April 17, 2015 / 10:34 AM / 4 years ago

Apa Group plans to build Japan's biggest hotel by 2020 Olympics

TOKYO (Reuters) - Apa Group aims to capitalize on an boom in visitors to Japan by building the country’s biggest hotel in time for the Tokyo 2020 Olympic Games, the chief executive of the nationwide hotel chain said.

APA Group CEO Motoya Toshio poses for pictures after an interview at the hotel group's headquarters in Tokyo April 17, 2015. REUTERS/Thomas Peter

The unlisted operator of mid-priced accommodation plans to open a 2,400 room hotel in the port city of Yokohama, some 40 km (25 miles) south of a capital city experiencing an upsurge in room rates after a 29 percent jump in tourists last year.

“With the possibility that Yokohama might host a casino, the city will attract more people and that’s good for us,” Toshio Motoya said in an interview, referring to ongoing debate over the legalization of casino gambling.

Apa has been expanding in Japan to help cater for the 20 million visitors a year the government targets by 2020 from a record 13.4 million in 2014, achieved through relaxing visa restrictions and broadening the range goods available tax-free.

The boom has attracted firms beyond hoteliers. Last month, a Fuji Media Holdings Inc subsidiary edged out a fund run by Morgan Stanley to buy a hotel holding company. A month earlier, private equity firm Bain Capital Partners spent $400 million on a hotel operator.

As well as its Yokohama project - set to depose its Makuhari which, from 2016, will expand to 2,001 rooms from 1,501 - Apa plans a 1,000-room hotel near Tokyo’s sumo stadium in Ryogoku, and a 620-room hotel in the Tokyo shopping district of Shinjuku.

With those in pipeline, Apa will become the capital’s biggest chain by number of rooms, according to its website.

“I still think we have the best business opportunities in Japan and particularly Tokyo is attractive so that’s our prime focus,” Motoya said. “But eventually the market will mature and that’s when we will shift our focus to overseas.”

Apa plans to expand in Asia over the next five years to counter impending market saturation and an inevitable lull after the Olympics, Motoya said. The hotelier wants local partners particularly in Singapore, South Korea and Taiwan, he said.

For the time being, as the rise in Tokyo visitors continues to outstrip the rate at which rooms become available, more travelers will have to seek hotels outside of the capital, said Kiyoshi Tsuchiya, director at brokerage CBRE Hotels.

Building such a large hotel outside of Tokyo surprised some market watchers, but Tsuchiya said, “a hotel in Yokohama could be a good business opportunity for Apa.”

Editing by Christopher Cushing

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