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New players catering to foreign tourists shaking up Tokyo hotel market

Embellished with traditional Japanese elements, up to six people can stay in this room at "Mimaru Tokyo Ueno North" in Tokyo's Taito Ward, seen on Feb. 1, 2018. (Mainichi)

Japan's capital has no shortage of hotels catered to business travelers, but ahead of the 2020 Tokyo Games, tourist-oriented hotels with features like group accommodations and special services are beginning to crop up, signaling a change in the hotel world.

The hotel development rush has come to Tokyo, and one contender is real estate developer Cosmos Initia Co., under the Daiwa House Industry Co. The company opened its "Mimaru Tokyo Ueno North" in the capital's Taito Ward on Feb. 8. The renovated hotel building once held offices, not guest rooms. Targeting long-stay foreign tourists coming to Japan with their families or in groups, each room has a capacity of four to six people and is equipped with a kitchen. The price varies by room type and starts from around 26,000 yen a night.

Over 90 percent of the bookings for the rooms since the end of last year are said to have been made by foreign visitors. The hotel is the company's first venture into the market, but Cosmos Initia is planning to open four more new locations just in the Tokyo area alone by the end of the year. President Yoshiyuki Takagi says, "While there are not many hotels in the Tokyo area where more than four people can stay (in a single room), the demand (for such accommodations) among foreign tourists traveling in groups is high."

Nomura Real Estate Development Co. is also set to open its first hotel "Nohga Hotel Ueno" this fall. The company's main target is also foreign visitors, but along with incorporating traditional crafts into the interior design of the rooms, the facility also plans to offer workshops on those traditional crafts and other special events for guests. Japanese-style inn operator Hoshino Resorts Inc. also launched its new "OMO" brand of urban hotels and plans to open "OMO5 Tokyo Otsuka" hotel complex in Tokyo's Toshima Ward in May, featuring guest rooms with tatami floor mats, oak bed frames and other chic interior design elements.

The number of inbound tourists to Japan in 2017 ballooned 19.3 percent from the previous year to 28.69 million people. The central government has set a goal of bringing that number to 40 million people by 2020. To accommodate this rise in visitors, the hotel world is jam-packed with plans to construct new hotels in the Tokyo area. According to real estate service giant CBRE K.K., from 2017 to 2020 the number of hotel rooms in Japan's capital is predicted to skyrocket by roughly 29,000 units.

While a CBRE representative says that "even then, there will be a shortage of 3,500 rooms" in the hotel industry, there is also worry of an accommodation surplus. In an estimate released by Mizuho Research Institute in January, due to new companies entering the market, the ban on private accommodations being lifted this June, the increase in cruise ship travelers and other factors, even in Tokyo there will be more than enough rooms in 2020.

"With one firm after the other entering the industry, competition will heat up and it will no longer be a matter of 'build it and guests will come,'" says the institute's senior economist Takayuki Miyajima. "Each hotel will have to market its particular appeal points if it wants to stay in business."

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