Tokyo hotels can expect Olympic boost – report

Tokyo hotels can expect Olympic boost – report

RevPAR usually climbs in seven years prior to Games, according to JLL and STR Global

RevPAR usually climbs in seven years prior to Games, according to JLL and STR Global

Photo by Sergei Bachlakov
Photo by Sergei Bachlakov

Tokyo’s hotels can expect an increase in revPAR (revenue per available room) in the years leading up to the 2020 Olympics, a new report has revealed.

The ‘Tokyo 2020: The Olympic Games Effect’ report, produced by Jones Lang LaSalle (JLL) with data from STR Global, said that Beijing and London both experienced revPAR growth in the years leading up to their Olympics, and the Japanese capital can expect a similar boost.

“Both Beijing and London experienced revPAR growth during the seven years following the announcement, up to the Olympic year, and we expect this to also be the case in Tokyo. This will have a number of positive effects on the market and, given that Tokyo is a more mature accommodation market than previous hosts like Beijing, there will be limited post-Games decline in revPAR,” said Frank Sorgiovanni, vice president of research for JLL Hotels in Asia.

The Japanese government has said it expects 8.5 million people to visit Tokyo during the Games, and while the city has already met the IOC’s standards in terms of hotel capacity, JLL said an increase in Tokyo’s inventory can be expected in the coming years. And despite this rise in supply, STR Global’s past data shows that Olympic host cities generally see “long-term positive effects on revPAR”.

The are currently 140,000 internationally-branded hotel rooms within a 50km radius of Tokyo
The are currently 140,000 internationally-branded hotel rooms within a 50km radius of Tokyo

“The successful bid has been beneficial for the construction and hospitality industries already in Tokyo. Both sectors have already enjoyed an ‘Olympic bounce’,” JLL’s report stated. “The flow of effects for the economy is difficult to quantify, but the Japanese government reports the Olympics may generate as much as JPY3 trillion (US$30.5 billion) and 150,000 jobs.”

JLL also noted that the value of hotel investments in Tokyo in the first nine months of 2013 reached US$1.4bn, marking a 267% increase compared to the same period last year. It added however, that this growth was “not directly a result of an impending Olympic announcement, but rather the long-term outlook for hotel investment.”

The IOC report on Tokyo’s Olympic bid revealed that there were approximately 140,000 internationally-branded hotel rooms within a 50km radius of the city. These hotels can now expect increasing returns in the coming years.

According to STR Global’s data, Beijing’s revPAR increased 4.2% per year in the seven years prior to the 2008 Olympics, while London’s revPAR climbed 6.4% annually in the lead up to 2012. It added however, that a fall in occupancy “seems to be a common occurrence” in the months prior to the Games, although this tends to be offset by higher rates.

Mark Elliott
Written by:
Mark Elliott
Posted On:
Posted In:
Hotel & Spa