With the decision to hold the Olympic games in Japan in 2020, a number of new hotel developments are preparing for the influx of tourists. To name a few, Moxy Hotels by Marriott International will open in November in Tokyo; in 2019, Park Hyatt Kyoto and Park Hyatt Niseko will open; and in 2020, the JW Marriott Hotel Nara and a ski-in resort in Niseko by Ritz-Carlton will open.
And on July 12, it was announced that two Marriott Edition hotels will come to Tokyo in 2020 – one in Ginza and one in Toranomon. A week that, Raymond Tan, Marriott’s country representative, spoke at a seminar hosted by Asterisk Realty and Baker & McKenzie, giving case studies of overseas branded residence developments. He discussed the power that brands hold on residential projects, and how each brand caters to the lifestyle and tastes of individual clients. He ended his session with the potential that Ritz Carlton sees in the Japan market, not only in central areas like Tokyo Osaka, but in resort locations like Okinawa, Niseko and Nikko.
Although the concept is still new in the Japanese market, we see Hakone, Hakuba, Karuizawa and resort destinations in Hokkaido having strong potential for luxury resorts and the branded residence business model.
The number of resort location luxury hotels is increasing, as Japan’s government pushes to revive rural areas. Aman introduced its Amanemu hotel in 2016, in Ise Shima National Park, Honshu’s Mie Prefecture. Ski resorts, namely in Niseko, have also welcomed a number of overseas operators. With the “casino bill” to legalize integrated resorts approved in December, Japan hopes to keep up momentum from Olympic tourism. Should integrated resorts be located in rural cities, they will also be key drivers for the city’s economy.
Building partnerships
For integrated resort developments, operators are waiting for more information from Japan’s government to proceed with further planning. In the meantime, the focus is on building partnerships with local companies, as well as demonstrating what positive impacts casinos can have on Japan. At the seminar, Ed Bowers, representative officer and CEO of MGM Resorts Japan, and senior vice president of global development at MGM Resorts International, highlighted what integrated resorts can offer in regards to economic revitalization and overall tourism.
As expectations for the hospitality market grow and hospitality assets are recognized as an investable asset class for Japanese institutional investors, Japanese capital is also expected to expand to overseas markets.
Following overseas operators and developers coming into the Japan market, we predict Japanese operators will also look to overseas markets. This movement can be compared to the spread of Japanese cuisine options overseas. The global Japanese food boom started with sushi, after the U.S found it blended well with health-conscious trends of the 1970s. It continued to spread and made its way to Europe and the rest of the world.
When sushi first hit the market, fusion options like the California roll, an easier concept for Americans to stomach, were popularized. As popularity increased, quality and authenticity escalated and people demanded more credible Japanese food. In the 2000s, top-quality Japanese chefs and restaurants entered the global market.
Similarly, the Japanese hospitality boom is well on its way. Much like Japanese cuisine was first introduced as a healthy option, Japan is well recognized in the service industry for omotenashi. The noun means “to entertain guests wholeheartedly.”
Tokyo recently welcomed two urban hotels that incorporate traditional Japanese aesthetics: Aman Tokyo in 2015 and Hoshinoya Tokyo in 2016. Both have urbanized interpretations of traditional Japanese residences, incorporating wood, washi paper, stone, and other accents to their designs. They are both recognized as some of the city’s most luxurious hotels. With the success that urbanized ryokan-styled luxury hotels have in the local market, it is natural for the concept to be spread overseas.
Heading overseas
As an example, the Nobu Hospitality brand is ranked among an elite selection of global luxury brands. The brand, both in gastronomy and hospitality, has managed to bring Japanese-inspired decor with sleek, modern Westernized touches. With Nobu Hotels in the U.S., Philippines, U.K., Spain, Saudi Arabia, Mexico, Canada and Bahrain, the brand shows hope to Japanese operators as they demonstrate the warm reception overseas markets have to Japanese aesthetics. Nobu Hospitality symbolizes the success of fusion concepts – through both menu options and hotel rooms.
Hoshino Resorts is an example of Japanese operator expanding to overseas. Its first overseas project started in April 2015, when it announced operations for Hotel Kia Ora Resort & Spa. In January 2017, Hoshinoya Bali opened its first overseas project. At the end of January 2017, it was also announced that Hoshino Resorts bought Surfjack Hotel and Swim Club in Waikiki, Hawaii.
We predict sourcing capital for Japanese brands to expand to the overseas market will be more enticing, and funds to help back these projects will also emerge.
Yukihiko Ito is managing director and Elizabeth Deakin is an associate at Asterisk Realty & Placement Agency in Toyko.