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Message from Management

Executive Director Kaname Masuda

Thank you for your support and patronage to Japan Hotel REIT Investment Corporation (JHR) and its asset management company, Japan Hotel REIT Advisors Co., Ltd.

Having settled the accounts for the midterm of the 24th fiscal period (from January 1, 2023 to June 30, 2023) of JHR, we are pleased to present you with the summary of management status and other information for the period.

Despite the long-lasting impacts of COVID-19, significant progress has been made toward the normalization of socioeconomic activities in Japan since the beginning of 2023, with some regions already experiencing domestic leisure demand surpassing pre-pandemic levels. The number of inbound visitors to Japan reached an estimated 10.71 million from January to June of this year, recovering to 64.4% of the same period in 2019.

The hotel market is on the road to recovery, with the total number of overnight guests for the six months reaching 95.5% of the same period in 2019, and many hotels show an increase in guest room unit price that exceeds that of 2019.

Given the recovery in the hotel market, JHR resumed property acquisitions, which it had refrained from due to the COVID-19 pandemic, and purchased Uan kanazawa in January 2023 and Sotetsu Fresa Inn Shimbashi-Karasumoriguchi in March of the same year, using cash on hand. JHR believes that acquiring hotels located in areas with high growth potential for accommodation demand has improved the quality of its portfolio.

Under this environment, JHR worked closely with the lessees and operators of each hotel to reduce operating costs and promoted measures to improve profitability in preparation for a full-fledged recovery period in the hotel market. As a result, JHR recorded operating revenue of JPY 11,288 million, ordinary income of JPY 4,897 million and interim net income of JPY 4,896 million for the midterm period under review. Since JHR pays dividends based on annual income, no dividend payments are made based on the midterm financial results.

Domestic tourism has been reevaluated through and after the COVID-19 pandemic, and JHR believes that domestic leisure demand will remain strong. With Japan's easing entry restrictions and China’s travel relaxation, the number of inbound visitors to Japan is expected to recover further, leading to a growth of leisure demand from those visitors.

JHR will continue to work with lessees and operators to aggressively take measures to improve profitability by promoting high-unit-price sales strategies, including creating attractive products and implementing effective marketing and sales measures.

Together with Japan Hotel REIT Advisors Co., Ltd., the asset management company, JHR is committed to its growth and enhancement of attractiveness by leveraging the high level of expertise and know-how it has cultivated to date. At the same time, JHR will strive to strengthen its sustainability initiatives and information disclosure and will continue to focus on contributing to society utilizing the characteristics of hotels.

We would appreciate your continued support for us.