COVID-19 webinar summary: 5 key points on Japan, 10 April

March hotel occupancy reaches the lowest monthly average in STR’s Japan database

Despite a decline in demand, Japan hotels reported 64.8% occupancy in February 2020. However, March preliminary data shows that occupancy dropped to 30.5% as the COVID-19 pandemic developed, representing the lowest monthly average in STR’s Japan database.

Event cancellations and postponements played their part, as did school and attraction closures

Government instructions to cancel or postpone major events affected hotel performance, as have the restrictions on domestic travel and encouragement to work remotely. On 28 February, nationwide school closures were also announced and coincided with the decision to close major amusement parks, including Tokyo Disney Resort and Universal Studio Japan.

Olympics rescheduling projected to drive July and August 2020 declines

With the Tokyo Olympics now scheduled to take place in 2021, the forecast for July and August 2020 looks markedly different. Those summer months are now expected to experience demand declines, reduced tourist arrival numbers and decreases in revenue per available room (RevPAR).

July 2021, on the other hand, is now expected to see 22.1% RevPAR growth, with an actual level 16,968.29 Japanese yen (US$156.31). Although it is worth noting that this is below the previous expectations for 2020, driven by lower occupancy and ADR in tandem with a cautious approach from Tokyo hoteliers.

Japan 2011 earthquake recovery rate for occupancy and ADR

Previous disasters can often help in providing context, and both the SARS outbreak and global financial crisis have done so for the COVID-19 pandemic. Analyzing the rate of recovery following the 2011 earthquake in Japan, more specifically, it took roughly one and a half years for occupancy to recover—although rate took considerably longer, as seen below.

International travellers in Japan, 2013 versus 2019

The growth of international travellers was a key part of recovery, with 2013 becoming the first year that Japan welcomed 10 million international travellers. However, according to the Japan Tourism Agency, international travellers accounted for 7% of travel in 2013 compared with 19% in 2019. This implies that rate recovery was mainly driven by domestic travellers.

With international visitors growing at a faster pace in 2019 versus 2013, and outpacing Japanese traveller growth ahead of COVID-19, recovery from the pandemic could be faster once travel restrictions are relaxed and international tourists can return. Even with the market’s considerable supply growth.

Find the full recording of this webinar, conducted in Japanese, here. For further insights into COVID-19's impact on hotel performance, please visit our content hub.