GLOBAL REPORT—More than a year after a 9.0-magnitude earthquake and resulting tsunami devastated much of Japan, the Tokyo hotel market is finally starting to see positive trends again, although hoteliers say the city still has a long way to go before it reaches previous peaks.
While the damage to Tokyo’s hotels was only cosmetic after the March 2011 disaster, performance plunged by more than 30% in occupancy and revenue per available room, according to STR Global, sister company of HotelNewsNow.com.
The Peninsula Tokyo, which opened its doors to nearly 800 people seeking shelter the night of the earthquake, continued to operate normally after the natural disasters with a few exceptions, said Malcolm Thompson, the property’s GM.
However, occupancy levels remained low, he added.
“The international luxury hotels in Tokyo experienced levels in the low teens immediately following the earthquake,” he said.
Road to recovery
Occupancy levels gradually increased each month, and by September of 2011, the city hit positive performance results, according to Jonas Ogren, area director of Asia for STR Global.
Other cities recovered faster than Tokyo did, Ogren said. Many of them actually experienced slight positive growth after the event. “People that were supposed to go to Tokyo went to Kyoto and Osaka instead … Some of those hotels were full several weeks and months after the whole tragedy.”
Domestic demand and corporate travel are back completely in Tokyo, based on reports from operators in the region as well as STR Global data, Ogren said.
Reconstruction and recovery efforts have led to even more corporate activity in the city, which will be a springboard for revitalization in the remainder of 2012 and in 2013, Thompson said.
What is still missing, however, is the high-end, long-haul leisure traveler. Those customers that stay three to five nights and have a significant impact on hotel revenues are the ones taking longer to decide to return to Japan, Thompson said.
“I think most people still have hesitation to go to Tokyo,” Ogren said. “The hotels are back to a larger extent than people realize.”
International leisure travel will be back with time, Thompson said. “The reality is, the further we move away from the 11 March (2011) scenario, the more people forget, and eventually Japan is on the itinerary again.”
Peninsula Tokyo recently saw occupancy levels in the high 80% to 90% range due to the cherry blossom period and Easter holiday earlier this month, Thompson said. “During that period we saw an increase of short- and long-haul leisure travelers.”
The first quarter ended very strong, and the remainder of 2012 is looking good at the moment for the Peninsula Tokyo, he said.
Rates, however, are somewhat of a different story. While they are above where they were last year at this time, it will still take significant time for them to recover to previous peaks, Thompson said. Many hoteliers in Tokyo significantly lowered rates last year to attract more leisure travelers.
Tokyo reported an average daily rate of $174.73 in March, a 7% increase from the month last year, according to data from STR Global. The city’s revenue per available room jumped 58% in March to $147.96.