Palace Hotel Co, an independent Japanese hotel brand, is expanding into Taiwan come 2028, and its president, Daisuke Yoshihara, is keeping his options open for further expansion
What prompted Palace Hotel Group to expand into Taiwan, and what other destinations are you considering?
Last year, we celebrated the 10th anniversary of Palace Hotel Tokyo, the flagship property of Palace Hotel Group. We spent that first decade focused on establishing the brand as a luxury brand that’s recognised both domestically and internationally, and we succeeded. In 2016, Palace Hotel Tokyo became the very first Japanese-owned and operated hotel to be awarded Forbes Travel Guide’s prestigious Five-Star rating and it’s a distinction we’ve held ever since.
Over the next decade, the plan is to leverage the brand to further broaden the group’s presence in Japan as well as abroad, steering a course towards an asset-light strategy focused more on hotel management in both urban and resort destinations.
The expansion into Taiwan was prompted by three key factors – a vibrant location in an increasingly popular travel destination and business hub, the opportunity to work in partnership with like-minded professionals, and the pairing of two home-grown brands that share noteworthy similarities (namely their long-standing histories in their respective destinations).
The debut of Ambassador Palace Hotel Taipei in 2028 will mark the unveiling of our group’s first-ever luxury project outside of Japan and it’s our hope that this undertaking, like Palace Hotel Tokyo, will prove to be a great success, giving momentum to our overseas business development.
At the moment, we’re not limiting our sights to any particular destinations. As long as the right factors are in place, we’re happy to consider all possibilities.
Can you provide an overview of your hotel’s portfolio expansion in the near term?
I would like to see the number of properties in our portfolio increase to at least 10 by 2030, including Palace- and Zentis-branded properties, as well as partnership hotels (for which we provide management support on a narrower scope versus full management contracts). The priority is not to expand rapidly. Rather, we’ll endeavour to grow the business steadily as we remain laser-focused on quality – quality of location, design, facilities and, of course, service.
Speaking of Zentis, what prompted the formation of this brand?
In 2015, lifestyle hotels had already established quite a presence for themselves in major cities throughout the US and were becoming increasingly popular. In particular, we noticed the emergence of upscale lifestyle brands, particularly in the US, but also in some parts of Asia.
The trend, however, had not yet gained any ground in Japan – where there’s a very noticeable gap between world-class, luxury hotels, and what we call ‘business hotels’ that almost cater exclusively to everyday, domestic business travellers.
We saw the opportunity to establish a new brand that could fit very nicely between the two; one which would allow us to develop the group’s business in a more time-efficient manner – luxury properties take much longer and are far costlier to erect – while also leveraging our expertise in luxury by elevating the level of service and quality of accommodation and F&B in the upscale lifestyle sector.
Although we’re not necessarily targeting specific markets or demographics, we do feel Zentis is most well-suited for early adopters and savvy, independent travellers who are usually content to manage largely on their own as long as the essentials – location, comfort, amenities, and facilities – are in place.
How are changing traveller habits and expectations influencing your hotel’s hardware and software, including ESG-related projects and guest engagements?
Our company has been quite conscious of the importance of sustainability well before it became the centre of everyone’s attention in recent years. In 1997, Palace Hotel was the very first hotel in Japan to implement a cyclical food-waste management programme which continues to this day.
The Eco-Palace programme, as we call it, involves the collection of compostable kitchen refuse from throughout the property to turn it into organic fertiliser for use by local farms. The rice crops and produce that result from use of these fertilisers are then bought by the hotel for our staff canteen’s menu.
We repurpose food items such as breads that don’t end up being served in our outlets or at events held on-site to make bread crumbs for incorporation into new pastries. We also donate to food banks any baked goods that we deem to be less than perfect in presentation but are still entirely edible, and we collaborate with Food Loss Bank to incorporate imperfect fruits and vegetables into some of the breads and desserts that we sell in our pastry shop or serve in our lounge.
Any food we’re unable to donate or repurpose goes to our Eco-Palace programme so, for a property that operates on a scale as big as ours – 10 F&B outlets plus extensive meetings & events spaces (where, among various other events, more than 900 weddings are held each year) – you’d be surprised by just how little ‘food loss’ we generate.
During our extensive, three-year rebuild of Palace Hotel Tokyo (2009-2012), we incorporated what were, at the time, above-standard energy-saving initiatives such as the installation of highly-efficient air-conditioning systems, solar-powered generators, combined heat and electric power generators, total heat-exchangers for guestroom air-conditioners and rooftop greening.
In recent years, we’ve worked towards eliminating single-use plastics as well as swapping out plastic water bottles with recyclable aluminium ones. We’ve also launched a collaboration with Japanese sustainable-cosmetics brand Kruhi to upcycle used cooking oil from some of our dining outlets to produce a high-quality dish-and-hand soap that’s made with 100 per cent natural ingredients, packaged using 100 per cent recyclable materials. It is available for purchase on our online shop.
We also make a point of engaging our staff beyond the workplace. At Palace Hotel Tokyo, for example, our staff regularly participate in neighbourhood clean-up initiatives, which encourages mindfulness about the communities in which we operate. Our in-house fire- prevention team also participates in lively community competitions held by the Marunouchi Fire Department every year, and both the men’s and women’s teams win on a regular basis, which is fantastic. Activities like these are great for strengthening camaraderie and encouraging staff to take greater ownership of their workplace as well as their guests’, their colleagues’ and their community’s safety and well-being.
Can you provide an overview of travel demand for your properties this year, and key markets your sales and marketing teams will be focused on developing?
Per the Japan National Tourism Organization’s latest report, the number of foreign visitors to Japan in June 2023 exceeded two million for the first time in nearly 3.5 years. During the same period, we saw an increase of more than 30 per cent in Palace Hotel Tokyo’s occupancy levels compared to June 2022, with approximately 70 per cent of our guests from overseas.
Since December 2022, both Palace Hotel Tokyo’s ADR and revenues have exceeded historical ADR and revenues every single month. Both Palace Hotel Tokyo and Zentis Osaka achieved their highest ever ADR and revenues in April 2023.
Approximately 70 per cent of Zentis Osaka’s guests also originate from overseas so, the return of foreign visitors to Japan has been critical to both properties’ success – particularly those from the US, Australia, parts of Europe and Asia. So, those are the markets that we plan to remain focused on as we work towards strengthening brand recognition and maintaining our competitiveness.
Japan seems to be on top of many travellers’ list at the moment. Why do you think this is so, and what is your outlook of Japan’s inbound travel sector?
Japan has always been very safe and clean, everything runs in a very orderly fashion, people are typically very friendly and considerate, and I believe most travellers would say that Japan’s an endlessly interesting destination. Recently, it’s become an even more attractive destination due to the weakening of the Japanese yen.
I expect tourism will remain one of Japan’s key economic drivers for the foreseeable future, as inbound tourism continues to grow and expand to the farther reaches of the country.
I may be a little bit biased, but if I could offer just one recommendation to travellers visiting Japan, it would be to stay at a Japanese-operated hotel, or a locally-run place such as a ryokan or traditional-style inn, to have a more authentic experience.
What other trends do you see in the leisure travel market?
I expect the demand for cultural experiences that are unique to the destination will continue, particularly as there’s no shortage of them when it comes to Japan.
As we see more and more travellers return time and time again, it’s imperative that we ensure Japan remains as welcoming as possible. Whether that means ensuring the right infrastructure is in place, or making sure that both public and private facilities are sufficiently staffed to handle the projected volume of visitors, and communicate effectively with them.
It’s also important to keep in mind that many of today’s travellers are conscious about the environmental impacts of tourism so, we need to be able to offer sustainability in travel as well – whether that’s through increasing the availability of electric vehicles and charging stations, or the option to book tourism activities – such as cycling or hiking tours – that leave a lighter carbon footprint.
At Palace Hotel Tokyo, we’ve noticed an increase in requests for private, custom-tailored tours. We’ve also seen an increase in the average length of stay for our international guests from 2.1 to 2.9 days, which syncs with the reported increase in the average length of stays for foreign visitors to Japan from seven to 10 days.