|Advertising|Jobs 転職|Shukan ST|JT Weekly|Book Club|JT Women|Study in Japan|Times Coupon|Subscribe 新聞購読申込|
|Home > News|
|Home > News|
Wednesday, April 8, 1998
Hilton execs looking to expand presence in Japan
The top management of Hilton International Co. and Hilton Hotel Corp. are on a fact-finding mission to look into expanding their presence in Japan, possibly through investment in property, according to the chiefs of the two companies.
International hotel firms usually participate in managing inns with small equity investment and do not own properties themselves. But with the recent economic slump, the price of land in Japan has fallen to a level where such firms can expect enough returns, said Stephen Bollenbach, president and CEO of Hilton Hotels Corp. and Peter George, chairman of Hilton International, a company under the Ladbroke Group of Britain.
HI was a subsidiary of HHC until 1964, when it spun off as an independent, publicly owned company. The owners of HI have changed from time to time since then, and the two have been operating as separate companies, with HHC holding the exclusive right to use the Hilton name for hotels in the U.S. and HI having the right to use the name throughout the rest of the world.
But sharing the same vision and recognizing the importance of reuniting the two separate entities, Bollenbach and George finally managed to form a worldwide alliance last year in marketing, sales, hotel development and other operational matters related to Hilton brand hotels, they said in a recent interview with The Japan Times.
Bollenbach said that in the U.S., Hilton has bought hotels because properties can provide good returns of around 9 percent to 10 percent on its investment, but in Asia, investors have been satisfied with returns of around 2 percent or 3 percent. "As a U.S. company, we could not afford to buy those with low returns," he said. "I am interested in finding out if that is changing. Hopefully, we'll find out that now might be an opportune time to buy properties in Asia, particularly in Japan."
According to George, many U.S. financial institutions, including Goldman Sachs, are now preparing to invest in hotel assets in Europe, Japan and the Far East now that U.S. property prices are high. "We are obviously in touch with those funds. We could invest with them, and then take the management of these properties," George said.
Currently, there are four Hilton hotels in Japan: the Tokyo Hilton, the Tokyo Bay Hilton, the Osaka Hilton and the Nagoya Hilton, and their expansion plan is proceeding slowly, according to the two executives. "When we opened the last hotel in Nagoya in 1989, we were hoping to double that number by 1995, but unfortunately, because of the economic situation generally here, that has not been proved possible," George said.
While revenues of hotels in other countries usually come from accommodations, George said that banquet services in Japan, particularly in Tokyo, accounted for between 30 percent and 40 percent of revenues in the late 1980s and early 1990s. However, such revenues have dropped sharply since then, and the industry is facing a tough time here, he said. "We don't see the banqueting side of the business coming back to what it was before," he said, adding that he believes banqueting will recover eventually, but that it will not reach as high a level as before.
In terms of rooms, George is optimistic because Hilton hotels in Japan are still running on an average of 80 percent to 90 percent occupancy, he said. Hilton will open its next hotel in Otaru, Hokkaido, next year, and plans to open one hotel each in Osaka, Kyoto and Fukuoka within a few years, he said. "We still believe that with the market within Japan, taking medium and long-term views, there are still tremendous opportunities," George said.