Often regarded as an industry resistant to recession, the news sites indicate that love hotels boast of solid occupancy ratios, yet even with land prices having estimated to have fallen *substantially from a year ago, sales are difficult.
Steve Mansfield of the investment firm New Perspective tells Reuters: “As long as we can secure funds, we would like to purchase more properties at the earliest opportunity.” New Perspective presently manages six hotels (242 rooms in total) on behalf of Guernsey-based Japan Leisure Hotels (JPLH).
The company wanted to increase its number of hotel rooms in Japan to 1,200 by the end of the year and to between 3,000 and 3,500 by 2012. But JPLH’s IPO in January of last year yielded only a quarter of its goal of 142 million dollars — a situation that will put those plans on hold.
The number one buyer and seller of love hotels is Tres Promption, showing 355 such properties for sale on its Web site. President Motonori Matsumura tells J-cast that many real estate companies bought love hotels in the past because it was an easy way to generate revenue, but the bankruptcies that followed the “Lehman Shock” have placed many of these properties back onto the market.
Borrowing from financial institutions, these days, is tough and in this post-Lehman Shock period this has made sales very slow. “Occupancy ratios are 2.5 times for love hotels,” says Matsumura,”but figures as high as 8 are also possible. Even 2.5 times can generate reasonable revenue so it can be regarded as a fairly good industry given the current economic situation.” (C.J.)
*Note: Both the Reuters and J-cast stories use 40 percent as the figure from Mansfield to express the fall in land prices from last year, but that is a number that is difficult to substantiate without more details being provided.