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- Visa-free inbound tourism resumed in Japan in October 2022, and there has been a significant uptick in overseas arrivals.
- The ADR index has increased significantly due to strong demand, while occupancy has improved at a slower rate. Many hotels have prioritised raising room rates over occupancy due to labour shortages.
- There has been notable disparity in recovery between different hotel types, with resorts and luxury full-service hotels set to perform better than limited-service counterparts.
- New supply forecasts are limited over the next few years, so room rates will likely remain elevated for the time being.
- Investment volumes in 2022 in the hotel sector are expected to have notably surpassed those of 2021. More deals are expected as prices have risen close to pre-pandemic levels.
- However, the high cost of air travel, overall increasing operating costs stemming from labour shortages, utility and food price hikes in the hospitality industry, and global economic slowdown might moderate future growth.
Despite challenges ahead, the resumption of inbound tourism has brought robust recovery
Inbound tourism has strongly rebounded with the border reopening, and optimism is high overall. Hotel performance has improved significantly, and room rates have seen notable increments. Nonetheless, there are still hurdles facing the hospitality sector going forward, such as labour shortages, higher costs from utilities and food, and the potential impact from the global economic slowdown.
Savills Research & Consultancy