Tokyo's Imperial Hotel, the luxury inn that counts Marilyn Monroe among past guests, raised room rates last year to levels it last charged before Japan's bubble burst in the early 1990s. A surging yen now threatens those gains.

With signs of spending from foreign tourists starting to wane as a result of the stronger currency, the hotel is looking to boost wedding banquets and turn those younger guests into repeat clients, said Hideya Sadayasu, the president and general manager of Imperial Hotel.

"I am worried that if the yen continues to strengthen we may see a brake on visitors coming to Japan," said Sadayasu, 55. He added that the currency impact was "big" because it can also weigh down domestic share prices which makes consumers tighten their purse strings.

The Imperial opened in 1890 as the country's first grand hotel to accommodate foreign visitors at a time when the nation was modernizing after two centuries of self-imposed isolation. Monroe's visit to the hotel in February 1954 on an impromptu honeymoon with her husband, retired New York Yankees star Joe DiMaggio, caused a sensation and she had to greet crowds from a balcony in the hotel to appease those wishing to see her.


After raising its basic room rates by 10-15 percent last year, the Imperial currently charges an average room rate of 35,000 yen ($343) to 37,000 yen, approaching the average rate in the late 1980s, according to Sadayasu. The hotel's profit rose 2.1 per cent to 1.04 billion yen in the first quarter.

Internationally, average Tokyo room rates are still lower than in other major global cities including New York, London, Paris and Hong Kong, according to data cited by Savills in a report this month. The average in New York in the 12 months to the end of June was $255, compared with $165 in Tokyo, the data show.

Still, the impact from the 18 per cent rise in the yen this year is already becoming apparent in falling domestic department store sales, declining spending per tourist, and a slowing in the pace of growth in visitors to Japan.

The average spending per foreign tourist dropped 9.9 per cent to 159,930 yen, according to the Japan Tourism Agency, while the percentage decline among mainland Chinese visitors was even bigger at 23 per cent, the data show. The number of visitors to Japan last year rose 47 per cent to a record 19.7 million. The government is targeting 40 million tourists by 2020 when Tokyo hosts the Summer Olympics.

A bartender works inside the Old Imperial Bar. Photo / Tomohiro Ohsumi
A bartender works inside the Old Imperial Bar. Photo / Tomohiro Ohsumi

Sadayasu said his Tokyo hotel wants to keep a 50-50 balance between overseas and domestic visitors, as one-time events such as Lehman Brothers Holdings's collapse can result in a sudden drop-off in numbers.

"The impact of the stronger yen is large," said Kouki Ozawa, an analyst at Mitsubishi UFJ Morgan Stanley Securities in Tokyo. "It makes it harder to raise prices and lowers occupancy rates. Guests that might have stayed four nights now stay only for three due to budget constraints, for example."

My mission is to pass it on to the next generation.

Japan's benchmark Topix share index has fallen 15 per cent so far this year as the yen has strengthened. Falling stock prices make domestic clients less likely to use a hotel and wealthy guests may opt to stay in a standard room rather than a suite in such an environment, according to Sadayasu.

The hotel, rebuilt since Monroe's visit and now in its third iteration, still offers a Marilyn Monroe Breakfast for an added charge of 1,100 yen to guests who book under a special ladies plan. The same room service breakfast requested by the Hollywood icon comprises pan-seared lamb, crisp Melba toast and rich roasted coffee.

The Imperial Hotel in Tokyo. Photo / Tomohiro Ohsumi
The Imperial Hotel in Tokyo. Photo / Tomohiro Ohsumi

Famed US architect Frank Lloyd Wright designed the second Imperial Hotel, in which Monroe stayed. Pictures of other Hollywood greats that visited the hotel such as Cary Grant, Ava Gardner and Danny Kaye hang on the hotel's walls.

A rebuilt Imperial opened in 1970 and it has lost some of its glamor compared with newer overseas hotel operators, such as Peninsula Hotels, Mandarin Oriental Hotels, and Shangri-La, which have come to Japan in recent years. With over 900 rooms, the Imperial is far larger with a broader array of restaurants and facilities, including a Japanese Shinto shrine.

After spending 18 billion yen on a major refurbishment in 2010, the Imperial plans to renovate suites to cater for visiting foreign VIPs ahead of the Tokyo Olympics, and to attract wealthy Asian clients.

Sadayasu, who has been with the hotel for over thirty years, working in different roles from bellboy to head of limousine services, says he is determined to fight off challenges and keep the hotel's legacy running.

"My mission is to pass it on to the next generation."