Salter Brothers Research: Japan Hospitality

November 2024

Identified as a premier real estate opportunity in Asia Pacific, Salter Brothers Research shares insights into Japan’s high performing hotel sector.

Strong Fundamentals

Japanese hotels are a fundamentals-driven investment opportunity. A large and heavily transacted market, the sector is supported by a strong base of domestic demand and fast-growing pool of international inbound.

Revenue Drivers

A strong base case is supported by a number of realistic upside revenue drivers. Prime exposure to fast-growing APAC outbound markets and a limited pipeline of future supply implies an encouraging supply-demand imbalance.

Growth Spurt?

Demand and performance growth has normalised globally but remains elevated in Japan. Japanese outperformance continues a trend of above average demand growth from the decade prior to COVID-19 border closures.

Domestic Decline

Japan’s hotels are exposed to the forecasted domestic population decline, with a considerable domestic share of the tourism market. This highlights the need for strategically positioning any investments towards international customer growth.

Sector Performance: Widespread Growth

The remarkable performance of Japanese hotels has been felt across all national markets and asset classes. Widespread growth has enabled diverse approaches, with investors and hotel chains pursuing strategies spanning from budget to luxury, across both urban and regional assets.

First Look: Retreats

The traditional Japanese Ryokan sector is experiencing notable investor interest. The unique features of the sector offer both opportunities and challenges for overseas investors.