Budget properties flood the market in run-up to 2020 Tokyo Olympics, writes Michael Taylor.

Japan is in the throes of a building boom as both domestic and foreign hotel groups race against the clock to open new properties in time for two major international sporting events.

Rugby World Sevens, the world’s third largest sporting event after the Olympics and the Football World Cup, will play a total of 48 matches in Japan from 20 September to 2 November in 2019. The Tokyo Summer Olympics will be held in Japan between 24 July and 9 August in 2020.

When Japan was first awarded the Summer Olympics in 2012, there was talk of a shortage of hotel rooms. All of that has changed, however, with investors opening new hotels and resorts across the country. There has also been a sharp rise in private lodging, such as Airbnb. Does the country now face an oversupply of hotel rooms, which could lead to a price war?

Canadian-based Four Seasons entered the Japanese market in 2002. It currently operates two hotels in Japan, one in Tokyo and another in Kyoto. A third property will open in Otemachi in Tokyo in 2020.

According to Takuya Kishi, hotel manager of Four Seasons Hotel Tokyo at Marunouchi, the new arrivals pose no threat to established properties because most of them are catering to the budget market.

“I have noticed that most of the new entries are limited service hotels without food and beverage outlets,” Kishi says. “They will not be our direct competitors, but certainly increase the number of rooms in the market.”

New product launches

With a current total of 42 full service properties spread across the Japanese archipelago, the domestic hotel chain Prince Hotels and Resorts has plans to launch 100 budget hotels throughout the country under the Prince Smart Inn label, which will be introduced in 2019. These hotels will offer “limited service”, concentrating on accommodation.

Marriott International currently has 43 hotels under different labels in Japan. The US-based hotel group will introduce its top-of-the-line Edition brand with two properties in Tokyo’s tony Toranomon and Ginza districts in 2020.

The InterContinental Hotel Group (IHG) currently has 33 properties under three brands, including the ANA InterContinental Tokyo, the Holiday Inn Osaka Namba, and the Crowne Plaza Kyoto.

The US-based hotel group has a lineup of new properties in the pipeline, including its first Japanese Hotel Indigo, which is scheduled to open in 2019. Located in the historic city of Gora, which is famous for its hot springs, it will be the first “branded” boutique hotel, the group says.

“Just 90 minutes from the heart of Tokyo, Hotel Indigo Hakone Gora will add a new dimension to the neighbourhood that will resonate with Japanese and international travellers alike,” says Hans Heijligers, chief executive officer, IHG ANA Hotels Group Japan. “We are very excited to bring Hotel Indigo to Japan.”

IHG will also open an onsen resort in the city of Beppu on the Southern Japanese island of Kyushu in 2019. The resort will have a public onsen bath, spa and pool. Each one of its 89 rooms will have its own private onsen, with water supplied from a local hot spring.

The ANA InterContinental Beppu Resort & Spa will be the first major internationally branded property in Ōita Prefecture. It is being developed by Tokyo Century Corporation.

“With its natural beauty and more than 2,400 natural springs, Beppu has built a reputation throughout Asia as one of Japan’s most renowned onsen destinations,” says Satoru Kondo, president of GHS K.K, a Japanese company operating hotels, motels and restaurants. “We are very focused on further developing the city’s potential as a destination for travellers who seek a world-class luxury resort experiences.”

First Kimpton property

IHG will also open its first Kimpton property in Japan, the Kimpton Tokyo Shinjuku, in early 2020. Too late for the Rugby Sevens, it will open with time to spare for the opening ceremony of the Summer Olympics. The hotel will have 162 rooms and three locally inspired restaurants.

Following hot on the heels of signings in Greater China and Southeast Asia, the hotel is being jointly developed by IHG and Tsukada Global Holdings, Inc, one of Japan’s leading hospitality companies and a long-time partner of IHG. The company owns four hotels, including the Intercontinental Tokyo Bay and The Strings by Intercontinental Tokyo.

“We are very proud to continue our strong partnership with IHG and introduce the Kimpton Hotels & Restaurants brand to Japan,” says Masayuki Tsukada, president and CEO of Tsukada Global Holdings. “With construction having commenced and completion expected in early 2020, we will be well-positioned to take advantage of the increased domestic and international luxury tourism in the lead up to Tokyo 2020.”