Kyoto hotel industry boosted by foreign tourists

Hotel revenues and occupancy rates in Kyoto are rising thanks to the recent boom in foreign tourist numbers. Even the typical off-season months in winter and summer are now seeing strong demand for accommodation.

According to the Kyoto Convention Bureau, a survey of 34 hotels catering to foreign tourists found that the hotel occupancy rate in January 2017, which is off-season, was 75.7%. This is an increase of 4.3 points from 2016 and the highest rate seen for the month of January in the past four years. Kyoto Hotel Okura had an occupancy rate of 89.0% in 2016, up 7 points from 2015.

36.6% of Kyoto’s hotel guests during the month were foreigners, up 4.8 points from last year. Visitors from mainland China accounted for 34.6% of foreign tourists, up 7.3 points from last year, while 21.9% of foreign visitors were from Taiwan and 7.1% were from Australia.

With a reported 14.3% year-on-year increase in the room revenue, Kyoto has stood out amongst other international cities. The Bureau’s report indicated that Kyoto’s accommodation prices are still considered to be relatively low when compared to international cities.

STR’s Global Hotel Study reported that Kyoto’s room revenue index in 2016 increased by 9.8% from the previous year, exceeding Tokyo’s index increase of 3.9%. New York City, meanwhile, saw a decline of 12.3%, while Paris saw a drop of 22.7%.

Hotels in Kyoto are starting to spend more on refurbishments, while also increasing room prices. Righa Royal Hotel Kyoto underwent a large-scale refurbishment in 2016 and room rates are gradually being increased. Hotel Granvia Kyoto is planning to refurbish guest rooms and the hotel restaurant later this year.

The Four Seasons Hotel Kyoto launched in late 2016. The 123-room hotel has an average room rate of around US$1,000, although it is expected to be raised in 2017. Initial occupancy rates are expected to be around 65% in the first year of operation.

Hotel industry insiders in Osaka have been reporting a decline in room prices due to a drop in the number of tourists from mainland China. Large hotels in Kyoto are faring much better with 150 hotels reporting a combined revenue of 105.4 billion Yen (approx. 919 million USD) in the 2015 year, up 2.7% from the previous year and the fourth year in a row to see an annual increase.

Approximately 71% of Kyoto’s small-to-medium sized hotel and ryokan operators, however, reported revenues of below 100 million Yen each. Growing competition is making it difficult for smaller hotels to stand out and differentiate themselves from their counterparts.

Although foreign tourist numbers are expected to continue to grow, hotels will need to make an effort to attract and retain repeat guests.

Sources:
The Kyoto Convention Bureau, March 1, 2017.
The Kyoto Shimbun, February 23, 2017.