With the recovery of Japan's tourism industry entering a new phase in the form of the government's 1.7 trillion Go to Travel campaign, new research has examined what the post-pandemic investment landscape could look like for the country's hotel sector.

JLL's Japan Hotel Recovery Guide outlines the health of the tourism and hospitality sectors prior to COVID-19, while also assessing the impact of the global pandemic and weighing in on the path ahead.

Since the country's state of emergency was lifted on May 25, restrictions have been gradually eased to allow the opening of libraries, museums, and F&B outlets.

Tokyo entered phase two of reopening on June 1, and phase 3 on June 11, which was followed by the easing of domestic travel restrictions on June 19.

As part of the government's latest tourism campaign, which was launched on July 22, subsidies of 50 per cent will be provided on travel within Japan, although Tokyo has been excluded due to a recent rise in COVID-19 cases.

In its report, JLL noted there was an opportunity for a "resurgence" in domestic tourism as social distancing was eased.

"Destinations such as Hakone in the Kanagawa prefecture, Atami in Shizuoka prefecture and other locations within a 90-minute drive or Shinkansen journey from Tokyo, are expected to be popular as they offer a less crowded getaway that allows for social distancing," the report said. 

Regarded as one of the safest countries in the world, the clear and efficient tax system in Japan also renders the country an attractive safe haven investment destination.

According to JLL, Japan continues to be amongst the most active hotel investment markets in Asia Pacific, due to its underlying demand prospects.

Figures from the firm indicate the country's hotel transaction volume in the first half of 2020 was JPY 142.2 billion, having been buoyed by the sales of Onyado Nono Kyoto Shijo to Commerz Real for JPY 24.4 billion and Four Seasons Kyoto for JPY 47.1 billion to Tokyo Tatemono Investment Advisors, both of which were conducted pre-COVID.

Going forward, JLL anticipates a pricing reassessment of hotel assets, as well as limited distressed sales in the near term.

"The bankruptcy of a limited number of hotel owners/operators may lead to pricing reassessments or potential conversion of hotel assets to alternative uses in markets with supply and demand imbalances," the report says.

"With lenders still taking a tolerant approach towards borrowers, bankruptcies and distressed opportunities are expected to be limited in the near term."

Click here to view the full report.

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