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- Domestic tourism has recovered notably over the past few months and will continue to recover.
- At this stage, most of the recovery is driven by leisure travellers, whereas the prospects of MICE recovery are still uncertain.
- Border restrictions are likely to be eased soon due to the absence of nationwide elections for the next few years and the contributions that inbound tourism makes to stabilising the trade balance.
- All regions in Japan have experienced recovery, but prospects for further recovery will vary depending on inbound tourism and overall travel demand.
- Hotel occupancy has increased, while the ADR index has remained flat, implying that demand remains lukewarm.
- Investment volumes in the hotel sector are comparable to the previous year, with some notable upscale hotel transactions. Both domestic and overseas investors have been active.
- The BOJ may revise its monetary policies by next spring. The hotel sector with larger room for growth should become more attractive than other sharply priced asset classes such as logistics and residential.
Hospitality sector on track for gradual recovery
Japan’s hospitality industry has experienced encouraging recovery as domestic tourism approaches pre-pandemic levels. Japan is also expected to open its borders more to inbound tourists to capitalise on the weak yen and stabilise the trade balance. With the attention that the sector is generating, now might be the last chance to acquire assets for investors with capital and conviction for the sector.
Savills Research & Consultancy