Photo/Illutration The Fair Trade Commission in Tokyo’s Chiyoda Ward (Kyota Tanaka)

Japan’s Fair Trade Commission will soon issue warnings to 15 luxury hotels in Tokyo over their cartel-like behavior that could lead to price collusion, sources said.

The 15 hotel operators, including Imperial Hotel Ltd. and New Otani Co., held monthly meetings to exchange information, including their room rates, that could be used to coordinate pricing strategies, the sources said.

The FTC decided that this exchange of pricing information falls under the category of Unreasonable Restraint of Trade, which is prohibited by the Anti-Monopoly Law.

The antitrust watchdog will warn the hotel operators to take measures to prevent a recurrence.

Hotel room rates have continued to rise with the surge in foreign tourists following the COVID-19 pandemic.

Under such a situation, the 15 hotels are believed to have engaged in collusive accommodation pricing to maximize profits among themselves.

Sources said sales officials from the 15 hotel operators met monthly to exchange information on management strategies, including each hotel’s occupancy rates, room prices and future pricing policies.

Confidential and sensitive information was exchanged at the meetings, leading the FTC to identify the risk of cartel behavior, the sources said.

Based on the shared data, each hotel is believed to have compared competitors’ occupancy rates and prices to strategically determine its own pricing.

FRONT RESERVATION MEETINGS

The talks among the sales officials were called “front reservation meetings,” and the hotels took turns hosting them for decades, the sources said.

The FTC believes similar data-exchange meetings have also been held among hotels at lower price levels, including business hotels and those outside of Tokyo.

The commission has been increasingly vigilant about ending such practices. It intends to issue the warnings to prevent collusive practices from driving up hotel prices throughout the industry.

The FTC has already informed the 15 hotel operators about the contents of the warning and will later gather feedback from them.

FTC warnings are issued for actions believed to violate the Anti-Monopoly Law. They are different from cease-and-desist orders, which identify illegal actions and allow the FTC to take disciplinary measures.

According to Tokyo Shoko Research Ltd., the average room price at 11 hotels, including business hotels, throughout Japan from July through September 2024 was 15,537 yen ($110), up 86.7 percent from the average price of 8,320 yen in 2021.

The research firm also said many hotels, mainly those in Tokyo’s downtown area, renewed their highest room prices in 2024.

Hotel rates in downtown areas across the country are expected to continue rising in 2025 because many international events will take place, including the ongoing Osaka Kansai Expo and the World Athletics Championships scheduled in autumn in Tokyo.

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