There is a shortage of luxury accommodation to meet the increasing number of affluent foreign visitors to Japan. Credit: Travelpixs / Shutterstock.com.

Luxury hotel operators in Japan, including Palace Hotel and Imperial Hotel, are planning to open new properties to woo rich foreign tourists in the wake of the rebound in tourism post-Covid-19, according to a report on Nikkei.

Palace Hotel plans to expand its hotel portfolio in the country by 2.5 times by the end of this decade. It aims to create open a network of around ten properties by 2030, from the present four.

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It intends to boost its portfolio by managing hotels on behalf of owners, with a focus on cities, rather than building new hotels.

Imperial Hotel plans to introduce a property in Kyoto by early 2026 and embark on the renovation of the main building of its flagship hotel in Tokyo during the 2030s.

These plans come to meet the increasing number of affluent foreign visitors to Japan.

As per the Japan National Tourism Organization records, 2,516,500 foreign visitors came to the country in October, an increase of 0.8% from the same month of 2019, before the Covid-19 pandemic.

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Even as the rebound of visitors from China is tepid, Japan has seen a noticeable increase in tourists from the US, Europe and Australia.

The average daily rate (ADR) at these hotels is rising, with Palace Hotel Tokyo experiencing an ADR increase to almost Y100,000 ($683.95) now from Y60,000 before the pandemic. Imperial Hotel Tokyo also saw its ADR grow to Y60,000 in October 2023 from Y36,045 in March 2019.

Furthermore, foreign guests represented about 75% of the total guests in October this year at Palace Hotel Tokyo, an increase of five percentage points from before the pandemic. At Imperial Hotel Tokyo, foreign visitors accounted for more than 60%.

Tokyo-based property developer Hulic plans to make substantial investments in directly managed hotels and inns in the country by 2030, to double the number of properties to 38, including 17 Fufu luxury inns.

While promoting overseas tourism policy, the Japanese Government is emphasising quality over quantity to raise spending per visitor.

The data from the Japan Tourism Agency’s Five Star Alliance website reveals a scarcity of luxury hotels in Japan compared with other countries, with only 34 five-star hotels operating as of June 2020. In contrast, the US had 801 luxury properties while Italy had 196. Japan is also far behind other Asian countries – China had 137 hotels, Thailand with 112, and Indonesia with 58 hotels.