Here’s a rundown of some notable hotel investments in Japan

Institutional investors dominated the market in 2021, with some active domestic players.

Despite the uncertainties brought about by the pandemic, investor appetite in the hotel industry remained healthy and the gap between sellers and buyers appears to have narrowed. 

Overall, Savills notes that transaction volumes in 2021 were around the same as what was seen between 2017 and 2020, barring 2019 which saw an exceptionally large volume of transactions (see graph below). The largest proportion in 2021 came from institutional investors, who have been notably active in the market. 

Here’s more from Savills:

Some domestic players have been active in the market. For instance, hotel chain operator Apa Group purchased two hotels in Tokyo and Nagoya from Nishi-Nippon Railroad, and acquired another hotel in Osaka in the second half of 2021. Apa Group is expanding its number of hotels, and appears to be using the pandemic as a chance to acquire underperforming assets at a discount.

Indeed, as a large and experienced hotel owner and operator, Apa Group should have the resources and expertise to withstand tough times, and is likely expanding with a long-term vision in mind. Samty Asset Management also established a REIT specialising in hotels in November 2021 and plans to go public with it. Nippon Telegraph and Telephone West Corporation will be developing the site of its headquarters, located next to Osaka Castle, in a redevelopment project that features a hotel with approximately 220 rooms.

Overseas investors have also been looking at the Japanese hospitality industry. For instance, Baring Private Equity Asia acquired The B Osaka Midosuji, a large hotel in Chuo ward, Osaka, in a transaction estimated at over JPY10 billion. The hotel will reportedly be the first of the “Holiday Inn Express” brand of IHG Hotels & Resorts in Japan. 

Overall, while 2021 has seen large transactions in the hotel sector, transaction volumes have been relatively low considering the pandemic. To be sure, although interest in the sector has gathered, many sellers have not been flexible on pricing. However, with more uncertainty about the timing of recovery surrounding the market and as the gap between buyers and sellers narrows, more transactions should be observed in 2022.