Japan's Seibu Targets $3 Billion Tokyo Hotel Rebuilding Project

  • Seibu wants to complete hotel rebuilding work by 2027
  • Company to negotiate doubling of floor space regulations

Seibu Holdings Inc., whose biggest shareholder is Cerberus Capital Management LP, wants to redevelop an area with four hotels in Tokyo’s Shinagawa district to tap demand from surging overseas tourists arrivals and the opening of Japan’s first high-speed magnetic- levitation train line.

Takashi Goto

Photographer: Noriyuki Aida/Bloomberg

The project may cost about four times the 98 billion yen ($817 million) Tokyo’s biggest hotel operator is spending on a hotel, office and residential redevelopment in central Tokyo, Takashi Goto, Seibu’s president, said in an interview at the company’s headquarters in Tokorozawa, west of Tokyo, on Oct. 19.

Seibu aims to negotiate an easing of building regulations with the Tokyo Metropolitan government that would allow double the amount of floor space to be built in Shinagawa, Goto said. Overseas visitors to Japan soared 49 percent in the January-to-September period, helping boost guests at the company’s hotels in the area, which is a 13-minute train ride from Haneda’s international airport.

“We want to make Shinagawa the front door to Tokyo,” Goto said. “It could be a landmark development for us. Of course our final plans will depend on whether we can win permission for an easing of building regulations.”

Tokyo Garden Terrace

Seibu is currently building Tokyo Garden Terrace, a complex that includes a 36-story office and hotel tower, and a 21-story residential building in Kiyoicho, an area in central Tokyo, that will open next year. The company negotiated an easing of building regulations for the project, allowing it to double the amount of floor space previously permitted, he said.

Tokyo Garden Terrace complex under construction

Photographer: Kiyoshi Ota/Bloomberg

“Kiyoicho’s Tokyo Garden Terrace is a model case for the Shinagawa redevelopment,” Goto said.

The company has seen a surge in earnings as more guests stayed at its hotels. Net income rose 53 percent in the three months to June from a year earlier. Seibu shares rose 0.9 percent to 2,395 yen as of 9:59 a.m. in Tokyo. They have declined 2.8 percent this year compared with an 11 percent gain in the Topix index.

ANA Holdings Inc., Japan’s largest airline, announced earlier this month it will increase flights between Haneda airport and Shanghai in February. The airline reported a 13.4 percent increase in passengers on international flights in the five months to August.

Central Japan Railway Co., which operates the world’s busiest bullet train line, is building a maglev link between Tokyo and Nagoya that will halve the travel time to the nation’s third-largest city to 40 minutes. Shinagawa will be the Tokyo terminus for the 286-kilometer journey when it opens in 2027.

The train will have a top operating speed of 505 kilometers per hour (314 miles). The maglev broke the world speed record earlier this year with over 600 kilometers per hour, but it won’t be driven that fast when it opens.

“It will be a tight schedule, but we want the redevelopment to be in time for the maglev opening,” he said.

Before it's here, it's on the Bloomberg Terminal.