The Journal The Authority on Global Business in Japan

It has breathtaking beaches and skies so blue you want to reach out and touch them. The islands have a distinctive history and a vibrant present. They have diving and shopping, cuisine and culture, entertainment, and a natural environment it is hard to find anywhere else.

Little wonder, therefore, that travelers from around the globe are flocking to Okinawa Prefecture.

Equally, the biggest names in the international tourism sector recognize that Okinawa has great potential for their businesses.

Nakijin Castle and its ruins are part of a UNESCO World Heritage Site.

Nakijin Castle and its ruins are part of a UNESCO World Heritage Site.

Japan, as a whole, has seen a surge in international arrivals in the past couple of years. Inbound tourists totaled 10.46 million in 2013, climbed to 13.41 million the following year, and soared to 19.737 million in 2015.

The national government’s target of 20 million visitors in 2020, the year of the Tokyo Olympic and Paralympic Games, will likely be surpassed well in advance of that date.

And, while Japanese still account for 81 percent of holidaymakers arriving in Okinawa, just over 1.5 million foreign travelers visited the prefecture in 2015, a remarkable 68 percent leap from the previous year’s figure.

“At this rate of growth, Okinawa will definitely become as big as Bali or Hawaii, based on sheer numbers,” says Carl Bastian, managing director of Ryukyu World Office, an international tourism consultancy.

Ancient paths around Shuri Castle in Naha

Ancient paths around Shuri Castle in Naha

Bastian is serving his fifth term as chairman of the Tourism and Hospitality Committee of the American Chamber of Commerce in Okinawa (ACCO).

The anticipated number of arrivals in 2015 was 6.9 million, but the actual total was 7.76 million. Growth has been a steady 10 percent over the past three years. Those impressive figures have resulted in the raising of the 2021 target to 10 million visitors, of whom 2 million are expected to come from abroad.

“As long as peace prevails in the Asia–Pacific region, we should easily clear that as well,” Bastian believes.

Yet a number of hurdles must be overcome to achieve that figure. The main obstacle, as elsewhere in Japan, is a shortage of accommodation.

“The average beach resort enjoys an annual average occupancy rate of 80 percent, while city hotels are sitting at around 70 percent—meaning that a lot of the time they are either full or overbooked,” says Bastian. “There are simply not enough beds to meet demand in the high seasons.”

Aware of the potential, two of the world’s largest hotel brands, both headquartered in the United States—Hilton and Hyatt—have recently opened expansive new properties in Okinawa. Several more hospitality-related developments are close to completion or are in the planning stages.

Mihama American Village in Chatan

Mihama American Village in Chatan

New Asia hot spot
The Hilton Okinawa Chatan Resort opened in the summer of 2015, and has broken new ground by taking a prime location between Chatan’s port and the Mihama American Village—a complex with restaurants, bars, boutiques, cinema, bowling alley, live music venues, and even a Ferris wheel.

“The development of inbound tourism, mainly from Asia, is accelerating impressively, and the number of domestic tourists shows no signs of slowing,” says Timothy E. Soper, vice president of operations for Japan, Korea, and Micronesia for Hilton Worldwide.

“First, the location is attractive as there is convenient access from major cities around Asia,” says Soper, pointing out that Naha Airport is a 90-minute hop from Taipei, and just two-and-a-half hours from both Shanghai and Seoul.

“The delivery capacity of inbound travelers is significantly expanding due to an increase in the number of direct flights from major Asian cities, entry by low-cost carriers, and more port calls by cruise ships.

“Okinawa is one of the government’s major hubs for tourism promotion, while the prefecture has also independently developed the Okinawa Tourism Promotion Roadmap, and begun a full-scale vitalization process for its tourism industry.

“As a result, we anticipate infrastructure development and expansion of the islands’ public transportation, such as the monorail, to continue to develop.”

Other projects that are designed to attract more visitors, Bastian points out, are the construction of a new runway at Naha Airport, due to be completed in 2019, and a second berth for cruise liners to dock at the nearby ship terminal.

In terms of tourist attractions, discussions are apparently ongoing between the Japanese company that operates Disney domestically and the prefectural government, for the creation of a new theme park on the site of the Marine Corps Air Station Futenma, as soon as its present tenants are relocated.

Similarly, Universal Studios Japan is reportedly exploring opportunities in the prefecture. There are also suggestions that a large-scale casino complex is under consideration.

Any projects on such a scale will put Okinawa on the map even more emphatically, Bastian says, and will help turn the prefecture’s islands into “a major international destination.”

Bed—and view—for the night
Hence, in part, the flurry of new hotel developments.

Hilton already has one of its Double Tree brand properties in Naha, while a second hotel, the Hilton Naha Shuri Castle, is on target to open July 1. The company has confirmed to The Journal that it intends to bring more of its luxury brands to Okinawa, including to some of the prefecture’s outlying islands.

Starwood Hotels and Resorts Worldwide, Inc. is to open the 200-room Sheraton Okinawa Sunmarina Resort in mid-2016, with 45 rooms scheduled to be added in early 2017.

Even institutional investors have seen the potential, with Morgan Stanley “flexing its muscles in the market” and expected to have no fewer than three management contracts in the near future, sources said.

Japanese developers are also moving swiftly to snap up opportunities, with Okinawa-based Terrace Hotels opening a new property this month and Hoshino Resorts due to break ground on their first hotel on the main island next year.

Ken Corp. is also working on a luxury hotel, while Mori Trust has two properties taking shape on the main island and another on Irabu Island, in the Miyako island group.

The ANA InterContinental Manza Beach Resort is also upgrading its facilities and services to secure its reputation as one of the most spectacular locations on the main island of Okinawa.

The hotel occupies a graceful curve atop a pit of land beside a serene bay on the west coast, and is working closely with the local community to regenerate nearby coral reefs.

KPG Hotel & Resorts, based in Osaka, is planning its next high-end property in Okinawa. Work is under way to add another 80 suites to the company’s impressive Kafuu Resort Fuchaku on the main island’s central west coast. The property is unusual for Okinawa, in that it has condos as well as hotel rooms, both of which offer spectacular ocean views.

“Our occupancy rate was 84 percent in the year to December and we have very definitely benefitted from the government’s decision to relax visas for tourists from China, South Korea, and Taiwan,” says Masao Tanaka, managing director and chief operations officer.

The hotel, a member of ACCO, is also a firm favorite with American guests, winning the Stars and Stripes newspaper award for the best lodging in the Pacific for three straight years, as well as being recognized for operating an international internship program with the University of Central Florida and Johnson & Wales University, in Rhode Island.

“Our brand has a good reputation and a good following in the region, and we now wish to expand that into new markets,” says Tanaka. “We are particularly interested in the Middle East, as that is a region where consumers are wealthy and they like to travel.

Shisa lion dogs are a common adornment outside Okinawa homes

Shisa lion dogs are a common adornment outside Okinawa homes

“It would also serve as a demonstration of the pull of Okinawa as a holiday destination,” he adds.

The Hyatt Regency Naha Okinawa is the latest addition to the southern capital’s skyline, having opened in July 2015.

The hotel occupies arguably the most sought-after spot in the city: Sakurazaka, or cherry blossom hill. It has been worked in alongside the existing traditional Okinawan-style community of low buildings, roofs with orange tiles, and each home with a pair of shisa lion-dogs from local mythology protecting the entranceway.

Okinawa has many tropical fruits and its own style of cuisine.

Okinawa has many tropical fruits and its own style of cuisine.

The hotel is just 200 meters from Kokusai-dori, the main drag of bars, restaurants, and shops that runs through the heart of Naha, and the airport is just 20 minutes away by car. From the upper floors, Shuri Castle can be seen atop the hill that dominates the entire city.

“We are finding that Okinawa is benefitting from repeat visitors to Japan,” says Takashi Nakamura, deputy director of sales and marketing.

“These are the people who have been to Japan before and visited Tokyo, Kyoto, and Osaka, but want to go somewhere new and different.

“It also helps that low-cost carriers like Peach and JetStar are now flying direct to Naha, and when the new runway is completed it will triple the flight capacity of the airport.”

Rachel Davidson, general manager of Hilton’s Chatan property and newly elected president of ACCO, says she is “delighted” to have been given the opportunity to lead “such a stunning property in a great destination.”

“Okinawa is deservedly enjoying record increases in tourist visits,” she told The Journal. “It offers a unique culture, wonderfully hospitable Okinawan people, beautiful beaches and landscape, nine [UNESCO] World Heritage Sites, great local cuisine, excellent weather, exciting water activities, and shopping and dining experiences.”

And the chamber intends to do everything in its power to build on those foundations.

“The ACCO’s mission is to facilitate an environment for current and prospective American businesses to flourish in Okinawa,” she said.

“We have a number of key priorities in 2016 to further the development of commerce and trade with Okinawa and to ensure that we are able to maximize opportunities for our ACCO members, including strengthening partnerships and continuing to build on strong relationships with our business and local communities, local governments, educational institutions, and fellow organizations.

“These mutually beneficial relationships provide support for our businesses and create opportunities for us all.”

The Hyatt Regency Naha Okinawa offers a stunning night view by the pool.

The Hyatt Regency Naha Okinawa offers a stunning night view by the pool.

Julian Ryall is Tokyo correspondent for The Daily Telegraph
The main obstacle [to boosting tourism] is a shortage of accommodation.