Alchemy Japan’s Japanese Leisure Hotels reported Q1 2012 revenue growth of 3.7% on previous year to JPY515 million. Net Operating Income of JPY214 million, showed a lower rate of growth of 1.3% growth on Q1 2011 due to increase of Utility unit prices and staffing costs caused by operational changes that were implemented following 2011 fueiho regulation changes.
Q1 2012 revenue growth was led by an increase in customer numbers of 9% reaching an all-time high water mark average occupancy rate of 283%.
“Our hotels produced strong counter-cyclical performance achieving market share increase and a 3.7% sales growth, with revenues attributed to the pre-earthquake period contributing 2.3% growth while post-earthquake revenues were also up, contributing 1.4% of quarterly growth. Q1 performance continues the recovery started in 2011’s winter holiday season with a return to sales growth in Q1 2012 turning around the declining trend experienced since the March 2011 earthquake” says Alchemy Japan CEO Miro Mijatovic. “The strong finish to 2011 and the excellent performance during the first quarter of 2012 establish a positive forward momentum for 2012 and we are confident that we can continue to produce revenue and earnings growth in 2012.”
A number of Leisure Hotel portfolios are available in the market however institutional investors have not yet returned. Conversely, major lenders cautiously returned to the market during the first quarter of 2012, and in spite of transactions being conducted at conservative LTV levels, this is a positive sign that will encourage caprate contraction going forward. High Net-Worth individual investors have shown strong interest in single hotels to utilise the tax minimisation and free cash flow effect generated by these high depreciation benefits available from assets in the industry.
