There have been a number of recent articles about the change in the laws regulating Leisure Hotels in Japan
http://japanrealestatecommentary.blogspot.com/2011/01/leisure-hotels-law-changes-forcing.html
http://www.japantrends.com/love-hotels-to-halve-next-year
http://www.youtube.com/watch?v=Ko-2DY3RPrU
Some of the articles are predicting that the number of love hotels will halve in 2011 as hotels which are close to schools and hospitals will be forced to close and also due to many hotels not being able to pay for the necessary renovations or new licensing costs.
Japanese Article links -
http://diamond.jp/articles/-/10125
http://www.j-cast.com/2010/11/22081522.html
We first posted on this topic back in May 2010 -
http://japanrealestatecommentary.blogspot.com/2010/05/japan-leisure-hotels-law-to-change.html
The recent articles do seem to evidence that there have been significant impacts on the industry; with many operators being forced into renovation capex or additional costs arising from the new licensing procedures.
What is clear is that there seems to be a lot of confusion about the new law and its application. All of which suggests to us that valuations will be under pressure until the impacts of the new law become clear.
It will certainly be interesting to watch what happens to valuations in the leisure or love hotel sector in the next few months.
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