Foreign Hotel Chains Transforming Japanese Market; Luxury Brands Open in Diverse, Non-Tokyo Locations

Yomiuri Shimbun

5 hours ago

The Japanese hotel market is entering a new era. As the tourism industry shifts its focus from quantity to quality, foreign hotel chains are increasingly targeting Japan as one of the few growth areas in a mature market, drawn by its appeal and investment opportunities. New concepts such as wellness and integration with local culture are emerging as competitive advantages, and a fresh breeze of 'Japanese luxury' is beginning to blow.
The Japanese luxury hotel market has historically been dominated by prominent Japanese brands, notably the 'Big Three' of the Imperial Hotel Group, Okura Nikko Hotels, and New Otani Hotels. However, there has been a notable surge in the presence of foreign brands outside the Tokyo metropolitan area in recent years, leading to increased competition and the introduction of new value propositions.
The Singapore-based hotel chain Capella Hotel Group has selected Osaka as the site for its inaugural establishment in Japan. The group, which developed Capella Singapore — the venue for the first U.S.-North Korea summit in 2018 — opened Patina Osaka in May of this year just across the moat from Osaka Castle, a popular destination for visitors to Japan. Patina presents itself as a lifestyle brand tailored to a new generation of travelers. John Blanco, the 'cluster general manager' for Capella Kyoto and Patina Osaka, stated in an interview, 'We aim to provide customers with not just a place to stay, but a unique, locally rooted experience.' He revealed plans to collaborate with famous graphic artists from Osaka for events, offer programs that utilize the region's cultural heritage and natural environment and develop region-specific menus. The group also plans to introduce hidden local attractions and establishments not featured in guidebooks.
Umeda, the area around Osaka Station, is attractive for its excellent access to tourist attractions in Kyoto, Nara and Kobe, all within an hour's reach, and has been called 'Osaka's last prime location' for development. In April, the Waldorf Astoria Osaka, representing the premium brand of Hilton Hotels, opened in this area, marking the brand's debut in Japan ahead of its planned opening of a hotel in Tokyo.
The Waldorf Astoria, established in New York in 1893, is a renowned brand with a distinguished history of offering exclusive menus and services. Prominent architect Andre Fu designed the hotel in Osaka, blending art deco elements popular in the brand's early days with Japanese-inspired touches. This design reflects the abundance of art deco architecture in Osaka and aims for 'harmony with the local community.' Besides the brand's reputation and glamour, this reflects a growing trend toward sustainability and support for local culture. Joseph Khairallah, Hilton's area vice president and head of Japan, Korea and Micronesia, said, 'We can provide guests with a unique experience.'
In Shikoku, four regional banks invested in a company to attract hotels, hoping to promote the use of local activities and foods as luxury brands seek regional cooperation and the central government aims to disperse foreign tourists across Japan in light of their current overconcentration in certain areas. The company plans to open a hotel in Kagawa Prefecture in the summer of 2027 in collaboration with Mandarin Oriental Hotel Group, based in Hong Kong. In addition to the fact that there are few foreign-affiliated hotels in rural areas, creating a gap between supply and demand, the company aims to expand consumption in the region by attracting visitors to Japan and creating job opportunities.
Changes are also underway in the midrange hotel sector, which has historically been dominated by domestic chains such as the APA Hotel and Resorts Group and Toyoko Inn. In 2025, IHG Hotels & Resorts opened its first midrange brand, Garner, in Osaka. While Marriott International is expanding its luxury brands, such as Ritz-Carlton and St. Regis, and lifestyle brands, including Moxy and Aloft, in major cities, it is developing midrange brands in Kyushu and Hiroshima, where it is making new investments. The objective is to position these brands as 'a gateway to lifelong use of Marriott' and to develop the market for the younger generation.
Prolonged deflation and zero wage growth have led to low wage levels in Japan's service industry, resulting in a severe labor shortage. Blanco of Capella highlighted that the most significant challenge in establishing the hotel was recruiting personnel, emphasizing that they offered the highest salary levels in the industry and had created a workplace environment where employees could take pride in every aspect, from their uniforms to the cafeteria. He added: 'There are some aspects of hospitality that somebody cannot teach through training. We proactively engage with motivated students enrolled in vocational and hotel schools at an early stage.' In the future, the hotel industry's focus will be on investing in human resources effectively. This will include the development of new evaluation criteria for employees and the creation of training programs tailored to their needs.
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Shingo SugimeShingo Sugime is a deputy editor in the Economic News Department of The Yomiuri Shimbun Osaka.