Culture & Lifestyle

Sunday Mainichi (June 8 issue)

A rush of posh foreign-funded hotels erected in Japan in recent years are feeling the pinch because of the U.S. sub-prime loan problem, according to the June 8 issue of the Sunday Mainichi, a weekly current affairs publication put out by the Mainichi Newspapers.

Occupancy at accommodations like the Park Hyatt Tokyo in Shinjuku (the setting for the 2003 movie "Lost in Translation") and the Westin Hotel Tokyo are apparently down by as much as 60 percent.

Much of the missing clientele is apparently because fewer Western business people in finance or investment fund fields are heading to Tokyo.

"Because foreign hotels work on a global basis, their mainstays are corporate contracts. If there is a corporate contract in place, the hotels can offer 50,000 yen-per-night rooms to individuals at a much cheaper rate and many businessman can take advantage of this to have long-term stays," a hotel industry insider tells Sunday Mainichi. "We can't deny the sub-prime problem has had an influence, but think this should only be a temporary problem."

Recent years have witnessed a boom in major foreign-backed hotel developments, with those opening up in the capital including the Conrad Tokyo, Mandarin Oriental Hotel Tokyo, The Ritz Carlton Tokyo and the Peninsula Tokyo, going some way toward addressing criticisms that Japan's capital doesn't have the same sort of world-class accommodation found in other international cities, such as London and Paris.

Some dispute whether the low occupancy rates will in fact only be a short-term problem.

"Part of the reason why so many foreign-backed luxury hotels opened up was because investors were looking for high interest rates on investment deals like hedge funds," another industry source tells Sunday Mainichi. "If the sub-prime problem means that money is siphoned away from those investment funds, there's a likelihood we may see the bursting of the luxury hotel 'bubble' that has popped up in Tokyo."