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Japanese hotel starts more than doubled in 2016

As occupancy rates soar, room shortage predicted for Osaka

A rendering of a low-budget hotel planned in Osaka.

TOKYO -- Hotel construction starts in Japan soared to the highest level in 18 years in 2016 as the lodging industry rushed to accommodate a large influx of foreign visitors.

Construction starts in the industry totaled 1.96 million sq. meters in 2016, 2.1 times as much as the prior year, according to the land ministry.

Figures from the Japan Tourism Agency show that occupancy rates at Tokyo and Osaka lodging facilities in November topped 80%, a level at which it becomes difficult to make reservations. Looking just at business hotels, occupancy was in excess of 80% in Tokyo and 12 other prefectures.

In response, ground was broken on 1,482 buildings in 2016, with projected costs reaching 633.2 billion yen ($5.6 billion). The trend appears to be toward larger hotels, as per-site size and cost grow.

The surge is expected to resolve hotel shortages in some areas. Tokyo, which as of August was on track to have a 4,000-room shortage by 2020, was no longer expected to have any shortage as of January, according to calculations by the Mizuho Research Institute. In contrast, Osaka is still projected to have a shortage of 5,000 to 16,500 rooms as of January's calculations. The scarcity of workers could cause delays in scheduled openings, exacerbating the shortage.


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