According to Tokyo Shoko Research, there were 25 bankruptcies in the hotel industry in the month of April. 60% of those were said to be directly related to the impacts of the coronavirus pandemic. This is a steep increase from the 2 bankruptcies reported in April 2019, and not far from the record high of 29 seen in May 2011 (following the Tohoku disaster).
With the borders essentially closed to international travelers and a nationwide state of emergency announced in mid-April, the tourism industry in Japan has taken a direct hit.
Some of the larger bankruptcies during the month included Shiga Prefecture-based Royal Oak Resort, which filed for bankruptcy on April 28th with debts of 5 billion Yen. The company operated the 169-room Royal Oak Hotel Spa & Gardens on Lake Biwa. Annual revenues in 2014 had reached 3.1 billion Yen. However, after struggling with strong competition from newer hotels nearby and lacking the knowhow to attract foreign tourists, the family owners sold their shares in the company to a Singapore fund in early 2018.
On April 24, capsule-hotel operator and developer, First Cabin, filed for bankruptcy with debts of 3.7 billion Yen. The company achieved annual revenues of 1.58 billion Yen in 2017. Growing competition saw occupancy rates fall below expectations, while a over-expansion and high labor costs saw operations fall into the red. When the international travel bans went into effect, occupancy rates dropped to the 10% range.
On April 27, Osaka-based WBF Hotel & Resorts filed for bankruptcy protection with debts of 16 billion Yen.
Bankruptcies across all industries in April topped 758 cases, a 16.4% increase from April 2019.
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