In the heart of Tokyo, a modest hotel room now costs more than double what it did five years ago. As Japan experiences a historic tourism boom local hotel operators have emerged as some of the biggest beneficiaries. Yet sector shares continue to underperform.
Visitors to Japan reached a record high last year, with 36.9mn international arrivals, surpassing the pre-pandemic peak of 32mn in 2019. This surge has been fuelled in part by a weak yen, which continues to attract budget conscious travellers from around the world. The momentum has continued into this year, with January visitors hitting a monthly record.
Tourist spending in Japan reached a record ￥8.14tn ($56bn) last year, more than 50 per cent higher than 2023 and nearly double pre-pandemic levels. A large chunk of this flowed into the hotel sector, as the surge in visitors drove both occupancy and room rates to historic highs. In September, the national average hotel rate climbed 12.6 per cent to ￥19,381 per night, the highest ever for that month, according to analytics firm STR.