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INTERVIEW |
Q |
What measures have Ichigo REIT implemented to cope with the impact , and how effective have these been ? |
Q |
How do you think the Japanese hospitality market will fare from here on ? |
Two hotels in Ichigo Hotel ’ s portfolio were leased to the local prefecture for an extended period to accommodate Covid patients with mild symptoms .
Since the beginning of the calendar year 2020 , we renewed the lease terms at six of our hotels . At three of these hotels , we changed the hotel operator to Hakata Hotels , a whollyowned subsidiary of the REIT ’ s sponsor . Hakata Hotels currently operates 12 hotels in Japan and has expertise in deploying an AI-based revenue management system .
Our sponsor , Ichigo , developed PROPERA , an AI-based hotel revenue management system that calculates the optimal pricing for hotel rooms to maximise returns . PROPERA identifies optimal pricing through machine learning based on multivariate statistical analysis of data in the past 365 days . The platform is able to flexibly respond to changes in market conditions .
For example , say , if a hotel operator wants 95 % occupancy on a certain date , PROPERA will calculate the ideal ADR , using data over 365 days before the aforementioned date , and will automatically adjust the ADR based on how quickly hotel rooms are being booked .
Uncertainty remains in the Japanese hospitality market . We expect full-scale recovery to take time despite the gradual recovery in hotel demand on the back of the Covid vaccine rollout . As of September 27 , 69 % of Japan ’ s population have had one dose of the vaccines . Going forward , Ichigo Hotel ’ s forecast for the Feb 1 , 2022 and July 31 , 2022 six-month fiscal periods are for ADR to be 40-50 % below the 2019 level and the occupancy rate to be 20-30 % lower .
Q
Do you see any difference in the economic and Covid policies of the new prime minister as compared to his predecessors , and what are the potential impacts for Ichigo Hotel REIT ?
The state of emergency was lifted on September 30 . The domestic sightseeing industry is yearning for a new version of the “ Go-To Travel ” campaign . With regards to the new prime minister , it is too early to talk about changes from the new administration . Going forward , there may be an uptick in the high-end sector , such as resort hotels and traditional Japanese style hotels , but we have not seen signs of a quick turnaround in reservations in our budget type stay-only hotels .
In case the ADR is too low , bookings should increase rather quickly , and vice versa .
Also , if there is an event scheduled in the area , and the rooms start to get booked faster than expected , PROPERA will adjust the ADR to a higher price to maintain a stable and gradual increase in reservations . The technology focuses on ADR , and ignores market data , such as RevPAR in adjacent hotels .
Three hotels in Ichigo Hotel ’ s portfolio have been using PROPERA for their revenue management , and these hotels have been able to maintain occupancy at above 90 % during the July 2021 fiscal period , which is between Feb 1 , 2021 to July 31 , 2021 . This is despite a decrease in occupancy at nearby competitors .
Q
Did the Olympics and Paralympics help increase RevPAR / ADR / Occupancy ? What was the impact from the Olympics / Paralympics ?
Some guests stayed at our hotel during the Olympics / Paralympics , but the impact was minimal .
Photo : The OneFive Fukuoka Tenjin , Fukuoka , Chuo-ku Dimyo 2-8-12 , Japan
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