Declining Demand and Operating Disruptions Across All Businesses Due to COVID-19

「Approximately one year after COVID-19 was moved to Category 5 of the designated infectious disease classification in May 2023, domestic accommodation demand, which had appeared to have passed its period of strong sales growth, remained firm during the spring-break season in March 2024. In addition, inbound consumption continued to expand against a backdrop of the rapid depreciation of the yen, driving the tourism industry as a whole, and domestic accommodation demand remained solid even after April, when it was said to have declined due to weak personal consumption.」

「Since autumn last year, various restrictions related to COVID-19 have been eased and the normalization of economic activity has accelerated. The flow of people traveling for business and leisure recovered to pre-pandemic levels, and became more active after COVID-19 was moved to Category 5 of the designated infectious disease classification in early May. Together with the rapid recovery in inbound demand, domestic accommodation demand has continued to expand.」

「During the cumulative first-quarter period, Japan's economy saw the impact of COVID-19 on social activity subside. Economic activity accelerated toward normalization, including the transition to Category 5 of the designated infectious disease classification in early May, and demand continued to improve substantially, particularly in the food-service, leisure and accommodation industries.」

「Although the impact of COVID-19 remained, signs of improvement emerged as economic activity moved toward normalization following the lifting of priority preventive measures to prevent the spread of disease in the Tokyo metropolitan area in mid-March. Domestic accommodation demand, particularly in the hotel industry, improved substantially, helped by the removal of caps on entry restrictions and the National Travel Assistance program.」

「Although the impact of COVID-19 remained, signs of improvement emerged as economic activity moved toward normalization following the lifting of priority preventive measures to prevent the spread of disease in the Tokyo metropolitan area in mid-March. Domestic accommodation demand, particularly in the hotel industry, improved substantially, helped by the removal of caps on entry restrictions and the National Travel Assistance program.」

「Following the lifting of priority preventive measures to prevent the spread of disease in mid-March, domestic accommodation demand continued to expand. At the business hotels operated in Chiba Prefecture, leisure-related accommodation improved as the number of visitors to nearby theme parks increased. Meanwhile, although some easing of entry restrictions for foreign tourists was seen, room rates, particularly on weekdays, continued to struggle because the number of visitors to Japan remained substantially below pre-pandemic levels. In addition, the number of new COVID-19 cases began increasing again from early July.」

「In January, the spread of the Omicron variant led to the implementation of priority preventive measures to prevent the spread of disease, and accommodation demand remained sluggish, with difficult conditions continuing.」

「In this environment, the condominium front-desk services business secured stable earnings, while occupancy rates at the hotel facilities continued to struggle because of requests to refrain from going out following a sharp increase in new infections. During the Tokyo Olympics, however, the group generated improvement in both revenue and earnings by leasing an entire facility to companies involved in operations as accommodation for their personnel, despite the events being held without spectators, and by securing group reservations during sporting events in the latter half of the summer holidays.」

「Meanwhile, the state of emergency was lifted in late June, preparations for the Tokyo Olympics were under way, and a gradual recovery in market conditions was expected as vaccinations progressed. However, a fourth state of emergency was declared for Tokyo on 12 July, and the outlook for the domestic economy remains uncertain.」

「In this environment, the group was also forced to temporarily close all of its unit-style hotels and some condominium front-desk locations as COVID-19 spread. Customer traffic at its business hotels and convenience-store locations also declined substantially as nearby large theme parks temporarily closed and events at large exhibition venues were repeatedly cancelled. Following the lifting of the state of emergency, the condominium front-desk services business largely returned to normal. In the hotel business, although the group resumed activities to secure revenue, including the opening of new business hotels and the reopening of some unit-style hotels in July, low occupancy continued due in part to a renewed increase in the number of new COVID-19 cases in Tokyo, resulting in a difficult earnings performance for the group as a whole.」

「In this environment, the group was also forced to temporarily close all of its unit-style hotels and some condominium front-desk locations as COVID-19 spread. Customer traffic at its business hotels and convenience-store locations also declined substantially as nearby large theme parks temporarily closed and events at large exhibition venues were repeatedly cancelled. Following the lifting of the state of emergency, the condominium front-desk services business largely returned to normal. In the hotel business, although the group resumed activities to secure revenue, including the opening of new business hotels and the reopening of some unit-style hotels in July, low occupancy continued due in part to a renewed increase in the number of new COVID-19 cases in Tokyo, resulting in a difficult earnings performance for the group as a whole.」

「In addition, as COVID-19 spread, sales declined in the hotel and convenience-store businesses because of requests to refrain from going out, the cancellation of business trips and the decline in foreign tourists, as well as the cancellation of large-scale events. Demand also declined in the cleaning business due to changes in the external environment.」

「Demand for accommodation in the hotel business has fallen sharply due to the impact of requests from the government and local authorities to refrain from going out as COVID-19 spread. In the convenience-store business, customer traffic has declined at stores in office districts and event-oriented locations, while some condominium front-desk service locations temporarily closed following the declaration of a state of emergency. The cleaning business has also seen a decline in demand for cleaning and linen services as telework has become more widespread and hotels and commercial facilities have closed.」