Nara’s hotel shortage continues – JAPAN PROPERTY CENTRAL K.K.

3 min read

Despite having some idyllic and historic tourist attractions, for many years Nara Prefecture had the fewest hotel rooms in Japan. And while there have been several notable hotel openings in recent years to boost the much-needed supply, it has only managed to move up three spaces to rank 44th out of the country’s 47 prefectures.

As of 2021, there were 10,232 hotel rooms in all of Nara Prefecture, less than a third of the nationwide average per prefecture. Nearby Osaka has 119,230, and Kyoto has 49,375 rooms. To meet the prefecture’s goal of 12,000 rooms by 2025, there is a maximum subsidy of 200 million Yen per hotel project. So far, 5 projects have been approved for the financial assistance. 

Most tourists will visit Nara City as a day trip from Osaka and Kyoto. In 2019, over 45 million tourists visited the prefecture but just 2.73 million, or 6%, were overnight guests. 

Several luxury hotel developers and operators have recently recognized the market potential for this historic city. In 2018, the 8-room NIPPONIA Hotel Nara Naramachi opened in a renovated 130-year old sake shophouse. Nightly rates for two guests are around 100,000 Yen. Another NIPPONIA-branded hotel opened with seven rooms in a 130~140 year old soy brewery warehouse also in Nara in August 2020. Nightly room rates are typically between 80,000 ~ 100,000 Yen.

In June 2020, real estate developer HULIC opened the Kengo Kuma-designed 30-room Fufu Nara. All rooms have private out-door rotenburo hot spring baths. The nightly rates can be as high as 280,000 Yen during autumn. HULIC was selected by the prefecture during a public bidding process held in 2017, with the 1.3-hectares of land offered under a lease agreement. 

The following month, the 158-room JW Marriott Hotel Nara opened across the street from Nara City Hall and near the historic Heijo Palace. Mori Trust acquired the 4,000 sqm site from the prefecture in 2017. Nightly rates can range from 55,000 ~ 70,000 Yen.

In August 2023, Shisui, a Luxury Collection Hotel, Nara opened near the famed Todaiji Temple. The 43 rooms are priced from around 100,000 to 820,000 Yen a night. Mori Trust won the development rights to the site back in 2017, leasing the land from the prefecture. The hotel was designed by Kengo Kuma. 

And then there’s the Nara Juvenile Prison hotel project. This was supposed to open in 2020, with a group of 8 companies led by Solare Hotels and Resorts winning the bid to convert the 115-year old prison buildings into accommodation. The operating rights for a 32-year term, extendable for a further 30 years, were acquired for 60 million Yen, and the total required investment was estimated to be around 15 billion Yen. Solare backed out of the project a few months later. Hoshino Resorts obtained the hotel operating rights in October 2019, but seismic retrofitting and restoration works are taking longer than initially expected. Hoshino plans to open a 48-room luxury hotel in the property in 2026. 

The Yomiuri Shimbun, October 30, 2023.
The Nikkei Shimbun, September 14, 2023.
NHK, August 29, 2023.


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