Hotel Operators Hit by Japan’s Cooling Relations With South Korea

Jan 17, 2020 – The on-going rift between Japan and South Korea has cut Japanese hotel operators’ revenue.

According to the Japan National Tourism Organisation, the number of foreign tourists visiting Japan in October 2019 declined by 5.5 percentage points year-on-year to 2,497,000. In particular, South Koreans who visited Japan fell drastically by 65.5 percentage points during the period. 

Among the cities with a higher concentration of South Korean inbound tourists is Fukuoka on the northern shore of Japan’s Kyushu Island. It is 200 kilometres from Busan, South Korea’s second-most populous city after Seoul. In 2018, South Koreans accounted for 51.2% of all inbound tourists in the city. 

According to the most recent issue of the Nikkei Real Estate Market Report, the impact of the rift between the two Asian countries has been significant, especially for hotel operators. 

One local hotel operator was quoted to have told Nikkei: “When Japan-South Korea relations deteriorated in August and September, RevPAR (revenue per available room) decreased by around 10% to 15%. In particular, older hotels struggled. While they made a comeback in October and November due to the Rugby World Cup, the outlook beyond December is uncertain.”

Hakata Hotels President Takanobu Kitazaki regarded the current decline in South Korean tourists as a “good opportunity to diversify risk.” He added that airlines and hotels are stepping up their efforts to attract tourists from other Asian countries, Europe, and the U.S. Hakata Hotels, established in March 2019, is a unit of Ichigo Inc. It is the parent group’s first hotel management company and was set up to enhance operational ability amid rising competition in Japan’s hotel industry.