Leading Japanese hotel operators Hotel Okura Co. and Royal Hotel Ltd. said Friday they have agreed to a business tieup and will set up a joint venture to handle mainly marketing operations.

Their announcement comes at a time when an increasing number of foreign luxury hotel operators have launched new inns in central Tokyo, resulting in fierce competition.

The two firms will set up a new company, Orange Marketing Services Japan Co., to launch joint marketing, promotion, and reservations beginning in July. Okura will have a 55 percent stake in the joint venture, which will be capitalized at ¥95 million, while Royal will finance the remaining 45 percent.

"Building infrastructure as a hotel chain is very important to increase the competitiveness of both of us and to expand our business," Hotel Okura President Toshihiro Ogita told reporters in Tokyo. The two companies said they are not considering a merger at the moment, but will look to broader cooperation with other domestic firms as well as foreign chains. They will also exchange human resources and jointly purchase necessities to reduce costs.

"Foreign hotel operators increase customer loyalty through their global network of 500 to 1,000 hotels," Royal Chairman Takayuki Tsukuda said. "We can't compete with one brand in one region anymore. We have to build a network that can cover at least the domestic market and hopefully the Asian region."