Hotels, airlines and other companies are scrambling to deal with the ramifications of this week's decision to postpone the upcoming Tokyo Olympics and Paralympics.
Many companies had boosted investment in anticipation of "special demand" generated by hosting the Games, exemplified by the rush of new hotel openings scheduled in central Tokyo in the next few months. While concerns about the impact of the postponement are widespread, stock prices of tourism- and transportation-related companies rose Wednesday as it emerged that the worst-case scenario of the Games being canceled had been averted.
A string of hotels due to open in Tokyo in the coming months were built in anticipation of the Games being held this summer. According to figures Mizuho Research Institute compiled as of November, the Tokyo metropolitan area had 157,000 hotel rooms as of the end of 2018, and this figure is set to increase by about 15% to 181,000 at the end of 2020.
A major real estate company that had hired many employees in preparation for the opening of a hotel plans to open its new business as scheduled. "If we stopped hiring staffers and so on just because the number of guests declined, it would be hard to secure enough workers later," a source at the company said.
Hotel cancellation fees are an issue that will need to be untangled following the decision to delay the Games. "Opinion is split especially among small and midsize hotels, and this could cause confusion at customer service counters," said Yasuhiro Aoki, a hotel and ryokan inn consultant. Hotel Lungwood, a hotel near JR Nippori Station in Arakawa Ward, Tokyo, had insisted when reservations were made that cancellations were not possible, but it has started reviewing this policy. "We are considering our position and leaning toward refunding guests," a representative of the hotel said.
Many major hotels had received bulk reservations for accommodating Games-related officials. A representative of Prince Hotels, Inc., said, "If delegations and others cancel their bookings in the weeks ahead, we'll make those rooms available for general guests." If the Games are postponed until the summer of 2021, the representative said securing rooms for Olympic officials would be possible. "Reservations can generally be made only for up to one year ahead, so I think we can handle" accommodating those officials, the representative said.
Stock prices rise
Airlines are already generally allowing flight bookings until April to be canceled or changed without charge. It is uncertain if such a step also will be expanded to cancellations triggered by the postponement of the Olympics.
Manufacturers and restaurants also are unable to precisely forecast the impact of the drop in demand this year. Asahi Breweries, Ltd., the only beer maker that is a sponsor of the Tokyo Games, could be pressed to change its planned introduction of products tied to the quadrennial sporting extravaganza. "Nothing has been decided at this point," an Asahi Breweries official said.
Sales of large-screen televisions increase ahead of major sports events, but manufacturers are unsure how the postponement will affect customer sentiment. "We've never experienced the postponement of a sports event this large, so it's difficult to tell how things will pan out," an official of a major home appliance maker said.
It is certain that the decision to delay the Olympics will have a heavy impact especially on the accommodation, tourism and transportation industries.
However, a leading securities company official said financial markets had "already factored in" a postponement of the Games. Some observers even viewed the postponement as a positive development compared to the worst-case scenario of the Olympics being canceled. On Wednesday, the Tokyo Stock Exchange rose overall, with stocks of companies connected with the Games logging solid gains.
Seibu Holdings Inc., which operates the Prince Hotel brand, rose 3.3%, and Mitsui Fudosan Co., which developed the Four Seasons Hotel Tokyo due to open in the capital's Otemachi business district in time for the Games, jumped 10.5%. Airlines also had a positive day, with Japan Airlines climbing 6.7% and ANA Holdings Inc. rising 4.1%.
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