New Strategy for 10,000 Yen Stays: Business Hotels’ Latest Trends & Tips
APA, which is on a path of super-expansion, Toyoko INN, which is going back to its roots, Lutoyoin, the king of roadside hotels, Dormy Inn, which is winning in service, Super Hotel, which is health-conscious, and others
A period of transformation since the collapse of the bubble economy.
Business hotels, known for their good access and affordable accommodations, have long been a reliable choice for business trips.
With the increase in business trips during the economic growth of the 1980s, business hotels experienced their first golden era. At that time, Tokyu Inn, Hotel Sunroute, and Washington Hotels were known as the “Three Major Business Hotels.”
“These three companies also had banquet facilities and offered services similar to those of luxury hotels at the time. However, with the collapse of the bubble economy, the demand for business trips and banquets drastically decreased. Hotels that offered extremely affordable rates of around 5,000 yen per night gained popularity. It was during this time that APA Hotel, Toyoko Inn, and Route Inn emerged and came to be known as the ‘New Three Major Business Hotels,'” said Junosuke Nagahama, a distribution journalist.
The “New Three Major Business Hotels” were all founded around 1985, just before the bubble economy began. A common characteristic among them is that they resisted the trend of offering luxurious services during that era and instead operated under the banner of low-cost, low-price management. They expanded nationwide when land prices plummeted, and to this day, they remain leaders in the industry. However, following the COVID-19 pandemic and the rapid increase in inbound tourism demand, the industry is once again entering a transformative period, reminiscent of the changes after the bubble economy collapse.
“Once, single rooms were priced between 5,000 to 6,000 yen per night, but now, all the major chains have raised their prices to over 10,000 yen, with a strong price-setting strategy. Dynamic pricing has also been introduced, meaning that when events such as concerts are held nearby, it is not uncommon for a single night to cost over 30,000 yen,” said an economic newspaper reporter.
Amid rising costs, companies that once led the industry with low prices are now in a situation where they must offer new added value to survive. Let’s report on the latest developments in the business hotel industry, where major chains are competing fiercely.
APA Hotels has established its position as the largest domestic chain, both in terms of sales and the number of hotels. In 2006, it was one of the first to introduce dynamic pricing, and even during the COVID-19 pandemic, it continued to pursue an aggressive expansion strategy. Market advisor Hideo Amano explains APA’s strategy.
“They have succeeded in acquiring struggling railway-affiliated hotels and utilizing them with minimal renovations, significantly cutting construction costs and the time needed to open. Hotels like ‘Keikyu EX Inn’ and ‘Nishitetsu Inn Shinsaibashi,’ which were acquired during the pandemic, have now become flagship properties for APA. The company’s strength lies in its speed-oriented management, led by the founding family.”
Another strength is the attention to detail in cost management. As long-time industry journalist Nagahama continues:
“They use heat-insulating materials for the curtains to improve the efficiency of air conditioning and heating, and have designed the bathtub in a unique egg shape to achieve a 20% water savings. The distinctive black and orange exterior increases visibility, allowing them to promote their brand without incurring additional PR costs.”
