Hulic Plans to Boost Japan Hotel Investment as Tourists Grow

Hulic Co. (3003) is seeking to invest as much as 100 billion yen ($981 million) over the next five years in hotels in Japan amid rising inbound tourism in the country.

Hulic, the second-best performer among Japanese real estate firms in the past two years, is looking to acquire properties for hotel development, said Noritaka Takahashi, general manager of the real estate planning department at the Tokyo-based company. The developer, which spun off from Mizuho Bank Ltd., owns buildings that house the bank’s branches and may redevelop them in key locations into hotels, he said.

The hospitality business is becoming one of Japan’s fastest-growing industries as the government targets inbound tourists to reach 20 million by 2020, when Tokyo hosts the Olympic Games. Foreign visitors to the country in April rose to a record high, gaining 33 percent to 1.2 million from a year earlier, according to an estimate by the Japan National Tourism Organization.

“We have identified some opportunities in the tourism market and we recognized our strength lies in the lodging business,” said Takahashi, who leads a team that was formed in April at Hulic.

Consumption by inbound tourists rose 31 percent to 1.4 trillion yen in 2013, while spending by domestic travelers gained 4 percent to 20.6 trillion yen, according to the Japan Tourism Agency.

Rising Occupancies

Hulic was created after Mizuho Bank, formerly known as Fuji Bank, spun off its real estate business in 1957, the company said on its website. About 40 percent of leasing revenue the developer generates is from Mizuho, while the bank and its subsidiaries own a 6.5 percent stake in the developer.

Hulic has invested about 15 billion yen to 20 billion yen in three hotels in Tokyo and the neighboring Yokohama area since 2010, according to the company. The developer plans to add about 10 to 13 hotels to its portfolio, Takahashi said.

Occupancy rates for city hotels across Japan rose for a second year to 75 percent in 2013, according to the Japan Tourism Agency. Tokyo hotels had an occupancy rate of 83 percent during the July to September period last year, according to the agency.

Shares of Hulic have more than tripled in the past two years, making the company the best performer among the 45 members that make up the Topix Real Estate Index after Sun Frontier Fudosan Co. The stock closed 2 percent higher at 1,384 yen in Tokyo, trimming its year-to-date decline to 11 percent, compared with the 14 percent drop by the industry measure.

To contact the reporters on this story: Kathleen Chu in Tokyo at kchu2@bloomberg.net; Katsuyo Kuwako in Tokyo at kkuwako@bloomberg.net

To contact the editors responsible for this story: Andreea Papuc at apapuc1@bloomberg.net Tomoko Yamazaki

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