As foreign visitors continue to flock to Japan, companies in various industries are looking to build out the hotel sector. The trading company previously managed hotels as well, but has decided to stick with developing properties in light of past troubles in turning a profit.
The 200-room hotel will be built on leased land near the new Yamanote Line station planned between Tamachi and Shinagawa. Development costs are estimated at several billion yen (1 billion yen equals $8.93 million at current rates), with the project slated for completion in the autumn of 2018. The finished hotel will then be sold to a leasing company, enabling Itochu to recover its outlays. The project will be undertaken with Itochu Property Development.
Kintetsu Miyako Hotels International will lease the property and operate the hotel, targeting business travelers and foreign tourists. The new Shinagawa station is scheduled to open in 2020.
Itochu's most recent development project in the industry involved Hotel Nikko Tokyo, which opened in 1996. The hotel, co-owned with Japan Airlines, faced deteriorating earnings, leading Itochu to sell its stake in fiscal 2007. The hotel currently operates as Hilton Tokyo Odaiba.
Selling newly developed hotels to real estate investment trusts has become more common as a way to hedge risks. Itochu will consider doing so with future hotel projects.