Tokyo hotel transactions to maintain momentum from Q2 onwards

Thanks to a strong recovery in accommodation demand.

Japan’s nationwide travel subsidiary program was announced to be gradually phased out after the end of June. However, according to JLL, inbound demand is on a recovery trend and a further increase in arrivals is expected due to the removal of China’s zero-COVID policy. 

The recovery in accommodation demand is expected to continue to support the hotel trading performance from 2Q23 onwards.

Here’s more from JLL:

Active hotel transactions are expected to continue from 2Q23 onwards. In addition to the recent depreciation of the Japanese yen, the debit financing environment in Japan is attractive to investors despite the backdrop of rising interest rates globally. 

No additional supply of four- or five-star hotels

No luxury hotels were scheduled to open in 1Q23. In 2Q23, Bulgari Hotel Tokyo, and two luxury and upscale hotels in a newly-built mixed use complex called “Tokyu Kabukicho Tower” in Shinjuku, opened in April and May, respectively. Jenu Tokyo and Hotel Indigo Tokyo Shibuya are scheduled to open from 2H23 onwards.

New supply of international luxury hotels such as JW Marriott and Fairmont are planned for 2025 onwards, indicating a continued willingness of international hotel operators to open new hotels in Tokyo. 

Hotel operating performance exceeds pre-pandemic levels

Tokyo’s luxury hotel revenue per available room (RevPAR) marked an increase of 9.7% y-o-y to JPY 42,207 as at YTD March 2023 compared to the same period in 2019. While occupancy was still down by 20.9%, the average daily rate (ADR) increased by 38.7%, resulting in an improvement in RevPAR.

The hotel investment market continues to see strong investment momentum, supported by improved operational performance and optimistic expectations for future demand in the hospitality sector.

Note: Tokyo Hotels refers to Tokyo's luxury hotel market.