Catering to Japanese travelers has its advantages, but it doesn’t solve all a hotel operator’s woes.

The New Otani Hotel & Garden in downtown Los Angeles is finding that even though occupancy rates are up, there are challenges ahead. “It’s a mixed bag,” said Ron Kipling, director of rooms for the hotel.

International visitors comprise about 50 percent of the hotel’s clientele, with many of those coming from Japan. As the yen’s purchasing power has risen by 25 percent against the dollar, it has made travel to Southern California a lot more appealing for Japanese travelers.

January occupancy at the 434-room New Otani was up between 8 percent and 10 percent over the year earlier, Kipling said, pushing levels to close to 60 percent. In the closing months of 2004, the average daily room rate rose 3 percent to 4 percent compared with the year-ago period, said Kipling.

The recent occupancy rate of most downtown hotels hover around 60 percent to 65 percent, according to PKF Consulting.

But gauging the effect of the rising buying power of foreign currencies is hard to pinpoint. The rebound at the New Otani, and other hotels, came as the industry was starting to shake off the effects of the 2001 terrorist attacks, followed by the SARS outbreak and travel concerns at the beginning of the war in Iraq.

Still, the undeniable strength of other currencies has not resulted in free-spending ways by overseas tourists.

“If you go back a decade ago to where international travelers spent a lot of money, bought high-end products, shopped on Rodeo Drive and were very name-conscious, we haven’t seen a return to those days,” Kipling said. “The travelers we see are still somewhat budget-conscious in how they spend money.”

While larger hotel chains may be able to spend enough on overseas advertising to capture an even bigger share of international visitors, the New Otani is unable to do that, although it continues to market its L.A. and Hawaii hotels to the Japanese and European markets, said Kipling.

And while it’s clear that the U.S. is poised to see an increase in international visitors because it has become cheaper to travel here, that doesn’t mean all destinations and hotels will reap the benefits.

“There’s a lot of competition for travel dollars from Las Vegas, Seattle, San Francisco and San Diego, as well as around the country,” Kipling said. “We can’t be complacent simply because suddenly we have a (weak) national currency. We have to market the city aggressively and work to make improvements and offer amenities we know we need to, to be attractive to foreign visitors.”