The Plan in Outline — About 240 Rooms in 23,000 m² of Floor Area, or Roughly 96 m² per Room

First, the outline of the plan as disclosed. The project is named the “Kyoto Shimbun Building Redevelopment Project” (tentative), and the developer is Kyoto Gosho-Minami Kaihatsu TMK, established in November 2025 by three companies: Taisei Corporation, Heiwa Real Estate and MINOR INTERNATIONAL PCL. The 3,894 m² site remains owned by Kyoto Shimbun Holdings and is leased to the TMK. The existing North Building (8 floors above ground, 2 below) will be renovated, while the South Building will be demolished and replaced with a new 5-story building with one basement level. Total floor area is about 23,000 m², with reinforced concrete construction. The hotel will be operated by Royal Minor Hotels (established March 31, 2025), a joint venture between Royal Holdings and Minor Hotels, and it will be the Japan debut of Avani, a brand with more than 40 hotels in 24 countries. The release states that the room count and exterior are based on the basic plan and may change through design work and consultations with authorities.

Dividing the numbers plainly, using about 23,000 m² of floor area for about 240 rooms works out to roughly 96 m² per room (gross floor area basis). By comparison, Motto by Hilton Kyoto Shijo Karasuma, also scheduled to open in Kyoto in fiscal 2029, is planned with 108 rooms in about 4,300 m², or roughly 40 m² per room. Avani’s building can therefore be read as devoting considerable floor area to uses other than guest rooms. This is consistent with the announcement that a restaurant using the former press room and a lobby lounge will be opened to the community, and it is reasonable to assume a lifestyle-hotel revenue model that earns from F&B and public spaces rather than a rooms-only model.

Room Inventory Within 1km of Marutamachi Station — Small Inns Drove 2013-19 Growth; Large Hotels Arrived After 2020

We checked each property within a 1km radius of the planned site (centered on Marutamachi Station at 35.0165, 135.7596, as verified on the GSI Maps, covering the southern half of the Kyoto Imperial Garden, the east side of Nijo Castle, and parts of Karasuma-Oike and Sanjo-dori), and defined the 148 properties and 5,933 rooms with sales observed in July-September 2026 as active stock. By size band, there are 75 properties with 10 rooms or fewer (213 rooms), 42 with 11-50 rooms (1,115 rooms), 18 with 51-150 rooms (1,671 rooms), and 13 with more than 150 rooms (2,934 rooms). Whole-house machiya rentals and guesthouses account for half of the properties, while half of the rooms are concentrated in the 13 properties with more than 150 rooms. New supply of about 240 rooms equals 4.0% of the area’s rooms, or 8.2% of the over-150-room class.

The area’s build-up is easiest to understand by opening year. Tracing active properties back by opening year, 21 properties opened in 2012 or earlier account for 1,684 rooms, while the 22 properties opened in 2013-16 add only 150 rooms, 20 of which have 10 rooms or fewer. Another 45 properties were added in 2017-19, but with only 1,187 rooms: 23 have 10 rooms or fewer and 16 have 11-50 rooms. In other words, what grew around Marutamachi during the inbound boom was small-scale lodging; only two large properties with more than 150 rooms opened in that period, Tokyu Stay Kyoto Sanjo-Karasuma (2017, 182 rooms) and Hotel Resol Trinity Kyoto (2018, 180 rooms). The picture changes after 2020. The 23 properties opened in 2020-22 add 1,700 rooms (four with more than 150 rooms: Ace Hotel Kyoto, HOTEL THE MITSUI KYOTO, Chapter Kyoto and Hyatt Place Kyoto), and the 27 opened in 2023-26 add 1,168 rooms (three with more than 150 rooms: Four Points Flex by Sheraton Kyoto Oike, Mitsui Garden Hotel Kyoto Sanjo Premier and Loisir Hotel Classic Garden Kyoto Sanjo), showing a shift toward larger properties. Avani sits on the extension of this post-2020 trend.

Price Tiers of the 200-Room Class — Only Three Large Hotels at ¥30,000-¥60,000, a Thin Band for Avani to Enter

Next, we look at where a property of about 240 rooms would sit in the area’s price structure. Ranking the 13 properties with more than 150 rooms by estimated settled ADR for October 2025-September 2026 (12-month average): Ace Hotel Kyoto at ¥57,600, Hyatt Place Kyoto at ¥37,700, Chapter Kyoto, a Tribute Portfolio Hotel at ¥32,000, Kyoto Brighton Hotel at ¥29,400 and ANA Crowne Plaza Kyoto at ¥24,600. Hotel Monterey Kyoto, Tokyu Stay Kyoto Sanjo-Karasuma and Hotel Resol Trinity Kyoto are in the ¥18,000-¥20,700 band, and Four Points Flex, Loisir and Hearton Hotel Kyoto in the ¥10,100-¥11,400 band. The deluxe properties outside the scope of the settled ADR estimate, HOTEL THE MITSUI KYOTO, The Royal Park Hotel Iconic Kyoto and Mitsui Garden Hotel Kyoto Sanjo Premier, show listed prices (all-plan average, tax included) of ¥253,800, ¥53,700 and ¥52,400 respectively.

Plotting this distribution on two axes, room count and estimated settled ADR, only three properties, Ace, Hyatt Place and Chapter, fall in the band of more than 150 rooms and ¥30,000-¥60,000. Given that the median estimated settled ADR for Nakagyo Ward as a whole is ¥17,000 on a 12-month average (N=102-112 properties), and the median for the 44 properties in the area for which settled ADR can be estimated is ¥19,700, the premium lifestyle tier Avani is targeting is roughly twice the level of a typical property in the area, and competition is concentrated in the ¥10,000-¥25,000 band of large business and city hotels. Note that during the November 2025 autumn-foliage season, Nakagyo Ward’s estimated settled ADR rose to ¥25,800, 2.1x the ¥12,500 of January 2026 and 2.3x the ¥11,300 of June 2026, the lowest of the 12 months. Because seasonality is so pronounced in this market, whether a lifestyle-tier property can fully capture rates in peak months is what separates outcomes.

We also checked inventory sell-through on a peak date. For the night of Friday, August 14, 2026, during the Obon holiday, three properties with more than 150 rooms had at least 30% of their total rooms listed on major booking sites: Ace Hotel Kyoto, Mitsui Garden Hotel Kyoto Sanjo Premier and Kyoto Brighton Hotel. (Properties listing less than 30% were excluded because their inventory cannot be read reliably. Small listed allocations may reflect several possibilities, such as selling mainly through other channels like the official website or travel agencies, releasing inventory gradually as check-in approaches, or contracts that set small allocations to booking sites in the first place.) Ace Hotel Kyoto (213 rooms) had 120 rooms remaining at LT45, 106 at LT30, 71 at LT14 and 46 at LT1, continuing to sell into the final days while raising its lowest listed price from ¥35,400 at LT45 to ¥59,700 at LT14, showing how a lifestyle-tier property captures rate from late demand. Mitsui Garden Hotel Kyoto Sanjo Premier (185 rooms) drew down its remaining inventory at a steady pace from 73 rooms at LT45 to 7 at LT1, and Kyoto Brighton Hotel (182 rooms) sold through from 49 rooms to 4. All of these are room-count observations and do not indicate the occupancy rate of any individual property.

Deal Structure — The TMK Holds the Building, the Brand Owner Invests, and a JV Operates

The project’s capital structure has three layers. Kyoto Shimbun Holdings retains the land, and Kyoto Gosho-Minami Kaihatsu TMK renovates, builds and owns the buildings on leased land. MINOR INTERNATIONAL PCL. participates in that TMK alongside Taisei Corporation and Heiwa Real Estate, and the hotel is operated by Royal Minor Hotels, a joint venture between Minor Hotels and Royal Holdings. Under the conduit (pass-through) requirements that give a TMK its tax treatment, the TMK does not operate a lodging business itself; standard practice is a lease or a management contract with an operating company. The disclosed materials do not say whether this project uses a lease or a management contract, or whether rent is fixed or variable.

What stands out structurally is that the foreign company that owns the brand is participating from the development stage as an investor in the TMK. Overseas brands usually enter Japan by placing their brand, via a franchise or management contract, on a building developed by a domestic owner; cases in which the brand side shares development risk are limited. In July 2025, Minor signed a hotel management agreement with Rist Development for Anantara Karuizawa Retreat (51 rooms, opening planned for 2030), which is a contract-based entry. In Kyoto, by contrast, it is taking part in both equity and operation, and Royal Minor Hotels is reported to be planning 21 hotel openings in Japan by 2035 under three brands: Avani, Anantara and Tivoli. On the domestic side, Royal Holdings has hands-on experience with staffing and licensing through its restaurant business and its operation of Richmond Hotels, and is expected to translate the foreign brand’s operating standards into Japan’s labor and Hotel Business Act framework.

From a lender’s perspective, three points will drive the assessment: the collateral is a building on leasehold land, the works include a renovation that retains the existing frame, and opening is three years away in fiscal 2029. Lease term and ground-rent revision terms, the treatment of any existing non-conforming parts of the renovated building, and construction-cost fluctuations would be absorbed by the operator’s creditworthiness under a fixed-rent structure, or by the seasonal swing in the area’s estimated settled ADR under a variable-rent structure. As shown in the previous section, Nakagyo Ward’s monthly ADR differs by 2.1x between January and November and by 2.3x between June and November, so any variable-rent design should look separately at capturing rate in peak months and at the floor in off-peak months.

Renovation Plus New Build — Securing Floor Area Close to the 600% FAR Cap While Keeping the Existing Frame

Checking the site’s zoning in the MLIT Real Estate Information Library shows a commercial district with a 600% floor-area ratio and 80% building coverage; 600% of the 3,894 m² site gives a simple cap of 23,364 m². The disclosed floor area of about 23,000 m² is about 98% of that (a simple calculation that ignores FAR bonuses and exclusions), suggesting that retaining the existing 8-story North Building secures floor area that nearly uses up the current FAR. Under its 2007 New Landscape Policy, Kyoto City reorganized maximum building heights into six levels from 10m to 31m, setting 31m along major arterial roads in the city center while holding areas meant to harmonize with traditional kyo-machiya townhouses to 15m. Existing buildings constructed before the tighter rules may not be able to recover the same floor area if rebuilt under current regulations, so a renovation that keeps the frame can be advantageous in both height and FAR compared with a new build under current rules. The institutional background of this point, and how the city’s scheme for attracting high-quality accommodation facilities is applied, are beyond the scope of this article.

A number of cases in Kyoto have converted corporate headquarters and office buildings into hotels, and Avani continues that lineage. Marufukuro, a renovation of the former Nintendo headquarters building (completed 1930), retained three RC buildings running north to south, partly dismantled and restored them, added a new wing and opened in 2022. Shinpuhkan, the former Kyoto Central Telephone Office (completed 1926), kept its preserved building while adding a new one, and Ace Hotel Kyoto opened there with 213 rooms in 2020. The Imperial Hotel Kyoto, which uses the Yasaka Kaikan in Gion, kept the southwest facades and structure and demolished the rest because the theater building was hard to convert as-is; it opened in March 2026 with 55 rooms. All of these retain the existing design while adding rooms in a new wing, and Avani’s North Building renovation plus South Building new build applies this method at a scale of about 240 rooms, larger than the three cases cited here (18-213 rooms).

Entry Routes for Overseas Brands — Rebranding, Domestic Owner, and “Equity Plus JV Operation”

Overseas brands entered Kyoto one after another in 2025-26, but the way capital comes in varies. On August 24, 2026, IHG Hotels & Resorts announced a portfolio agreement covering 14 hotels and 1,063 rooms in Kyoto City owned by GCP Hospitality, part of Hong Kong’s Gaw Capital; over the next 12 months, 12 will be renovated and converted to the midscale conversion brand “Garner”, one to “Holiday Inn Express”, and one will remain unbranded. Ownership is a foreign fund and the brand is placed by contract: a rebranding model. Hilton has Motto by Hilton Kyoto Shijo Karasuma (108 rooms, opening planned for fiscal 2029), a new build developed by a domestic owner, and a plan to convert Kyoto Brighton Hotel (opened 1998, 182 rooms) into a Curio Collection by Hilton with about 160 rooms in 2028, combining the domestic-owner model with a brand conversion of an existing hotel. Hyatt Place Kyoto (239 rooms), which opened in the area in April 2022, is a precedent of similar size to Avani and serves as a reference point for price tier.

Compared with these, Avani is a third model in which “the brand owner invests in the TMK and a joint venture with a major domestic restaurant company operates the hotel”; the difference is that the brand side enters the area not only as operator but also as equity. For developers, this means that negotiations to bring in an overseas brand can extend beyond the level of franchise and management fees to the sharing of development funding and the design of the exit (a sale or inclusion in a REIT). For hotel operators, it is an implemented example of a JV operating company between a foreign brand and a domestic business, an option for bridging brand standards with domestic labor and licensing practice.

Room Revenue Sensitivity — ¥1.8bn-¥4.3bn per Year Across Four Reference Price Tiers and Occupancy; the Monthly Floor Is Key to Security Design

As noted in the deal-structure section, whether rent is fixed or variable, and whether the arrangement is a lease or a management contract, has not been disclosed. Under variable rent or a management contract, what lenders and developers need to look at is the level and volatility of room revenue. Here we fix the room count at about 240 rooms (87,600 available room-nights per year), take ADR from the estimated settled ADR of four reference properties in the area (12-month average for October 2025-September 2026, tax-excluded equivalent), and assume annual occupancy of 70-85% as a modeling assumption to estimate room revenue. The center of the assumption is the March 2026 result for 113 major hotels in the city compiled by the Kyoto City Tourism Association (81.6%), not the actual results of each reference property. Non-room revenue such as F&B and banquets is excluded.

Against ¥2.64bn per year in the middle case (Hyatt Place Kyoto level, 80%), the pessimistic case (Kyoto Brighton Hotel level, 70%) is ¥1.80bn, about 30% lower. While the vertical spread in the table (occupancy 70% to 85%) is about 1.2x, the horizontal spread (ADR ¥29,423 to ¥57,591) is about 2x: what determines the revenue range is the choice of price tier more than occupancy. The optimistic Ace Hotel Kyoto case reaches over ¥4bn per year, but it should be read as an upper-bound guide premised on the property with the highest estimated settled ADR in the area.

More important than the annual level is the monthly swing. Over the 12 months, the reference properties’ monthly estimated settled ADR differed by about 2.0x to 3.3x between the highest and lowest month (Chapter Kyoto: ¥53,598 / ¥20,251, about 2.6x). Hyatt Place Kyoto went from ¥64,107 in October 2025 to ¥19,242 in February 2026, a wider swing than the 2.3x of Nakagyo Ward as a whole. The lifestyle tier can capture high rates in peak months, but its off-peak declines can also be larger, so a variable-rent design is safer if it is premised on the off-peak floor rather than the annual average.

The room count is based on the basic plan and may change in later design stages. Even across 200-280 rooms, the supply increase relative to the area’s rooms stays at 3.4-4.7%, so the issue remains competition within the over-150-room class (6.8-9.5%) and with the three incumbents in the ¥30,000-¥60,000 band, rather than the impact on the market as a whole.

Investment Considerations — Five Axes: Demand, Brand, Structure, Building and Market

On demand, according to the Kyoto City Tourism Association, occupancy at 113 major hotels in the city in March 2026 was 81.6% (+2.5pt YoY), average room rate was ¥26,017 (+4.7%), and RevPAR was ¥21,230 (+8%). Foreign guest-nights were 559,898 (-0.4%); by country and region, the United States led with 27.4%, Europe grew +16.0%, and China fell -64.9%. The association projected April occupancy at 81.1% (vs. 89.5% a year earlier). According to Japan National Tourism Organization (JNTO) estimates, international visitor arrivals in August 2026 were 3,098,900 (-9.6% YoY), and the January-August cumulative total was 27,626,300 (-2.7%); China fell -59.0% while South Korea rose +28.7% and the United States +1.5%, showing a reshuffling of the source-market mix. A rising share of visitors from Europe, North America and Australia could be a tailwind for lifestyle-tier brands. However, the area’s foreign-language review share is 47.3% at Ace Hotel Kyoto and 33.5% at Hyatt Place Kyoto, while Hearton Hotel Kyoto, with one of the lowest estimated settled ADRs in the area, has the highest at 86.5%; there is no consistent relationship between price tier and foreign-language review share. Because foreign-language reviews include languages other than Western ones, how much Western demand flows to the lifestyle tier needs to be checked separately against market-by-market lodging statistics.

Summary

The room stock within 1km of Marutamachi Station stands at 148 active properties and 5,933 rooms, built up in two stages: inns of 10 rooms or fewer grew in 2013-19, and large properties with more than 150 rooms arrived after 2020. Avani Kyoto’s roughly 240 rooms equal 4.0% of the area’s rooms, and only three incumbents, Ace, Hyatt Place and Chapter, occupy the band of more than 150 rooms at an estimated settled ADR of ¥30,000-¥60,000, leaving room for lifestyle-tier supply. The deal structure, in which the brand owner invests in a TMK and a JV with a major domestic restaurant company operates the hotel, brings capital in differently from IHG’s rebranding model or Hilton’s domestic-owner model. Renovating the existing North Building works as a way to secure floor area close to the 600% FAR cap, and the project can be seen as an attempt to scale Kyoto’s conversion practice, built up through Marufukuro and Shinpuhkan, to about 240 rooms. For developers and lenders considering bringing in an overseas brand, it is likely to become a precedent that widens the discussion from negotiating brand fees to designing capital and exit.

Frequently Asked Questions

Q. How much will the opening of Avani Kyoto increase rooms around Marutamachi?
A. Against the 148 properties and 5,933 rooms within a 1km radius of Marutamachi Station with sales observed in July-September 2026, about 240 rooms is a 4.0% increase. Limited to the large properties with more than 150 rooms (13 properties, 2,934 rooms), it is 8.2%.

Q. Are there properties of the same size and price tier nearby?
A. Three properties have more than 150 rooms and an estimated settled ADR (12-month average) of ¥30,000-¥60,000: Ace Hotel Kyoto, Hyatt Place Kyoto, and Chapter Kyoto, a Tribute Portfolio Hotel.

Q. Can a TMK (special purpose company) operate a hotel directly?
A. Under the conduit requirements, a TMK does not operate a lodging business itself; standard practice is to lease the hotel to an operating company or to entrust its operation under a management contract. The disclosed materials do not state which approach this project will take.