Page 18 - Forbes - Asia (July - August 2018)

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RIPPLING RICH

ing, yet growth is slow because of a mature tunately, hotel cap rates are the highest.
economy and shrinking population. Our hotel REIT cap rate, however, is
Tourism, however, is still a rapidly around the average of all Japanese REITs
developing market, especially as Japan at 4%. I think we are showing—with the
pushes to expand inbound travelers right hotels—that they’re a good invest-
from 2017’s nearly 29 million to 40 mil- ment. hat’s because they’re in good lo-
lion when Tokyo hosts the 2020 Summer cations—the most important factor, and
Olympics. Visitors have more than dou- not because the current conditions favor
bled in the past three years. hotel investment anywhere [because of all
Date, who earned a graduate degree the inbound tourism]. Good locations,
from elite Keio University, where she stud- good brands and good management.
ied urban planning, spoke with Forbes
Asia. (he interview has been edited.) What are the strong and weak points of
a family-run business?
What’s the state of Japan’s hotels? And Rather than that, I think it’s easier to
what are your plans in the sector? look at the results. As a family company
Japanese hotels are many laps behind and as long as it’s continuing and grow-
the rest of the world. Boutique and lux- ing, chances are that you’re part of the
ury hotels are inally starting in Japan. decision-making process. he company
While there are a large number of ho- doesn’t exist because you exist. If you can
tels coming on line, about 86% of them contribute to the growth of the company,
“Japanese hotels are many laps behind the
are budget hotels, meaning there aren’t rest of the world,” says Mori’s Date. there’s meaning as a family irm. Steady
that many high-end hotels. Everyone is growth is another thing oten said about
going in the same direction. hat’s Japan. ice-lease business. But we’d like to ex- family-run companies. But if looking for
Compared to New York, Japan’s boutique pand the hotel business to that same expansive growth, there are some limits.
hotels are two, three or ten laps behind. level of revenue by 2027 with 17 difer- When the economy was growing—with
Hotels with a focus on design are inally ent projects. the so-called demographic bonus [of an
starting in Japan—but not the indepen- As a developer, our job is to maximize expanding population], a corporation
dent boutique hotels with a lot of charac- the value of real estate. Understanding could grow by just showing up. But with
ter, which develop into their own brands urban planning and thinking about the the population shrinking, without expan-
[like Ian Schrager’s Morgans hotel in New location of projects and the mix of uses sion, that equals decay for family irms.
York that started the boutique movement for that land are part of that. When build- Without innovation, it’s just surviving.
in 1984]. We are developing hotels that ing hotels, we’ll also think about which hat’s why a new generation must work
have aspects of a global brand and bou- brand that should be. hat will afect the on the next generation of business.
tique hotel. value of the oices and housing. Hotels
help to balance our business portfolio. What about future plans, including
You partnered with Marriott Internation- With the [upward] direction of tourism, overseas investments, like the two oice
al and Schrager on two Edition hotels set it’s also a big opportunity and a pillar that buildings purchased in Boston in 2017,
to open in Tokyo in 2020 and are plan- we must seriously build up. Moreover, I and your “Advance 27” strategic plan
ning to further expand the Suiran luxury believe that the tourism industry can help for the next decade?
brand ater opening a hotel in Kyoto drive Japan’s economy. We’re currently looking at about Y200
in 2015 as part of the Marriott Luxury billion ($1.8 billion) in overseas invest-
Collection Hotel brand. What about the Mori Trust Hotel REIT ment. In the Advance plan, we’re look-
As our strategy is targeting inbound listed last year? ing at between Y600 billion and Y800
visitors, we are planning to partner with We listed the hotel REIT to try to objec- billion, but I think that it’ll be more like
global brands. tively show that the value of hotels can between Y1 trillion and Y1.2 trillion,
correspond to that of oices. In gener- with overseas about 20% of that. We
How do hotels it into Mori’s overall al, the capitalization rate for hotels is need to wait and see about Europe be-
strategy? the highest [because of the greater risk], cause of all the uncertainty. here’s no
he oice-leasing business is mature, but when compared to other real estate seg- need to rush. As for the U.S., the regula-
it’s stable. And we plan to continue to ments in Japan. If the average of Japanese tions are fairly clear, and my impression
grow at our current pace with new de- oices is about 2.8%, the average of hotel is that it’s easy to invest. We’re also in-
velopments in Toranomon, Akasaka and REITs is about 6%, followed by housing, terested in ASEAN. A few years ago, we
Mita [in central Tokyo]. hree new ones distribution and commercial. he average thought there was risk, but if there are
by 2027 will further strengthen our of- of all domestic REITs is about 4%. Unfor- good deals, we’d be interested. F

16 | FORBES ASIA JULY / AUGUST 2018