Blackstone is adding three hotels to its Japanese portfolio. The alternative asset manager announced that real estate funds managed by Blackstone have entered into agreements to acquire three hotels in Osaka and Okinawa.
The three new additions to Blackstone’s portfolio include The Ritz-Carlton Okinawa, Kise Beach Palace and Nest Hotel Osaka. These three properties bring Blackstone’s hotel portfolio in Japan to $1.3 billion, solidifying its position as one of the largest foreign hospitality investors in the market.
The Ritz-Carlton Okinawa is a luxury resort that is surrounded by an 18-hole championship course overlooking the ocean. Kise Beach Palace is a beachfront resort, while the Nest Hotel Osaka is situated within walking distance to Osaka’s retail and entertainment district.
While Blackstone has not disclosed the total purchase price of the three properties, a Japan Times report claimed that Blackstone acquired the 97-room Ritz-Carlton Okinawa and the Kise Beach Palace for about $130 million.
Blackstone has been one of the most active investors in Japan hotels in the past three years, anchored by the firm’s conviction in hospitality and leisure as an investment theme globally, Blackstone said.
“Japan is experiencing strength in both inbound tourism and domestic travel, supported by its robust economic growth. We will apply our operational expertise and use the full breadth and depth of our global resources to support these hotels for long-term success,” said Daisuke Kitta, head of real estate Japan, Blackstone.
In the last three years, Blackstone has acquired or signed to buy close to 20 properties, including an eight-hotel portfolio, from Kintetsu Group Holdings.
“We are pleased to expand our hotel portfolio in some of Japan’s most vibrant markets – Osaka and Okinawa. We’ll continue our work of building these properties into destinations for dining, leisure and entertainment and support the growth of these hotels and the local economies in Japan,” said Jeremy Bleackley, a managing director in Blackstone Real Estate.
Thriving hotel sector
Japan’s tourism industry is experiencing unprecedented growth. From January to September 2024, foreign visitor spending reached JPY 5.8 trillion, surpassing last year’s full-year record, Blackstone said in the release. July saw a record-high of nearly 3.3 million international visitors in a single month, a 10% increase compared to July 2019. The Japan Tourism Agency forecasts 2024 visitor numbers to hit a record 35 million, Blackstone added.
Japan’s tourism has been witnessing a steady rise since pandemic restrictions were lifted, which helped tourism to roar back to life and marked the return of foreign visitors. The weaker Japanese Yen, persistently low interest rates and the phenomenal rise in tourism have created an ideal platform for hotel investments. Hotel investment volume in the first half of 2024 reached around $2.9 billion, up more than 30% from the same period in 2023, according to a report by Colliers. There has been keen interest among hospitality companies to add locations in key leisure and resort destinations across the country, with the ryokan (traditional Japanese-style inn) segment also garnering rising interest among investors.
The Japanese market shows immense potential and is projected to attract 60 million inbound visitors annually by 2030, the Colliers report added. This, along with the robust domestic market, offers an ongoing opportunity for investors and operators to foray into the market or strengthen their existing presence in the country.
