An Analysis of Japanese Investment in the U.S. Hotel Industry

Abstract

Abstract Over the last few years, Japanese investment in the U.S hotel industry has increased significantly. Spurred by favorable tax structuring and interest rates, in 1989, they expended $4. 16 billion on the purchase of hotels and resorts (Kenneth Leventhal & Co., 1989. Barron's 1990), nearly triple the amount spent in 1986. (Most of the capital went to the states of California and Hawaii.) This level of investment has raised interest and concern about potential domination by the Japanese of the U.S lodging and commercial real estate market. This study provides an analysis of Japanese investment in the lodging industry of the United States with respect to 1) the unprecedented growth of Japanese investment 2) the reasons why the United States is preferred by Japanese 3) the unique characteristics of Japanese investors compared to others 4) the present effects and future investment strategies of Japanese investors. The study will also demonstrate the importance of socioeconomic and psychological factors in their investment decision.