The Wall Street Journal - 11.09.2019

B6| Wednesday, September 11, 2019 THE WALL STREET JOURNAL.

price of about $28,000 a night.

“Compared to other cities

like New York and Paris, Tokyo

still has very few luxury ho-

tels,” said Miwako Date, chief

executive of real-estate com-

pany Mori Trust Co., which is

developing the Edition prop-

erty. She said the new devel-

opments weren’t “just about

quantity but also quality,”

with a diverse lineup that in-

cludes some traditional for-

mats and others with a more

hip vibe.

Japan has 32 five-star ho-

tels, compared with 127 in

France, 187 in Italy, 112 in

Thailand and 793 in the U.S.,

according to CBRE Hotels. One

reason is that demand for of-

fice space in prime Tokyo lo-

cations eclipsed other proj-

ects, according to CBRE’s

Japan unit.

The country is expecting to

set a record of 40 million visi-

tors next year when the Sum-

mer Games come to Tokyo, up

from 31 million in 2018. Tour-

ists spent more than $12 bil-

lion on lodging last year, ac-

cording to government figures.

A common practice in the

more recent luxury hotels in

Tokyo is to occupy the top few

floors of office towers. What is

being called the Tokyo Edition

Toranomon sits atop a 38-

story tower in the Toranomon

business district and is a col-

laboration with American ho-

telier Ian Schrager, best

known for pioneering the bou-

tique hotel concept.

Ms. Date of Mori Trust, the

developer leading the project,

said she was traveling to meet

Mr. Schrager every three

months. She pointed to little

details meant to create the

right atmosphere, saying the

developer took two weeks to

transplant a more than 100-

year-old tree that stood in the

way of a new road.

The new Four Seasons,

scheduled to open in mid-2020

in the financial district of

Otemachi, features floor-to-

wall windows in all 193 rooms

and suites. The bar is sup-

posed to evoke a “Tokyo meets

Paris” ambience, according to

General Manager Andrew De

Brito. The hotel is being de-

signed by architect Jean-

Michel Gathy.

A top attraction at the

Okura hotel is its Zen garden,

says General Manager Shinji

Umehara. Though made of

stones, it is designed to look

like flowing water. “It’s not

about flashiness and gaudi-

ness, it’s about creating an at-

mosphere where you feel at

peace,” said Mr. Umehara.

“This is the Japanese way.”

The original Okura, com-

pleted in 1962, played host to

famous names like Princess

Diana and Barack Obama be-

fore being torn down four

years ago amid protests from

preservationists who counted

the hotel as one of Tokyo’s

modern-day architecture

gems. The lounge area of the

lobby combined Japanese min-

imalism with a jet-age aes-

thetic including a world-map

clock. That part of the lobby

has been re-created down to

the last detail in the new

building.

The imperial suite, on the

39th and 40th floors of the 41-

story main tower, claims the

title for Tokyo’s most spacious

hotel room, according to Hotel

Okura Co. That tower, the

Okura Prestige, is mostly of-

fice space with hotel rooms on

the top floors, while the lower

Heritage Tower next door has

additional rooms that list at

about $1,000 a night and up.

TOKYO—A wave of new lux-

ury hotels is sweeping across

Japan’s capital city, as devel-

opers start to showcase their

projects before legions of visi-

tors descend on Tokyo for the

2020 Summer Olympics.

A Four Seasons hotel on the

top six floors of a 39-story

tower in the financial district

and the first Japanese location

of Marriott International

Inc.’s luxury Edition brand are

set to open by next summer.

Even historic properties are

remaking themselves to at-

tract more affluent guests:

The Okura Tokyo hotel, long

known for restrained elegance

and somewhat cramped

rooms, is reopening on Thurs-

day after a $1 billion re-cre-

ation. It now features a duplex

7,857-square-foot suite at a

BYSURYATAPABHATTACHARYA

ANDRIVERDAVIS

Luxury Rooms Rise in Tokyo Ahead of Olympics

At top, the Okura hotel lobby
in Tokyo. The historic property
is reopening on Thursday after
a $1 billion re-creation. It
features the Starlight bar
lounge, right, and touches of
SHIHO FUKADA FOR THE WALL STREET JOURNAL (4) unassuming Japanese elegance.

A nearly decadelong rally

for the hotel business is show-

ing signs of petering out.

Hotel owners in large cities

say they are getting squeezed

by weaker business-traveler

demand, higher labor costs and

a crush of new hotel projects

that is weighing on room rates.

“The floodgates have

opened in terms of supply,”

said Bashar Wali, principal and

president of Portland, Ore.-

based Provenance Hotels ,

which owns and manages 14

hotels across the U.S. “When

there are so many offerings,

you don’t have the ability to

stretch rates even during the

high demand period.”

Growth in hotel revenue per

available room, or RevPAR,

narrowed to 1.4% and 1.1% in

the first and second quarters,

respectively, compared with

the same periods of 2018, ac-

cording to STR. It marked the

first time since 2010 that reve-

nue growth fell below 2% for

two straight quarters. In June,

STR lowered its forecast for

2019 U.S. RevPAR growth to 2%

from 2.3% forecast in February.

Some investors are getting

jittery about the sector. Hotel

real-estate investment trusts

have been the second-worst

performer among REITs this

year, ahead of only mall REITs.

The FTSE Nareit All Equity

REITs index has a total return

of 26% over the first eight

months of the year, according

to the most recently available

data, compared with 3.4% for

hotel REITs over that period.

Some hotel owners have

stemmed their share-price de-

clines with buybacks. Host Ho-

tels & Resorts and Sunstone

Hotel Investors bought $230

million and $50 million, re-

spectively, in shares in recent

months. Both share prices have

recovered from this year’s

lows. Shares of Sunstone ended

at $13.66 on Tuesday, versus a

52-week low of $12.54, and

shares of Host closed at $17.43,

up from their low of $15.51.

They are still up 5% and 4.6%,

respectively, this year.

One hotel owner cut its divi-

dend to raise cash: In June,

Ashford Hospitality Trust Inc.

sliced its second-quarter divi-

dend to 6 cents from the 12

cents distributed every quarter

since 2013. Shares of the Dal-

las-based company, which owns

hotels including Embassy

Suites New York Midtown Man-

hattan and Renaissance Nash-

ville, have since fallen by one-

third.

“We weren’t getting credit

for what was an outsized divi-

dend,” said Doug Kessler, chief

executive of Ashford Hospital-

ity, during its earnings call last

month.

Hotel operators in places

such as Seattle, New York and

Chicago say new hotel supply is

weakening their pricing power

by outpacing their more mod-

est growth in bookings.

Investors are pricing in a

higher probability that the U.S.

economy is closer to a down-

turn than a year ago, said Lu-

kas Hartwich, an analyst at

Green Street Advisors.

“Things could get uglier in

the short run,” he said. Slower

corporate profit growth is cur-

tailing demand from business

travelers, he added.

New York City looks particu-

larly vulnerable. Labor costs

have been rising and the num-

ber of hotel rooms has bal-

looned to more than 125,000,

with around 13,200 new rooms

added since 2016.

BYESTHERFUNG

Growth in

Lodging

Industry

Weakens

U.S.hotelrevenueper

availableroom,change

frompreviousyear

Source: STR

5

0

1

2

3

4

%

2018 ’19

A Chinese insurer has

agreed to sell a luxury hotel

portfolio for more than $5.8

billion, overcoming an unusual

stumbling block: A California

individual secretly created a

series of fake deeds to transfer

ownership for up to a half

dozen of the hotels.

Mirae Asset Global Invest-

ments, part of a South Korean

financial services company,

agreed this week to buy the

15-hotel portfolio from An-

bang Insurance Group Co.,

people familiar with the mat-

ter said. Mirae prevailed in a

process that began early this

year and attracted widespread

interest from private-equity

and government-run funds,

these people said.

The two sides were on the

verge of a deal last month, but

a more formal agreement was

held up when Anbang discov-

ered the fraudulent deed

transactions while performing

a routine title search, accord-

ing to people familiar with the

matter. The search indicated

BYCRAIGKARMIN

ANDKONRADPUTZIER

THE PROPERTY REPORT

that ownership of at least four

California hotels had been

transferred to limited liability

companies.

One deed showed a transfer

of ownership for Anbang’s

Montage Laguna Beach hotel,

a luxury coastal resort in

Southern California, to a com-

pany known as Andy Bang

LLC, according to California

property records.

The seller on the deed was

listed only as Shr Holding

Group LLC, records show.

San Francisco’s Westin St.

Francis, the Loews Santa Mon-

ica and the Four Seasons Sili-

con Valley in East Palo Alto

were also transferred to lim-

ited liability companies,

though no sales prices were

recorded, according to prop-

erty records.

Deeds for the Ritz-Carlton

hotels in Half Moon Bay and in

Laguna Niguel were also faked,

said people familiar with the

matter. These fraudulent

transfers occurred without An-

bang’s knowledge or approval,

said people familiar with the

matter.

Representatives for Anbang

and Mirae declined to com-

ment.

The Wall Street Journal

couldn’t confirm the identity

of the individual or how this

person expected to profit from

the illegal ownership transfers.

Fraudulent deed transfers,

in which homes may be trans-

ferred without the knowledge

of the seller, by forging signa-

tures, for example, are com-

mon. In 2012, California’s De-

partment of Real Estate issued

a consumer alert on the prac-

tice. These transfers are less

common for larger commercial

properties such as hotels.

A December report by a

Manhattan Supreme Court

grand jury found an “epi-

demic” of fraudulent property

transfers in New York City and

noted 2,000 complaints since

2014 and had 20 convictions

since 2015.

The Anbang hotel portfolio

includes high-end properties

such as the Essex House over-

looking Manhattan’s Central

Park and the InterContinental

hotels in Chicago and Miami.

Chinese insurers and other

investors went on a U.S. real

estate buying spree, taking ad-

vantage of new rules that al-

lowed them to invest more

easily abroad.

In 2015, Anbang paid $1.95

billion for New York’s land-

mark Waldorf Astoria, the

highest price ever for a U.S.

hotel. The property is closed

as it undergoes renovation.

Anbang didn’t include the ho-

tel in the deal.

In recent years, the Chinese

government has limited cer-

tain types of investments

abroad, including real estate,

as part of an effort to stabilize

its currency.

Anbang Hotels Fetch $5.8 Billion

South Korean buyer

agrees to deal despite

fake deeds created by

California individual

Hotels including the Loews Santa Monica were transferred to limited liability companies.

JOHN SALANGSANG/INVISION FOR IFTA/AP IMAGES