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Olympic Games to Impact Tokyo Hotel Market in 2020

Profile Photo By: H L
September 12, 2013

Olympic Games to Impact Tokyo Hotel Market in 2020

Olympic Front-Runner TokyoThe Olympic Games in 2020 will be held in Tokyo, Japan, and while an event of such magnitude poses real challenges, the event is likely to have a very positive impact on the Tokyo hotel market.

STR Global has been monitoring hotel performance for the Olympic host cities since Atlanta hosted the Olympic Games in 1996, and the forthcoming 2016 summer Olympics in Rio de Janeiro will be the sixth games STR Global has followed.

?For the most recent Olympic Games in London, STR Global reported daily hotel performance for 423 properties equating to more than 73,000 rooms. The trend in occupancy and average daily rate (ADR) during the Olympic Games displayed very different patterns of performance compared with pre-and post-Olympic years.

The year 2011 was strong for London, having recovered from the financial crisis in 2010, following two years of downturn. Average occupancy in 2011 was 84.4% over what is considered the Olympic period. Looking at the Olympic year (2012), occupancy was above 85% on most days. Highest occupancy achieved during this period was 94.4% on the day Team Great Britain won six gold medals, dubbed as ?Super Saturday?. This was the day after the new, 80,000-seat Olympic stadium opened for the start of the games. The average occupancy over that same period in 2013 was 83.0%, lower than pre-Olympic and Olympic years. In 2013, London was primarily impacted by Ramadan, which started on 10 July and ended 9 August. London also has had a significant number of new openings; year-to-date August 2013 supply grew by 4.5% compared to a historical average of 1.0%.

In terms of ADR, London has continued to grow from strength to strength. In 2011, London achieved ?114.06 during the Olympic period and reported record levels of ADR throughout the rest of the year compared to its previous 2007 peaks. During the games, daily ADR stayed above ?200, achieving an average ADR of ?211.37. Such high levels have not previously been recorded by London hotels for as long as STR Global has been reporting daily data. However, the ADR growth was lower than past host cities, such as Beijing and Athens, when ADR grew during the Olympic month more than 200% for both cities. London ADR growth for the month of August 2012 was only 44% in comparison. For the post Olympic year (2013), the trend for ADR appears to have returned closer to 2011 levels and maintained an average of ?122.95 for the period.

?Daily hotel performance in Tokyo during the Olympic Games will be tracked by STR Global. Each host city is very different in terms of the state of its economy and maturity of the hotel market. STR Global tracks monthly hotel performance for 107 properties with 33,739 rooms in Tokyo. YTD July 2013 performance is positive, with both occupancy and ADR increasing by 4.3% to 84.6% and 7.5% to JPY15082, respectively year over year. According to the recent forecast report in Tokyo, supply compound annual growth rate (CAGR) for 2013 to 2015 is up 2.0%, while demand CAGR is up 1.8%.

Source Asia Travel Tips

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