Where it runs between the city of Sendai and the Pacific coast to the east, National Highway Number 4, Japan’s longest road, is a seemingly endless strip of diners, car dealers and DIY home centres that separates the bustling northern metropolis from the devastation wrought by last year’s tsunami.

Soon it will also be home to a new hotel, named Value the Hotel, Natori, with 322 rooms, catering to temporary workers who have been coming from all over the country to help with reconstruction.

Sparx, an asset management company, together with Kachikaihatsu, a real estate development and consulting company, came up with the idea for the hotel, raised Y1bn ($12m) in funds from investors and arranged to have the 40-foot shipping containers, which will serve as rooms, transported from China.

But it is not just budget hotels in the Tohoku region that expect strong demand for their services in the years ahead.

Despite last year’s disasters, many people in the hotel business believe Japan still holds huge potential as a tourist destination.

“I am a big believer in Japan, because of the infrastructure it has, the safety it has and the beauty it has,” says Dan Seymour, representative director in Japan of Pacific Star, a real estate investment group.

Large overseas hotel developers and operators, from the Ritz-Carlton group to Hilton Worldwide, are planning to open new premises in Japan over the next several years.

The Ritz-Carlton is doubling the number of hotels it has in the country, with openings in Okinawa and Kyoto adding to its existing premises in Tokyo and Osaka.

Pacific Star is developing a hotel for Malaysian conglomerate, Berjaya Corporation, in Kyoto, which will be operated by the Four Seasons group. “We are aggressively working in a number of other areas,” says Mr Seymour.

Pacific Star is also sponsoring funds that are investing in hotels in Japan – in Okinawa, Fukuoka and Niseko. These are due to open between 2014 and 2017.

A big factor behind this bullish stance is the expected increase in tourists from China. “Everyone is interested in one big market – it is called Chinese outbound,” Mr Seymour says.

Luxury hotel groups are particularly keen to be in Kyoto, because “it is an eternal city and eternally difficult to build in,” says Kazunobu Takita, executive director of CBRE Hotels, the consultancy, in Tokyo.

Top-end hotels in the ancient capital have for long been restricted to traditional Japanese ryokan, because of stringent building regulations and a lack of appropriate sites.

The southern island of Okinawa is also attracting foreign investment, despite being little known to people outside Japan.

Apart from the Ritz-Carlton group, Hilton is opening its first Doubletree hotel in Okinawa this year, targeting both tourists and business travellers.

There is potential for Okinawa to become an international tourist destination because of its exceptionally clear waters, coral reefs and variety of marine life, says Mr Takita.

“I think the wedding market, in particular, will grow on demand from Asia,” he says.

While the Ritz-Carlton expects its core guests in Okinawa to be Japanese tourists for the first two years, Victor Clavell, area vice-president for the Asia-Pacific region, says he expects international travellers to increase over time.

“Hong Kong is an important market for Okinawa [as] there is a direct flight from Hong Kong and [the market] is growing,” he says.

At the other end of the geographic extreme, Niseko, on the northern island of Hokkaido, is the site of new resort complexes developed by Hong Kong’s Pacific Century Group, Malaysia’s YTL group and Annupuri Land, a Hong Kong developer.

Annupuri Land commissioned Tadao Ando, the renowned architect, to design the Capella Niseko Resorts and Residences, which is scheduled to be opened in the summer of 2013 and will be managed by the luxury hotels group led by Horst Schulze, an international hotelier.

Global luxury hotel groups are also eyeing Niseko, which was initially developed into a ski resort largely by Australians.

“We would love to have a place in Niseko,” says Mr Clavell at Ritz-Carlton.

Mr Seymour says: “As the [global hotel] brands come in, the wealthy travellers will come, making Niseko the winter playground of all of Asia.”

But Japan, which saw overseas visitor numbers decline from 9.4m in 2010 to 7.1m last year, according to Justice Ministry numbers, is competing with other countries in the region, such as South Korea, that are working hard to attract tourists as well as international conventions and exhibitions.

For Japan to attract more visitors, “the government and its own people should be more confident in promoting Japan,” says Ritz-Carlton’s Mr Clavell.

Japan also needs to invest in infrastructure such as attractive convention centres and offer lower air fares to attract the meeting, incentive, conference and exhibition (MICE) market, says Mr Takita.

At the same time, Mr Seymour says opening the country to casinos could have a huge impact on the tourism market.

“The amount of revenue that would generate is substantial,” he says.

The possibility that Japan might open up to casinos is already attracting the attention of the large operators, such as Las Vegas Sands, whose founder, Sheldon Adelson, was in Tokyo last month promoting that very idea.

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