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Japanese 'love hotels' arouse investors' interest
By Olivier Fabre
January 20, 2005
Girls in mini-skirts hand out pamphlets as delegates in business suits mill
around the convention floor, dropping in on lectures, checking out the latest
engineering marvels and squinting at product videos.
It sounds like the Tokyo Motor Show.
Except that the video is showing how to use a mat designed for sex in the
bathtub, and a typical piece of equipment on display is a two-person
contraption with handles, straps and built-in vibrators known as the "love
chair".
Welcome to the 10th annual "Leisure Hotel Fair", where operators and investors
get updated on the most profitable niche of Japan's real estate market --
17,000 "love hotels" serving a population of 99 million adults.
"It's such a tough industry you have to be on top of the trends," said Etsuko
Tasaki, manager of the "Ring Bell" love hotel and one of about 7,000 people who
attended the first day of the two-day conference, which is not open to the
public.
Love hotels, which rent out rooms to amorous couples by the hour, rake in at
least four trillion yen ($37 billion) a year, slightly more than the gross
domestic product of Cuba.
This had made them attractive propositions for investors, including at least
one foreign equity fund.
Overseas private equity firm MHS Capital Partners set up a $10 million pilot
fund in April to invest in love hotels by revamping undervalued properties with
a view to increasing cash flows and eventually providing security to them for
the debt market.
Participants at the fair, which includes seminars to educate people on the
industry, include Shinsei Bank, which specialises in security or bundling
assets such as land and buildings into a tradable investment.
"The industry is basically all about investing new money to bring in more
customers so interest is quite heavily concentrated on this kind of event,"
said Dai Okumura, a spokesman for the event's organiser, Unicom, an industry
publisher.
Okumura said the number of participants has risen by about 1,000 every year,
but some vendors say the industry, once associated with yakuza gangsters, has
hit a rough patch.
"The industry is overheating right now," said Yoshihiko Kunishima, a sales
representative for France Bed, which supplies hotels with beds including the
revolving round classic.
"Everyone's slashing prices to remain in the market. There's not much room for
big-ticket items like revolving beds," he added as two men and a woman, all
middle aged, sat on the edge of a big four-poster, bouncing up and down to test
the mattress against a backdrop of a sign reading "hustle and fever".
Companies with stalls range from bathroom fixture maker Toto Ltd to Toy's Club,
a maker of beds and sex chairs as well as hundreds of models of multi-coloured
vibrators.
"In Japan people tend to look for the visual appeal more than anything else,"
sales representative Rise Tsuruyama said of the company's penchant for models
featuring clown faces.
Some are adorned with bunnies and teddy bears.
"Those are for beginners," he said as a video showing the intricacies of
working a large green model called the "Cobra" played in the background.
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