神戸市内の住宅街で、ラブホテルが禁止地区に「旅館」として営業していた問題で、兵庫県警生活環境課などは１４日、ホ
テルを経営している大阪市天王寺区の経営コンサルタント業「ＧＨＰ」代表の男性（３９）ら３人と、同社を１５日にも風営法違反（禁止区域営業）容疑で書類
送検する方針を固めた。「偽装ラブホテル」の立件は異例という。
調べでは、代表は今年１月中旬ごろ、風営法でラブホテル営業が禁止されている神戸市中央区山本通で、事実上のラブホテル「チャペルスイート」を旅館として市の許可を受け、営業した疑いが持たれている。
県警は今年１月、ホテルを捜索。旅館業法でビジネスホテルや旅館に義務づけられている宿泊者名簿がない▽外観が派手▽建物の外に宿泊料金が表示されている▽成人向けの自動販売機がある−ことなどが判明。ラブホテルとして営業していたと判断したもようだ。
同市によると、同ホテルは捜索を受けた後、設備や構造を改善して営業を再開したという。
http://sankei.jp.msn.com/affairs/crime/080415/crm0804150136004-n1.htm
In the residential area of Kobe city, in an area where Love Hotels are prohibited, there was an incident of a Love Hotel operating under a ryokan license. On the 14th, the Hyogo Prefectural Police served a summons of breach of the Adult Entertainment Law to 3 officers of the Osaka office of the hotel operator, called "GHP" GHP ウェブサイト
KPGウェブサイト
Investigators allege that according to their investigations, that the accused have around mid January this year, in Chuo-ku, Kobe, Yamamotodori, operated a love hotel business called Chapel Suite Chapel Hotels ウェブサイト, even though this is prohibited in this area under the Adult Entertainment Laws. while they had only received the permission of the city to operate as an Inn, they were in fact operating a love hotel de facto.
In January this year, prefectural police searched the hotel. They found that in contravention of the laws, there were vending machines for adult toys, that room rate is displayed on the outside of the flashy building, there is no hotel guest roster as is required for inns business hotel in the Hotel Business Law. According to these matters, it was determined to have been opearting as a love hotel.
According to city, after receiving the search, the hotel that was reopened by improving the structure and equipment.
Showing posts with label Japan love hotels. Show all posts
Showing posts with label Japan love hotels. Show all posts
Sunday, October 12, 2014
Tuesday, February 14, 2012
Love Hotel Operator Posts Impressive Results despite earthquake and recession
Alchemy Japan’s Japanese Leisure Hotels’ 2011 revenues grew to JPY2,074 million, a 2% improvement on 2010. EBITDA was on par with previous year, at JPY623 million, despite Japan’s biggest recorded earthquake and tsunami and its disruption on economic growth and consumer confidence.
2011 revenue growth was led by an increase in customer numbers of 6% reaching annual high water mark average occupancy rate of 272%.
In Q1 2011, Japanese GDP contracted by 3.7% (annualized) while Alchemy’s hotels posted 13% EBIDTA growth in Q1 driven by 6% revenue growth. Q2 was heavily impacted by nationwide supply chain problems caused by the 3/11 EQ and tsunami and after-effects which disrupted production and impacted consumer confidence. This also had an adverse direct impact on operations in Kanto area hotels. Q2 revenue slowed but exceeded Q1 by 2.3% and was 3% above previous year, while Q2 EBITDA was 6.8% ahead of Q1 and +3% on PY.
H2 2011 saw Alchemy’s hotels post resilient results, maintaining revenues with year on year growth in customer numbers. Bottom line results were impacted by cost inflation, particularly energy costs.
“Our hotels produced strong counter-cyclical performance achieving market share growth, sales growth and resilient earnings in 2011 despite recessionary and deflationary pressures and substantial external shocks. ” says Alchemy Japan CEO Miro Mijatovic. “While our hotels’ rate of revenue and earnings growth slowed post 3/11, bottoming out in the summer; our strong finish to 2011, with the winter holiday period posting record growth and revenue high water marks at a number of our hotels, established positive forward momentum into 2012 and provides us confidence that we can continue to produce growth in 2012.
“The improved liquidity and contracting caprates in the general Japanese property sector has started to trickle down to operational assets like Leisure Hotels. A number of deals were completed in 2011 with the return of financing to the sector subsequent to the closing of the Japan Leisure Hotels Ltd transaction in June 2011 at historically high caprates, setting a low point for valuations. On the supply side, attractive single turnaround opportunities are available from numerous operators who have not coped well with 2011’s regulatory changes and also portfolio deals where some institutional investors are looking to recycle capital on their long term holdings. We see the current trend for contraction of caprates to continue into 2012.” says Mijatovic.
http://www.propertyfundsworld.com/2012/02/08/161853/alchemy-japan-kk-japanese-leisure-hotels-continues-revenue-growth-2011
2011 revenue growth was led by an increase in customer numbers of 6% reaching annual high water mark average occupancy rate of 272%.
In Q1 2011, Japanese GDP contracted by 3.7% (annualized) while Alchemy’s hotels posted 13% EBIDTA growth in Q1 driven by 6% revenue growth. Q2 was heavily impacted by nationwide supply chain problems caused by the 3/11 EQ and tsunami and after-effects which disrupted production and impacted consumer confidence. This also had an adverse direct impact on operations in Kanto area hotels. Q2 revenue slowed but exceeded Q1 by 2.3% and was 3% above previous year, while Q2 EBITDA was 6.8% ahead of Q1 and +3% on PY.
H2 2011 saw Alchemy’s hotels post resilient results, maintaining revenues with year on year growth in customer numbers. Bottom line results were impacted by cost inflation, particularly energy costs.
“Our hotels produced strong counter-cyclical performance achieving market share growth, sales growth and resilient earnings in 2011 despite recessionary and deflationary pressures and substantial external shocks. ” says Alchemy Japan CEO Miro Mijatovic. “While our hotels’ rate of revenue and earnings growth slowed post 3/11, bottoming out in the summer; our strong finish to 2011, with the winter holiday period posting record growth and revenue high water marks at a number of our hotels, established positive forward momentum into 2012 and provides us confidence that we can continue to produce growth in 2012.
“The improved liquidity and contracting caprates in the general Japanese property sector has started to trickle down to operational assets like Leisure Hotels. A number of deals were completed in 2011 with the return of financing to the sector subsequent to the closing of the Japan Leisure Hotels Ltd transaction in June 2011 at historically high caprates, setting a low point for valuations. On the supply side, attractive single turnaround opportunities are available from numerous operators who have not coped well with 2011’s regulatory changes and also portfolio deals where some institutional investors are looking to recycle capital on their long term holdings. We see the current trend for contraction of caprates to continue into 2012.” says Mijatovic.
http://www.propertyfundsworld.com/2012/02/08/161853/alchemy-japan-kk-japanese-leisure-hotels-continues-revenue-growth-2011
Thursday, January 5, 2012
Japanese love hotels: A recession-proof play
People get intimate in good times and bad, so taking exposure to the leisure hotel industry while values are at all-time lows could be a wise counter-cyclical investment, argues Alchemy Japan, an asset management and advisory firm that operates the country’s 10th largest chain of love hotels.
Asset prices are dependent on the availability of leverage – and since banks and finance companies have been reluctant to lend during the financial crisis, property prices have dropped and capitalisation rates (net operating income divided by property price) are at record highs, says Garry Frenklah, Alchemy’s Asia ex-Japan representative. Japanese lenders’ innate conservatism means that fewer still are prepared to lend against love hotels, he adds.
As a result, he notes that deals are closing in the 25-30% cap-rate range. The sale of the Japan Leisure Hotels (JLH) portfolio, the first significant transaction executed since the financial crisis, traded in June last year at 35%, a historic high. By comparison, the typical cap rate for hotel deals in the US is 6-8% at present, notes Frenklah.
The buyer of the JLH assets was able to re-trade two of the hotels within two months of purchase and has recently disposed of a third at rumoured cap rates of 23-25%, says Frenklah, suggesting that cap rates may be coming off their peaks and prices are starting to recover.
However, the deal also demonstrates the perils of getting in at the wrong level. JLH had to sell the portfolio following the exit of its largest shareholder, DKR Oasis, due to the hedge fund’s liquidation.
Still, firms such as Orix and Tokyo Star Bank – the sector’s biggest lenders – have tentatively started to re-enter the market, adds Frenklah, meaning cap rates are likely to continue to fall.
Investors should consider buying now, he says, especially given that love-hotel net cash flows are very high, at 10-14% a year in yen (and higher when swapped into higher-yielding currencies).
“This is a unique play on something that is seemingly everything-proof,” says Frenklah.
There are different portfolios available, he notes, including one available from a large foreign institution that had bought at a low cap rate and now wants to exit for purely strategic reasons. Alchemy has managed the portfolio for years, so has intimate knowledge of the assets.
Foreigners can invest directly in Japanese land and property without restrictions and with or without leverage, says Frenklah, adding that Alchemy can package investments as any combination of pure debt, hybrids or equity via special-purpose companies.
The potential to make money is substantial, he adds. Japan’s love hotel industry is huge – its ¥4.2 trillion ($54 billion) in revenue exceeds that of the entire UK hotel industry. It is also very fragmented: the 448 rooms managed by Alchemy make it the 10th biggest operator in an industry with an estimated 625,000 rooms, and the top 10 operators account for less than 1% of the market.
There is a massive consumer base for this ubiquitous industry: every single day 2.5 million people, or 2% of Japan's population, use love hotels, with 70% in the 20-30 age bracket. That’s hardly surprising, since there is little privacy for most Japanese: the average person has 18 square metres of living space, and it is common for three generations to share the same accommodation.
In addition, profitability is very high: love hotel rooms are typically used several times a day, with a turnover rate of 236% for the industry and 265% for the hotels managed by Alchemy, and operating margins at 45-50% of sales.
For those investors put off by the thought of investing, it may provide some comfort that Japan’s love hotels are government-regulated and legal. Alchemy’s hotels hold licences identical to those of a Hyatt or a Hilton, there is no social stigma within the country and no systemic involvement by organised crime, says Frenklah.
Moreover, Alchemy says it is the only foreign asset manager in the industry that serves institutional investors and complies with the disclosure, reporting, audit and transparency requirements of sophisticated investors.
And on a final point, one of Alchemy’s founders is a former Australian public servant. Greig McAllan, the firm’s chief executive of group operations, was formerly head of Tourism Australia for North Asia. One would think he knows a thing or two about hospitality.
http://www.asianinvestor.net/News/285673,japanese-love-hotels-a-recession-proof-play.aspx
Asset prices are dependent on the availability of leverage – and since banks and finance companies have been reluctant to lend during the financial crisis, property prices have dropped and capitalisation rates (net operating income divided by property price) are at record highs, says Garry Frenklah, Alchemy’s Asia ex-Japan representative. Japanese lenders’ innate conservatism means that fewer still are prepared to lend against love hotels, he adds.
As a result, he notes that deals are closing in the 25-30% cap-rate range. The sale of the Japan Leisure Hotels (JLH) portfolio, the first significant transaction executed since the financial crisis, traded in June last year at 35%, a historic high. By comparison, the typical cap rate for hotel deals in the US is 6-8% at present, notes Frenklah.
The buyer of the JLH assets was able to re-trade two of the hotels within two months of purchase and has recently disposed of a third at rumoured cap rates of 23-25%, says Frenklah, suggesting that cap rates may be coming off their peaks and prices are starting to recover.
However, the deal also demonstrates the perils of getting in at the wrong level. JLH had to sell the portfolio following the exit of its largest shareholder, DKR Oasis, due to the hedge fund’s liquidation.
Still, firms such as Orix and Tokyo Star Bank – the sector’s biggest lenders – have tentatively started to re-enter the market, adds Frenklah, meaning cap rates are likely to continue to fall.
Investors should consider buying now, he says, especially given that love-hotel net cash flows are very high, at 10-14% a year in yen (and higher when swapped into higher-yielding currencies).
“This is a unique play on something that is seemingly everything-proof,” says Frenklah.
There are different portfolios available, he notes, including one available from a large foreign institution that had bought at a low cap rate and now wants to exit for purely strategic reasons. Alchemy has managed the portfolio for years, so has intimate knowledge of the assets.
Foreigners can invest directly in Japanese land and property without restrictions and with or without leverage, says Frenklah, adding that Alchemy can package investments as any combination of pure debt, hybrids or equity via special-purpose companies.
The potential to make money is substantial, he adds. Japan’s love hotel industry is huge – its ¥4.2 trillion ($54 billion) in revenue exceeds that of the entire UK hotel industry. It is also very fragmented: the 448 rooms managed by Alchemy make it the 10th biggest operator in an industry with an estimated 625,000 rooms, and the top 10 operators account for less than 1% of the market.
There is a massive consumer base for this ubiquitous industry: every single day 2.5 million people, or 2% of Japan's population, use love hotels, with 70% in the 20-30 age bracket. That’s hardly surprising, since there is little privacy for most Japanese: the average person has 18 square metres of living space, and it is common for three generations to share the same accommodation.
In addition, profitability is very high: love hotel rooms are typically used several times a day, with a turnover rate of 236% for the industry and 265% for the hotels managed by Alchemy, and operating margins at 45-50% of sales.
For those investors put off by the thought of investing, it may provide some comfort that Japan’s love hotels are government-regulated and legal. Alchemy’s hotels hold licences identical to those of a Hyatt or a Hilton, there is no social stigma within the country and no systemic involvement by organised crime, says Frenklah.
Moreover, Alchemy says it is the only foreign asset manager in the industry that serves institutional investors and complies with the disclosure, reporting, audit and transparency requirements of sophisticated investors.
And on a final point, one of Alchemy’s founders is a former Australian public servant. Greig McAllan, the firm’s chief executive of group operations, was formerly head of Tourism Australia for North Asia. One would think he knows a thing or two about hospitality.
http://www.asianinvestor.net/News/285673,japanese-love-hotels-a-recession-proof-play.aspx
Friday, August 5, 2011
Alchemy's Japan Leisure Hotel's Strong Performance even after Earthquake and Recession
Despite the earthquake and nuclear crisis and recession - Japanese leisure hotels are still showing excellent cash growth showing counter cyclical tendencies -
Alchemy Japan KK Japanese Leisure Hotels’ Post Strong earnings Growth for First Half 2011
Tokyo, Japan August 1st 2011 – Alchemy Japan’s Japanese Leisure Hotels reported H1 2011 EBITDA of ¥302 million, a 7% improvement on H1 2010, from a Net Operating Income of ¥432 million, a 4% growth on previous year. H1 revenues grew to ¥1,005 billion, a 4% increase on H1 2010 as customer numbers grew by 9% to reach a 265% occupancy rate.
Despite Japan returning to recession in the January-March Quarter, on the back of supply chain disruptions caused by the nation's biggest recorded earthquake and tsunami, with a GDP fall of 0.9 percent in Q1 (3.7% annualized), Alchemy’s Leisure Hotels posted 13% EBIDTA growth in Q1 driven by 6% revenue growth.
Many analysts saw the downturn worsening in April-June, as nationwide supply chain problems continued to disrupt production and consumer confidence was impacted by the aftereffects of the quake. Notwithstanding the difficult post 3/11 conditions, Alchemy’s Leisure Hotels Q2 revenue exceeded Q1 by 2.3% and was 3% above previous year, while Q2 EBITDA was 6.8% ahead of Q1 and +3% on PY.
Two strong quarters of growth combined to post H1 4% revenue Growth - led by a 9% increase in customer numbers as H1 2011 Occupancy rate (OCR) reached 265%.
“Our hotels have shown strong counter cyclical performance achieving sales and earnings growth despite recessionary and deflationary pressures. In the face of challenging consumer demand conditions resulting from defensive consumer spending we have been able to grow market share and strengthen our market leading revenue growth performance. We have outperformed both the greater hotel sector, which has seen revenue declines reaching as high as -32.4% on PY -according to STR Global- and also the general leisure hotel industry which has shown year on year contractions of around -4.6% post earthquake -according to Leisure Hotel Magazine-” said Alchemy Japan CEO Miro Mijatovic.
“While our rate of revenue and earnings growth has slowed in Q2 post 3/11, our revenue and earnings outlook for the rest of 2011 is positive. In June, industrial production had returned to pre-quake levels and there are signs that various other economic indicators (consumption and employment) had also recovered and so we anticipate the second half of 2011 to outperform H1 and also previous year” continued Mijatovic.
“The outstanding performance of the LH sector, during unprecedented conditions following the 3/11 earthquake and its after effects, confirms the attractiveness of this high yielding sector of the Japanese real estate market as a defensive investment.
Furthermore, while the broader Japan real estate sector has seen improved liquidity and contracting caprates, this trend has not yet trickled down to operational assets like Leisure Hotels where debt and equity are still scarce.
However we foresee a contraction of caprates in the future as we believe that the Japan Leisure Hotels Ltd transaction which closed in June 2011 at historically high caprates, has set a low point for valuations in this caprate cycle. This deal has also set a benchmark for buyer bids which has stimulated interest from new potential investors looking for defensive investment, due to the high cash yields and the counter-cyclical nature of the demand, both specific to the LH asset class” said Mijatovic.
http://www.propertyfundsworld.com/2011/08/09/127320/alchemys-japanese-leisure-hotels-post-strong-earnings-growth-1h-2011
Alchemy Japan KK Japanese Leisure Hotels’ Post Strong earnings Growth for First Half 2011
Tokyo, Japan August 1st 2011 – Alchemy Japan’s Japanese Leisure Hotels reported H1 2011 EBITDA of ¥302 million, a 7% improvement on H1 2010, from a Net Operating Income of ¥432 million, a 4% growth on previous year. H1 revenues grew to ¥1,005 billion, a 4% increase on H1 2010 as customer numbers grew by 9% to reach a 265% occupancy rate.
Despite Japan returning to recession in the January-March Quarter, on the back of supply chain disruptions caused by the nation's biggest recorded earthquake and tsunami, with a GDP fall of 0.9 percent in Q1 (3.7% annualized), Alchemy’s Leisure Hotels posted 13% EBIDTA growth in Q1 driven by 6% revenue growth.
Many analysts saw the downturn worsening in April-June, as nationwide supply chain problems continued to disrupt production and consumer confidence was impacted by the aftereffects of the quake. Notwithstanding the difficult post 3/11 conditions, Alchemy’s Leisure Hotels Q2 revenue exceeded Q1 by 2.3% and was 3% above previous year, while Q2 EBITDA was 6.8% ahead of Q1 and +3% on PY.
Two strong quarters of growth combined to post H1 4% revenue Growth - led by a 9% increase in customer numbers as H1 2011 Occupancy rate (OCR) reached 265%.
“Our hotels have shown strong counter cyclical performance achieving sales and earnings growth despite recessionary and deflationary pressures. In the face of challenging consumer demand conditions resulting from defensive consumer spending we have been able to grow market share and strengthen our market leading revenue growth performance. We have outperformed both the greater hotel sector, which has seen revenue declines reaching as high as -32.4% on PY -according to STR Global- and also the general leisure hotel industry which has shown year on year contractions of around -4.6% post earthquake -according to Leisure Hotel Magazine-” said Alchemy Japan CEO Miro Mijatovic.
“While our rate of revenue and earnings growth has slowed in Q2 post 3/11, our revenue and earnings outlook for the rest of 2011 is positive. In June, industrial production had returned to pre-quake levels and there are signs that various other economic indicators (consumption and employment) had also recovered and so we anticipate the second half of 2011 to outperform H1 and also previous year” continued Mijatovic.
“The outstanding performance of the LH sector, during unprecedented conditions following the 3/11 earthquake and its after effects, confirms the attractiveness of this high yielding sector of the Japanese real estate market as a defensive investment.
Furthermore, while the broader Japan real estate sector has seen improved liquidity and contracting caprates, this trend has not yet trickled down to operational assets like Leisure Hotels where debt and equity are still scarce.
However we foresee a contraction of caprates in the future as we believe that the Japan Leisure Hotels Ltd transaction which closed in June 2011 at historically high caprates, has set a low point for valuations in this caprate cycle. This deal has also set a benchmark for buyer bids which has stimulated interest from new potential investors looking for defensive investment, due to the high cash yields and the counter-cyclical nature of the demand, both specific to the LH asset class” said Mijatovic.
http://www.propertyfundsworld.com/2011/08/09/127320/alchemys-japanese-leisure-hotels-post-strong-earnings-growth-1h-2011
Thursday, June 9, 2011
Japan Leisure Hotels Minority Shareholders Appalled by Directors and DKR Oasis
The shares of Japan Leisure Hotels Ltd were today cancelled from AIM
http://independent.moneyam.com/news/article.php?id=4161281&epic=
The minority shareholders believe that they have been screwed over by the directors of JLH and the main shareholder DKR Oasis (http://www.oasiscm.com/organization.html )
http://www.mynewsdesk.com/uk/view/pressrelease/japan-leisure-hotels-limited-japan-leisure-hotels-limited-jlh-or-the-company-statement-by-minority-shareholders-647100
http://japanrealestatecommentary.blogspot.com/2011/05/q1-2011-japan-leisure-hotel-operator.html
We have been following this story for a while - apart from the conduct of the DKR Oasis and the Board; which raise serious issues for the minority shareholders - there are also large questions raised about the Colliers Valuations which were used to support valuations for this company - http://japanrealestatecommentary.blogspot.com/2011/05/investegate-japan-leisure-hotels.html
The Japanese leisure hotel sector is a sector that seems attractive and may offer high returns
http://japanrealestatecommentary.blogspot.com/2010/06/foreign-investors-in-japanese-leisure.html
But JLH has been another story of investors having issues in this sector -
http://japanrealestatecommentary.blogspot.com/2010/01/japanese-retail-investors-look-to.html
http://japanrealestatecommentary.blogspot.com/2010/09/love-hotel-fund-freezes-redemptions.html
However, some players seems to be doing well in this sector -
http://japanrealestatecommentary.blogspot.com/2011/08/japan-leisure-hotel-operator-announce.html
http://independent.moneyam.com/news/article.php?id=4161281&epic=
The minority shareholders believe that they have been screwed over by the directors of JLH and the main shareholder DKR Oasis (http://www.oasiscm.com/organization.html )
http://www.mynewsdesk.com/uk/view/pressrelease/japan-leisure-hotels-limited-japan-leisure-hotels-limited-jlh-or-the-company-statement-by-minority-shareholders-647100
We are minority shareholders in the Company, and have been since launch, owning in total 5.5% of the issued share capital. We are appalled at recent events culminating in the Board disposing of the Company's six hotels at a price equal to 28.4% of their net asset value. This represents a cap rate of almost 30%, a price per room of GBP44,000 or GBP67 per square foot of gross floor area. This is an historic low valuation in the leisure hotel market according to Alchemy Japan, a competitor of the Company.
Despite the difficulties of dealing with an 87.5% majority shareholder, the Board must take its share of the blame for this disastrous outcome. The Board knew in early 2010 that the DKR Oasis hedge fund was to be liquidated and that its shares in the Company were a significant part of that portfolio. However the Board failed to retain the services of a broker who could market the company to a wider range of investors than those institutions who had been contacted during the IPO process. In fact no significant marketing of the Company has been undertaken in Europe since 2009.
The Board says that the current business is not large enough to support the central overheads but the Company bought a hotel out of operating cash flow in 2008 and paid a 1p per share dividend in 2010, with a higher figure projected in 2011 according to independent research. Since the IPO in 2008, the Company's net asset value has risen by 62% in sterling terms, a record of some merit compared to many international funds listed in London. That the share price has fallen by 54% during the same period is evidence that the Board has failed to promote the Company adequately.
When it came to the current transaction, the Board failed to engage a financial adviser to manage the process and advise on tactics, relying on the Nomad to advise on the AIM rules and the Majority Shareholder to conduct an auction, a job for which he was clearly unqualified. We believe the erratic conduct of this process led to a number of credible buyers withdrawing, when they might have made proposals more favourable to the minority shareholders.
We made it clear to the Board that the minority shareholders did not wish to participate in a fire sale of assets and preferred to retain a shareholding going forward. Our preference was to leave the Company listed and obtain finance for the Company to buy in the DKR Oasis fund's shares for cancellation. Alternatively, the DKR Oasis fund's JLH shares might have been distributed to their investors in specie, leaving them to sell shares in the market, should they wish to exit for cash. Either of these outcomes would have been better for all the minority investors.The minority shareholders refer to a comment about the low valuation for the JLH transaction -
http://japanrealestatecommentary.blogspot.com/2011/05/q1-2011-japan-leisure-hotel-operator.html
We have been following this story for a while - apart from the conduct of the DKR Oasis and the Board; which raise serious issues for the minority shareholders - there are also large questions raised about the Colliers Valuations which were used to support valuations for this company - http://japanrealestatecommentary.blogspot.com/2011/05/investegate-japan-leisure-hotels.html
The Japanese leisure hotel sector is a sector that seems attractive and may offer high returns
http://japanrealestatecommentary.blogspot.com/2010/06/foreign-investors-in-japanese-leisure.html
But JLH has been another story of investors having issues in this sector -
http://japanrealestatecommentary.blogspot.com/2010/01/japanese-retail-investors-look-to.html
http://japanrealestatecommentary.blogspot.com/2010/09/love-hotel-fund-freezes-redemptions.html
However, some players seems to be doing well in this sector -
http://japanrealestatecommentary.blogspot.com/2011/08/japan-leisure-hotel-operator-announce.html
Sunday, May 22, 2011
Q1 2011 - Japan Leisure Hotel Operator Shows Impressive Revenue and EBITDA Growth Despite Earthquake
Tokyo, Japan May 19, 2011 – Alchemy Japan’s Japanese Leisure Hotels reported Q1 2011 results producing EBITDA of ¥146million, a 13% improvement on the previous year, from a Net Operating Income of ¥211million being a 7% growth on net income for Q1 2010. Sales grew to ¥497 million, a 6% increase on Q1 2010. Revenue growth was led by a 12% increase in customer numbers as Q1 2011 average Occupancy Rate (OCR) reached 260%.
“Following revenue and EBITDA growth in 2010, we commenced 2011 with strong growth momentum; despite the March 11 earthquake and its aftereffects which impacted our hotels in the Kanto region, we are pleased that in the first quarter of 2011 we have achieved our best revenue and earnings growth since we entered the sector in 2004.” noted Mr. Mijatovic.
“While our Kanto area hotels, representing half of our hotels and 40% of our room inventory, escaped major structural damage in the earthquake and after shocks, they did suffer in the immediate aftermath with some damage to rooms and facilities, power outages and disruptions in supply chains, but were able to quickly recover by the last week of March. Nonetheless, the March 11 earthquake and its aftereffects interrupted the sales growth of 9%, achieved prior to March 11, with sales growing only 1.2% in March 2011. Since March, we have again returned to strong positive growth in top and bottom line results"noted Mr. Mijatovic.
Our positive results can be attributed to a combination of factors said Mr. Mijatovic:
“While it is difficult to fully assess the medium and long term impacts of the aftereffects of the March 11 earthquake on our operational business, early results show that we continue to be well placed to continue to deliver revenue and EBITDA growth in 2011 in excess of levels achieved in 2010.”
“In relation to valuations, we believe that the recently announced transaction, of London AIM-listed Japan Leisure Hotels Limited proposed disposal of its trading subsidiaries to Sanglier Pte, comprising Japanese and foreign based investors, represents a historic low in the leisure hotel mark for cap rates and could mark the bottom point of this market cycle in terms of valuation. With the clearance of that transaction, which was causing an overhang in the market, we foresee a contraction of cap rates in the future, while increased interest from overseas investors attracted by the Japan Leisure Hotels transaction may improve liquidity in the market” stated Mr. Mijatovic.
Headquartered in Tokyo, Alchemy Japan is an asset management, investment and advisory company that creates value by transforming and managing real estate, investments, and financial assets.
Alchemy Japan commenced management of Leisure Hotel assets in Japan in 2004 with an asset management mandate for one of the first foreign institutional investors into the sector. Its Leisure Hotel division now owns and manages a nationwide portfolio of 15 hotels.
Urban Resorts Japan is one of Japan’s leading and most dynamic leisure hotel operators and is ranked 10thnationally in terms of room inventory.
http://www.hospitalitybusinessnews.com/article/10607/alchemy-japan-kk-announces-its-japanese-leisure-hotels-1st-quarter-2011
“Following revenue and EBITDA growth in 2010, we commenced 2011 with strong growth momentum; despite the March 11 earthquake and its aftereffects which impacted our hotels in the Kanto region, we are pleased that in the first quarter of 2011 we have achieved our best revenue and earnings growth since we entered the sector in 2004.” noted Mr. Mijatovic.
“While our Kanto area hotels, representing half of our hotels and 40% of our room inventory, escaped major structural damage in the earthquake and after shocks, they did suffer in the immediate aftermath with some damage to rooms and facilities, power outages and disruptions in supply chains, but were able to quickly recover by the last week of March. Nonetheless, the March 11 earthquake and its aftereffects interrupted the sales growth of 9%, achieved prior to March 11, with sales growing only 1.2% in March 2011. Since March, we have again returned to strong positive growth in top and bottom line results"noted Mr. Mijatovic.
Our positive results can be attributed to a combination of factors said Mr. Mijatovic:
· the success of our operating partner, Urban Resorts Japan’s Guaranteed Value® customer retention and acquisition strategy evidenced by OCR increasing by 12%,
· Food & Beverage sales, growing 12% during the Q1 2011, to reach a high water mark of 6% of sales, doubling the industry average of 3%,
· continuous improvement in operational efficiency,reaching a 42.4% NOI margin in the first quarter (+1% year-on-year), and most importantly a 12% growth of EBITDA.
“In relation to valuations, we believe that the recently announced transaction, of London AIM-listed Japan Leisure Hotels Limited proposed disposal of its trading subsidiaries to Sanglier Pte, comprising Japanese and foreign based investors, represents a historic low in the leisure hotel mark for cap rates and could mark the bottom point of this market cycle in terms of valuation. With the clearance of that transaction, which was causing an overhang in the market, we foresee a contraction of cap rates in the future, while increased interest from overseas investors attracted by the Japan Leisure Hotels transaction may improve liquidity in the market” stated Mr. Mijatovic.
Headquartered in Tokyo, Alchemy Japan is an asset management, investment and advisory company that creates value by transforming and managing real estate, investments, and financial assets.
Alchemy Japan commenced management of Leisure Hotel assets in Japan in 2004 with an asset management mandate for one of the first foreign institutional investors into the sector. Its Leisure Hotel division now owns and manages a nationwide portfolio of 15 hotels.
Urban Resorts Japan is one of Japan’s leading and most dynamic leisure hotel operators and is ranked 10thnationally in terms of room inventory.
http://www.hospitalitybusinessnews.com/article/10607/alchemy-japan-kk-announces-its-japanese-leisure-hotels-1st-quarter-2011
Tuesday, May 3, 2011
Japan Leisure Hotels Announcements | Japan Leisure Hotels: Proposed Disposal
Investegate |Japan Leisure Hotels Announcements | Japan Leisure Hotels: Proposed Disposal
Japan Leisure Hotels announced that it is selling its 6 hotels and business for JPY1.4bn - a discount of 70% on the JPY5bn value claimed by JLH for the assets. The JPY5bn value was basically the original investment amount into the assets by hedge fund DKR Oasis - although most of this was invested in around 2005 and 2006 when most of the hotels were originally acquired and renovated.
JLH was listed on AIM in January 2008 at 50P a share trying to raise GBP100m; but eventually only raised GBP3 million before expenses.
http://www.propertyweek.com/investors-turned-off-by-love-hotels/3103082.article
JLH came to AIM offering
http://www.guardian.co.uk/business/2007/nov/08/investing.japan
In August 2008, using the proceeds from its IPO, JLH acquired another hotel to take its total to 6 hotels
http://www.lse.co.uk/FinanceNews.asp?ArticleCode=w8bn7w49qp4ten8&ArticleHeadline=Japan_Leisure_Hotels_buys_additional_leisure_hotel_for_410_mln_yen
In May 2009, JLH went back to the market, unsuccessfully, looking to raise GBP50million
http://www.thisislondon.co.uk/standard-business/article-23693741-japan-love-hotels-owner-seeks-50m-for-growth.do
Another attempt was made to raise equity in its 3rd year on AIM in May 2010.
But again this was unsuccessful - even though this attempt was made after the payment by JLH of its first ever dividend of 1P per share (total - GBP440,000 on an investment of GBP20m) in 2010 - as its analyst Hardman put it in May 2010 -
But 2 months later, in July 2010, Hardman hurriedly had to re-issue a restatement of their guidance -
http://www.stockopedia.co.uk/research/reaction-to-trading-statement-45157/
as JLH revenues and EBITDA and share price began to slide in 2010 as it was hit by a loss of revenues due the closing of their most recently acquired hotel for renovations - leaving it closed the first half of 2010, and also loss of market share to competitors and their hotels requiring refurbishments (ie., further investment) -
http://uk.ibtimes.com/articles/20100722/japan-leisure-hotels-revenue-below-market-forecasts.htm
In December 2010, JLH's main investor DKR Oasis announced it was selling out - presumably as it was faced with holding an investment which on top of providing little or no yield since its inception in 2005 - was now faced with declining revenues and with the operator foreshadowing requirements for future investments in renovations.
http://www.ft.com/cms/s/0/15a512b6-0d2e-11e0-82ff-00144feabdc0.html#axzz1LNI0zBZp
JLH says that investors can expect to get 22P a share on winding up. The FT reports on the deal as follows-
JLH was listed on AIM in January 2008 at 50P a share trying to raise GBP100m; but eventually only raised GBP3 million before expenses.
http://www.propertyweek.com/investors-turned-off-by-love-hotels/3103082.article
JLH came to AIM offering
investors an absolute return, supported by a ‘stable and growing’ income stream.http://blog.amoncorp.com/?eid=533342
http://www.guardian.co.uk/business/2007/nov/08/investing.japan
In August 2008, using the proceeds from its IPO, JLH acquired another hotel to take its total to 6 hotels
http://www.lse.co.uk/FinanceNews.asp?ArticleCode=w8bn7w49qp4ten8&ArticleHeadline=Japan_Leisure_Hotels_buys_additional_leisure_hotel_for_410_mln_yen
In May 2009, JLH went back to the market, unsuccessfully, looking to raise GBP50million
http://www.thisislondon.co.uk/standard-business/article-23693741-japan-love-hotels-owner-seeks-50m-for-growth.do
Another attempt was made to raise equity in its 3rd year on AIM in May 2010.
Japan Leisure Hotels (LON:JPLH, market cap £24m) produced results ahead of our forecast this morning. We are both pleased and reassured by the numbers. There is a maiden dividend, and EBITDA margins are at an all time high. The business model has been proved and we believe a capital raising to purchase more hotels would be good news for shareholders.http://www.stockopedia.co.uk/research/good-results-proof-of-business-40436/
But 2 months later, in July 2010, Hardman hurriedly had to re-issue a restatement of their guidance -
http://www.stockopedia.co.uk/research/reaction-to-trading-statement-45157/
as JLH revenues and EBITDA and share price began to slide in 2010 as it was hit by a loss of revenues due the closing of their most recently acquired hotel for renovations - leaving it closed the first half of 2010, and also loss of market share to competitors and their hotels requiring refurbishments (ie., further investment) -
Japan Leisure Hotels warns that revenue and EBITDA for the year to the end of December will be lower than current market expectations.
The Yokkaichi hotel was closed for renovation for the majority of the first six months of the current financial year.
Some other hotels were experiencing reduced occupancy due to competitors aggressively reducing prices and some hotels nearing their scheduled refurbishment.
The firm said: "The asset manager is taking immediate steps to address these short term issues, where possible, and is confident that it they will be quickly resolved."
In December 2010, JLH's main investor DKR Oasis announced it was selling out - presumably as it was faced with holding an investment which on top of providing little or no yield since its inception in 2005 - was now faced with declining revenues and with the operator foreshadowing requirements for future investments in renovations.
http://www.ft.com/cms/s/0/15a512b6-0d2e-11e0-82ff-00144feabdc0.html#axzz1LNI0zBZp
JLH says that investors can expect to get 22P a share on winding up. The FT reports on the deal as follows-
In some cases, boards are not entirely happy with the prices being paid when companies with dominant shareholders are sold...
Now the board of Japan Leisure has announced “considerable misgivings about the price to be paid for the trading subsidiaries, especially in view of its underlying value as a going concern”...
The company tried to raise £100m in 2007, convinced that it would be able to consolidate the fragmented Japanese industry. But it had to settle for £3m at 50p a share, leaving DKR Oasis, a US hedge fund that specialised in pre-IPO fundraising in Asia, holding 88 per cent of the shares. Another attempt at a £50m fundraising in 2009 failed.
At the end of last year DKR announced that it wanted to realise its investment and last week JLH said that it had agreed to sell its operations to Sanglier, a private buyer, for £10.4m. Shareholders were told to expect to receive 22p a share from the deal, against the last reported net asset value of 77p a share.
The company is being realistic about its position, pointing out that DKR could push the deal through regardless of the board’s misgivings about the price. The simple truth is that, even allowing for the credit crisis and Japan’s natural disasters, the flotation should never have gone ahead. The market’s lack of interest was clear from the beginning.http://www.ft.com/cms/s/0/31b0e34c-7672-11e0-b05b-00144feabdc0.html#axzz1LNI0zBZp
Thursday, February 10, 2011
Love Hotel Operator Arrested for Lending Nintendo/Wii Software
We previously posted on the raid by the Police of a Love Hotel operator being raised for suspicion of breaching copyright by lending Ninetendo and Wii games to customers
http://japanrealestatecommentary.blogspot.com/2011/01/nintendo-gets-tough-on-love-hotelss.html
The latest news is that raid has resulted in an arrest of the Leisure Hotel operator; which continues the tough line taken by the Police and copyright owners against Love Hotel operators
http://www.leisurehotel.net/topics2/topic_110201.html
http://japanrealestatecommentary.blogspot.com/2011/01/nintendo-gets-tough-on-love-hotelss.html
The latest news is that raid has resulted in an arrest of the Leisure Hotel operator; which continues the tough line taken by the Police and copyright owners against Love Hotel operators
http://www.leisurehotel.net/topics2/topic_110201.html
Saturday, February 5, 2011
Japan Love Hotels - New Law Starts with Police Audits
The new regulations regarding the classification of Love Hotels commenced on 1st January 2011. Love hotels which met the definitions of the new law were required to be registered with the Police by 31 January 2011.
The law required love hotels to be registered with the Police if -
- "rest" pricing is advertised
- concealed carparks are provided
- there is not enough interaction between customers and staff on checkin/checkout
- in room payments machines are available
The article below describes how from 1 February 2011, the Police have started audits and compliance checks of all love hotels to ensure that hotels now classified as "love hotels" are registered with the Police.
The article describes how one hotel was found by the Police to be in breach; but doesnt describe what sanction was applied. But a breach of the Public Morals Act, such as a failure to register with the Police can result in criminal sanctions.
http://news.kanaloco.jp/localnews/article/1102010049/
The law required love hotels to be registered with the Police if -
- "rest" pricing is advertised
- concealed carparks are provided
- there is not enough interaction between customers and staff on checkin/checkout
- in room payments machines are available
The article below describes how from 1 February 2011, the Police have started audits and compliance checks of all love hotels to ensure that hotels now classified as "love hotels" are registered with the Police.
The article describes how one hotel was found by the Police to be in breach; but doesnt describe what sanction was applied. But a breach of the Public Morals Act, such as a failure to register with the Police can result in criminal sanctions.
http://news.kanaloco.jp/localnews/article/1102010049/
Monday, January 24, 2011
2010 - Japan Leisure Hotel Operator Announces sales and EBITDA growth
Alchemy Japan KK Announces its Japanese Leisure Hotels’ 2010 Earnings Results: EBITDA 10% Growth on Previous Year
Tokyo, Japan January 24, 2011 – Alchemy Japan’s Japanese Leisure Hotels reported: an EBITDA of ¥564 million, a 10% improvement on the previous year, and a Net income of ¥909 million being a 9% growth on net income for 2009. Sales grew to ¥2.036 billion, a 4.3% increase on 2009. Revenue growth was led by an 18% increase in customer numbers as 2010 average Occupancy Rate (OCR) reached 257%.
Our positive results can be attributed to a combination of factors said Mr. Mijatovic:
the success of our operating partner, Urban Resorts Japan’s “Guaranteed Value”™ customer retention and acquisition strategy evidenced by OCR increasing by 18% and the 8% increase in Food & Beverage revenues,
the systemization of our yield maximization processes enabled specific analysis, precise examination and quicker reaction times to changes in the competitive market environment at each hotel and customer preferences,
industry leading levels of operational efficiency, in particular labour productivity.
“Despite the weakening economic conditions in Japan we have achieved our greatest revenues and net income growth in the second half of 2010, with the end of year holiday period in particular achieving record revenues.” noted Mr. Mijatovic
“Our hotels and operating procedures have been updated to comply with the new regulatory changes governing Leisure Hotel operations and we are well placed to continue both revenue and bottom line growth in 2011."
Alchemy Japan’s management anticipates that their 2011 leisure hotels’ earnings will maintain or exceed the growth levels achieved in 2010.
“We expect to see significant opportunities for acquiring new hotels as a large number of hotel owners seek to exit their investments due to liquidity constraints, distress in their financing arrangements and the impact of the new regulations” stated Mr. Mijatovic.
About Alchemy Japan:
Headquartered in Tokyo, Alchemy Japan is an asset management, investment and advisory company that creates value by transforming and managing real estate, investments, and financial assets.
Alchemy Japan commenced management of Leisure Hotel assets in Japan in 2004 with an asset
management mandate for one of the first foreign institutional investors into the sector. Its Leisure
Hotel division now owns and manages a nationwide portfolio of 15 hotels.
Urban Resorts Japan is one of Japan’s leading and most dynamic leisure hotel operators and is
ranked 10th nationally in terms of room inventory.
http://www.japantoday.com/category/business/view/alchemy-japan-kk-announces-strong-results-in-love-hotel-sector
http://alchemyjapan.jp/en/whoweare/Alchemy%20Japan-MediaRelease-January2011.pdf
Tokyo, Japan January 24, 2011 – Alchemy Japan’s Japanese Leisure Hotels reported: an EBITDA of ¥564 million, a 10% improvement on the previous year, and a Net income of ¥909 million being a 9% growth on net income for 2009. Sales grew to ¥2.036 billion, a 4.3% increase on 2009. Revenue growth was led by an 18% increase in customer numbers as 2010 average Occupancy Rate (OCR) reached 257%.
Our positive results can be attributed to a combination of factors said Mr. Mijatovic:
the success of our operating partner, Urban Resorts Japan’s “Guaranteed Value”™ customer retention and acquisition strategy evidenced by OCR increasing by 18% and the 8% increase in Food & Beverage revenues,
the systemization of our yield maximization processes enabled specific analysis, precise examination and quicker reaction times to changes in the competitive market environment at each hotel and customer preferences,
industry leading levels of operational efficiency, in particular labour productivity.
“Despite the weakening economic conditions in Japan we have achieved our greatest revenues and net income growth in the second half of 2010, with the end of year holiday period in particular achieving record revenues.” noted Mr. Mijatovic
“Our hotels and operating procedures have been updated to comply with the new regulatory changes governing Leisure Hotel operations and we are well placed to continue both revenue and bottom line growth in 2011."
Alchemy Japan’s management anticipates that their 2011 leisure hotels’ earnings will maintain or exceed the growth levels achieved in 2010.
“We expect to see significant opportunities for acquiring new hotels as a large number of hotel owners seek to exit their investments due to liquidity constraints, distress in their financing arrangements and the impact of the new regulations” stated Mr. Mijatovic.
About Alchemy Japan:
Headquartered in Tokyo, Alchemy Japan is an asset management, investment and advisory company that creates value by transforming and managing real estate, investments, and financial assets.
Alchemy Japan commenced management of Leisure Hotel assets in Japan in 2004 with an asset
management mandate for one of the first foreign institutional investors into the sector. Its Leisure
Hotel division now owns and manages a nationwide portfolio of 15 hotels.
Urban Resorts Japan is one of Japan’s leading and most dynamic leisure hotel operators and is
ranked 10th nationally in terms of room inventory.
http://www.japantoday.com/category/business/view/alchemy-japan-kk-announces-strong-results-in-love-hotel-sector
http://alchemyjapan.jp/en/whoweare/Alchemy%20Japan-MediaRelease-January2011.pdf
Sunday, January 16, 2011
2011 Revised Japan Leisure Hotel laws: What changes?
On July 6 of this year, the Diet approved proposed revisions of Japanese law regarding “adult entertainment” establishments (風俗営業等の規制及び業務の適正化等に関する法律). The laws are periodically revised as police attempt to keep up with and keep control over the country’s ever-expanding adult entertainment venues. Information on the changes is slightly difficult to come upon, but this site reportedly has the low-down on what will be different.
The upcoming revisions will hit two types of businesses that have been identified as problems in recent years: gisou love hotels and deai-kissa. Gisou love hotels are establishments registered as hotel or ryokan that are effectively operating as love hotels. They include small spaces that don’t resemble love hotels but can be rented for short-term trysts much like this unfortunate punter did. This allows the gisou love hotel to dodge regulations that bind normal love hotels to certain districts, allowing them to set up shop near schools, residential neighborhoods and other areas. Easiest way to beat the competition is monopolise an area they can’t touch, right?
While both gisou love hotels and deai kissa have trampled the grey line of adult entertainment laws, as of January 1, 2011, this will no longer be the case.
The revisions have redefined what a love hotel is in order to re-evaluate businesses and close many of the loop holes gisou love hotels have been taking advantage of. As of January 1, businesses that do one or more of the following may be classified as love hotels:
- Are available for “rest” use
- Have dining and lobby floor area that are less than legal standards set by capacity
- Have an entryway or reception area that is hidden from the outside
- Take payment through a machine or tube
- Use signage to direct customers to rooms instead of staff guidance
- Have installed a form of obstruction to prevent face-to-face interaction between customers and staff
The rules get complicated from there. For example, hotels that have signage to guide customers and obstructions so they may not come face-to-face with staff qualify as love hotels if payment for the room is made through a machine. If a hotel has very little restaurant or lobby space, displays “rest” prices, and has a reception that’s difficult to see, they must have a rotating or vibrating bed, a mirror in the room where people can observe themselves while lying down, “facilities that incite sexual curiosity” such as S&M goods or glass walls in the bathroom, and/or adult toys for sale in vending machines. Whew. Also, spaces which exist particularly to be rented at “rest” rates by members of the opposite sex fall under the love hotel article.
Some say that, under these restrictions, there are almost no entertainment district in which new businesses will be able to set up.
As a requirement, businesses must submit up-to-date blueprints or measurements of the entire premises together with their application. Other information that must be submitted includes:
- Method of doing business
- Map of the surrounding area (at least 200m)
- A diagram of the entryway and lobby
- Certificate of residence if the owner is a private individual
- In the case of a company, the above for all executives as well as company registration
Police say they will only accept applications until January 31, with all businesses neglecting to register before that presumably being slowly shut down. Ultimately, the authorities get to determine what qualifies and what does not under such complex stipulations. Whether this results in loads of shutdown or loads of bribery (or both) remains to be seen, but expect a large shift in the love hotel landscape over the upcoming year.
Memo From Jake: Every change in the law has interesting ripple effects. I can’t help but speculate on the effects this time around. There are now several “love hotel” funds–investment trusts that are involved in the love hotel industry. It’ll be interesting to see how the new laws will effect the value of those funds or whether it will have any effect at all. What puzzles me about the changes in the laws is why do the authorities even feel they are needed? I can see that there are some problems with the Deaikai cafes, but other than that, is an abundance of love hotels bad for Japanese society? Many people using love hotels are couples who live with their parents, or have room-mates and want some privacy to fool around. They are also used by married couples with children that don’t have space in the house to really enjoy their marital bliss. For a nation concerned about a declining birth-rate, you’d think Japan would actually be encouraging love hotel construction. I know of at least one child that was probably conceived in a love hotel because her over-worked father had to sneak out of the office to rendezvous with his wife on her ovulation day, knowing that he’d be trapped at the office all night. Ahem.
2011 Revised adult entertainment laws: What changes?
The upcoming revisions will hit two types of businesses that have been identified as problems in recent years: gisou love hotels and deai-kissa. Gisou love hotels are establishments registered as hotel or ryokan that are effectively operating as love hotels. They include small spaces that don’t resemble love hotels but can be rented for short-term trysts much like this unfortunate punter did. This allows the gisou love hotel to dodge regulations that bind normal love hotels to certain districts, allowing them to set up shop near schools, residential neighborhoods and other areas. Easiest way to beat the competition is monopolise an area they can’t touch, right?
While both gisou love hotels and deai kissa have trampled the grey line of adult entertainment laws, as of January 1, 2011, this will no longer be the case.
The revisions have redefined what a love hotel is in order to re-evaluate businesses and close many of the loop holes gisou love hotels have been taking advantage of. As of January 1, businesses that do one or more of the following may be classified as love hotels:
- Are available for “rest” use
- Have dining and lobby floor area that are less than legal standards set by capacity
- Have an entryway or reception area that is hidden from the outside
- Take payment through a machine or tube
- Use signage to direct customers to rooms instead of staff guidance
- Have installed a form of obstruction to prevent face-to-face interaction between customers and staff
The rules get complicated from there. For example, hotels that have signage to guide customers and obstructions so they may not come face-to-face with staff qualify as love hotels if payment for the room is made through a machine. If a hotel has very little restaurant or lobby space, displays “rest” prices, and has a reception that’s difficult to see, they must have a rotating or vibrating bed, a mirror in the room where people can observe themselves while lying down, “facilities that incite sexual curiosity” such as S&M goods or glass walls in the bathroom, and/or adult toys for sale in vending machines. Whew. Also, spaces which exist particularly to be rented at “rest” rates by members of the opposite sex fall under the love hotel article.
Some say that, under these restrictions, there are almost no entertainment district in which new businesses will be able to set up.
As a requirement, businesses must submit up-to-date blueprints or measurements of the entire premises together with their application. Other information that must be submitted includes:
- Method of doing business
- Map of the surrounding area (at least 200m)
- A diagram of the entryway and lobby
- Certificate of residence if the owner is a private individual
- In the case of a company, the above for all executives as well as company registration
Police say they will only accept applications until January 31, with all businesses neglecting to register before that presumably being slowly shut down. Ultimately, the authorities get to determine what qualifies and what does not under such complex stipulations. Whether this results in loads of shutdown or loads of bribery (or both) remains to be seen, but expect a large shift in the love hotel landscape over the upcoming year.
Memo From Jake: Every change in the law has interesting ripple effects. I can’t help but speculate on the effects this time around. There are now several “love hotel” funds–investment trusts that are involved in the love hotel industry. It’ll be interesting to see how the new laws will effect the value of those funds or whether it will have any effect at all. What puzzles me about the changes in the laws is why do the authorities even feel they are needed? I can see that there are some problems with the Deaikai cafes, but other than that, is an abundance of love hotels bad for Japanese society? Many people using love hotels are couples who live with their parents, or have room-mates and want some privacy to fool around. They are also used by married couples with children that don’t have space in the house to really enjoy their marital bliss. For a nation concerned about a declining birth-rate, you’d think Japan would actually be encouraging love hotel construction. I know of at least one child that was probably conceived in a love hotel because her over-worked father had to sneak out of the office to rendezvous with his wife on her ovulation day, knowing that he’d be trapped at the office all night. Ahem.
2011 Revised adult entertainment laws: What changes?
Nintendo Gets Tough on Love Hotels's Renting Games
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click here to view the post.
Revised love hotel regulations
From January 2011, a revision to the section of the nationwide Law Regulating Adult Entertainment Businesses that pertains to love hotels will come into force, and, as Shukan Asahi Geino (Oct. 7) reports, the industry will be in for a shake up.
The weekly tabloid explains that the revisions are intended to remove prostitution and underage porn shoots from hotel premises.
“There are two types of love hotels,” explains journalist Akihira Otani. “Those operating under the approval of the Law Regulating Adult Entertainment Businesses and those operating as lodging entities under the conventional lodging law, just as with any hotel or ryokan you may see.
“Giso (camouflaged) love hotels operate under the conventional lodging law yet provide adult-oriented gear, such as dildos,” he continues. “In both cases, one can go straight to a room without being seen. This is believed to be a contributing factor to crimes for which this revision is designed to counter.”
There are 3,590 of these pseudo-love hotels and that number matches the figure for those operating under the adult-entertainment law.
“The revised law will extend the list of requirements for love hotels to become eligible,” says a reporter who covers social issues.
The changes can be found here in Japanese. Most notably, guests will be asked to register personal information at the front desk. Other measures mainly deal with the establishment’s facilities and layout.
“Infrastructure must be in place to ensure that room fees are clearly shown and automatic room-fee payment machines are situated in every guest room,” continues the source. “Further, the entire building must be designed so that guests will not be visible by staff members in common areas.
(Ostensibly, these latter requirements are to specifically impact pseudo-love hotels, which contain nearly standard hotel rooms and open hallways and common areas.)
“While some of the pseudo-love hotels may apply for the license under the Law Regulating Adult Entertainment Businesses,” the reporter adds, “the current design of the buildings will result in rejection. Many will be forced to redesign their hotels.”
Asahi Geino believes that some may be forced to close altogether as they will not be able to afford such renovations.
While this revision is targeting certain crimes, it is actually nonsense, according to Ikkyon Kim, a part-time professor and author of the book “The Evolution of the Love Hotel,” published by Bunshun Shinsho.
“It is old fashioned to separate love hotels from regular hotels,” she says. “City hotels nowadays offer short-stay programs. It will be just a continuous game of cat-and-mouse between the hotels and law enforcement.”
Will this revision end the problem? Journalist Otani is skeptical. “Is a front desk clerk likely to determine whether a female is a high school girl or not?” he asks. “Unless the roots of the problems are resolved, it may simply shift the crime scenes to city hotels.”
A male guest laments the move. “Checking in and facing the staff members defeats the whole point of the love hotel,” he says. “It’s intended to be a discrete environment.”
Revised love hotel regulations to pinch prostitution and underage porn | The Tokyo Reporter - "All the News That's Fit to Squint"
The weekly tabloid explains that the revisions are intended to remove prostitution and underage porn shoots from hotel premises.
“There are two types of love hotels,” explains journalist Akihira Otani. “Those operating under the approval of the Law Regulating Adult Entertainment Businesses and those operating as lodging entities under the conventional lodging law, just as with any hotel or ryokan you may see.
“Giso (camouflaged) love hotels operate under the conventional lodging law yet provide adult-oriented gear, such as dildos,” he continues. “In both cases, one can go straight to a room without being seen. This is believed to be a contributing factor to crimes for which this revision is designed to counter.”
There are 3,590 of these pseudo-love hotels and that number matches the figure for those operating under the adult-entertainment law.
“The revised law will extend the list of requirements for love hotels to become eligible,” says a reporter who covers social issues.
The changes can be found here in Japanese. Most notably, guests will be asked to register personal information at the front desk. Other measures mainly deal with the establishment’s facilities and layout.
“Infrastructure must be in place to ensure that room fees are clearly shown and automatic room-fee payment machines are situated in every guest room,” continues the source. “Further, the entire building must be designed so that guests will not be visible by staff members in common areas.
(Ostensibly, these latter requirements are to specifically impact pseudo-love hotels, which contain nearly standard hotel rooms and open hallways and common areas.)
“While some of the pseudo-love hotels may apply for the license under the Law Regulating Adult Entertainment Businesses,” the reporter adds, “the current design of the buildings will result in rejection. Many will be forced to redesign their hotels.”
Asahi Geino believes that some may be forced to close altogether as they will not be able to afford such renovations.
While this revision is targeting certain crimes, it is actually nonsense, according to Ikkyon Kim, a part-time professor and author of the book “The Evolution of the Love Hotel,” published by Bunshun Shinsho.
“It is old fashioned to separate love hotels from regular hotels,” she says. “City hotels nowadays offer short-stay programs. It will be just a continuous game of cat-and-mouse between the hotels and law enforcement.”
Will this revision end the problem? Journalist Otani is skeptical. “Is a front desk clerk likely to determine whether a female is a high school girl or not?” he asks. “Unless the roots of the problems are resolved, it may simply shift the crime scenes to city hotels.”
A male guest laments the move. “Checking in and facing the staff members defeats the whole point of the love hotel,” he says. “It’s intended to be a discrete environment.”
Revised love hotel regulations to pinch prostitution and underage porn | The Tokyo Reporter - "All the News That's Fit to Squint"
Wednesday, January 5, 2011
Valuation of Japanese Leisure Hotels Impacted by New Laws
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.
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.
Tuesday, December 28, 2010
Japan Leisure Hotels - Main Investor Exit - Analyst Comment
Interesting comments on JLH and its valuation from its analyst Hardman and Co.
http://hardmanandco.com/Research/JPLH_Dec2010.pdf
It is very interesting that Hardman believes that Japan Leisure Hotel's hotels should be valued in line with international hotel chain valuations; when it is common knowledge in Japan that Leisure Hotels or Love Hotels trade at much bigger caprates compared to their traditional hotel cousins in Japan
In the current market climate in Japan; combined with lack of financing, JLH's poor performance (most recently posting a loss in H1 2010) and also the upcoming regulatory change in the LH industry http://japanrealestatecommentary.blogspot.com/2010/05/japan-leisure-hotels-law-to-change.html
it is difficult to see any buyer emerging for the Bonita hotel chain
http://hardmanandco.com/Research/JPLH_Dec2010.pdf
It is very interesting that Hardman believes that Japan Leisure Hotel's hotels should be valued in line with international hotel chain valuations; when it is common knowledge in Japan that Leisure Hotels or Love Hotels trade at much bigger caprates compared to their traditional hotel cousins in Japan
In the current market climate in Japan; combined with lack of financing, JLH's poor performance (most recently posting a loss in H1 2010) and also the upcoming regulatory change in the LH industry http://japanrealestatecommentary.blogspot.com/2010/05/japan-leisure-hotels-law-to-change.html
it is difficult to see any buyer emerging for the Bonita hotel chain
Japan Leisure Hotels - Board Statement
20 December 2010
Japan Leisure Hotels Limited
("JPLH" or the "Company")
Potential Offer for the Company
Funds managed by DKR Oasis Management Company, LP ("DKR Oasis") own approximately 87.6% of the Company's issued share capital. DKR Oasis recently informed the Board that it wanted to exit its investment in the Company and was taking active steps to achieve this end. There are a number of ways such an exit could be structured including an offer being made for its shares or a sale of the Company's assets.
The Takeover Panel has ruled that an offer for the Company will be subject to the City Code on Takeovers and Mergers (the "Code"). If an offer is made under the Code, DKR Oasis is in a position to deliver control of the Company by selling its shares (in which event the buyer will be required to make a cash offer on no less favourable terms to the remaining minority shareholders) or by providing an irrevocable undertaking to accept a takeover offer made for the Company's shares.
Under the AIM Rules, the Company cannot liquidate its assets without first obtaining the approval of shareholders in general meeting. At any such meeting, DKR Oasis would be in a position to vote through the required resolution. Although DKR Oasis does not currently control the Board, and so cannot force the Board to enter into contracts to liquidate its investments in the Bonita hotel portfolio, DKR Oasis can under Guernsey law gain control of the Board or requisition shareholder meetings to achieve its ends should it wish to do so.
The Board has recently been working with DKR Oasis to help maximise any sale proceeds for the benefit of all shareholders but it is not anticipated that the proceeds of any offer for the Company will deliver a premium to the current share price and it may even result in a discount.. Also, a sale of the assets to realise value in the short term is likely to be at a substantial discount to the previously announced net asset value per ordinary share which was based on the value of the assets on a going concern basis..
The Board believes that given additional time it might be possible to deliver greater value to shareholders than has been offered to date and is in discussions with DKR Oasis to explore whether it would be prepared to exit its investment in the Company over a longer timeframe.
The Board is willing to consider proposals from any new party interested in considering an offer for the Company or its assets. The asset manager New Perspective has indicated its willingness to continue as manager or alternatively to resign in order to facilitate any preferred exit structure
A further announcement updating shareholders will be made when appropriate. There can be no certainty that any offer will be made nor as to the terms on which any offer may be made.
In accordance with Rule 2.10 of the Code, the Company confirms that, as at 20 December 2010, it had 44,100,002 ordinary shares in issue. The International Securities Identification Number (ISIN) reference for these securities is GG00B28QMS50 and the SEDOL code is B28QMS5.
In accordance with Rule 19.11 of the Code, a copy of this announcement will be published on the Company's website: www.japanleisurehotels.com.
http://www.investegate.co.uk/article.aspx?id=201012201506323044Y
Japan Leisure Hotels Limited
("JPLH" or the "Company")
Potential Offer for the Company
Funds managed by DKR Oasis Management Company, LP ("DKR Oasis") own approximately 87.6% of the Company's issued share capital. DKR Oasis recently informed the Board that it wanted to exit its investment in the Company and was taking active steps to achieve this end. There are a number of ways such an exit could be structured including an offer being made for its shares or a sale of the Company's assets.
The Takeover Panel has ruled that an offer for the Company will be subject to the City Code on Takeovers and Mergers (the "Code"). If an offer is made under the Code, DKR Oasis is in a position to deliver control of the Company by selling its shares (in which event the buyer will be required to make a cash offer on no less favourable terms to the remaining minority shareholders) or by providing an irrevocable undertaking to accept a takeover offer made for the Company's shares.
Under the AIM Rules, the Company cannot liquidate its assets without first obtaining the approval of shareholders in general meeting. At any such meeting, DKR Oasis would be in a position to vote through the required resolution. Although DKR Oasis does not currently control the Board, and so cannot force the Board to enter into contracts to liquidate its investments in the Bonita hotel portfolio, DKR Oasis can under Guernsey law gain control of the Board or requisition shareholder meetings to achieve its ends should it wish to do so.
The Board has recently been working with DKR Oasis to help maximise any sale proceeds for the benefit of all shareholders but it is not anticipated that the proceeds of any offer for the Company will deliver a premium to the current share price and it may even result in a discount.. Also, a sale of the assets to realise value in the short term is likely to be at a substantial discount to the previously announced net asset value per ordinary share which was based on the value of the assets on a going concern basis..
The Board believes that given additional time it might be possible to deliver greater value to shareholders than has been offered to date and is in discussions with DKR Oasis to explore whether it would be prepared to exit its investment in the Company over a longer timeframe.
The Board is willing to consider proposals from any new party interested in considering an offer for the Company or its assets. The asset manager New Perspective has indicated its willingness to continue as manager or alternatively to resign in order to facilitate any preferred exit structure
A further announcement updating shareholders will be made when appropriate. There can be no certainty that any offer will be made nor as to the terms on which any offer may be made.
In accordance with Rule 2.10 of the Code, the Company confirms that, as at 20 December 2010, it had 44,100,002 ordinary shares in issue. The International Securities Identification Number (ISIN) reference for these securities is GG00B28QMS50 and the SEDOL code is B28QMS5.
In accordance with Rule 19.11 of the Code, a copy of this announcement will be published on the Company's website: www.japanleisurehotels.com.
http://www.investegate.co.uk/article.aspx?id=201012201506323044Y
Japan Leisure Hotels - Main Investor to Exit
Following the half year loss posted by Japan Leisure Hotels in H1 2010; it has been announced by the Board of JLH that its main investors, DKR Oasis, is looking to exit either by selling its shares in a TOB under the Takeovers Code or by Japan Leisure Hotels selling its hotels. According to the Financial Times, this could mean that Japan Leisure Hotels will be listed from AIM.
the FT says -
One of the more colourful companies on Aim looks set to join the hundreds that have left the junior market over the past two years.
Japan Leisure Hotels operates a portfolio of so-called love hotels, one of those Japanese idiosyncrasies that make sense to the country’s inhabitants.
They act as a refuge for married couples who live with family, philanderers and those – often backpacking foreigners – looking for a cheap room for the night.
Japan Leisure’s biggest shareholder is DKR Oasis Management, which has an 87.6 per cent stake. It has told the board it wants to realise its investment. Japan Leisure said it did not expect the proceeds of any offer to “deliver a premium to the current share price, and it may even result in a discount”.
In the short term, said the company, a sale was likely to be at a substantial discount to the previously announced net asset value per share of 77p, based on the value of the assets on a going concern basis.
Japan Leisure tried to raise £100m when it listed in 2007, convinced that it would be able to consolidate the fragmented Japanese industry. In the event it had to settle for £3m at 50p a share, leaving DKR Oasis with its large stake. Another attempt at a £50m fundraising in 2009 failed.
The shares fell 2½p to 23p on Tuesday, giving a market capitalisation of £10m.
The Takeover Panel has ruled that any offer will be subject to the City Code, so any buyer would have to offer similar terms to minority shareholders. The board is willing to consider proposals from any new party for either the company or its assets.
The board believes that given additional time it might be possible to deliver greater value to shareholders than has been offered to date, and it is talking to DKR Oasis to see if it “would be prepared to exit its investment over a longer time frame”.
So far this year 178 companies have delisted from Aim, against 293 departures in 2009. The total number of companies on the junior market fell below 1,200 at the end of November, the lowest level since 2004.
http://www.ft.com/cms/s/0/15a512b6-0d2e-11e0-82ff-00144feabdc0.html#axzz19RwfLEcf
the FT says -
One of the more colourful companies on Aim looks set to join the hundreds that have left the junior market over the past two years.
Japan Leisure Hotels operates a portfolio of so-called love hotels, one of those Japanese idiosyncrasies that make sense to the country’s inhabitants.
They act as a refuge for married couples who live with family, philanderers and those – often backpacking foreigners – looking for a cheap room for the night.
Japan Leisure’s biggest shareholder is DKR Oasis Management, which has an 87.6 per cent stake. It has told the board it wants to realise its investment. Japan Leisure said it did not expect the proceeds of any offer to “deliver a premium to the current share price, and it may even result in a discount”.
In the short term, said the company, a sale was likely to be at a substantial discount to the previously announced net asset value per share of 77p, based on the value of the assets on a going concern basis.
Japan Leisure tried to raise £100m when it listed in 2007, convinced that it would be able to consolidate the fragmented Japanese industry. In the event it had to settle for £3m at 50p a share, leaving DKR Oasis with its large stake. Another attempt at a £50m fundraising in 2009 failed.
The shares fell 2½p to 23p on Tuesday, giving a market capitalisation of £10m.
The Takeover Panel has ruled that any offer will be subject to the City Code, so any buyer would have to offer similar terms to minority shareholders. The board is willing to consider proposals from any new party for either the company or its assets.
The board believes that given additional time it might be possible to deliver greater value to shareholders than has been offered to date, and it is talking to DKR Oasis to see if it “would be prepared to exit its investment over a longer time frame”.
So far this year 178 companies have delisted from Aim, against 293 departures in 2009. The total number of companies on the junior market fell below 1,200 at the end of November, the lowest level since 2004.
http://www.ft.com/cms/s/0/15a512b6-0d2e-11e0-82ff-00144feabdc0.html#axzz19RwfLEcf
Thursday, September 30, 2010
Love Hotel Fund Freezes Redemptions
The Nikkei reports today that Global Financial Support stopped the refund of principal of "HOPE series"of investment products which invested into love hotels. The products promised a yield of 8.4% yield per year to retail investors with a minimum investment of ￥500,000. However, they have run out of money and have stopped redemptions by investors.
Investors have retained lawyers to sue the manager (GFS).
GFS issued various funds known as the "HOPE series" of which there were 10 separate funds each investing into single love hotels. They started operating from Oct/2006, and "HOPE last", which started operating Sep/2007. In term of "HOPE alfa 7~10" of currently in operation, GFS announced to stop the refund of principal at 14th Sep. In term of "HOPE last" of finishing operation, GFS announced that amount of redemption remained about ￥80,000 per principal ￥500,000.
According to lawyers, GFS traded hotel asset between each funds, and postpone loss of hotels to successor fund. Moreover, lawyers pointed out that their inappropriate operation to "the breach of trust and dishonest asset management"
Not only GFS did not sufficiently explain a sales of property to investors, but GFS assigned investors capital into a subordinated equity, which should be provided by GFS. Moreover, if introduced new investors to them, GFS paid an incentive (2.5%~5% of principal) to introducer
Asset and property of GFS is already a subject to seizure. Also , GFS could not make a payment a rental fee of their office.
http://kenplatz.nikkeibp.co.jp/article/nfm/news/20100929/543553/
This fund was covered in this article
http://www.tokyoreporter.com/2009/12/01/funds-investing-in-love-hotels-rise-to-the-occasion/
Web Site for GFS -
http://www.hotel-fund.com/
GFS investor news/updates -
http://www.hotel-fund.com/investor/
Class Action Law Suit website -
http://gfshope-bengodan.com/index.html
Investors have retained lawyers to sue the manager (GFS).
GFS issued various funds known as the "HOPE series" of which there were 10 separate funds each investing into single love hotels. They started operating from Oct/2006, and "HOPE last", which started operating Sep/2007. In term of "HOPE alfa 7~10" of currently in operation, GFS announced to stop the refund of principal at 14th Sep. In term of "HOPE last" of finishing operation, GFS announced that amount of redemption remained about ￥80,000 per principal ￥500,000.
According to lawyers, GFS traded hotel asset between each funds, and postpone loss of hotels to successor fund. Moreover, lawyers pointed out that their inappropriate operation to "the breach of trust and dishonest asset management"
Not only GFS did not sufficiently explain a sales of property to investors, but GFS assigned investors capital into a subordinated equity, which should be provided by GFS. Moreover, if introduced new investors to them, GFS paid an incentive (2.5%~5% of principal) to introducer
Asset and property of GFS is already a subject to seizure. Also , GFS could not make a payment a rental fee of their office.
http://kenplatz.nikkeibp.co.jp/article/nfm/news/20100929/543553/
This fund was covered in this article
http://www.tokyoreporter.com/2009/12/01/funds-investing-in-love-hotels-rise-to-the-occasion/
Web Site for GFS -
http://www.hotel-fund.com/
GFS investor news/updates -
http://www.hotel-fund.com/investor/
Class Action Law Suit website -
http://gfshope-bengodan.com/index.html
Monday, July 26, 2010
Japan Leisure Hotels Downgrades Revenues and EBIDTA (18%)
Japan Leisure Hotels warns that revenue and EBITDA for the year to the end of December will be lower than current market expectations.
The Yokkaichi hotel was closed for renovation for the majority of the first six months of the current financial year.
Some other hotels were experiencing reduced occupancy due to competitors aggressively reducing prices and some hotels nearing their scheduled refurbishment.
The firm said: "The asset manager is taking immediate steps to address these short term issues, where possible, and is confident that it they will be quickly resolved."
The firm said the board's long term confidence in the company's business model, based on the unique features of Japanese culture and demographics, remains unchanged.
The company will announce its half year results for the six months to the end of June on 28 September.
http://www.bfnnews.com/display/?id=3908724§ionId=standardNews
Analyst, Hardman has the following to say -
A Trading Statement this morning says that revenue and EBITDA
for the current year will be lower than market expectations, so we
are reducing our estimates.
• Price cutting by competitors has been impacting some hotels.
One of the units has seen its REVPAR fall by 12% in recent
weeks. But some hotels are holding up well and this is not a
general trend.
• The newly refurbished Yokkaichi, the second largest hotel in
the group, has experienced a slower than expected build-up
after the refurbishment that took it out of action between
January and May. It would be premature to read too much into
eight weeks’ trading after what was supposed to be a ‘soft’ reopening,
but we (and the management) will be watching
closely for lessons to be applied to other refurbishments likely
in 2011.
• Market conditions are aggressive. This is not a surprise,
because the Japanese economy is flat, and still experiencing
price deflation. JPLH has been reducing costs, and has been
introducing marketing initiatives such as a loyalty card.
We already expected the first half to show a modest loss, because
of the loss of income from the Yokkaichi during its refurbishment.
We are now reducing our second half estimate. The effect for the
full year will be:
• Revenue growth of 2% rather than the 7% we had previously
expected.
• EBITDA of Y274m rather than the Y334m we previously
forecast. Our new forecast is still higher than the 2009
EBITDA however, the company is still moving forward.
• Adjusted profit of Y34m and eps of UK0.3p, still ahead of the
previous year, in spite of the Yokkaichi closure.
• We retain our dividend forecast at UK1.5p, 50% up on 2009.
We have pulled back our 2011 estimates also.
Overall, the announcement should have limited impact upon the
share price, because JPLH’s value lies in its potential once the
chain has reached three to five times its current size, rather than
its 2010 or 2011 earnings.
The Yokkaichi hotel was closed for renovation for the majority of the first six months of the current financial year.
Some other hotels were experiencing reduced occupancy due to competitors aggressively reducing prices and some hotels nearing their scheduled refurbishment.
The firm said: "The asset manager is taking immediate steps to address these short term issues, where possible, and is confident that it they will be quickly resolved."
The firm said the board's long term confidence in the company's business model, based on the unique features of Japanese culture and demographics, remains unchanged.
The company will announce its half year results for the six months to the end of June on 28 September.
http://www.bfnnews.com/display/?id=3908724§ionId=standardNews
Analyst, Hardman has the following to say -
A Trading Statement this morning says that revenue and EBITDA
for the current year will be lower than market expectations, so we
are reducing our estimates.
• Price cutting by competitors has been impacting some hotels.
One of the units has seen its REVPAR fall by 12% in recent
weeks. But some hotels are holding up well and this is not a
general trend.
• The newly refurbished Yokkaichi, the second largest hotel in
the group, has experienced a slower than expected build-up
after the refurbishment that took it out of action between
January and May. It would be premature to read too much into
eight weeks’ trading after what was supposed to be a ‘soft’ reopening,
but we (and the management) will be watching
closely for lessons to be applied to other refurbishments likely
in 2011.
• Market conditions are aggressive. This is not a surprise,
because the Japanese economy is flat, and still experiencing
price deflation. JPLH has been reducing costs, and has been
introducing marketing initiatives such as a loyalty card.
We already expected the first half to show a modest loss, because
of the loss of income from the Yokkaichi during its refurbishment.
We are now reducing our second half estimate. The effect for the
full year will be:
• Revenue growth of 2% rather than the 7% we had previously
expected.
• EBITDA of Y274m rather than the Y334m we previously
forecast. Our new forecast is still higher than the 2009
EBITDA however, the company is still moving forward.
• Adjusted profit of Y34m and eps of UK0.3p, still ahead of the
previous year, in spite of the Yokkaichi closure.
• We retain our dividend forecast at UK1.5p, 50% up on 2009.
We have pulled back our 2011 estimates also.
Overall, the announcement should have limited impact upon the
share price, because JPLH’s value lies in its potential once the
chain has reached three to five times its current size, rather than
its 2010 or 2011 earnings.
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