Rising Prices Due to Increasing Domestic and International Tourists
Targeting Consumers with Purchasing Power... Upward Trend Expected to Continue
As the number of domestic and international tourists in Japan increases, hotel rates in central Tokyo and other urban areas have surged sharply. Japanese media have described this rise as "comparable to that of New York in the United States," and with the hotel industry targeting high purchasing power tourists, the price increase trend is expected to continue for the time being.
On the 4th, Nihon Keizai Shimbun (Nikkei) reported that the average daily rate (ADR) of luxury hotels in Tokyo is 30% higher than before COVID-19, and this rate of increase surpasses that of New York in the United States.
The ADR of The Palace Hotel Tokyo, located in Chiyoda-ku, recorded 87,999 yen (790,000 KRW) from January to July, which is a 40% increase compared to the 2019 average of 62,047 yen (550,000 KRW). During the peak demand period of March to April, it exceeded 100,000 yen (900,000 KRW) for the first time, which is the benchmark for overseas luxury hotels.
The Imperial Hotel Tokyo has been charging 30% higher regular room rates since June.
According to STR, a U.S. hotel industry opinion research firm, the ADR of luxury hotels in Tokyo was 46,133 yen (410,000 KRW) from January to June this year, showing a 33% increase compared to the same period in 2019. Nikkei reported that this rate of increase surpasses that of New York and the United Kingdom during the same period.
In fact, the ADR of The Ritz-Carlton Tokyo at 155,000 yen (1,390,000 KRW) is more expensive than The Ritz-Carlton New York Central Park in the U.S. (100,000 yen; 900,000 KRW). The ADR of Hilton Tokyo is 73,000 yen (650,000 KRW), higher than Hilton Midtown New York (52,076 yen; 460,000 KRW).
This appears to be influenced by the increase in tourists visiting Japan as a form of revenge spending after COVID-19. Above all, the continued depreciation of the yen has contributed psychologically, as overseas customers feel that accommodation fees calculated in yen are relatively inexpensive. A representative of the Imperial Hotel stated, "Considering the weak yen, there is still room to raise prices."
Moreover, as Japanese hotels are targeting consumers with strong purchasing power to increase the average spending per customer, hotel prices are expected to maintain an upward trend for the time being.
The Palace Hotel significantly increased the number of suites in Tokyo during the COVID-19 period, and The Imperial Hotel Tokyo rebuilt its main building and remodeled rooms to raise rates. Tokyu Hotel opened a new hotel in Shinjuku last May, offering rooms priced at over 3 million yen (27,020,000 KRW) per night.
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