Luxury hotels in Japan's largest city must offer oversized guestrooms, cutting-edge technology and extraordinary service if they are to regain the levels of occupancy and the rates the properties enjoyed before the recession hit.
At the same time, the high-end sector must compete with the burgeoning supply that continues to be built in this futuristic city of 29 million, a magnet for both the business and the leisure traveler, according to Koji Takabayashi and Tokiro Kawai. Takabayashi is managing director of Horwath HTL Japan, and Kawai an associate there.
Leisure-travel business has remained robust at the Conrad Tokyo in Shiodome, a new, multileveled business district in Japan's capital city-but rates have not recovered, said Gregor Andréewitch, GM of the ultramodern, 290-room hotel.
Opened in 2005, the Conrad Tokyo suffered badly during 2008 and 2009 when business travel dried up, leaving the property's three meeting rooms and two ballrooms underused.
According to Andréewitch, the Conrad Tokyo's key competitors are the Shangri-La Hotel Tokyo, which opened in 2009; The Peninsula and the Ritz-Carlton Tokyo, which opened in 2007; and the Mandarin Oriental Tokyo that opened in 2005.
"The luxury segment got hit deep in the pocket because we all lived for the corporate traveler, particularly coming from the finance industry," he said during a recent interview at the hotel.
The rooms-the Conrad claims they're the largest in the city- are a minimum of 43 square meters (almost 463 square feet), the ceilings are high, the public spaces generous. Andréewitch noted space is a premium in this city, where the average apartment size for a family with three children is 52 square meters (about 550 square feet).
Part of Hilton Worldwide's luxury lifestyle brand portfolio, the Conrad Tokyo is a business hotel Monday to Thursday and a leisure hotel Friday through Sunday. Fifty percent of its clientele is Japanese; 25% is European and American; and 25% is Asian other than Japanese. Based on demand, ADR spans JPY33,000 to JPY70,000 (US$394 to US$835).
Tokyo luxury market
And those aren't the top rates, according to Horwath's Takabayashi and Kawai, who define luxury hotels as those that charge at least JPY50,000 (US$597) per room night. They call Tokyo Japan's only luxury market, noting that in Osaka, the country's second-largest city, the Ritz-Carlton Osaka is price leader but charges just more than JPY30,000, or US$358, and the St. Regis Osaka, which opened in October, targets an ADR of JPY30,000 (US$358). At the same time, hotel rooms in Osaka are as big as the largest in Tokyo.
"Average occupancy of Tokyo luxury hotels ... shows a decrease from about 80.0% in 2007 to around 60.0% in 2009 mainly due to the global economic recession," Takabayashi and Kawai wrote in an e-mail. "While luxury hotels in Tokyo tend to maintain their ADR at the cost of occupancies in order to keep their brand value or brand image, Grand Hyatt Tokyo is the most negatively impacted by the global recession and its ADR has dramatically decreased in 2009."
How competitive the Tokyo luxury hotel market will be, particularly considering the scheduled 2012 opening of the Palace Hotel Tokyo and of the Aman Tokyo in 2014, comes clear in Horwath recommendations. Takabayashi and Kawai said to maintain high ADR, hotels in this class must offer not only "hard" products like large units, cutting-edge technology and sophisticated furniture, but also "soft" services such as the personalized butler typical at Ryokans, small, high-end hotels in resort locations.
The Horwath executives note that despite the area's economic doldrums, such high-end projects as the Palace Hotel and the Aman are proceeding "due to the high credibility of their developers." They also suggest that potential hotel developers consider linking their projects to a multiuse development including offices, which could charge higher rents.
External source: To read complete article 'Click Here'.