Kyoto to see 12,000 new hotel rooms by 2020

A survey by the Kyoto Shimbun has estimated that there will be approximately 12,000 new hotel rooms supplied in the city by 2020, a 40% increase from 2015. This is 20% more than the 10,000 rooms required to eliminate the current room shortage.

The city had a total of 33,887 rooms as at the end of 2016, a 4,000 room increase from 2015. By 2020 there will be a total of 42,000 rooms. The data measured by the city does not include small-scale accommodation facilities like guest houses, which means the total could be much higher.

There are concerns that a large increase in supply over a short period could result in lower operating ratios and reduced room revenues.

The feverish pace of hotel development has led to a steep rise in land prices, with commercial land values up 10.3% year-on-year in 2017. And with competition becoming fierce between hotels, investment returns are expected to decrease. Some industry insiders have reported that major banks are becoming much more cautious about lending on hotel projects in the city.

In September 2017, foreign tourists accounted for 41.3% of hotel guests in Kyoto City, an increase of 3.5 points from the previous year and the 9th month in a row to record a year-on-year increase. Approximately 25% of the foreign tourists were from China, 15% from Taiwan and 11% from the US. Major hotels reported an average operating ratio for the month of 90.6%.

Source: The Kyoto Shimbun, December 5, 2017.