Though their guests may be short-term, the business prospects of the typical Japanese 'love hotel' have been anything but. Emerging after World War II as the modern form of chaya (tea rooms), the 25,000 love hotels in Japan today have annual revenues of $36 billion a year, more, for example, than the UK's entire hotel market. The rooms, which an estimated two percent of Japan's population uses every day, offer guests a “rest” typically lasting one to three hours. They are frequently used by prostitutes, but also by young couples wishing to spend some alone time together, since many young Japanese people live with their parents
The Hello Kitty S&M Room at the Hotel Adonis, Osaka
Now a company called Japan Leisure Hotels is planning to raise up to £100 million ($200 million on the London Stock Exchange's Alternative Investment Market to invest in love hotels. Right now the company, based in Guernsey, owns five such venues in Japan worth about $44 million, and it hopes to attract investors to its listing with an eight percent dividend and a plan for aggressive growth.
The company's director, Stephen Mansfield, is making the case that the love hotels are good for more than just sex. He told Reuters news service this week: “People have busy lifestyles and they don't want to be tied down to 'Now, I got to check in after 12, or after three' or 'I've got to check out before midday. It's very much like a discount airline. The required time reduces the prices to attract more people in and make it more economical for them. At busy periods, prices go up.”
The five hotels operate under the brand Bonita, and the company plans to increase the number of rooms it owns from the current 195 to 1,200 rooms in two years, and 3,000-3,500 rooms in five years.
Other investors have also entered the market. Tokyo-based investment group Global Financial Support has launched 10 love hotel funds, raising a total 12.5 billion yen, according to Reuters. MHS Capital Partners also solicited $10 million from foreign institutional investors a few years ago.
And like the rest of the country's property market, Japanese love hotels have also seen the trend of domestic investors offloading property at low prices because of the country's financial crisis. Like the hourly rooms themselves, love hotels may prove to be a bargain price for a good time.