INTERNATIONAL REPORT—Japan Airline Corporation’s massive bankruptcy filing is not expected to have an effect on the company’s portfolio of hotels, according to an official at the Tokyo-based company.
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Hotel Nikko Shanghai
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One of the largest bankruptcies in Japanese history, JAL is saddled with ¥2.5 trillion (US$28 billion) of debt, according to a bankruptcy filing made by the airliner in a New York court on 19 January. In the filing, the company said it has been stung by rising costs and declining demand for air travel caused by terrorism, the outbreak of the H1N1 virus, and other factors.
Read the U.S. bankruptcy filing here.
In addition to its airline business, JAL also oversees 58 hotels comprising just less than 19,000 rooms located mostly in Asia, though the company also operates hotels in the United Arab Emirates, Germany, London, Mexico City and San Francisco.
Those hotels are owned separately from JAL and will not be affected by the bankruptcy, Haruya Kusakabe, public relations manager of JAL Hotels Company Ltd., said in a written statement.
Also, the company’s two brands—Hotel JAL City and Nikko Hotels International—will continue on with business as usual, Kusakabe said.
“We … plan to continue operating our hotel management business, which has been profitable, as we have been operating it,” he said.
Openings still planned
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Michelle Chang
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Kusakabe said the company is still planning to open its 471-room Hotel JAL Tower Dubai in the United Arab Emirates as well as two properties in China this year: the 388-room Hotel Nikko Shanghai and the 500-room Hotel Nikko Wuxi.
In 2011, JAL expects to open three hotels: the 300-room JAL Bahrain Resort & Spa in Bahrain; the 335-room Hotel Nikko Saigon in Vietnam; and the 411-room Hotel Nikko Guangzhou in China.
The Asian market, particularly in China, is coveted by hoteliers currently, said Michelle Chang, a hotel analyst at Morningstar in Chicago. She said China’s economic growth has resulted in a growing, wealthier middle class.
“As the population becomes wealthier in general, (the Chinese middle class) will have more income to devote to China, and that will increase travel throughout the country,” she said. “That’s driving the demographics for the hotels.”
