Hotel Transaction Market

Transactions of hotels have intensified. According to a survey announced by Jones Lang LaSalle in February 2015, the number of Japanese hotels transacted in 2014 was a record high of 101 hotels, exceeding the peak level before the global financial crisis.

Many of the transactions were by J-REITs. As entering 2015, APA Hotel Yokohama Kannai (acquisition price: 8.35 billion yen, number of rooms: 451, acquisition price per room: approximately 19 million yen, estimated cap rate: 5.2%), the b akasaka-mitsuke (acquisition price: 6.25 billion yen, number of rooms: 122, acquisition price per room: approximately 51 million yen, estimated cap rate: 4.6%) and other hotels have already been traded. Not only investment from Japan but also from Asian countries such as Hong Kong, Singapore and Malaysia are seen.

Hotel demand has been increasing with the surge in number of visitors from foreign countries due to the easing of the requirements for issuing tourist visas, spreading sense of inexpensive travel costs due to the further depreciation of the yen. The Japan National Tourist Organization reported that the number of foreign visitors in 2014 was 13.414 million, the highest ever, and the figure this year is expected to be even bigger.

The movement of the participants in the hotel market continues to be active with many hotels scheduled to open towards the 2020 Tokyo Olympic Games along with a recovery in occupancy rates and growth in profitability of existing hotels being observed. Accordingly, the number of hotel transactions is expected to increase in 2015.

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