Japanese hoteliers slash prices as bookings canceled by Olympics delay
Last year, hoteliers in Japan had the luxury of worrying about a shortage of hotel rooms for summer 2020. But that changed when the Tokyo Olympics was postponed until 2021 due to the global novel coronavirus outbreak.
With border controls tightened and travel limited worldwide, hotels in Japan have been struggling with cancellations and fewer bookings for months.
A survey conducted by Japan’s Ministry of Land, Infrastructure, Transport and Tourism showed some Japanese hotels saw bookings for March and April drop as much as 90 percent year-on-year, the Nikkei Asian Review reported.
It added that based on the Japan City Hotel Association data, the average occupancy declined to 69.6 percent in February, a 12.8-point fall year-on-year. The occupancy in March is expected to fall significantly further.
This is aggravated by the Olympics postponement, which will wipe out demand from an estimated 9 million domestic and 300,000 foreign spectators, Nikkei said.
On top of this, 46,000 hotel rooms reserved each day for organizers and officials during the Tokyo Olympics
have to be canceled.
Seibu Holdings, owner of 76 hotels inside and outside Japan, was set to provide the organizing committee rooms. Now it may lurch from confidence to wariness.
In addition, experts have warned of the dangers of bankruptcies. As of March 25, 15 companies went bankrupt in Japan amid the coronavirus outbreak. Six of them were in the tourism industry.
Shigenobu Abe with Teikoku Databank, a Japanese credit research firm, told the Japan Times: “There has recently been a case where the coronavirus directly forced a business into bankruptcy even though it was doing well before the outbreak.”
But there are hotels showing their mettle to weather the storm. The Imperial Hotel in Tokyo — which cut its net profit forecast for the fiscal year ending March by 37 percent — is working to release rooms booked for Olympic officials to the public.
Its decisiveness was recognized by investors. Nikkei reported that after nearly a week of declines, the stock price of the hotel’s operating company surged 23 percent at one point on March 25.
Meanwhile, as small businesses find it hard to survive, some hoteliers want to capitalize on the situation.
In an interview with Nikkei, some said they want to buy hotels that can’t continue through the crisis.
Another tactic by hoteliers is to cut prices. A Nikkei analysis of hotel reservation site Rakuten
Travel compared prices before and after the Olympics were delayed. It found that 433 out of 522 business hotels in central Tokyo had lowered prices.
It is now much easier to book a hotel in Tokyo on July 24, which was supposed to be the opening day of the Tokyo Olympics. Room prices for that day have halved, Nikkei reported.
But these efforts are far from enough. The Japanese government needs to offer financial support, experts said.
Recent news reports said the government will soon launch a stimulus package worth 10 percent of the country’s economic output to cushion the blow to businesses from the novel coronavirus outbreak.
For the hospitality industry, Takayuki Miyajima, a senior economist at Mizuho Research Institute, said the government could provide subsidies, just as it did after the 2011 Tohoku earthquake.
Data from the Japan National Tourism Organization show that some 1.08 million overseas travelers visited the country in February, a 58 percent fall from the same period of last year.
Of them, about 87,200 were from China, a drastic reduction of 88 percent year-on-year.