Travel recovery sends Japan hotel room prices soaring

TOKYO – Hotel room prices in Japan climbed nearly 20 per cent in December compared with the same month before the Covid-19 pandemic.

A big reason for the soaring prices has been the jump in the number of overseas travellers to Japan, the Nikkei newspaper reported.

Their numbers have climbed since the Japanese government loosened Covid-19 border restrictions in October.

Hotel room prices have also gone up owing to a labour crunch that has forced some hotels to limit the number of rooms on offer, and this has in turn cut supply and pushed prices higher.

Last December, the average price of a hotel room in Japan was 17,127 yen (S$172), according to American hotel market data company STR.

The figure was 10.8 per cent higher than that of last November.

Last December’s average was also 18.4 per cent higher than the average in December 2019.

It marked the second consecutive month that the average price was higher than the same month in 2019.

The occupancy rate stood at 75 per cent, just under the 2019 rate of slightly over 80 per cent.

The highest average room price last December – about 83,000 yen – was recorded at the Palace Hotel Tokyo.

According to the Japan National Tourism Organisation, 1.37 million foreign travellers arrived in December, which is 54 per cent of the December 2019 total.

There has also been an increase in domestic travel, boosted by government subsidies. 

In addition to a worker shortage, higher energy prices have also contributed to the spike in hotel room prices.

“We are forced to keep our occupancy rate at 80 per cent of normal days because we can’t hire enough people, so the price per room is rising to secure profit,” said an executive at a hotel in Tokyo.

The high prices are not expected to subside any time soon.

Data showed that demand remained strong in January, which is ordinarily considered part of the low season.

In addition, the government restarted its travel subsidy programme on Jan 10 while foreign travellers continued to arrive.

Hospitality company Seibu Prince Hotels Worldwide said its Prince Hotel brand saw the January average price rise to about 13 per cent above the pre-Covid level.

Average room prices at the Okura Tokyo fell 3 per cent compared with December, which is a busy month, the hotel said.

Another strong month is expected for February. 

Seibu Price’s Nagoya Prince Hotel Sky Tower, in the city of Nagoya, is already seeing reservations for February rise to 2.4 times of the same time last year.

It shows the recovery is being felt beyond Tokyo. 

Prior to the pandemic, Japanese hotels tended to focus more on raising occupancy rates instead of prices.

That trend may change, however.

This is because some may see raising room rates as a chance to raise the wages of their workers and the financial stability of operators, which suffered throughout the pandemic.

At the same time, a sudden surge in prices could cool demand.

In some foreign-brand luxury hotels in the Japanese capital, room rates have risen to 150,000-200,000 yen per night.

If the prices rise too high too fast, they could offset the benefit of the government subsidy programmes.