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Tokyo 2020 Olympics

Tokyo hotels wait for '2021 Olympics' with empty guest logs to fill

Delay of games adds to coronavirus impact as foreigners stay away

The Imperial Hotel in Tokyo had held several hundred rooms for the organizers of the Olympics. (Photo courtesy of the Imperial Hotel) 

TOKYO -- A day after the 2020 Tokyo Summer Olympic and Paralympic Games were postponed by a year, Tokyo's landmark Imperial Hotel began arrangements to release the several hundred rooms it had withheld for organizers of the games during the July-September period.

The hotel, lnear the Ginza shopping district, will begin accepting reservations from the public. But it comes at a challenging time. The Imperial saw a 50% drop in foreign guests in its Tokyo and Osaka hotels in February due to coronavirus travel restrictions. Overseas guests account for half of the group's guests.   

Yet things could have been worse. An outright cancellation of the games would have been disastrous. Having managed to avoid that nightmare scenario, the stock price of operating company Imperial Hotel surged 23% at one point on Wednesday, after nearly a week of declines due to growing anxiety. 

The Imperial's fortunes mirror many in Japan's travel and hospitality industry -- they are relieved that an Olympic cancellation has been avoided but apprehensive given the ongoing impact of the coronavirus on the world's third-largest economy.

During the Olympics, some 46,000 hotel rooms per day had been reserved for the games' organizers. Now the task of replacing those bookings begins. 

For Kanako Takahashi, manager of Hotel Toka, a small budget inn located in eastern Tokyo, the postponement was simply bad news with no immediate silver lining even visible. She expects another six months of "catastrophe" for her business.

Takahashi said most of the 13 rooms in her establishment were booked from the end of July at a rate of nearly 30,000 yen ($270) per night for a single bed, five times higher than usual. But now, she is sure that "100% of these bookings will be canceled."

The hotel was already suffering from the closure since Feb. 29 of Tokyo Disneyland over coronavirus concerns, given its location just half an hour away from the amusement park. "Nearly all family visitors with several nights (of reservations) canceled their bookings in March and quite a few for April too," Takahashi said. "We have run this hotel for more than 20 years. We need to make it through this challenge."

Olympic flags are lined up at the Tokyo Metropolitan Government office on March 25. (Photo by Masayuki Terazawa)

The Olympic postponement is the latest blow to Japan's economy, which was already reeling from the coronavirus impact.

Since China banned group overseas trip on Jan. 27, the number of inbound tourists has sharply dropped. According to the Japan National Tourism Organization, foreign tourist arrivals declined 58% to 1.08 million in February from the same month last year. Japan has so far imposed entry restrictions in the form of quarantines on foreign nationals who come from China, South Korea, the U.S., Iran and Europe.

Tadashi Kaneko, executive vice president at JNTO, expects the Olympic postponement to significantly impact the tourism industry in the form of further accelerating hotel and travel booking cancellations.

A major worry for hotels and travel agencies is the extent to which they will have to cover cancellation costs. Travel agency JTB will start mulling whether to issue refunds or reschedule dates for those who booked ticket-inclusive travel packages to attend the Games.

"The government may be able to ask these companies to voluntarily offer these options but it is probably more realistic to let them decide," says Takayuki Miyajima, senior economist at Mizuho Research Institute, citing the difficulty of judging whether visitors cancel bookings solely on the Olympic postponement. Rather, the government could provide extra subsidies for visitors, as it did after the deadly 2011 Tohoku earthquake, tsunami and nuclear accident, as well as other natural disasters, Miyajima said.

And while the postponement removed one question mark, plenty of others remain, such as exactly when the Games will be held next year and how long the pandemic will last.

An official at a Tokyo based department store operator summed it up by saying, "We are not sure what the situation will be even in just a week."

An executive at All Nippon Airways, meanwhile, said that while the burden of not knowing what would happen had been lifted in the form of the postponement announcement, it provided little overall solace.

"Even if the Olympics are held amid the new coronavirus pandemic, it will not help boost tourism demand," the executive said.

Some are looking to take advantage of the delay.

"We have more time to prepare for the Olympics," Akiyoshi Yamamura, president of subway operator Tokyo Metro, told reporters on Wednesday. Preparations include adding more safety doors on track platforms whichare currently set to be in place at 79% of its stations as of July 2020.

Sohgo Security Services, also known as Alsok, said an Olympic postponement gives it more time to train staff, while a spokesperson for Hub, an operator of British-style pubs, said there is more time to put together special campaigns and events for customers.

Family restaurant operator Royal Holdings was also upbeat. "We plan on being fully prepared" for the Games, a spokesperson said.

And Japanese regions might still get a boost from Japan Airlines, which had planned to give away up to 100,000 domestic round-trip tickets to overseas visitors as part of a government effort to encourage summer travel beyond Tokyo. The airline said the postponement will bring no changes to campaign.

Additional reporting by Eri Sugiura, Nana Shibata, Akane Okutsu and Jada Nagumo.

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