Tokyo Shoko Research released a report on March 18 on the current impacts the coronavirus is having on Japan’s hotel industry. We are only two months into the crisis and listed companies are one-by-one lowering their earnings estimates for the year.
The true amount of damage is impossible to determine at this early stage, with some companies struggling to come up with a number, while others give up entirely.
Resorttrust, Inc. revised their revenue down 6.7% to 160 billion Yen. Two typhoons in 2019 impacted travel, while the fourth quarter has impacted not only their expected revenue from both inbound and domestic tourists.
Kyoto Hotel went from forecasting a net profit of 111 million Yen to a revised net loss of 192 million Yen this year due to guest and event cancellations. Occupancy rates dropped 40% in February, while banquet hall bookings were cancelled.
Royal Hotel initially lowered their earnings forecast on February 13, but issued a further revision downwards on March 17 as the coronavirus situation worsened. Their latest revision puts revenues down 8.9%.
Washington Hotel Corporation also issued a reduced earnings forecast on February 13. By March 15, revenues had fallen 68.2% from the same period in 2019, causing the company to leave their earnings estimate ‘pending’.
Over the past few years, Japan has seen a surge in inbound tourist numbers. This, along with the now-postponed 2020 Tokyo Olympics, led to a rush in the construction of new hotels. Business hotels and tourist-oriented hotels were experiencing high occupancy rates and growing revenues. The onset of the worldwide coronavirus pandemic has been catastrophic to the hotel industry not just in Japan but across the globe.
Source: Tokyo Shoko Research, March 19, 2020.
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