its hotel on Hokkaido’s Lake Toya, reducing its number of cars from 30 down to three.
Although the firm needed to renovate its facility, “we couldn’t wait for the end of the pandemic,” said Tomomi Cadogan, the company’s manager. “It was essential to change the business model in order to maintain stability.”
Another business that had to adapt is the operator of Kanro no Mori, a hotel in the town of Niseko. It has been offering discounts to attract new customers, knowing it cannot count on support from the central government. It began accepting reservations for the winter in May, about three months earlier than usual, and started offering 20% discounts for all rooms at its own expense to attract domestic tourists.
Even though the sales will fall due to the discount, “we wanted to secure bookings from Japanese customers as soon as possible” amid the absence of foreign guests, said an official at the hotel.
Amid expectations that the Niseko area will further grow once the pandemic is stamped out, the area continues to attract investment. Yet local businesses in the tourism industry that have suffered from the health crisis are seeking to change their business models to survive the tough times.
This section features topics and issues from Hokkaido covered by the Hokkaido Shimbun, the largest newspaper in the prefecture. The original article was published Oct. 25.
More stories in the “Niseko gears up for a post-COVID era” series:
- More development taking place in towns and villages near Hokkaido’s Niseko area
- Businesses and town clash over construction regulation in Hokkaido’s resort area
- Businesses fight for workers ahead of tourism recovery in Hokkaido’s Niseko
- Planned scenery regulation hampers development on main street of Hokkaido’s Kutchan
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