GGRAsia – Osaka hotel supply up, demand tighter pre-IR: Nomura

Osaka hotel supply up, demand tighter pre-IR: Nomura

Dec 12, 2019 Newsdesk Japan, Latest News, Top of the deck

Inbound tourism to Osaka is struggling to keep pace currently with the amount of fresh hotel space being created in that market, but the hope is that the World Expo 2025 to be held in that Japanese city – and the possibility of a casino resort being built there - could stimulate consumer demand and reassure investors.

So said a Tuesday note from Japanese brokerage Nomura.

Analyst Daisuke Fukushima stated regarding investment in the local hotel sector: “There is still a large amount of new supply planned for Osaka and Kyoto. We assume that one reason is the inability to halt or postpone development plans even though supply-demand conditions are deteriorating in these areas.”

The institution noted that the number of such rooms in Osaka was expected to register a compound annual growth rate of 5.7 percent between end-2018 and the year 2022.

“We believe that this is because developers are expecting inbound demand to remain strong… due to the World Expo in Osaka in 2025 and the possibility that integrated resorts (including casinos) will also open around that time,” stated the Nomura analyst.

In February it was reported that Osaka city and prefecture’s so-called “IR basic plan” – “IR” being the term for integrated resort, a large-scale casino complex – mentioned circa 25 million visits being generated annually to a local casino resort. That tally is understood to include Japanese domestic visitors. It was anticipated 18.9 million visits would be from non-gambling customers, and 5.9 million by those wishing to take part in gambling amongst other things.

An analysis of inbound tourism trends to Japan – published in July by JTB Tourism Research & Consulting Co Ltd – gave information for the Kansai or “Kinki” region, of which Osaka is part.

It said that – using an index base of 100 for July 2017 – inbound tourism via the region’s border points had increased by 17.1 points year-on-year to December 2018.

The JTB report noted, referring to a three-month outlook from July 2019 onward regarding total “bed nights” in the Kansai region – i.e. the number of foreign visitors staying overnight – “future growth is expected to continue partially driven by the rebound from last year, although the actual growth rate may decline”.

The Nikkei Asian Review media outlet reported on Wednesday that the passenger-handling capacity of Kansai International Airport – a key entry port for overseas visitors to Osaka – was to be greatly increased.

The airport’s Terminal 1 would expand its international departures area by 60 percent, said the news outlet.

Another facility run by Kansai Airports Group is Osaka International Airport, which despite its name serves currently only domestic services within the country according to the latter’s website. It is also being partly remodelled, with a “grand reopening” planned for summer 2020, according to the airport’s English-language website.

Nikkei Asian Review said Kansai Airports Group aimed to be able to accommodate about 40 million international travellers per year – nearly 17 million more than in fiscal-year 2018 – after improvement work.