Premium quality, new luxury attractions and emerging markets are bringing back the well-heeled to city
A night view of the city from Conrad Tokyo
LUXURY hotels in Tokyo are hopeful that this year will see a revival of the high-end leisure travel market, now that Japan is more or less off the headlines with the 3/11 earthquake tragedy.
The months of March and April kept their hope afloat as hotels in the city saw bookings materialising at short notice, bumping up occupancies unexpectedly.
Said Malcolm Thompson, general manager of The Peninsula Tokyo: “You might open the month with, say, 35 per cent occupancy on the books but see that double within the month.”
He added: “We were really on a roll until January/February last year, with forward bookings for the cherry blossom season last year looking very good. Then came the tragedy in March, which saw all the bookings cancelled. I think people still wanted to come to Japan and were waiting for a trigger. Easter this year was the trigger. We had families from the US, who were planning to visit last year, visiting this year.”
Fears of holidaying in Japan have abated. In fact, what may stand in the way of revival is not so much safety consideration, but the European debt crisis and the strong yen, which is now about ¥78-¥80 to the US dollar, compared to ¥150 pre-Lehman.This derails Japan’s effort to position itself as not an abnormally expensive destination.
But industry players believe the luxury market is resilient and discerning about the real value of a Japan holiday, which is premium and aspirational.
Said Gregor Andreewitch, general manager, Conrad Tokyo: “Of course it is difficult for Tokyo to compete on price. Thailand or Indonesia has fantastic properties at half the price. But there comes a point when a client must decide what suits his needs.
“Japan has many unique things to offer. It’s a different planet here. The people are so polite. If you buy something, they wrap it so beautifully you don’t want to ever open it again. The quality you get is simply unrivalled.”
Jesper Koll, head of Japanese Equity Research, JP Morgan, speaking from a panel at the recent WTTC Summit in Tokyo, refuted Japan was expensive.
“Easter this year was the trigger. We had families from the US, who were planning to visit last year, visiting this year.”
General manager, The Peninsula Tokyo
“When I arrived 26 years ago, yes, Japan was mega-expensive. But in the last 20 years, there has been an adjustment and disinflation. I urge you to go to the convenience store here in Tokyo and compare, like for like, the price of milk, orange, etc, to the price in New York or London. Prices in Tokyo are more or less the same; the city is no longer super expensive,” he said.
Kazuko Abe, general manager inbound travel sales and marketing division of Kinki Nippon Tourist, said the US and Asian luxury travel markets “are not so affected by the exchange rate” and are “gradually returning”. Europe, however, is still “not so good” due to the debt crisis.
Many inbound players have thus ventured into Eastern European markets such as Poland and the Czech Republic, and Asian markets such as Indonesia, whose economy is booming.
This fact is also not lost on Japan National Tourism Organization (JNTO), which is seeking the Indonesian government’s nod to open an office in Jakarta (TTG Asia e-Daily, May 28, 2012). Motonari Adachi, JNTO’s executive director in Singapore, expects the office to open by next year. He said Indonesia, along with the Philippines and Vietnam, were added as priority markets this year.
The Tokyo Metropolitan Government also went on a roadshow in South-east Asia earlier this year to highlight new attractions in the city.
This includes the 290-room Palace Hotel Tokyo, which opened on May 17 in the Marunouchi district, where The Peninsula Tokyo is also located (see Checking In below).
Part of a ¥90 billion mixed-use development, The Palace Hotel Tokyo replaces the former Hotel Teito and Palace Hotel that occupied the same site – a moatside location beside the Imperial Palace.
Said Palace Hotel Tokyo president, Takashi Kobayashi: “This hotel is Japanese through and through, from its ownership and management, to its service protocols and its picture-perfect location by the Imperial Palace gardens and moats.
“For domestic and international travellers alike, whether they are with us for business or leisure, we hope they will walk away saying, to have stayed at Palace Hotel Tokyo is to have experienced the very essence of Japanese hospitality.”
Another new attraction is the Tokyo Skytree, which opened on May 22 as the highest tower in the world now at 634m. It is located in the Sumida Ward, where the Edo culture remains to this day. Its glass-covered observatory and air corridor offer visitors the sensation of walking on air and it bills itself as the new sightseeing spot and landmark from which to view Tokyo’s skyline.
STR Global’s latest available figures show Tokyo registering the largest occupancy increase in Asia in March, rising 47.6 per cent to 84.7 per cent over March 2011. The city also experienced a RevPAR increase of 58 per cent to US$148.
High-end hotels are encouraged, saying they need to build up ARR and can only do that if there is a healthy balance between corporate and leisure travel.
Both The Peninsula and Conrad Tokyo will be rolling up their sleeves again at ILTM Asia in Shanghai this month, as they did last year after the disaster, to put Japan firmly back on the radar of the luxury travel market.
Said Peninsula’s Thompson: “Actually, by the end of last year, at ILTM (in Cannes), all the Virtuoso (luxury travel) agencies we spoke to were already very positive about Japan. They said people would forget and they would return because they love Japan.”