Global Economics

Foreign Hotels Raise the Bar in Japan


Customer service is a Japanese specialty, but when it comes to high-end hotels, it's the outsiders that earn most of the highest marks

Apart from the fantastic food and beautiful temples, one thing that strikes many first-time visitors to Japan is the customer service, which is probably the best in the world. Whether it's convenience store employees who seemingly can't do enough to help, ticket collectors on bullet trains bowing deeply when leaving a carriage, or the gas station attendants who take away drivers' litter while filling up, in Japan the customer really is king. It's no surprise that many of the 8 million visitors to Japan each year return wondering why they don't get similar service back home.

Yet as good as service is in Japan, when it comes to high-end hotels, it's foreign-owned and managed hotels that are taking service levels even higher. In January a customer survey by Japanese business paper Nikkei found that 7 of the top 10 hotels were foreign-owned, with Ritz-Carlton's hotels in Tokyo and Osaka the most popular.

Building on the success of the Shinjuku Park Hyatt, which opened in 1994, a slew of upscale hotels have sprung up in Tokyo in recent years. Among the most expensive is the Mandarin Oriental, Japan's only six-star hotel, which opened in 2005, with rooms starting at $780 per night. Another is the 248-room Ritz-Carlton, in business since March, 2007, with room rates from $765. Other recent openings include the 290-room Conrad Tokyo in 2005 and the 314-room Peninsula Tokyo in autumn 2007. The Shangri-La, Tokyo, is slated to open in 2009.

Beyond Polite

It's easy to see why the Ritz-Carlton—located high above Tokyo in the Midtown Tower, part of a huge shopping and arts complex and the city's tallest building—ranks high in customer polls. Ten minutes from Tokyo's lively Roppongi district, it has spectacular views in every direction. Staff, while as polite and attentive as you would expect in Japan, are trained to be more engaging than at traditional Japanese hotels. And as is expected in Tokyo, the hotel offers excellent food—not least at Hinokizaka, the Ritz-Carlton's Michelin-starred Japanese restaurant.

But it is the Ritz-Carlton's attention to detail that stands out. Its Dutch general manager, Ricco DeBlank, is a proponent of kaizen, Toyota's philosophy of continuous improvement—and Toyota Motor (TM), in turn, sent Lexus managers in Japan to the Ritz-Carton for tips on improving service skills. "I constantly measure everything [because] without numbers you can't improve," says DeBlank. Check-in, for example, takes an average of 3 minutes and 10 seconds, but DeBlank would like it to be 2 minutes and 30 seconds. Before the hotel opened, he insisted that each of the thousands of crosshead screws in the hotel be adjusted so the crosses were aligned throughout the hotel. The process took a month to complete.

That sounds extreme, but DeBlank says Japanese customers, who account for about 70% of guests, appreciate small details and send dozens of letters a month. "Some are 14 pages long—with photos. They take note of everything," says DeBlank.

Pampered by Technology

Rising competition means newcomers have to work even harder to please customers, particularly once the initial buzz following a new opening dies down. At the Peninsula, which overlooks Tokyo's Imperial Palace and offers the largest suite among high-end hotels in Tokyo, General Manager Malcolm Thompson says customers also appreciate the new technology the hotel has added to its rooms, including everything from in-room humidifiers installed in the air conditioning system, portable phones that work like normal hotel telephones in the rooms and like cell phones outside, and even nail-polish dryers. "If you're a foreign company coming here, you had better well have your act together," Thompson says.

Yet despite all the new rivals from afar, local hotels don't appear to have suffered. The biggest Japanese hostelries—the Imperial Hotel, Hotel Okura, and the New Otani Hotel—have seen room rates, while less than half those of foreign rivals, increase during the current wave of building. One reason is that the foreign-owned hotels, while creating a lot of media attention, have fewer rooms and tend to focus on relatively small groups of wealthy clients.

The three Japanese hotels, by contrast, have 800 to 1,500 rooms each, which means they can cater to a wider range of customers, such as conference guests or large weddings. Of course, that doesn't mean they can rest on their laurels. At the Imperial, guests can choose from one of seven types of pillows, and soon rooms will include air purifiers that, some people believe, offer health benefits by churning out negative ions. "Rather than threatening Japanese hotels, the new hotels are creating demand," says Masahiro Ishiwata, deputy editor of Hoteres, a weekly magazine.

Rowley is a correspondent in BusinessWeek's Tokyo bureau. With Hiroko Tashiro in Tokyo.

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