Osaka Tourism Market Overview - By Tomohiko Sawayanagi, Senior Vice President and Yasokazu Terada, Vice President (Jones Lang Lasalle Hotels)

Located approximately 400 kilometers west from Tokyo, Osaka is recognized as Japan's second largest business center, following Tokyo. With a population of 2.6 million, Osaka is ranked Japan's third largest city and acts as the capital of the Osaka prefecture (population of 8.8 million). Osaka functions as the center of the Kansai area, which includes the popular tourist destinations of Kyoto, Kobe, and Nara. Osaka is easily accessible from Tokyo with travelling times of 2.5 hours by bullet train or 1 hour by air. Osaka is home to Kansai International Airport, one of Japan's largest airports which opened in 1994.

International visitor arrivals to Japan rose 7.9% to reach a record high of 4.8 million in 2000. During the period 1990 to 2000, international arrivals recorded a compound annual average growth of 4.0% per annum between 1990 and 2000.

The latest available figures show that international visitor arrivals to Osaka have increased in line with national growth, reaching 1 million for the first time in 1999. The ratio of Osaka visitors to total Japan visitors has also increased in recent years, as shown below.

In 1999, the majority of foreign visitors to Osaka were drawn from Asian countries, such as Korea and Taiwan, representing 31.3% and 22.1% of total visitors respectively. The United States followed, contributing 8.5% to total visitor arrivals.

International visitors to Osaka demonstrate traditional seasonality patterns, with higher arrivals recorded during the summer and autumn months from June to November attaining peaks in July and October.

Osaka is a popular tourist destination due to its rich in historical and cultural heritage. The city is also in close proximity to the towns of Kyoto, Nara and Kobe, all featuring popular attractions.

Housing the headquarters of many multinational and high tech companies, business is another major reason for international travellers to visit Osaka.

Osaka Hotel Market Review

Hotel Supply

As at the year-end 2000, Osaka had 14 hotels with 8,464 rooms in the luxurious and first-class categories. The market was predominated by domestic brands until 1990. During the 1990s, a sharp increase in hotel development introduced major international brands to the marketplace, as shown in the following table.

As a result of hotel development and collapse of the Bubble Economy in Japan, three hotels of domestic branding were closed in 1999: the Dojima Hotel, Osaka Kokusai Hotel and Hotel Plaza. These closures represented a removal of 984 rooms from the market.

Occupancy and ADR

Due to the unavailability of market information it is difficult to establish trends in occupancy and ADR in the Osaka market. It is reported that both occupancy and ADR have reflected the Japanese declining economy, showing gradual decreases during the 1990s.

Our research indicates that the average ADR for Osaka's top ten hotels fell to approximately JPY 16,000 in the fiscal year 1999/00.