Hotel Properties, New Airport Enter Japanese Market

Accor has chosen Nagoya and Yokohama, two of Japan's most important economic centers, as well as Narita, the country's main gateway, for its latest venture into the Japanese market. These properties are part of the international hotel group's continuing expansion program, which will see the rapid growth of Sofitel, Novotel, Mercure, Ibis and Formule 1 brands throughout Japan.

"Being the second-largest economy after the United States and a market that is void of truly national hotel networks, we believe Japan offers a significant development opportunity for Accor," said Tony Virili, Accor group general manager for Japan, adding that company executives "would be disappointed if Accor did not have 25 hotels in Japan by 2005."

Accor will achieve that goal partly by looking for management contracts for existing properties, especially in the case of the company's top-end Sofitel and Novotel brands. "Given the high cost of land and construction relative to other countries, new four- and five-star developments in Japan are more difficult to materialize than say North America, Australia or much of Asia," Virili said. "For the time being, the collective impact of 9/11, the Iraq war and SARS has made new developments even more challenging for the investors.

"Accor believes that securing long-term management agreements over existing four- to five-star business and leisure hotels is a more realistic growth strategy, particularly as many current owners re-evaluate their direct ownership/management involvement in the hotel business. The Yokohama Novotel and The Mercure Hotel Narita are the first of what we expect to be many long-term management agreements signed in Japan."

The company re-branded the 115-room The Cypress, originally the Century Hyatt Nagoya, as Sofitel The Cypress at the end of last year. The property is located in the center of Nagoya, just a short walk from Nagoya Station, the region's most important railway crossroads, and close to the Nagoya Congress Center, the city's main convention center.

"After Tokyo and Osaka, Nagoya arguably is the next most important center of economic activity in Japan and is the home of Toyota Motors," Virili said. "A new international airport is under construction and due to open before the 2005 Expo." The 2005 Expo will occur in neighboring Aichi. With as many as 100 nations slated to participate, Expo is expected to be a catalyst for development in the region, most notably the new US$7 billion Chubu International Airport, or Centrair.

Centrair will be a new gateway to Japan and to a major Asian business destination. Nagoya and the surrounding prefectures of Aichi, Mie and Gifu boast a population of 10 million and account for 9 percent of Japan's gross domestic product. Automobile, auto parts and aircraft component manufacturers are the major businesses in the area.

Toyota is building a major office complex not far from The Cypress that will open in 2007. Companies, including Volkswagen Group Japan KK, have relocated their head offices from Tokyo to the Nagoya area, while foreign auto companies, including Mercedes-Benz Japan and Rover Japan, have established their importation and distribution centers in the Nagoya region.

Meanwhile, Accor will assume management of the Hotel Yokohama on July 1 and rebrand it the Yokohama Novotel on Oct. 1. The 166-room hotel has been managed as an independent property since it opened in 1979 adjacent to the city's well-known Yamashita Park.

The Novotel property stands on the site of the former U.S. consulate. A new subway station will open next year behind the hotel, improving access. The Novotel is near Haneda, which was the country's main international airport before Narita and which is expected to begin accepting regular international service in the near future.

Although heavy industry and pharmaceuticals are the main industries in the immediate vicinity of the Novotel, Yokohama is developing itself as a major biotechnology center. Located just 18 miles southwest of Tokyo, Yokohama, the country's second most populous city and a major shipping port, has more than 165 foreign companies based there.

While Sofitel sets up shop in Nagoya and Novotel in Yokohama, Accor this month will debut is first Mercure hotel, the Mercure Hotel Narita, on a site next to Narita Station.

"Narita was chosen as the perfect launch city for Mercure in Japan because it is the key gateway to the country," said Accor managing director for Japan Michael Issenberg. "More than 65,000 people fly in and out of Narita everyday, making this the busiest airport in the country, with more than 25 million passenger movements per year."