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Property

Japan hotel REITs take hit as cancellations mount

Revenues plunge with Chinese travelers thwarted by virus outbreak

Japanese hotel operators have experienced a drop-off in Chinese visitors due to travel restrictions imposed by Beijing.

TOKYO -- Japanese real estate investment trusts with hotels in their portfolios are slumping as the new coronavirus keeps travelers away.

Three of four hotel REITs disclosing January revenues have reported year-on-year drops. The Chinese government on Jan. 27 banned group tours abroad, causing a rash of cancellations.

Ichigo Hotel REIT Investment said Tuesday that revenue per room retreated 10% on the year in January. Hotel bookings in Osaka in particular have suffered from cancellations by Chinese visitors, as well as lower traffic from South Korea.

Invincible Investment's revenue per room slipped 5% in Japan.

Japan Hotel REIT Investment's figure dropped 1% for January and could shrink more than 20% this month. "Cancellations could come from travelers besides those from China," said Hisashi Furukawa, president of affiliated asset manager Japan Hotel REIT Advisors.

Meanwhile, Ooedo Onsen Reit Investment reported 4% growth in revenue per room. Foreign group tourists contribute only about 1% of the total, insulating the hot-springs resort specialist from the coronavirus fallout.

Share prices of the REITs have dropped precipitously so far this year. Invincible Investment is off 20% since the end of 2019, while Ichigo Hotel is down 18%.

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