Japan's seemingly endless hot streak as a tourism destination has been the defining trend for travel in the Asia-Pacific region in recent years, but even though hotel performance metrics are finally cooling there, they remain strong.
On the latest episode of the CoStar News Hotels podcast, STR area director for Asia-Pacific Jesper Palmqvist said the narrative in Japan is tourism remains strong and officials remain hopeful that hotel demand extends beyond major markets such as Tokyo.
"It's about how tourists spread and travel around the country," Palmqvist said.
In June, Japanese hotel occupancy increased 1.2% year over year, and in local yen currency, hotel average daily rate rose 7.2% and revenue per available room jumped 8.5%.
Still, during three months this year — January, April and May — Japan's hotels recorded RevPAR growth over 20% on a year-over-year basis.
Last week, Japan hosted national elections that pushed its parliament in a more conservative direction even though Prime Minister Shigeru Ishiba promised to stay in his position. Japanese officials also announced a new trade deal with the U.S.
Palmqvist said the trajectory for Japan will rest at least partially on the new government's political agenda, which is yet to come into focus. He doesn't see a reason why the incoming administration would be incentivized "to create policies that impact and decrease and impact tourism in a negative way."
"I don't see that yet," Palmqvist said.
The ultimate takeaway is Japan's hotel industry remains strong.
"Our forecast still holds up quite well that the second half of the year is where large Japanese markets will be slowing down in their growth pace, but sit at unprecedented levels," Palmqvist said. "The fact that they have pretty good productivity, too. We know that their margins have stabilized in a lot of hotels, and so [it will be] much more about the how they manage their hotels operationally over the next 18 months."
For the rest of the interview with Palmqvist, including discussions on uncertainty in Thailand and performance across the rest of the Asia-Pacific region, listen to the podcast above.