INTERNATIONAL REPORT—While the world watches scenes of abandoned cities along the eastern coast of Japan, hoteliers in Tokyo are working hard to recover business in one of Asia’s largest metropolitan areas.
Although Tokyo hotels did not suffer any physical damage from the earthquake and tsunami that hit Japan’s east coast in mid-March, the negative effects of a natural disaster still linger when looking at hotel data for the capital city.
It’s no secret that hotel performance suffered immediately after the quake. Several research and analysis firms recorded double-digit declines in occupancy.
In April, Tokyo saw a 42.8% drop in occupancy to 46.4% and a 52.3% drop in revenue per available room in local currency, according to data from STR Global, a sister company of HotelNewsNow.com.
Tom Sawayanagi, managing director Japan, Jones Lang LaSalle Hotels, said the first 30 days after the quake saw a sharp drop of demands in every segment, but the situation changes every day.
The good news is things quickly are picking back up, according to Abhiram Chowdhry, marketing director, Hotels.com Asia Pacific.
“Though not at the same level as before the earthquake, yet the search interest indicates that the demand for travel to Japan is very resilient,” he added.
Hotels.com Asia Pacific
On the Hotels.com Hong Kong site, searches for Tokyo as a travel destination decreased by 71%, while for Osaka it decreased by 17% when comparing this April to the same period in 2010. But when comparing the period of 1 May to 19 May with the same period in April, search interests in those destinations have increased–Tokyo up by 70% and Osaka up by 50%.
Business remains challenging in Tokyo, especially for attracting international business, according to Mark Kobayashi, director of public relations for The Peninsula Tokyo.
“However, we are starting to see our regular corporate guests return,” he said in an email. “Unfortunately, the international leisure traveler has not returned and we expect that it will remain this way for at least the next three to six months if not longer.”
During a first-quarter earnings call on 10 May, InterContinental Hotels Group reported that its properties in Tokyo were showing 35% to 40% occupancy. All of its hotels in Japan were open, according to Richard Solomons, incoming CEO and current CFO and head of financial development for IHG.
“Many of the international luxury hotels are concentrating on the Japanese domestic market now as we realize it is difficult to attract the international leisure traveler at the moment,” Kobayashi said. “However, we continue to do our sales activities in the international markets and plan to target them with attractive offers, especially the local regional market (i.e. Hong Kong) very soon.”
The pace of recovery varies from segment to segment, JLLH’s Sawayanagi said in an email.
“Only a part of inbound corporate sector has come back and inbound leisure hasn't showed a good sign of recovery,” he said. “Therefore those who had catered (to) inbound leisure business well suffered more than those who focus on domestic corporate. … International hotel operators are categorized to the former case, while so-called business hotels (limited-service hotels with 10-15 square meter guestrooms), which is the latter case, are running at more than 70% occupancy while the room rate is somewhat discounted.”
Hotels.com is launching extensive activities to speed and support the recovery of the Japanese tourism industry, Chowdhry said.
“For example, we are showcasing great deals and offers for travel to Japan. In fact this week (18 May) we have launched our popular 72-hour Japan sale and are promoting it (on) all of our 15 websites in Asia/Pacific and to our extensive email subscriber base.”
Chowdhry also noted bookings from Japanese travelers are back to and even surpassing the pre-earthquake levels, which shows the strength of the Japanese consumer market.