Savills Japan is pleased to introduce the Savills Opinion Letter, a new monthly(ish) publication offering forward-looking, thematic insights into Japan’s real estate market. This initiative is designed to complement our core research by addressing timely and strategic topics with a sharper focus and practical relevance.

Our inaugural issue explores our favoured strategies for hotel investment across Japan—a sector experiencing renewed momentum amid the sharp rebound in tourism and inbound demand.

With inbound visitor numbers expected to grow to a record 40+ million in 2025, and the Japanese government’s “Tourism Nation Promotion Basic Plan” seeking to increase this to 60 million by 2030, investor appetite for Japanese hospitality related real estate continues to expand—particularly in the tourism and leisure space—but with a notable shift from passive ownership to value-add strategies. 

Japan currently attracts 40 million annual international visitors, but reaching the government’s target of 60 million will require a fundamental diversification of tourist destinations. Growth is increasingly constrained by infrastructure bottlenecks—Haneda Airport’s congestion being a prominent example. At the same time, Japan is rich in "undiscovered" destinations that remain under the radar of most inbound travellers. Investors are beginning to recognize the potential in these overlooked areas and are aligning their strategies accordingly.

While iconic destinations such as Tokyo, Kyoto, and Mt. Fuji are experiencing overcrowding, many regional areas—including Tohoku, Chugoku, and Shikoku—have only just returned to their pre-pandemic visitor levels. This imbalance reveals untapped potential for regional tourism growth and signals opportunities for investment and revitalisation in less-saturated markets.

Osaka is currently in the global spotlight as it hosts Expo 2025 amid strong tourism momentum. Looking further ahead, an even more transformative project looms: the opening of Japan’s first integrated resort in 2030. This major initiative is expected to drive a new wave of inbound demand, catalyse infrastructure upgrades, and generate substantial economic spillover across the Kansai region and beyond.

Prior to the pandemic, a wave of hotel developments had been planned to keep pace with the rising volume and shifting preferences of inbound travellers. However, many of these plans were shelved or delayed due to elevated construction costs and persistent labour shortages. This has left a critical gap in supply. For instance, more than 30% of international visitors are said to travel in groups of three or more, yet the availability of hotel accommodations designed for group travellers remains limited. These mismatches present compelling opportunities for innovative operators and developers willing to address evolving market needs.

Against this macro backdrop, we highlight three preferred strategies for investors assessing opportunities in the sector:

• Repositioning underutilised assets through refurbishment, concept renewal, or operational overhaul.
  
  

  Example: Oakwood Suites Yokohama
  Rumoured price per key: approximately JPY60 million
  Buyer: Lone Star Funds

  Background: Currently operated as a serviced apartment, the asset is located in a market where several luxury hotels command more than twice the room rates. Repositioning it as an upscale branded hotel could significantly enhance RevPAR. Moreover, Yokohama remains largely under the radar for inbound tourists despite its proximity to Tokyo and established infrastructure. With the right positioning, it holds significant potential to transition from a day-trip or domestic business hub into a compelling overnight destination for international visitors.

• Reflagging / Rescaling assets to better align with market demand, adopt more efficient formats, or affiliate with stronger and more regionally appropriate brands—enhancing both visibility and returns.
  
  

  Example: Nest Hotel Osaka Umeda
  Rumoured price per key: approximately JPY45 million
  Buyer: Mitsubishi Jisho Investment Advisors

  Background: With the current management contract expiring later this year, and inbound group tourism surging, reflagging to a recognised brand with larger room formats could materially enhance profitability. Furthermore, Osaka is gaining increased global visibility through Expo 2025 and is expected to attract even greater attention with the launch of integrated resorts in 2030.

• Entering untapped regional markets benefitting from infrastructure improvements, government incentives, and destination marketing—offering lower competition and attractive entry points.
  
  

  Example: Chisun Budget Kanazawa Ekimae
  Price per key: approximately JPY13 million
  Buyer: CapitaLand Ascott Trust

  Background: International institutional investors are increasingly targeting new markets. With repeat inbound tourism on the rise, lesser-known regional destinations—many of which are featured in global rankings such as the New York Times’ 52 Places to Go—are gaining international visibility and growing investor interest. For example, Kanazawa has grown into a popular tourist destination following the Shinkansen extension, while Toyama is actively promoting tourism through strong public-sector initiatives.

Hotel pricing remains firm, supported by robust operating metrics such as elevated ADR and RevPAR. Sellers remain bullish, while limited new supply, rising construction costs, and labour shortages continue to enhance the relative appeal of existing assets.

In this environment, both domestic and international investors are becoming more selective and strategic—focusing on micro-locations, operator capabilities, and alignment with evolving traveller preferences such as wellness, sustainability, and experiential offerings.

This issue outlines the key drivers and opportunities shaping Japan’s hotel investment landscape today—and how leading players are adjusting their strategies to capture upside in a dynamic and evolving market.