[Nikkei Asia] Tokyo hotels 30%-40% cheaper than New York, Singapore in dollar terms
TOKYO — A weak yen has helped make Tokyo hotels more affordable for growing numbers of international visitors, and is giving operators an opening to raise their prices.
Tokyo room rates in the fiscal year ended in March averaged $177.30, around 30%-40% cheaper than New York or London, hospitality industry analytics company STR reports.
The average room rate in Tokyo in dollar terms rose $8.90, or 5.3%, from fiscal 2018 to fiscal 2023, according to STR data.
Rates in New York rose 19.9% to $304.40 over that period, while London’s hotels increased 25.2% to $244.80 and Singapore’s climbed 27.2% to $250.90.
But looking at the changes in local currency terms paints a different picture. Tokyo hotel rates went up 37.9% in yen terms over those five years, far exceeding the 26% increase in London and 30.2% growth in Singapore in their respective currencies.
This difference results from Japan’s weak currency, which has fallen by more than 10 yen against the dollar since the end of last year.
Tokyo hotels targeting foreign tourists are now under pressure to raise prices, with luxury properties leading the way. Bulgari Hotel Tokyo, which opened adjacent to Tokyo Station in April 2023, offers rooms this month starting around 300,000 yen ($1,900) per night on its homepage.
Planned high-end hotels like JW Marriott Hotel Tokyo, set to open in 2025, and Hilton’s Waldorf Astoria Tokyo Nihonbashi, scheduled to open in 2026, are expected to boost the city’s average room rate.
Rates at Japan’s more affordable business hotels also are rising. Occupancy rates nationwide are hovering around 80%, buoyed by overseas visitors, and reservations are harder to obtain at an increasing number of locations.
Room prices at business hotels topped 20,000 yen per night as of March. On major booking sites, business hotels in the Kabukicho nightlife district of Tokyo’s Shinjuku area can reach 30,000 yen on some days.
Higher room rates are lifting earnings. Kyoritsu Maintenance, which operates business hotel chain Dormy Inn, on Wednesday reported 12.4 billion yen in consolidated net profit for the year ending March, nearly triple the previous year’s level.
International visitors to Japan in March surpassed 3 million for the first time in a single month, the Japan National Tourism Organization reports. Meanwhile, the driving force behind the yen’s weakness — the interest rate gap between the U.S. and Japan — shows no sign of narrowing.
Rising room rates make it harder for Japanese government workers and business people to find a hotel under their employers’ price guidelines. A Tokyo hotel industry source said the city could see a decline in domestic guests. But with inbound tourism booming, hotels are showing a strong focus on profits as they make up for time lost during the COVID-19 pandemic.
Original article: Akinobu Masubuchi, 2024/05/18, NIKKEI Asia
Tokyo hotels 30%-40% cheaper than New York, Singapore in dollar terms