Kanazawa hotel market reaches over-supply

Kanazawa’s hotel market is rapidly reaching over-supply as developers move to cash in on growing tourist numbers. 

The city saw a surge in developments following the extension of the Hokuriku Shinkansen route connecting Nagano and Kanazawa in 2015. The number of hotel rooms in the city has increased by 20% since then. Demand, however, has yet to catch up.

The head of a city hotel near Kanazawa Station reported operating ratios in the 80% range this August, a 4 point drop from last year. Reservations for the peak Autumn season are currently down 7 points from last year. 

According to the Japan Tourism Agency, the operating ratio for city hotels with on-site restaurants and function facilities in Ishikawa Prefecture was 76% in May, down 5 points from last year. This was despite a record long 10-day Golden Week holiday. The operating ratio was 2 points lower than it was in 2014 – a year before the Shinkansen route extension.

As of July 2019, Kanazawa City had 10,273 hotel rooms. 2015 saw an increase of just 76 rooms, while 2016 saw 24 new rooms. In 2018 that number surged by 1,200 rooms. While the number of new rooms saw a 13% increase in 2018, the number of hotel guests increased by just 3% over the same period. Over 2019 and 2020, the number of hotel rooms is expected to grow by another 30%. 

There are over 10 hotels currently under construction in the city. In November, Agora Hospitalities will open Agora Kanazawa. The 200-room hotel is a 30-minute walk or 13-minute taxi ride from Kanazawa Station and close to Kanazawa Castle Park. Nightly room rates are expected to range from 7,000 ~ 10,500 Yen. In 2020, Hyatt is opening a 90-room Hyatt House Kanazawa and adjoining 250-room Hyatt Centric Kanazawa in front of Kanazawa Station. Nomura Real Estate Development is planning an 8 billion Yen (approx. US$74 million) hotel and residential project with a construction schedule yet to be decided.

Many of the new hotels are business hotels. Offering cheap nightly rates, these low-cost business hotels are attracting budget-conscious guests that would have once stayed in city hotels. A survey by travel site Jalan found a 21% increase in business hotel users in the prefecture in 2018 versus a 0.4% drop in city hotel users.

Finding front desk and cleaning staff for the growing number of hotels is becoming a challenge, with some hotels forced to limit room availability due to staff shortages. The Ishikawa Labor Bureau reported a ratio of job openings to job applicants of 4.15 in July for cleaning-related jobs. This is almost double the national average. For front desk jobs, the ratio was 7.18, well above the national average of 3.9. 

Sources:
The Nikkei Shimbun, August 31, 2019.
PR Times, August 2, 2019.
FNN, July 20, 2019.

588 total views, 6 views today