Chapter

4

Section 1
Reviewing Ten Years of Kansai’s Tourism Strategy: The Tourism
Agency’s Budget and Large Hotel Construction Trends

Part Ⅰ

Inbound Demand Recovery andTourism Strategy

1. Characteristics of the tourism strategy based on a
10-year budget allocation(1) Budget trends of the Japan Tourism Agency
First, we will examine the Tourism Agency’s budget from FY 2014 to FY 20231)(Figure 4-1-1).
The budget increased sharply from JPY 9.8 billion in FY 2014 to JPY 20
billion in FY 2016. Looking back at the inbound tourism demand during thisperiod, “Bakugai” (explosive buying) became a social phenomenon in 2014 and
1) The budget amounts are the total of the initial budget, and do not include reconstruction
quotas or economic measures.

Part ⅢPart Ⅳ

Section 1 reviews 10 years of tourism strategies from the viewpoints of thenational government and private sectors, and clarifies the challenges of tourism strategies for the future. Specifically, Subsection 1.1 reviews the budget ofJapan Tourism Agency for the past 10 years and discusses the characteristics ofthe national tourism strategy. In Subsection 1.2, we focus on micro-based hotel
construction trends in the Kansai region to extract the characteristics of the
response to inbound tourism demand, considering the challenges posed by the
COVID-19 pandemic and the upcoming Osaka-Kansai Expo. While this white
paper has focused mainly on the demand side, this section discusses the supply
side and sustainability of the tourism industry. Finally, we present a summaryof Section 1.

Part Ⅱ

NOMURA, Ryosuke; INADA, Yoshihisa; INOUE, Kenji236

Chapter 4 / Inbound Demand Recovery and Tourism Strategy（Unit：JPY million）
80,00068,09565,59770,00060,00050,00040,87340,00030,00024,77521,03420,01420,00010,0000

Figure 4-1-1

30,51822,2549,810 9,913

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Trends in Tourism Agency Budget: FY 2014-23

Source: Compiled from Japan Tourism Agency

2015, during which the number of Chinese tourists visiting Japan skyrocketed.
This trend continued after FY 2017, reaching JPY 65.6 billion in FY 2019 anda record high of JPY 680 billion in FY 2020. However, inbound tourism demand
disappeared due to the COVID-19 pandemic, and the budget fell sharply to JPY
40.9 billion in FY 2021 and JPY 22.3 billion in FY 2022. In FY 2023, the budget
increased to JPY 30.5 billion in expectation of a recovery in demand.
The trends in budgets thus indicate a response to the trend of foreign visitors to Japan. Next, we will clarify the characteristics of the budget by purpose.
(2) Characteristics of the budget by purpose
Table 4-1-1 shows the budget allocated for each fiscal year, categorized bypurpose. In addition to public relations activities and improvement of the environment for foreign visitors to Japan, the budget also includes items related to
SDGs, D&I and DX (Digital Transformation).
Next, Figure 4-1-2 shows the changes in the budget amount by purpose.
“Attracting foreign visitors”, promotions targeting foreign countries, accounted
for more than 80% of the total budget in FY 2014 and FY 2015.
From FY 2016 to FY 2018, the budget for “Improving the environment forforeign visitors” increased, possibly because local regions were improving their
receptions of foreign visitors in response to a steady increase in international
tourists. From FY 2019 to FY 2020, there was a large increase in the budget for“regional visitor attraction”. This suggests that the funds were allocated to thediscovery and improvement of tourism resources to increase the number of foreign visitors to each region. In FY 2019, there was an increase in the budget forregional development for tourism and DMO”. The increase reflected the reformSection 1 / Reviewing Ten Years of Kansai’s Tourism Strategy: The Tourism Agency’s Budget and Large Hotel Construction Trends

Table 4-1-1

237

Tourism Agency Budget Classified by Purpose

Budget for measures to improve the environment for foreign visitors
to Japan, such as immigration and tourist information

Attracting foreign visitors
to the region

Budget for measures to explore and refine local tourism resources

Tourism development
and DMO

Budget for measures to create tourism regions before the institutionalization of DMOs, and for measures to support and reform DMOs

Human Resource
Development

Budget for the development of tourism-related human resources,
including specialized personnel and interpreters

Accommodations andprivate lodging

Budget for measures to improve the lodging environment, such as
improving the lodging facilities and optimizing the private accommodations

Exchange population

Budget for measures to increase the exchange population withother regions in Japan

Value added and DX

Budget for measures to increase productivity and value added in
the tourism sector and support digitalization

SDGs

Budget for the creation of a model for promoting sustainable
tourism

D&I

Budget for universal tourism measures

EBPM

Budget related to the collection and analysis of tourism-related data

OthersBudget not applicable to the above

Budget for reconstruction

Budget for reconstruction and promotion of tourism after the Great
East Japan Earthquake (separate appropriation)

Economic measures

Budget for measures to support tourism in the COVID-19 pandemic(separate appropriation)

Part Ⅱ

Improving the environment for foreign visitors

Part ⅠClassification Definition
Budget related to PR activities for foreign countries

Part ⅢClassification by purpose
Attracting foreign visitors

Part Ⅳ

Source: Compiled from Japan Tourism Agency website(Unit：JPY million）
80,00070,00060,00050,00040,00030,000

OthersTourism development・DMO
Attracting foreign visitors
EBPM
Accommodations / Private Lodging
Human Resource Development
Value added/DX
SDGs
Improvement of the environment for foreign visitors
Attracting foreign visitors to the region
D&I
Exchange population

0

Figure 4-1-2

27,84915,20328,416

9,158

12,12320,00010,00014,453

8,000

8,550

10,032

19,145 21,788 15,971

12,589
6,813
6,318
5,244

6,877
7,815

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Budget of Japan Tourism Agency: FY 2014-2023

Source: Compiled based on Japan Tourism Agency

238

Chapter 4 / Inbound Demand Recovery and Tourism Strategyof DMO, which plays a role in tourism regional development, in accordance withword-standard DMO formation2).
From the FY 2021 - to FY 2022, a new category “value added and DX” wasestablished in response to the changes caused by the COVID-19 pandemic.
Specifically, anticipating a full-fledged recovery in inbound tourism demand,the budget allocated funds to projects that promote online tourism using DXor create tourism content using digital technology. In FY 2023, a large share of
the budget was again allocated to “attracting foreign visitors” in response to therecovery of inbound demand. Utilizing cultural resources to develop tourism
contents aiming towards inbound tourism led to a larger budget for “regional
tourism promotion” compared to previous fiscal year, indicating that tourism
resources were being improved in preparation for the recovery of inbounddemand.
The above trends suggest five phases of Japan Tourism Agency’s budget:(1) overseas promotion, (2) improving of the reception environment for inboundtourists, (3) creating local contents, (4) responding to COVID-19, and (5) recovery in inbound tourism demand.

2. COVID-19 pandemic and hotel construction
Subsection 1.1 reviewed the changes in national tourism strategy over the past
decade using budget data of the Japan Tourism Agency. Subsection 1.2 draws
attention to the private sector. Specifically, we look at how private sectors
respond to COVID-19 by focusing on the supply side of hotel construction in
the Kansai region.
(1) Planned Construction Costs of Lodging Industry in Kansai
First, let’s review the construction trends of the lodging industry. Table 4-1-2
shows the planned construction cost of accommodation facilities in each of theprefectures in the Kansai region, based on the “Survey of Construction Starts”
by the Ministry of Land, Infrastructure, Transport and Tourism. The estimatedcost in Osaka Prefecture increased six-fold from JPY 26.7 billion in 2015 to JPY
154.8 billion in 2017. Similarly, the cost in Kyoto Prefecture increase significantly
from JPY 4.9 billion in 2015 to JPY 92.8 billion in 2017. The surge in the construction of accommodation facilities might be due to the aforementioned rapid
increase in the number of foreign visitors to Japan triggered by the “bakugai”.
In Osaka Prefecture, the planned amount peaked in 2017 and remained
2) For more information on the government’s DMO policy, refer to the Tourism Chronology.

Planned Construction Costs for Buildings in the Lodging Industry:
2011-2022【Number of building】

Unit：number of building

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Total

Shiga pref.

3

13

4

9

13

8

30

4

4

49

40

80

257

Kyoto pref.

13

9

33

27

35

150

254

265

195

110

21

44 1,156

Osaka pref.

13

18

11

12

29

100

133

85

99

54

27

24

605

Hyogo pref.

17

28

40

24

34

41

68

43

38

40

62

159

594

Nara pref.

10

0

7

5

7

6

22

7

15

7

0

10

96

Wakayama Pref.

22

16

33

31

19

22

22

19

13

10

9

30

246

Total

78

84

128

108

137

327

529

423

364

270

159

【Planned Construction Cost】

347 2,954

Unit：JPY million

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Shiga pref.

564

1,355

57

940

745

3,610

14,033

157

2,337

1,402

789

2,512

Total
28,503

Kyoto pref.

9,963

1,731

18,666

16,680

4,915

32,204

92,837106,212

91,247

48,974

12,953

46,168482,550

Osaka pref.

3,385

10,73813,552

1,948

26,701

77,902

154,810

94,20089,82966,71175,145

13,338628,258

Hyogo pref.

1,131

1,559

4,473

6,955

11,652

18,8959,591

27,771

15,564

3,141

4,845

10,579116,156

Nara pref.

290

0

1,210

1,143

3,511

259

8,212

5,080

6,290

4,515

0

7,508

38,019Wakayama Pref.

377

460

753

626

516

508

608

479

967

582

2,804

2,938

11,617

Total

15,71015,84338,71028,29348,040133,378

280,091

233,898

206,235

125,325

96,53783,042 1,305,102

Source: Compiled from Ministry of Land, Infrastructure, Transport and Tourism, “Survey of Construction Starts(2) Inbound tourism demand and hotel construction response
As mentioned earlier, the rapid increase of inbound tourism demand since themid-2010s has stimulated construction investment in hotels and other accommodation facilities. Here we focus on the trend of hotel construction in the Kansai

Part Ⅳ

Table 4-1-2

Part Ⅱat the JPY 90 billion level from 2018 to 2019. On the other hand, the planned
amount in Kyoto Prefecture peaked in 2018, and reached the same amount as
Osaka Prefecture in 2019.
In 2020, the amount decreased in both Osaka and Kyoto prefectures fromthe previous year due to the COVID-19 pandemic. In 2021, it increased slightly
to JPY 75.1 billion in Osaka Prefecture, but continued to decline further to JPY
13 billion in Kyoto Prefecture.
In 2022, the planned costs significantly decrease to JPY 13.3 billion in Osaka
Prefecture, but Kyoto Prefecture increased substantially to JPY 46.2 billion fromthe previous year. As shown, the planned construction cost reveals the responseof the private sectors to inbound tourism demand. In the next subsection, we
will examine the response to inbound tourism demand after the COVID-19 pandemic, using microdata on the movements of large-scale hotel construction.

Part Ⅰ

239

Part Ⅲ

Section 1 / Reviewing Ten Years of Kansai’s Tourism Strategy: The Tourism Agency’s Budget and Large Hotel Construction Trends

240

Chapter 4 / Inbound Demand Recovery and Tourism Strategy

region by utilizing APIR’s own survey3). Specifically, we summarize and analyze
the number of large-scale hotels that opened in the six prefectures of the Kansai
region from 2017 to 2023 and their construction costs. Similar analysis is also
conducted for properties scheduled to open by 2026.
Figure 4-1-3 shows the number of new hotel openings in each prefecture.
Of the 75 large-scale hotels that have opened or are scheduled to open, Osaka
Prefecture accounts for about 51% (38 openings) and Kyoto Prefecture accounts
for about 36% (27 openings). making up more than 80% of the Kansai region.
Figure 4-1-4 shows the construction cost (estimated) of large-scale hotels. The(Number of building)
8
7
6
5
4
3
2
1
0

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Osaka pref.

Figure 4-1-3

Kyoto pref.

Hyogo pref.

Nara Pref.

Shiga pref.

Number of large-scale hotels opened in Kansai: 2017-2026

Note: Actual opening until 2022; scheduled openings from 2023 onwards.
Source: Compiled by APIR from various press articles(JPY million)
120,000
100,000
80,00060,00040,00020,00002017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Osaka pref.

Figure 4-1-4

Kyoto pref.

Hyogo pref.

Nara Pref.

Shiga pref.

Trends in construction value of large-scale hotels in Kansai:
2017-2026

Note: Actual openings until 2022; scheduled openings from 2023 onwards.
Source: Compiled by APIR from various press articles

3) Hotels in this study are selected if their estimated construction cost is JPY 4 billion or more
and the total floor area is 3,000 tsubo or more. For more details, see Inoue, Nomura andInada (2023).

Section 1 / Reviewing Ten Years of Kansai’s Tourism Strategy: The Tourism Agency’s Budget and Large Hotel Construction Trends

241

10

10
8

8
6
4
2
0

8

5

4
1

4

0

4

3

1

4

44

5

1

5

1

2

1

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Domestic

Figure 4-1-5

Part Ⅱ
Part Ⅳ(Number of case)
12Part Ⅲ(3) Features of Hotel Construction
Next, let us focus on the brand and grades of lodging expense of large-scale
hotel construction.
Figure 4-1-5 shows the number of hotels that opened or are scheduled toopen between 2017 and 2026, divided into domestic and overseas hotels. thenumber of large hotels openings (75 openings) peaked in 2020 with 14 openings.
Although the COVID-19 pandemic slowed the pace of new openings from 2021
to 2023, the number of new openings is expected to increase again in 2024, with
13 new openings planned in expectation of a recovery from the pandemic. The
number of openings of domestic hotels peaked at 10 in 2020, partly due to thepandemic, and has averaged about 4 annually since 2021. On the other hand,
while the number of foreign hotels was 4 in 2000 and decreased from 2021 to
2022, it started to increased again in 2023. The number is expected to increasesteadily to 9 in 2024 and 5 in 2025.
Figure 4-1-6 shows the trends of hotel construction by grades of lodging
expense4) (per room per night). Until 2020, the majority of the properties had
relatively reasonable rates (B and A). However, as more foreign-brand hotels

Part Ⅰ

total construction cost (JPY 794.6 billion) during this period indicates that Osakaand Kyoto prefectures have by far the largest shares, at 58% and 30%, respectively. In terms of both number and scale, the construction of large-scale hotels
is concentrated in Osaka and Kyoto. The geographical distribution in Osaka andKyoto Prefectures is shown in Reference Figure 4-1-1 below.

Overseas

Hotel openings by brands: 2017-2026

Note: Actual openings until 2022; scheduled openings from 2023 onwards
Source: Compiled by APIR from various press articles

4) The grades of the unit price per night are as follows: B: from about JPY 10,000, A: fromabout JPY 30,000, S: from about JPY 50,000, and H: from about JPY 100,000.

242

Chapter 4 / Inbound Demand Recovery and Tourism Strategy(Number of case)
8

7

7
6

5

5
4
3
2
1
0

4
3

3

3
2

1

1

1

2

2

1

1

1

1

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
B

Figure 4-1-6

3

2

A

S

H

Hotel construction by grades of lodging expense: 2017-2026

Note: Actual openings until 2022; scheduled openings from 2011 onwards.
Source: Compiled by APIR from various press articles

started to open, the number of hotels with high room rates (S, H) has been
increasing since 2023.
Thus, as the number of foreign guests increases, the number of openings
also increased steadily at peak at 2020, when the COVID-19 started. Some ofthe opened hotels were shut down and later transferred to other brands before
reopening, while others continued to be built and opened after the construction
was suspended.5) However, expecting a recovery from the pandemic, overseas
top luxury brand and major hotels in Japan continue to steadily build theirhotels. Since it takes a minimum of four years from the acquisition of land tothe opening for large hotels, many of the hotels scheduled to open around 2024
are probably planning for the Osaka-Kansai Expo. As such, the construction ofmajor hotels in the Kansai region is focusing on quality rather than quantity, in
response to the growing number of wealthy foreign visitors.

3. How did the lodging business operators respond to the
COVID-19 pandemic?
In June 2019, Prime Minister Shinzo Abe met with Chinese President Xi Jinping
at the G20 Osaka Summit and invited him to visit Japan. On January 15, 2020,
Chief Cabinet Secretary Suga headed the 36th meeting of the Tourism Strategy
Promotion Council and discussed about “Promoting foreigner-friendly accommodation in rural areas”. The discussion agreed on: 1) the government and5) For more information on hotel construction trends in the Kansai region, see Tourism Chronology.

White Bear Family.
White Bear Family went bankrupt in 2020 with the largest debt in the travel andlodging industry (total debt of the three companies exceeded JPY 51 billion).
The company as a travel planner and travel agency since 1977, based in Hyogo
Prefecture. From 2004, starting in Okinawa and then expanding national wide,
it operated 27 hotels, including the Hotel WBF. In January 2020, the company

Part Ⅱ(1) Examples of well-established and emerging businesses affectedby the setbacks of the COVID-19 pandemic
Fujita Kanko
Originating from the Fujita zaibatsu established in 1869, Fujita Kanko is a prominent lodging business that owns 62 hotels domestic and abroad (as of August2023), including the Chinzanso, Kowakien, and Washington Hotel. In June 2019,the historic banquet facility Taikoen, which had been used as guesthouse during
the G20 Osaka Summit, faced several closures and openings due to the COVID19 pandemic and a significant decline in demand for weddings and banquets. In
June 2021, the establishment ended its operation. By selling the assets, Fujita
Kanko managed to improve its deteriorating financial situation.
Meanwhile, a new brand “Hotel Tabinos” with a “MANGA” motif was developed in Hamamatsu-cho, Asakusa, and Kyoto from 2019 to 2021. The once outof business Hotel Kirara Resort Kanku was also reopened as Kanku Izumiotsu
Washington Hotel in 2021. Similarly, the Hakone Hotel Kowakien, which wasclosed down in 2018 due to deterioration, was rebuilt and reopened in July 2023.

Part Ⅲfinancial institutions should cooperate to encourage aggressive capital investment to increase the value added and attractiveness of lodging facilities; 2) the
government should promote multilingualization and the separation of lodging
and food services.
Many lodging businesses had been optimistic about the bright future of theindustry and invested aggressively. However, Japan was hit by the COVID-19
pandemic as cherry blossoms were blooming, and “state of emergency” and“Priority measures to prevent the spread” were repeatedly issued and lifted from
April 2020 to until March 2022. How did domestic lodging businesses respond to
this unprecedented crisis situation?
Because of the pandemic, hotels were forced out of business, or had theirproperties sold and rebranded by other firms. Some suspended constructions
or delayed their opening. On the other hand, some business owners looked
towards the post-COVID and continued to invest steadily in construction andmake new developments. The followings are some notable examples.

Part Ⅰ

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Part Ⅳ

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244

Chapter 4 / Inbound Demand Recovery and Tourism Strategy

opened its first large-scale project, the 400-room WBF Shin-Osaka Sky Tower,
but the hotel operator (WBF Hotel & Resort) went bankrupt in April. The hotel
was then sold to APA Group in June and reopened as APA Hotel Shin-Osaka
Station Tower (case 1).
In August 2020, Hoshino Resort initiated rehabilitation plan after concluding
a share transfer agreement to acquire the White Bear Family and hotel management company (WBF Hotel & Resort), which were in the process of applying
for the Civil Rehabilitation Law. About 350 employees transferred to the new
Hoshino Resort subsidiary and continued to operate the hotel. Meanwhile, construction of the WBF Grande Kansai Airport (case 2), which was suspended
due to the pandemic, was resumed by Hoshino Resort and opened in 2023 as
the OMO Kansai Airport (700 rooms). In October 2021, the company completed
the civil rehabilitation proceeding, sold its hotel division, and restarted its corebusiness of travel planning and sales agency (Table 4-1-3).
Table 4-1-3

Examples of hotels that abandoned continued operations andrebranded

Case
numberOpening
nameOperator(Brand)①

Hotel WBF
Shin-Osaka
SKYTOWER⇒APA Hhotel
Shin-Osaka Eki
Tower

②

（計画時）Hotel
WBF GrandeKansai International Airport
OMO Kansai
AirportHoshinoResorts③

Hotel WBF⇒OMO3 Kyoto
Toji

WBF Hotels& Resorts⇒Hoshino
Resorts（21/6～）WBF Hotels& Resorts⇒APA Hotel（20/6～）

Operator attime of construction

White Bear
Family Co., Ltd

White Bear
Family Co., Ltd

White Bear
Family Co., Ltd

Date ofopening

Properties (<Reference>
Press Release/Home Page/
Newspaper Report)

2020/1The 32-story building is the highest in the Shin-Osaka area. Thereis an observation restaurant anda rooftop bar on the rooftop witha spectacular view of central
Osaka. Closed due to COVID-19
pandemic; reopening as APA
Hotel in June 2020.

2023/3Largest hotel development in“Rinku Town” by WBF in 2018.
Construction was suspended dueto the COVID-19 pandemic. After
Hoshino Resort acquired theproperty, construction resumed
and the hotel opened under the“OMO” brand.

2019/10Within walking distance of Toji
Temple, a World Heritage Site.
The hotel will be closed in June
2020 due to the COVID-19 pandemic, and will reopen in April
2009 under the brand “OMO3”.

Part Ⅱ

Case study of Hoshino Resort.
In Kansai, before the COVID-19, Hoshino Resort only had “Hoshinoya Kyoto”(formerly known as “Arashiyama Onsen Rankyokan”), which was bought andrenovated by Hoshino Resort in 2009. In 2021, other than the “Hotel WBF Kyoto
Toji (case 3)” in Kyoto City from WBF, it acquired properties that were closed
or were completed but could not be opened due to the COVID-19 pandemic,
including two from “OMO5” before reopening as “OMO3” hotel. In Osaka
City, it opened a new large-scale property, “OMO7 Shin-Imamiya (case 4)” (436rooms), in 2022. Currently in 2023, after rebranding part of the Hyatt Regency
Osaka (currently Grand Prince Hotel Osaka Bay) (64 rooms on 4 floors) to“Resonare Osaka”, and acquiring “OMO Kansai Airport” from WBF, the company increased its number of hotels to the total of 7 in Kansai, 4 in Kyoto and 3
in Osaka.
During the unprecedented crisis situation from April 2020 to March 2022,
APA Hotels and Hoshino Resort responded flexibly and continued to increase
their number of guest rooms. Both brands also have planned to capture theinbound visitors to Japan after the pandemic (Table 4-1-4).

Part Ⅲ(2) New developments by APA Hotel and Hoshino Resort, while
facing the setbacks by COVID-19 pandemic
APA Hotel.
APA Hotel operates 737 hotels domestic and abroad (as of August 2023), including franchised hotels, and 43 of them were repurposed as “hotels for people
with minor symptoms of COVID-19” (as of August 2009, according to Airstair).
Opened in 2019, the APA Hotel & Resort (Yokohama Bay Tower), boasting
the largest number of rooms for one hotel building in Japan with 2311 rooms,
was repurposed as “hotels for people with minor symptoms of COVID-19” inresponse to the requests from the Ministry of Health, Labour and Welfare andPrefecture. Such repurposed properties and deteriorating properties were thenrenewed and reopened one after another. As a result, the number of hotels had
increased by approximately 17% over the past two years, from 583 hotels (95,130
rooms) in January 2020 to 683 hotels (105,290 rooms) in January 2022 (according to figures published in the company’s news release).

Part Ⅰ

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Chapter 4 / Inbound Demand Recovery and Tourism Strategy

Table 4-1-4

New large properties built by Hoshino Resort and APA Hotel

Opening
nameOperator(Brand)Operator
at time of
construction

④

OMO7
Osaka

HoshinoResorts

Shin-Imamiya Development Special
PurposeCompany⑤

APA Hotel＆ Resort
Midosuji
HommachiEki Tower

Case
number⑥

APA Hotel＆ResortOsaka
Umeda Eki
Tower⑦

APA Hotel＆ResortOsaka
Namba Eki
Tower

APA
Hotel

APA
Hotel

APA
Hotel

APA
apartment

APA Home

APA Home
APA
apartment

Date ofopening

2022/4

2019/122023/22024/10

Start ofconstruction

Properties (<Reference>
Press Release/Home Page/
Newspaper Report)

2019/6OMO Ranger will guide you to
the Shinsekai area, where you will
have a unique encounter.Guests
can interact with each other inthe common space.

2017/6APA Hotel has the largest numberof guest rooms in western Japan
(at the time of opening).The hotel
has the latest specifications of thecompany's new urban hotels, witha large indoor and outdoor bathand an outdoor terrace pool, providing a resort-like atmosphere.

2020/8A new landmark tower in the
Umeda area of Osaka, withan observation restaurant andswimming pool on the top
floor, as well as a large publicbath and open-air bath facilities, providing a resort-likeatmosphere while remaining
in the city.

2022/3APA Hotel, a high-rise towerwith the largest number of guest
rooms in western Japan. Aiming
to become a new landmark in the
Namba area as an “urban resort”
where guests can enjoy their stay,including a restaurant and swimming pool on the top floor.

4. Summary
We have reviewed 10 years of tourism strategies in Japan and analyzed trends
in hotel construction to determine the characteristics of how lodging business
operators were responding to changes in inbound tourism demand due to the
COVID-19 pandemic and the forthcoming Osaka-Kansai Expo. The results canbe summarized as follows.
The Tourism Agency’s budget indicates that before the rapid increase in thenumber of foreign visitors to Japan, most of the allocation was for overseas PR.
However, after 2014, in order to cope with the rapid increase in the number offoreign visitors to Japan, the budget was reallocated to focus on improving thereception environment of tourist destinations in response to jump in the numberof inbound tourists. From 2018, as the number of foreign visitors to Japan had
been increasing steadily, the budget was focusing on discovering local tourism

References
Inoue, K., Nomura, R., and Inada, Y. (2023), “The COVID-19 pandemic andhotel construction in Kansai: How did lodging businesses respond to the
COVID-19 pandemic?”, (Japanese title: Koronaka to Kansai no Hoteru
Kensetsu -Koronaka ni Shukuhaku Jigyosha wa Donoyouni Taiou Shitanoka-),
APIR Trend Watch No. 87, August 9, 2023, (https://www.apir.or.jp/
research/12454/).
Japan Tourism Agency HP, “Budget and Procurement Information,” (https://www.mlit.go.jp/kankocho/siryou/yosan/youbou.html, last viewed July 5,2023).

6) For more information on large hotel construction projects, see the Tourism Chronology
section of this publication.

Part Ⅱ
Part Ⅲ

resources to draw visitors to regions outside of urban areas. However, after
2020, the budget is allocted to Tourism DX, SDGs, and D&I in response to thechanges caused by COVID-19 pandemic.
Regarding the hotel construction trend in the Kansai, the number of lodging
facilities had been steadily increasing, especially in Osaka and Kyoto prefectures, following the increase in the number of foreign visitors. However, after
2020, hotel construction projects came to a halt due to the COVID-19 pandemic.
Expecting the recovery in inbound tourism demand and the Osaka-Kansai Expo,
hotels with high rates per night are now being constructed not only in Osakaand Kyoto prefectures, but also in other prefectures.6)
After the pandemic started in 2020, many large hotels have opened. As aresult, several hotels went out of business or were acquired by other companies;
while others suspended their construction or delayed their opening. Amongthem, APA Hotel continued to operate by converting a number of its properties
into “ hotels for people with minor symptoms of COVID-19”. On the other hand,
Hoshino Resort acquired properties that were closed or under construction, andput the hotel operations and employees under its management. APA Hotel andHoshino Resort have increased the number of guest rooms while responding
flexibly to the pandemic, and have begun to steadily attract not only domestic
guests but also the resumed inbound foreign visitors to Japan.

Part Ⅰ

247

Part Ⅳ

Section 1 / Reviewing Ten Years of Kansai’s Tourism Strategy: The Tourism Agency’s Budget and Large Hotel Construction Trends

248

Chapter 4 / Inbound Demand Recovery and Tourism Strategy
Osaka city : 37

Kyoto city : 27

Reference Figure 4-1-1

Hotel Construction Map 2017-26: Osaka City and Kyoto
City

Note: The height of the bar indicates the construction project cost of the hotel in question in Reference Charts
1.1 and 1.2, and the color indicates the grade of lodging cost.