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Message from Management

Executive Director Kaname Masuda

Thank you for your support and patronage to Japan Hotel REIT Investment Corporation (JHR) and its asset management company, Japan Hotel REIT Advisors Co., Ltd.
Having settled the accounts for the 20th fiscal period (from January 1, 2019 to December 31, 2019) of JHR, we are pleased to present you with the status of management and detail of the settlement of accounts for the period.

In the 20th fiscal period, the number of inbound visitors (hereinafter called “inbound”) to Japan from South Korea declined due to the deterioration of Japan-South Korea relations, but the number of inbound to Japan reached an estimated 31.88 million (up 2.2% from the previous year) making a record high, due to the factors including the increase in inbound due to the Rugby World Cup held in Japan. In addition, despite typhoons and other natural disasters, the number of overnight guests at domestic accommodation facilities in 2019 totaled 545 million guest nights (preliminary figures), and demand for accommodations among Japanese people remained firm. On the other hand, accommodation market was weak in the Kansai area and other areas due to the loosening supply-demand balance caused by increase in new supply of hotels and the significant impact of the decline in the inbound from South Korea. Under these circumstances, JHR has been making efforts to improve revenue through the active asset management strategies such as rebranding with large-scale renovation, review of sales measures, and cost management.

As for the external growth in the 20th fiscal period, JHR acquired “Hilton Tokyo Odaiba,” which became a flagship property (acquisition price: \62,400 million) of JHR and “Hotel Oriental Express Osaka Shinsaibashi” (acquisition price: \2,738 million). As a result, JHR grew its asset size to approximately \374.5 billion (total acquisition price).

As a result, JHR posted operating revenue of ¥28,278 million, ordinary income of ¥15,291 million and net income of ¥15,290 million for the 20th fiscal period. Dividend per unit came to ¥3,690, minus 5.1% from the previous fiscal period. As dividend per unit in the previous fiscal period included a part of gain from sales of properties, excluding such amount, dividend per unit in the current fiscal period remained at the same level as in the previous fiscal period.

As for the environment surrounding the hotel market, in addition to a decline in the number of inbound to Japan from South Korea since last year, there has been the coronavirus outbreak since the beginning of the year, and there are concerns that demand for hotel accommodations will decline until the outbreak is over. One the other hand, the Tokyo 2020 Olympic and Paralympic Games will be finally held this summer, and the attractiveness of Japan and its tourism resources will be widely disseminated overseas. We believe that the advertising effect of the Olympic Games will be significant, and it will boost the growth of Japan’s tourism industry in the mid to long term. Amid expectations for the mid to long term growth in the hotel market, we at JHR, and Japan Hotel REIT Advisors Co., Ltd., its asset management company, will make every effort for JHR’s further growth and enhancement of its attractiveness by leveraging the expertise and know-how cultivated to date.
We would appreciate your continued support for us.