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Tourist influx creates hotel price battles

Date Posted: 2005-02-11

Okinawa hotels are locked in a fierce battle for tourists.

As officials announced more than 5,000,000 tourists visited the islands last year, local hotels are scrambling to package tours that let them capture a larger market share. Teaming with Japan Air Lines or All Nippon Airways, the hoteliers are designing attractive all-inclusive packages which include roundtrip airfares, two night hotel stays, and more.

The special package prices are well below market rates. A ¥24,000 package is typical, while a tourist visiting independently would pay much more. A travel agent notes a two-night hotel stay would cost ¥20,000, while in the package it’s factored at only ¥3,000.

The hotels respond “¥3,000 is better than having an empty room. If we don’t have any customers, we’ll go belly up.” Japanese chain hotels entering the Okinawa market are driving up competition, too. Prefecture figures show hotels increasing by more than 156 since 2002, with more under construction. Some say there are already too many hotels, and question why more are being built.

A tourist typically spends from ¥70,000~110,000 during an Okinawa stay, and hotel industry leaders say those tourists are increasing profits at any of the tour package locations. Naha City Kariyushi Urban Hotel increased revenues by more than 20% last year, and are working to attract a higher class tourist with more expendable cash.

Other travel industry representatives question the numbers, charging hotels are actually losing about 20% more than before, but acknowledge that tourists are coming back. They’re asking hotels to reduce prices to draw more visitors, and say hotels are rejecting their requests. The travel industry is irate with the Prefecture Government over its lack of support.

“Yes, the prefecture is promoting very much on the mainland, but has only been using our agencies about 20%,” says one. “Each prefecture does its own sales and hotels have to do their own sales too.” The hotels typically do not use the agencies, choosing instead to go it alone.

Agency officials contend they know more about sales and marketing than the hotels do, and insist they could help Okinawa’s hotels make more profit.

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