For reference, in 2019, approximately 10 million of the unprecedented 32 million arrivals to Japan came from China. Logistical complexities are expected to subside in due course, which will hopefully occur before the Chinese outbound market fully kicks in again. As in most Asia Pacific markets, the lack of large, wide-body aircraft and seat capacity continues to restrain recovery, keeping supply low and flight prices high, but also extending into staffing across the entire sector. The first quarter of 2023 has shown continued growth, particularly from mid-February onwards and until the end of the fiscal year, driven mostly by growing hotel rates up until this popular tourist week when the trees are in full bloom.Īs international brands and owners are competing more with traditional domestic operators, questions linger about confidence in increasing hotel rates further and operational profitability. During the pandemic, Japanese brands were generally seeing stronger rate growth as domestic travel prevailed, but in December and continuing into Q1 2023, international brands are growing rates faster. International brands in Japan quickly capitalized on the reopening of borders, and as hotel room rates increased more rapidly, so did flights to key hub cities.
In Japan, however, growth is still moderate as luxury and upper upscale hotel ADR finished 2022 at 5% above the pre-pandemic comparable. The luxury segment in many other countries has far surpassed 2019 levels, often by as much as 20% even when adjusted for inflation. Other hotel classes, on the other hand, remain behind historical highs. Much like other markets around the world, there is a noticeable difference in Japan’s high-end properties, which have recovered to 2019 rate levels. In the first two months of this year, those metrics began to soften although we anticipate higher levels throughout the season following the current tourism growth trends. In the final two months of 2022, Japan’s hotel performance surpassed 2019 levels, first with average daily rate (ADR) in November followed by ADR and revenue per available room (RevPAR) in December. Tourism hopes to warm up Japan’s hotel performance Japan’s recovery is moving in the right direction as the current central administration continues to focus on growing both domestic and inbound tourism as well as experiences in the country, resetting the agenda for rapid growth in international arrivals.
Known as Sakura, these trees also provide the perfect metaphor for the country’s hotel industry, which is beginning to show reasons for optimism after a later reopening than many parts of the world.
In Japan, the cherry blossom is in full bloom, providing spectacular sights in cities and signaling the arrival of warmer weather. Japan hotel performance beginning to blossom
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