The EconomistDecember 14th 2019 Business 552 has been identified. And the hoped-for
trickle-down effect—whereby more female
board members would swell the ranks of
female executives—has yet to materialise.
Still, quotas are here to stay. No country
has lifted those put in place so far (though
the Dutch insist theirs are temporary). Best
practice is a work in progress, but some dos
and don’ts are becoming clear. Formalising
selection processes to avoid a shortlist of
chairman’s chums, for example by hiring
an external search firm, as most British
firms but only two-fifths of those in Ameri-
ca do, is a good idea; it helps avoid inadver-
tent double standards. So is broadening se-
lection criteria away from a multitude of
narrow ones, such as years of executive ex-
perience or industry expertise. Ensuring
that more than one woman makes it onto
the shortlist also helps; research has
shown that a lonely shortlisted woman (or
representative of a minority) has little
chance of getting the job.
Firms should avoid seeking a “pink un-
icorn” who ticks all conceivable boxes, re-
commends Laura Sanderson of Russell
Reynolds, an executive-search firm.
Spreading the desired skills over a number
of future appointments makes it easier to
find female candidates with at least some
of them (or male ones, for that matter).
Short, fixed terms for board members make
renewal easier. This helps explain why in
Britain, which has espoused them, boards
are 30% female whereas in America, which
has not, progress has flagged, despite cor-
porate professions of gender equality.
Critics say boards are the wrong thing to
focus on—a symptom of workplace gender
inequality, not its cause. A study just pub-
lished by Zoë Cullen of Harvard and Ricar-
do Perez-Truglia of the University of Cali-
fornia, Los Angeles, highlights this. The
authors studied promotion at a large Asian
bank and found that men with male supe-
riors rose up the hierarchy faster than
those with female ones. Women managers
do not appear to be similarly partial to fe-
male underlings, which may help explain
why female board quotas have no effect on
management’s gender mix.
The Dutch quota requires 30% of seats
at large listed firms to be occupied by wom-
en. This translates to an extra 66 female
board members, on top of the 122 who oc-
cupy such positions already, estimates
Mijntje Lückerath from Tilburg University.
Annet Aris, herself a member of several
boards, admits the new law is “a lot of noise
for a small group of women”. But, she adds,
it is “still a very important signal”.
And signals matter, not least to esg in-
vestors, who care about firms’ environ-
mental, social and governance perfor-
mance as well as their bottom-line.
Helpfully, gender diversity on boards is
easier to pin down than most esg metrics.
It is becoming ever harder to skirt. 7
W
ith itscool modernist interiors and
views of Tokyo’s Imperial Palace, Ho-
tel Okura has been the choice of the well-
heeled since its gilded lobby was unveiled
in 1962 as a symbol of Japan’s emergence
from post-war austerity. Taro Aso, the dep-
uty prime minister, enjoys a late-night tip-
ple at the bar. Yoko Ono takes a suite on her
trips to the city. Every American president
from Gerald Ford on, has graced its rooms.
Donald Trump may well have done, too,
had the Okura not been shut for refurbish-
ment when he visited Japan in May.
One reason for the Okura’s popularity is
the lack of alternatives. Japan has roughly
the same number of five-star hotels as Viet-
nam, and fewer than London or Paris. The
Okura has stopped taking bookings for
next summer’s Olympics for want of
rooms, many of which have been ear-
marked for organisers. The dearth of high-
end accommodation has the government
considering tax breaks and cheap loans to
help build 50 “world-class” hotels—though
not in time for the Tokyo games.
Japan came late to mass tourism, points
out Koki Hara, a real-estate lawyer. For de-
cades the government pushed industrial
growth, so the country’s cities filled up
with drab business hotels that catered to
armies of salarymen. Property developers
dominated the real-estate market and
clung to most of the prime city-centre
spots. High inheritance taxes mean Japan
has fewer moguls than other rich places,hence fewer people who might be keen to
build and run posh hotels.
A leap in tourist numbers has exposed
the problem. Lured by the cheaper yen, 31m
people visited Japan last year, a fivefold rise
since 2011. Next year 40m foreign visitors
are expected, including 10m just for the
Olympics. By 2030 demand for accommo-
dation from foreigners will roughly dou-
ble, estimates cbre, a consultancy. A lot of
them will be well-off.
Hotels used to be a bad business, but not
any more, says Yutaka Kawamura of Mitsui
Fudosan, Japan’s biggest property devel-
oper. Hotels in central Tokyo are well-per-
forming assets in the property market,
with annual yields of around 3%, according
to cbre. Prices at posh hotels have shot up.
Some have enjoyed unimaginably luxuri-
ant margins, says Sam Sakamura, vice-
president of Hyatt Hotels in Japan.
This has drawn in more developers.
Property companies are erecting hotels on
the sites of old office buildings, fewer of
which will be needed as Japan’s workforce
ages and shrinks. Franchise agreements
with foreign brands, once rare, are becom-
ing common. Mitsui Fudosan is expanding
its portfolio in collaborations with Four
Seasons, Bulgari and Mandarin Oriental.
Hyatt will open four luxury hotels by next
year. And in September the Okura complet-
ed its $1bn renovation, including an ele-
gant new 41-storey building with views of
distant Mount Fuji.^7TOKYO
As tourist numbers shoot up, Japan faces a chronic shortage of posh hotels.
Property developers spot a five-star opportunityJapan’s hoteliersRoom to grow
Going up