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- International borders are still essentially closed to tourists, and the second half of the year saw only a small number of foreign arrivals.
- While a second state of emergency has been enacted, the Japanese government increased the “Go To” Travel campaign funding to up to a total of 2.7 trillion yen, extending the initial support provided to the industry.
- Bankruptcy rates kept low due to emergency loans will likely increase as banks re-evaluate forbearance.
- Although the second half of 2020 saw some recovery, the number of hotel nights stayed should see a decrease in early 2021 due to the state of emergency.
- As of December 2020, Hotel J-REIT ADRs were 80% of preCOVID levels, and RevPAR was down almost by half. Japanesestyle hotel (Ryokans) and resort hotels are faring better than business and city hotels.
- The spread between the unit prices of Hotel J-REITs and the TSE REIT index narrowed in the second half of 2020, implying that J-REIT investors have priced-in further recovery.
- Hotel investment volumes plummeted with few loans available, and the second half of 2020 accounted for only 13% of the yearly volume.
Tough times persist
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GRAPH 1 | Hotel Guest Room Supply, 1982 to 2023*
There is some hope for domestic tourism with increased funding from the “Go To” Travel campaign and extra savings from self-quarantine. Increasing bankruptcy figures and a substantially lower supply pipeline should prove favourable for operators who can weather the storm.
Savills Research & Consultancy