Japan Hotel Market Outlook
Kiyoshi Tsuchiya Director, CBRE Hotels, Japan Mami Hattori Associate Consultant, CBRE Hotels, Japan Yoshitaka Igarashi Associate Director, Research Asuka Honda Associate Director, Research SUMMARY : Figure 1 : New Supply of Hotel Rooms by City thousand rooms 140 120 100 80 60 40 20 0 Source: CBRE, December 2017. (B) Number of existing rooms (2016) (A) Number of room supply (2017 to 2020) (A) (B) New supply as a percentage of existing stock (RHS) Kyoto Osaka Nagoya Tokyo Fukuoka Sapporo Hiroshima Sendai 70% 60% 50% 40% 30% 20% 10% 0% 2
1. D EVELOPMENT B OOSTED B Y GROWING INB OUND TOURISM Figure 2 : Inbound Tourist Trends and Government Target million persons Actual Government Target Growth Rate (RHS) 45 40 35 30 25 20 15 10 5 0 2011 2012 2013 2014 2015 2016 2017 2020 Note: 2020 figure is the government's target. Source: JNTO, PM Office, CBRE, January 2018. 50% 40% 30% 20% 10% 0% -10% -20% -30% -40% 3
2. NEW SUPPLY AND WIDER RANGE OF LODGING OPTIONS BRING THE HOTEL MARKET TO A TURNING POINT 4
Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep Oct-Dec Jan-Mar Apr-Jun Jul-Sep VIEWPOINT Figure 3 : Percentage Staying in "Other" Accommodation 16% 14% 12% 10% 8% 6% 4% 2% 0% Respondents Counted under Other Accommodation 2015 2016 2017 Source: Japan Tourism Agency Consumption Trend Survey for Foreigners Visiting Japan (July-September 2017), CBRE, November 2017. Figure 4 : Type of Accommodation Used in Japan Hotel (western style) Japanese-style inn Villa/condominium School dormitory or company-owned accommodation facility Home of family/friends Youth hostel or guest house Vacation rental (Airbnb, Zizaike, etc.) Other (excluding Vacation rental) 0% 20% 40% 60% 80% 12.4% Figure 5 : Comparison of Total Inbound Tourists and Total Foreign Visitor Nights y-o-y Inbound Tourists Foreign Visitor Nights 70% 60% 50% 40% 30% 20% 10% 0% -10% Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2013 2014 2015 2016 2017 Source: JNTO, Japan Tourism Agency Overnight Travel Statistics Survey, CBRE, November 2017. 3. THE HOTEL MARKET IN 2020 5
Figure 6 : Outline of Supply and Demand Estimate for 2020 VS Inbound Tourists 40million persons Room Demand Required Rooms Allowing for a Reasonable Vacant Rooms Existing Rooms + New Supply Source: CBRE, December 2017. Vacation Rental etc. 6
Percentage of Inbound Tourists Staying Overnight VIEWPOINT Figure 7 : Comparison of Room Stock and Required Rooms (2020) thousand rooms 140 120 100 80 60 40 20 0 Tokyo Osaka Kyoto Source: CBRE, December 2017. Required Rooms (OCC 85%) Room Supply (2017 to 2020) Existing Rooms (2016) Figure 8 : Hotel Rooms Per Inbound Tourist and Percentage Staying Locally (2016) 70% 60% 50% 40% 30% Kyoto Osaka Tokyo 2.0 2.5 3.0 3.5 Hotel Rooms Per Inbound Tourist Note: Hotel Rooms Per Inbound Tourist = number of rooms / number of inbound tourists by prefecture; Percentage of Inbound Tourists Staying Overnight = actual number of foreigners staying overnight / number of inbound tourists by prefecture. Source: Ministry of Land, Infrastructure, Transport and Tourism FF-DATA, Japan Tourism Agency Overnight Travel Statistics Survey, CBRE, December 2017. 4. D IVERSIFICATION OF D EMAND SET TO CHANGE THE HOTEL MARKET 7
8
Figure 9 : Hotel New Supplies by Category (2017 to 2020) Full Service Hotel Limited-Service Hotel Other 2018 CBRE K.K. 2018 CBRE K.K. 9
Figure 10 : Assumptions used to estimate the number of rooms needed and available in 2020 Assumptions Our forecast assumes that the following government targets for 2020 (as published in "Tourism Vision to Support the Future of Japan") will be achieved Inbound tourists to Japan: 40 million; Total number of inbound visitor nights in regional cities (excluding the three main metropolitan areas): 70 million; Proportion of inbound visitor nights in regional cities: 50% To consider the impact of vacation rentals on the number of inbound visitor nights, the ratio of vacation rental listings to rooms in hotels was calculated for each prefecture as of end-2016. This ratio was used to indicate the impact on inbound visitor nights The proportion of inbound tourists using each type of accommodation (Japanese inn, hotel and other categories) was assumed to be unchanged from 2016 The total number of visitor nights, geographical spread and proportion per type of accommodation for Japanese travellers was assumed to be unchanged from 2016 The number of rooms required by type of accommodation and by prefecture was derived by calculating the number of visitors per room for each prefecture and each type of accommodation and assuming no change from 2016 figures Total demand for hotel rooms by prefecture was calculated and the estimate revised city-by-city, and the number of rooms required was calculated assuming 85% occupancy New supply was calculated as incremental supply according to CBRE's figures on individual plans and estimates Source: CBRE, December 2017. 10
CB RE HOTELS CB RE GLOB AL RESEARCH JAPAN CB RE HOTELS JAPAN RESEARCH Disclaimer: All materials presented in this report, unless specifically indicated otherwise, is under copyright and proprietary to CBRE. Information contained herein, including projections, has been obtained from materials and sources believed to be reliable at the date of publication. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. Readers are responsible for independently assessing the relevance, accuracy, completeness and currency of the information of this publication. This report is presented for information purposes only, exclusively for CBRE clients and professionals, and is not to be used or considered as an offer or the solicitation of an offer to sell or buy or subscribe for securities or other financial instruments. All rights to the material are reserved and none of the material, nor its content, nor any copy of it, may be altered in any way, transmitted to, copied or distributed to any other party without prior express written permission of CBRE. Any unauthorised publication or redistribution of CBRE research reports is prohibited. CBRE will not be liable for any loss, damage, cost or expense incurred or arising by reason of any person using or relying on information in this publication. 2018 CBRE, Inc