Terrie's Take 782 (Tourism Edition) -- Where Will They All Stay?

Mon Nov 24 10:35:48 JST 2014

* * * * * * * * TERRIE'S (TOURISM) TAKE - BY TERRIE LLOYD * * * * * *
A bi-weekly focused look at the tourism sector in Japan, by Terrie
Lloyd, a long-term technology and media entrepreneur living in Japan.
(http://www.terrielloyd.com)

Tourism Sector Edition Sunday, November 23, 2014, Issue No. 782

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+++ WHERE WILL THEY ALL STAY?

Last month a friend and I traveled to Shikoku to take part in a major
annual cycling event called the Shimanami Kaido Cycling Taikai. This
may well be the largest single cycling event in Asia, with over 6,500
cyclists participating this year. Although it is so large,
surprisingly, the event is still little-known outside Japan. Probably
because not only is it relatively new, starting in 2013, but also
because it is still struggling to keep up with local demand, let alone
deal with hordes of foreigners.

We registered to race in the 110km course, the longest available,
which took us around several of the major islands serviced by the
amazing Shimanami Kaido road and bridges network. If you haven't heard
of this impressive piece of civil engineering, the Shimanami Kaido
links seven islands with ten bridges, and is in fact the world's
longest series of suspension bridges. More importantly for cyclists,
the 60km route includes a pedestrian-bicycle lane running alongside
the main auto lanes. It's a scenic location, and you can see more
about the Shimanami Kaido here:

http://bit.ly/1xn9y5M

Anyway, just for this one day annual event, in the morning the local
authorities shut down the freeway and let the 6,500 cyclists ride
there. It's an awesome experience riding four lanes abreast over the
suspension bridges high above the whirlpools below. Indeed, it's a
special enough experience that the event will probably attract 10,000
riders next year -- which is the organizers' original target.

Ten thousand people descending on the small 166,000-person host city
of Imbari is a real challenge logistically, and I suspect is the main
reason why they shut off applications this year at 6,500 people. There
simply aren't enough hotel rooms in the whole city to cater for more.
Indeed, this year accommodation within a 50km radius of Imbari was
completely booked out two months ahead.

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As two dumb foreigners we found out just how short the area is in
hotels when we finally got around to booking rooms 3 weeks before the
event. We quickly found that all the web-listed hotels were full, as
were minshuku, unlisted local places, and even the high-end resort
onsen. Calls to various local tourist support organizations revealed
that if we were really serious about going, we were going to have to
either stay in Matsuyama, about 40km away, or Niihama, which was 50km
distant. In the end we finally found an expensive (but nice) ryokan
around the back of Dogo Onsen in Matsuyama, so it wasn't a total loss.

What this did start me thinking, though, is how limited Japan's hotel
infrastructure is because it focuses on local traffic and
business-as-usual conditions. As the cycling event organizers in
Imabari are finding out, it's all very well to come up with a great
idea for pulling visitors, but unless you can regulate your guest
volumes, you either have to build a lot more hotels, or have to face
some severe criticism from disappointed customers. The city of Imabari
certainly isn't equipped to handle a surge of foreign visitors the way
things stand.

Neither, for that matter is Tokyo, which is preparing for both the
Rugby World Cup in 2019 and the Tokyo Olympics in 2020. According to
figures from last year, Tokyo had about 690 hotels with just under
100,000 rooms (actually, 96,113 rooms in March, 2012). At present the
Average Occupancy Rate (AOR) is around 83%, just behind Hong Kong's
87% and Singapore's 86%.

With these major sporting events, while there will no doubt be some
drop off in regular tourist numbers and thus more rooms will become
available, nonetheless, it's hard to see where all the foreign
visitors are going to stay. Right now, allowing for, say, a 5% drop
off in regular visitors (a number similar to what London experienced),
the resulting 20,000 available rooms will hardly be enough for the
families of competing athletes, let alone all the others who will
come.

In comparison, London had about 140,000 rooms, with an AOR of just
under 70%. During the months of July-September in 2012 while the
Olympics and Paralympics were taking place, 680,000 foreigners visited
London on Olympic Games-related trips, occupying about 90,000+ of
those rooms. In other words, London and surrounding cities probably
had just enough extra rooms to spare. Going the extra mile, though,
the authorities in London even opened up a temporary camp site
Walthamstow, East London, for backpackers to pitch their tents. The
campsite was serviced by a 10-minute free shuttle bus ride from the
Olympic Park and sold pre-erected tents for £40 a person, or £15 a
head if you pitched your own.

Tents in Hibiya or Yoyogi Park anyone? :-)

So this sets a challenge for Tokyo, and I doubt the Tokyo Metropolitan
Government will throw the opportunity or their reputation away on
doing nothing. Therefore, we should see a frenzy of building and
deregulation over the next 3 years, which will be great for the local
economy. They will fast-track building approvals, make zoning
exceptions, provide more special transportation from outside Tokyo
into the city, and change at least temporarily laws regarding
short-term private accommodation. For example, I would not be
surprised to see an Airbnb style registry operate, letting locals to
open up their homes to foreign visitors.

At least some foreign investment funds are excited about the prospects
for the hotel sector, looking out even beyond the Olympic Games. One
major U.S. Investment Fund, Fortress, which has US$63bn of assets
globally under management, said in a press interview recently that
they expect hotels to, "Generate the highest returns among its various
property assets because far more tourists are expected to visit Japan
than there are places for them to stay."

The next challenge facing property investors in Tokyo is to find
enough laborers to build these new hotels. So maybe we'll see mass
work visa issuances as well.

...The information janitors/

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END

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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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