Hokkaido Urges Businesses to Adopt Two-Tier Pricing for Travelers

Hokkaido Two Tier Pricing
Hokkaido joins the call for two-tier pricing for tourism in Japan, calling on businesses to give prefectural residents a discount.

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2024 is shaping up to be another lucky year for Japan’s tourism industry. As travelers flock to experience Japan’s rich culture, concerns about overtourism and disruptions to local life are growing. In response, both central and local governments are exploring solutions. One new idea: a dual fee system that charges tourists more than locals. In the latest sign this approach is gaining popularity, Hokkaido is calling on local merchants to adopt the strategy.

Pricing split

Tough times call for tough measures. That seems to be the driving force behind Hokkaido’s imminent introduction of a “dual pricing” system for tourist attractions and services. Simply put, higher prices for tourists and lower ones for locals.

This plan has been in the works in Japan for a while now. In Hokkaido, it was first announced during a Yomiuri panel discussion featuring Kenji Koganezawa, Chairman of the Hokkaido Tourism Organization, and Masayuki Onishi, President of Tsuruya Holdings.

The main takeaway: local tourism saw a significant decline during the 2024 Golden Week in Hokkaido’s popular spots. Prefectural locals aren’t going to hot vacation spots like Niseko – possibly because they’re feeling priced out.

Given the apparent declining trend, Chairman Koganezawa is pushing for companies and organizations to lower fees for local customers starting this fall—a dual pricing system, in essence. This initiative aims to standardize approaches across all sectors, from accommodations to dining and transportation.

In the accommodation sector, locals might soon enjoy a 10% discount. Meanwhile, tourists could face a 3% rate increase, aiming to balance revenue impacts. Discussions are ongoing, with many factors still on the table.

A rising trend

Himeji Castle, Hyogo Prefecture
Himeji Castle in Hyogo Prefecture is also launching a two-tier pricing system. (Picture: はっち / PIXTA(ピクスタ))

Amid a weakening yen and inflation, foreign tourists are clearly outspending locals. Visitor numbers soared past 3 million for two consecutive months, hitting 3,042,900 in April alone. The Ministry of Finance’s preliminary report for fiscal year 2023 reveals a travel balance of ¥4.2295 trillion, underscoring a notable gap between Japanese spending abroad and inbound tourist expenditures.

To retain local tourists, tourist areas across Japan are increasingly considering the dual pricing system as the solution. Different industries have proposed various plans, aiming not only to attract more locals but also to raise funds for area preservation and enhancement.

One notable proposal this year came from Himeji Castle: a plan for a dual admission fee system that would separate foreign tourists from locals. The reasons cited, all connected to concerns over over-tourism, were the projected costs of preserving the UNESCO site. Himeji City Mayor Kiyomoto shared his thoughts:

“It’s not about turning a profit. When calculating the costs of maintaining a sustainable World Heritage site, there should be varying prices for children, seniors, educational visits, and pure tourists. Implementing dual pricing for citizens and international visitors could be a viable approach.”

But Himeji Castle isn’t the only one taking action. The beloved tourist destination “Blue Pond” in Biei Town, Kamikawa, Hokkaido, is also considering an “entrance tax” for visitors. With annual tourist numbers averaging over 250 times the local population, the area is feeling the strain of overtourism. Like Himeji, this tax could help fund necessary maintenance costs.

Divide beyond price

The dual pricing system experiments didn’t stop at cultural sites; the dining industry has also embraced this approach. With food prices seemingly too affordable for visitors with strong currencies and too high for locals managing a weak yen, restaurants are implementing dual pricing strategies to strike a balance.

Among them, establishments like “Kaisen Viking & Hamayaki BBQ Tamatebako” in Shibuya, Tokyo, have differentiated lunch set prices based on the customer. Tourists are charged ¥6,578, whereas domestic residents enjoy a generous ¥1,100 discount.

Others have taken a more creative approach. For instance, a Hiroshima okonomiyaki restaurant launched “Prefecture Day” every Friday night starting April 2024. Essentially, an exclusive evening reserved for locals and returning visitors. With 80% of its usual clientele being foreign tourists, this initiative aims to reengage with regulars.

“The restaurant was originally a place for locals to enjoy and communicate, not just for tourists. I believe the current situation is a bubble that won’t last forever,” commented the owner.

Yet, criticism quickly ensued over the perceived exclusion of foreign visitors one day each week. This debate extends beyond “Prefecture Day” to encompass concerns about the dual pricing system and the broader notion of creating a divide.

What do people in Japan think?

Waterfalls at the Shirogane Blue Pond in Biei, Hokkaido. (Picture: KAZE / PIXTA(ピクスタ))

Opinions on this approach are mixed. Many locals welcome the relief of their costs, and some agree that higher tourist fees are necessary to maintain high-quality services. But what are the actual numbers on positive feedback? Let’s break it down.

According to the February 2024 Loyalty Marketing survey, about 60% of the population supports the dual pricing system. Of those, 29.4% strongly back the measure. Many view it as an effective way to combat over-tourism and preserve the environment. One X user commented:

“Globally, dual pricing, or foreigner pricing, is quite common. Complaints that it is discriminatory or will deter inbound tourism are unwarranted. Given the current issues with overtourism, such concerns don’t align with reality. Japan has simply been too accommodating until now.”

Even so, concerns remain. Critics warn of a potential backlash, making local tourism less profitable and less appealing. Others worry about the discriminatory nature of this approach:

“Frankly, it’s discriminatory and highlights flaws in Japanese societal ethics and xenophobia. This could lead to distrust in Japan and aversion among travelers, ultimately harming the Japanese economy in the long run. It should be regulated by law.

Careful consideration required

Many places worldwide use dual pricing to tackle overtourism. Examples include Bhutan’s $100 tourist tax and the ninefold higher fees for tourists at Egypt’s Giza Pyramids. However, as Professor Takehiro Sataki from Josai International University’s Faculty of Tourism notes:

“In developing countries, dual pricing is often used to earn foreign currency, but it’s rare in developed countries like Japan. Some might argue that it’s unfair to have different prices based on nationality. As Japan promotes itself as a tourist-friendly country that actively welcomes foreigners, we need careful discussion to see if this will impact inbound tourism trends.”

Professor Sataki also emphasized other key factors, such as the status of foreign residents in Japan, to be treated as “locals” regardless of nationality. Plus, long-term concerns—potential backlash from foreign tourists, a decline in Japan’s appeal, and the risk of increased inflation.

In other words, the situation is not straightforward—it goes beyond just the cost of services. Implementing such a complex plan will require ongoing discussions and adjustments ahead.

Need help navigating rising tourism prices in Japan? Want a unique, one-of-a-kind Japan experience? Let the experts at Unseen Japan Tours plan a tour based on your interests. We can even serve as your guides!

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Sources

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人気観光スポット「青い池」で “入場税” 徴収を検討…人口の『250倍以上』観光客が訪れる北海道の美瑛町 オーバーツーリズム対策の切り札に Yahoo News Japan

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