As Japan continues to accommodate rising numbers of tourists, it’s putting a strain on the country’s hotel capacity. The cost of hotels is rising as a result. That’s forcing Japanese business travelers who operate on fixed budgets to settle for the crappiest rooms available.
According to a report from ITMedia, RevPAR (Revenue Per Available Room) in Tokyo crossed 10,000 yen (USD $63) in January 2022. By this March, that was up to 15,000 yen ($95). As of November, it’s sitting at 18,308 yen ($116).
It used to be easy for business travelers to get a business-oriented hotel room for under 10,000 yen. Now, lower-star hotels and even capsule hotels are routinely fetching over 10K yen a room. That’s bad news for the local workforce, as most Japanese companies give their employees a set travel budget in advance. That means settling for the cheapest room available, even if that’s a capsule hotel or an AirBnB-style residence.
Inbound travelers have outsized impact
On net, far more Japanese people use hotels than foreigners. In 2023, local hotels saw 474.56 million domestic travelers versus only 19.53 million foreign visitors. The number of inbound visitors has increased dramatically since then, with Japan announcing this week it set a new monthly record of 3.18 million tourists in November.
Still, domestic travelers vastly outnumber inbound travelers; at most, Japan will see 37 million tourists this year. So why are inbound visitors having such an outsized impact?
One travel industry expert said it’s because they’re bigger spenders, staying on average three or more nights for a single stay. By contrast, domestic travelers tend to stay two nights or less. The weak yen is also enticing visitors from countries such as the US to stay longer.
Not all hotels in Japan cater to tourists, of course. Many specifically target domestic vacationers and business travelers. However, hotels set their rates to match the average market price. That means even hotels that don’t cater to inbound tourists are getting more expensive.
The price hikes and demand crunch are forcing domestic travelers to stay on the outskirts of Tokyo, away from tourist-heavy areas. That means areas like Koiwa in East Tokyo or Fuchu in West Tokyo. While that works, it means traveling to midtown Tokyo for work-related activities can take anywhere from an hour to 90 minutes. (The fastest public transit from Fuchu to Roppongi takes slightly over an hour.)
ITMedia’s story generated over 2,000 comments on Yahoo! News Japan and active discussion on social media. One popular comment laments that, due to Japanese fealty to the concept of hospitality (omotenashi), many businesses won’t engage in two-tiered pricing, even though inbound visitors benefit from the country’s weakening currency.
“Between that and the government being the Finance Ministry’s lapdogs and steadily raising taxes, Japan’s becoming a country the Japanese can’t afford to live in.”
Some experts are also calling on Japanese companies to abandon the fixed-rate approach to business expenses (定額支給; teigakushikyuu) and move towards a “real expense” or out-of-pocket model (実費支給; jippi shikyuu).
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