Ichigo Hotel REIT Net Income Drops 11% on Renovations, China Tourist Decline
Ichigo Hotel REIT reported an 11 per cent year-on-year fall in six-month net income to JPY 1.2 billion ($7.9 million), hit by renovation closures, fewer Chinese tourists and weaker post-Expo Osaka demand. The Tokyo-listed trust still beat its revised forecasts, while domestic travel and business boo
Ichigo Hotel REIT posted an 11 per cent year-on-year decline in net income for the six months ended July, as renovation closures, fewer Chinese tourists and weaker post-Expo demand offset resilient domestic travel and business bookings. Net income fell to JPY 1.2 billion ($7.9 million), while operating revenue declined 4.9 per cent to JPY 2.9 billion, the Tokyo-listed trust’s manager said on Thursday. The results still beat revised forecasts by 5.4 per cent and 2.1 per cent, respectively.
“During the July 2026 fiscal period, Ichigo Hotel’s hotels saw stable business demand as well as a broad range of domestic demand from leisure travel, live concerts, sports events and academic conferences, resulting in higher-than-forecast hotel earnings,” the manager said. The trust highlighted strong performances at Nest Hotel Hakata Ekimae in central Fukuoka and Koko Hotel Nagoya Marunouchi, while lower-than-forecast borrowing rates reduced interest costs. It declared a distribution of JPY 3,761 per unit, topping guidance by 5.5 per cent but falling 11 per cent from a year earlier.
Revenue per available room (RevPAR) across 22 comparable hotels fell 4.6 per cent year-on-year to JPY 8,445 during the period, according to the trust’s July operating report. The average daily rate dropped 2.4 per cent to JPY 10,042, while occupancy eased 1.9 points to 84.1 per cent. Nationwide guest nights fell 3.5 per cent year-on-year in July, including a 3.1 per cent drop in domestic stays and a 4.6 per cent decline in foreign stays, the Japan Tourism Agency said. Japan received 24.5 million overseas visitors in the first seven months of the year, down 1.7 per cent from the same period in 2025, Ichigo Hotel said.
The trust said its performance was hurt by China’s continuing advisory against travel to Japan and a decline in Osaka demand after the close of World Expo 2025. At The OneFive Osaka Sakaisuji, six-month RevPAR sank 43 per cent, while the metric dropped 21 per cent at The OneFive Okayama and 30 per cent at The OneFive Garden Kurashiki. The Iran conflict has added pressure through higher travel costs and disruption to Gulf aviation hubs linking Europe with Asia, though Ichigo Hotel did not quantify any impact from the conflict.
Ichigo Hotel is pressing ahead with JPY 3 billion in major renovations in Sapporo and Yokohama as it seeks to lift room rates and asset values despite the softer market. The trust has budgeted JPY 1.7 billion to upgrade Nest Hotel Sapporo Odori, which reopened this month under the higher-tier Nest Hotel Alt brand, and a JPY 1.4 billion overhaul of Hotel The Knot Yokohama is scheduled for completion ahead of a December reopening under a new operator. The two closures contributed to a 5.2 per cent year-on-year drop in portfolio rental revenue during the six months.
For the current period, Ichigo Hotel is forecasting occupancy of 84.9 per cent and an average daily rate of JPY 11,004, with the reopening of both properties expected to help stabilise revenue. The REIT also sold Hotel Livemax Nihombashi-Hakozaki for JPY 1.6 billion, or 1.3 times book value, booking a JPY 281 million gain. It plans to distribute the gain and use the remaining proceeds for acquisitions and value-add investments, after ending July with 29 hotels acquired for a combined JPY 71.7 billion. Investor demand for prime hotel properties remains firm, with expected yields for prime Tokyo hotels falling five basis points to a record low in the second quarter, CBRE said.
