Mori Trust Co., Japan’s second-biggest closely held developer by sales, plans to expand its hotel business amid a rising number of inbound tourists and business travelers.
Mori is considering the renovation of several hotels and development of new resorts in Japan, Miwako Date, executive managing director of the Tokyo-based developer, said in an interview. The company plans to open a luxury hotel in Kyoto in 2015 after redeveloping a Marriott Hotel in Tokyo last year, said Date, who is also the president of Mori Trust Hotels & Resorts Co., a unit of Mori.
“It is good timing,” for hotel investments, said Date, the daughter of billionaire Akira Mori, chief executive officer of Mori Trust. “We are also at a point where we have a better view of where to allocate future investment.”
Mori Trust, which owns and manages about 30 hotels in Japan including the Shangri-La and Conrad in Tokyo, is trying to capture rising demand by introducing more international hotels. Three hotels under new foreign brands are opening in the country this year, five years after the opening of Shangri-La Hotel Tokyo in 2009, according to broker Jones Lang LaSalle Inc.
Rising construction costs are among the risks for expansion, said Date. Building costs have risen about 10 percent from 2013, according to the Construction Research Institute.
“The construction costs remain the negative,” she said, adding that the company will try to secure the type of land they would want to invest in early and be prepared to start building any time.
Courtyard by Marriott near Tokyo station opened in a building owned by Mori Trust while Andaz Hotel, a brand of Hyatt Hotel Corp., began operating in a Mori Building Co. development. Amanresorts will open a new hotel in the capital later this year, Jones Lang LaSalle said.
The number of tourists to Japan in May rose 25 percent from a year earlier to 1.1 million, following a record 1.2 million tourist arrivals in April, according to estimates by the Japan National Tourism Organization.
Consumption by inbound tourists rose 31 percent in 2013 to 1.4 trillion yen, while spending by domestic travelers gained 4 percent to 20.6 trillion yen, according to the Japan Tourism Agency. Tokyo hotels had an occupancy rate of 83 percent from July through September last year, according to the agency.
“The hotel market is very strong at the moment,” said Date. “As Japan’s economy attracts more attention, more developments in central Tokyo are to take place. That will create more and more new hotels and put Tokyo under the spotlight.”