TOKYO (BLOOMBERG) - The city of Beppu in western Japan is famed for its hot springs, with hotels and resorts competing to attract tourists to an area renowned for sights such as the "Hells of Beppu", a series of coloured and super-hot natural pools.
As the numbers of Japanese visiting the resorts plateau, local and international hotel chains are expanding to target the boom in foreign tourists.
Tourist numbers dipped in 2016 after an earthquake in nearby Kumamoto, but recovered to a record in 2017. South Koreans have driven the 130 per cent increase in foreigners staying in Beppu over the past five years.
In the five years of economic revitalisation efforts under Prime Minister Shinzo Abe, the boom in inbound tourism has been a notable success, while other areas like wage growth and inflation have had mixed results.
Foreign tourist numbers have increased so much that it has helped to shrink the chronic deficits in Japan's services account.
InterContinental Hotels Group is one of the businesses looking to take advantage of this boom in Beppu. Its joint venture with All Nippon Airways will open a new 89-room luxury hotel next year (2019).
"Beppu is one of the world's most famous hot springs resorts, but it didn't have a luxury hotel of international fame," said Mr Hans Heijligers, the chief executive officer of ING ANA Hotels Group Japan. "The wealthy Japanese market is very attractive, and inbound tourism is also booming."
Luxury domestic hotel chain Hoshino Resorts is building a new hotel, and Oedo Onsen refurbished an older hotel and opened in July last year.
The current boom in hotels is going to increase the number of rooms in the city to 5,030 in 2019, from the current 4,400, according to the Beppu City Ryokan and Hotel Association.
With five matches for next year's Rugby World Cup being played in neighbouring Oita City, those rooms may be needed.
The largest hotel in the city is not worried about the new investment and new competition.
"It's an attractive town, and we welcome it. We can make money if they come and make it even more attractive," said general manager Koichi Sasaki at the Suginoi Hotel and Resort, which has 647 rooms. The hotel has had an occupancy rate of 100 per cent since 2014, and is renovating its conference space.