Tokyo, Osaka, Kyoto: Number of Hotel Rooms to Rise 38% by 2020

Hotel Room Shortage Remains in Tokyo’s 23 Wards

Little Risk of Oversupply in Osaka and Kyoto

  • Hotel development has been boosted by growing inbound tourism and rising average daily room rates. In the three major markets - Tokyo, Osaka, and Kyoto - the number of hotel rooms is expected to increase by 38% between 2017 and 2020.
  • The hotel market reached a turning point at the start of 2017. Revenue per available room (RevPAR) growth in the eight major cities had slowed down since 2016 and turned negative in Osaka in February 2017. This was due to the rapid rise in room rates, an increase in new supply, and a greater variety of lodging options, including vacation rentals and hostels.
  • Tokyo is forecast to remain tightly supplied, with a shortfall of around 3,500 rooms. Although Osaka and Kyoto will see the addition of more rooms than what was estimated to be needed, the new supply is likely to stimulate latent demand or recover demand which to date had been lost to other areas.
  • New supply is skewed towards limited service hotels, which would account for more than 90% of new supply in the eight major cities. Of these limited-service hotels, at least 50% will be business hotels.