Overview of the Japan Hotel Market

Kazumasa Takeuchi

■index

1. Room and Bed Occupancy Rate Trends
2. Development and New Supply of Hotels
3. Demand for Hotel Rooms
4. Short -term Forecast for Hotel Guests and Lodging Expenditure
5. Importance of Expansion of Hotel Demand
6. Conclusion

■Abstract

We overview the hotel market in Japan by means of several statistics， and forecast hotel demand for the next two years.
In the past， the lack of statistics prevented us from analyzing and predicting hotel market trends in Japan with reasonable accuracy. However， two new statistical surveys on hotels and tourism provide vital data for analyzing hotel demand for business as well as investment purposes.
We found that (1) total overnight visitors for both tourism and business decreased significantly in 2008 and 2009 following the Lehman shock; and (2) the bed occupancy rate， which also slumped after the Lehman shock， was actually already in decline at hotels for business due to new hotel supply.
According to our forecast for hotel demand， total overnight visitors will increase 2.0% in 2010 and 3.0% in 2011， bringing the number to only 89% of the peak level attained before the Lehman shock. Meanwhile， per capita lodging expenditure will increase 9.8% in fiscal 2010 and 0.1% in fiscal 2011， and thus remain significantly below the peak level attained before the Lehman shock.
Accurate data on hotel and tourism trends is particularly important because Japan’s population decrease points to a hotel market downtrend. Hopefully， ongoing improvement of the statistics will help improve forecast accuracy.