Direct translation Photo copyright by : Gan Yung Chyan, KUCINTA SETIA
Price war rages in Japanese hotels! The price difference between Toyoko Inn and APA is staggering; their floating price strategy revealed
Photo of a reception counter of a Toyoko Inn branch in Narita.
Copyright by : Gan Yung Chyan, KUCINTA SETIA
Price war rages in Japanese hotels! The price difference between Toyoko Inn and APA is staggering; their floating price strategy revealed
Most business hotels in Japan compactly integrate essential functions into their room types, making the stay smoother and suitable for both business and personal travel. This makes them a top choice for many visitors to Japan. The two major chain business hotel brands, "APA Hotel" and "Toyoko Inn," are popular choices for Taiwanese tourists due to their numerous branches and consistent quality. However, experts point out that the two operators have significantly different pricing strategies. APA Hotel uses a floating price system, resulting in large price fluctuations for the same room type, while Toyoko Inn maintains a fixed price. This difference stems from their different target customer groups.
Shinichi Yamaguchi, a Japanese accountant and financial planner, and a contributor to the fields of economics, technology, and real estate, points out that rooms costing over 10,000 yen (approximately NT$2,027) per night on weekends can sometimes be booked for just a few thousand yen on weekdays. This is because hotels adjust prices based on daily demand—the so-called floating price system—which is gradually becoming the mainstream in the Japanese hotel industry.
APA Hotels is a prime example of a floating price system. Although classified as a business hotel, during peak seasons, prices often adjust to near-luxury hotel levels, with significant price fluctuations for the same room type. For instance, at the Ikebukuro Station North Exit branch in May, a single room might cost less than 10,000 yen per night during off-peak hours like Mondays or Wednesdays, but could exceed 26,000 yen per night (approximately NT$5,270) on Saturdays. Based on current data, the lowest price is approximately 6,000 yen (approximately NT$1,216), and the highest is approximately 26,200 yen (approximately NT$5,310), a price difference of over four times.
Reports indicate that APA Hotels' prices are determined by each branch manager, leading to significant differences between branches. APA's operating strategy can be summarized as "maximizing profits when possible."
Toyoko Inn, on the other hand, emphasizes a "principle of a single price," differentiating only between "weekdays/Sundays" and "Saturdays/the day before long weekends," with a fixed rate. In Tokyo, for example, weekday prices are around 8,000 yen (approximately NT$1,621), while weekend prices are around 10,000 yen, with relatively limited price differences.
Even during peak seasons like Golden Week in Japan, prices don't surge to over 20,000 to 30,000 yen per night, generally remaining similar to weekday prices. However, because prices are relatively lower during peak seasons and weekends, Toyoko Inn is often fully booked in advance, making last-minute bookings more difficult for consumers.
Regarding its single-price system, Toyoko Inn stated that its core philosophy is: "Whether for business trips or personal travel, we set a 'budget-friendly price' as the upper limit." The underlying goal is to provide customers with peace of mind and retain long-term repeat customers, especially focusing on business travelers.
Compared to Toyoko Inn, when booking APA hotels last minute, customers have a better chance of securing rooms in popular areas near train stations, but the trade-off is that nightly rates may reach 20,000 to 30,000 yen or more (approximately NT$4,054 to 6,081).
In the latter half of the 2010s, APA Hotels faced criticism from the Japanese public for its extreme price fluctuations, even ranking last in business hotel satisfaction surveys. However, APA Hotels continued to use a floating price system. But with the increase in foreign tourists, other hotels gradually adopted the same system, reducing the criticism of APA Hotels.
Currently, the hotel industry is experiencing a peak in profits due to the increase in inbound tourists. However, Toyoko Inn did not rely heavily on inbound tourists before the pandemic, so foreign tourists accounted for only about 10%, lower than the industry average of about 25%. To retain regular business travelers, Toyoko Inn chose to maintain price stability.
As for APA Hotels, the proportion of inbound tourists exceeds 30%, higher than Toyoko Inn. Furthermore, due to the conservative political stance of APA Hotels founder Toshio Motoya, its foreign customer base is also different, with more tourists from the United States and Taiwan than from China and South Korea. Tourists from Europe, America, and Australia, who stay longer and are willing to pay higher prices per night, have become an important advantage for APA Hotels. Due to the depreciation of the yen, prices in Japan are about 1.5 to 2 times cheaper than in other developed countries. Therefore, even a nightly stay exceeding 20,000 yen is not particularly expensive for European and American tourists.
In terms of business models, Toyoko Inn primarily operates through direct management, while APA Hotels employs a dual system of direct management and franchising. Since APA Hotels' franchisees pay approximately 4% or more of their revenue as royalties, this further contributes to the price difference. Shin Yamaguchi points out that the divergence in pricing strategies essentially reflects a different target customer group: one primarily serving domestic business travelers, and the other primarily serving inbound tourists.
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