Wealthy foreigners in winter, Japanese in summer… The painful reality of “Niseko

Rooms in the 100,000 yen/night range are already sold out for the upcoming winter season!

Winter room reservations for Niseko, a ski resort in Hokkaido boasting superb powder snow, have been brisk. It was on September 22 that Prime Minister Fumio Kishida announced a drastic relaxation of waterfront measures starting October 11, but even before that, reservations in Niseko had apparently begun to show signs of recovery.

Ms. Manami Tai, a spokesperson for Expedia, an online travel agency, said, “Reservations for the winter season from January to March 2023, which is the company’s winter season, have been recovering.

Winter hotel bookings in the Niseko area began to increase around the beginning of August,” said Ms. Manami Tai, a spokesperson for online travel agency Expedia. I think this is in anticipation of the opening of the ban on the acceptance of individual travelers from overseas by winter,” said Ms. Tai.

Since the 2000s, a number of condominiums and luxury hotels have been opened by foreign companies for foreigners, and Niseko has become a resort for wealthy foreigners.

The Niseko area is centered on the towns of Kutchan and Niseko, and in FY 2018, before the Corona disaster, the total number of foreign guests in both towns reached a record high of 682,163. The number of overnight guests by country shows that Australia has the largest number of visitors, followed by Hong Kong, China, Singapore, and Taiwan, all of which are Asian countries.

According to Ms. Tai, more than 90% of lodging reservations for January through March of next year will be made by foreigners, with Japanese accounting for less than 10%. By country, the U.S., Australia, Hong Kong, Taiwan, and Singapore are the most popular, in that order. China is not among the top five countries, probably because of its ongoing zero-corona policy.

The average price per night at hotels contracted by Expedia in Niseko is approximately 60,000 yen (as of October 20). However, due to dynamic pricing (variable rate system), the price is expected to rise in the future.

We also asked about Expedia’s recommended hotels.

The Hilton Niseko Village and Higashiyama Niseko Village Ritz-Carlton Reserve have rooms with large windows overlooking Mt. The direct connection between the ski slopes and the hotel is another attraction.”

Checking the Hilton’s room rates on the Expedia website for a one-night stay starting January 21, 2023, the “Deluxe Room Mt. Yotei View Twin” is approximately 95,500 yen including half board. The Ritz-Carlton offers a twin-bedded room with Mt. Yotei view for January 21-24 (minimum 3-night reservation) for about 195,000 yen per night including buffet breakfast (both prices as of October 17).

Some rooms are already sold out by the day on our website. It is likely that some days this season the most popular hotels will be fully booked.”

For the Japanese public, whose real incomes are declining as prices rise but wages remain the same, Niseko’s luxury hotels in winter may be out of reach, not because they cannot be booked, but because of the price.

Factors contributing to Niseko’s brand strength as a result of the entry of foreign-affiliated luxury hotels

Financial consultant Katsuhide Takahashi writes about Niseko in his book, “Why Niseko is the only resort in the world?

–The supply of quality hotel condominiums and other facilities has increased the branding of Niseko, and a virtuous cycle continues, with investment attracting investment. — Seibu Holdings Co.

The Niseko Higashiyama Prince Hotel, which Seibu Holdings sold to Citigroup, a major U.S. financial institution, opened as the Hilton Niseko Village in 2008, and Mr. Takahashi was working for Citigroup at the time. We interviewed Mr. Takahashi.

After the Hilton acquisition, Citigroup Tokyo-based employees began to actively travel to Niseko, with foreign employees in particular praising Niseko’s snow quality, scenery, and food. I remember their word of mouth spread the word of Niseko’s reputation not only to Tokyo, but also to employees in New York, Sydney, Hong Kong, and Singapore.

In 2020, Park Hyatt and Ritz-Carlton opened in Niseko, and there is no doubt that the entry of foreign luxury hotels was one of the factors that enhanced Niseko’s brand power,” said Takahashi.

In 2023, the Aman Niseko, a top-class hotel, will also open. It is likely that Niseko’s brand power will be further enhanced.

High-class hotels and restaurants in overseas ski resorts concentrate their business only in winter, and most of them are closed during the green season. In the case of Niseko, if they are mainly targeting wealthy overseas customers, they should be able to make it as a resort that earns money for a whole year by operating only during the ski season.

There is no need to aim for a so-called “makunouchi bento” type resort where rafting and camping can be enjoyed and where families and local guests also come. If Niseko becomes a resort where anyone can go and enjoy this or that, its brand value as a resort for the wealthy will decline. The wealthy will find an alternative resort to Niseko and leave.

Huge costs for infrastructure development associated with resort area development

How do the locals perceive the reality of Niseko, which has become a ski resort for wealthy foreigners and continues to be invested and developed by foreign capital? We asked Yoshito Tanaka, a business owner in the town of Kutchan and a member of the town council.

Niseko has four ski resorts, and the resort area of Kutchan Town is slated to have a total of more than 35,000 accommodation beds in the next five years. Kutchan Town has a population of 15,000, but during the three months of winter, the town will be home to approximately 50,000 people.

During the green season, the number of incoming tourists itself is not small because domestic visitors come, but the number of overnight guests and the amount of money they spend are low. For the town, the issue is what to do in the summer.

From November 2019, Kutchan Town is the only town in Japan to introduce a lodging tax at a fixed rate. Even if the number of overnight guests during the green season is low, the lodging tax revenue during the winter season will keep the municipality wealthy.

The lodging tax is entirely the town’s income, but the local tax is reduced by the increase in property taxes and town taxes due to soaring land prices. In the end, the town’s income itself remains the same. On the contrary, the municipality has to maintain the roads, water supply, and other infrastructure necessary for the development of the resort area, so a huge amount of money is going out.

No local resident believes that the town is being enriched by inbound demand and resort area development. In the Niseko area in particular, the residents are burdened by rising prices and the cost of infrastructure development,” he says.

What does Mr. Tanaka want to see happen to Niseko?

We need to make Niseko a town where people who come to this area and local residents can have a win-win relationship. In order to achieve this, we need to welcome both inbound and domestic travelers as our customers. It is important to create a system that allows the entire town to benefit from the money they spend.

While many thoughts and ideas cross over in Niseko, as a tourist, I would like to see more affordable accommodation prices in the winter.

There are still a few Japanese-owned lodges in Niseko, so it is possible to stay at a reasonable price even during the ski season,” he said. In the summer, I think the prices of foreign-owned hotels are about two-thirds or less than in the winter.

Summer may be the right time for Japanese to visit Niseko.

The air and food are delicious, and there are plenty of activities that take advantage of the natural surroundings. Niseko in summer is the best.

Katsuhide Takahashi, Representative Director of Malibu Japan Co., Ltd. and financial consultant, was born in Gifu Prefecture in 1969 and graduated from Keio University in 1993 with a bachelor’s degree in economics and received a master’s degree in economics from the Graduate School of International Political Economy, Aoyama Gakuin University in 2000. After working at Mitsubishi Bank and Citigroup Securities, he established his own company in 2013. His publications include “Bank Zero Era” (Asahi Shinbun Publishing) and “Why Only Niseko Became a World Resort” (Kodansha +α Shinsho).

Yoshihito Tan aka, Representative Director of Niseko Resort Service, Inc. and member of the Kutchan Town Council, was born in Hokkaido in 1972. After graduating from Kutchan High School, he competed as a freestyle skier (mogul), competing in the Europa Cup and All-Japan competitions. After retiring from skiing, he worked for a car sales company and a foreign financial company before establishing his own company in 2007 and serving as a town councilor since 2011.

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