Trinity Teams With Okura For Limited-Service Hotels In Japan
Trinity Investments LLC, a Hawaii-based real estate firm, said it plans to open a chain of limited-service hotels in Japan in partnership with Hotel Okura Co., targeting a surge in tourism that the government hopes will double by 2020 when Tokyo hosts the Olympic Games.
Trinity will seek to raise as much as $300 million of equity to initially fund the chain, called Nikko Style and aimed at leisure and business travelers, said Sean Hehir, president and chief executive officer of Trinity. The first hotel is scheduled to open in 2020, he said. The partners aim to open 20 to 30 Nikko Style hotels throughout Japan, including in Tokyo, Osaka and Fukuoka, then potentially expand in Asia, North America and Europe, Hehir said.
“When we looked at the current hotel offerings, there were a lot at the budget end and also at the full-service end,” Hehir said. “There wasn’t as much activity in the select-service space we’re targeting.”
Trinity faces competition from the major US chains expanding in Japan. Select-service hotels are the fastest-growing segment of the US lodging industry, costing less to develop and operate because they typically don’t have restaurants or meeting space and require fewer employees. Most Nikko Style hotels will have a breakfast restaurant and limited meeting space.
“There’s still a very wide-open market for select-service in Japan,” Hehir said.
Trinity’s plans come amid a push by tourism officials to attract more Western visitors and double international tourism by 2020. Achieving that goal would require more hotels to address a lodging shortage, according to a 2016 report by McKinsey & Co. The Nikko Style hotels will feature rooms about 250 to 350 square feet (23-33 square meters) in size and charge between 18,000 yen and 25,000 yen ($158-$220) a night, Hehir said.
Trinity’s partner, Hotel Okura, was founded in 1958 and opened its namesake hotel in Tokyo in 1962. The hotel’s mid-century design is so revered that it inspired a global petition, ultimately unsuccessful, to save the building from demolition. Part of the original hotel was torn down and is being rebuilt in time for the Olympics.
A record 7.4 million tourists visited Japan in the third quarter, led by visitors from South Korea, Taiwan and Hong Kong, and up 19 percent from a year earlier, according to the Japan National Tourism Organization.
The Okura partnership falls under a joint venture Trinity formed in August with Oaktree Capital Management LP to invest as much as $3 billion in hotels in Trinity’s main markets of Hawaii, California, Mexico and Japan.
“We will be raising capital separately but Oaktree will be partners with us” in Nikko Style, Hehir said. “We plan to raise as much capital as needed to put the first 20 to 30 hotels on the ground in Japan.”
News by Bloomberg, edited by Hospitality Ireland