Japan's hotel market: from recovery to a high-yield growth cycle
Japan’s hotel market has moved beyond post-pandemic recovery into a high-yield growth cycle. While the explosive visitor volume increases seen right after borders reopened are now moderating, spending per guest is hitting record highs, driven by premium travel, longer stays, and more luxury experiences. Operators and investors are shifting focus from just filling rooms toward maximizing revenue through higher room rates and added services like food & beverage, wellness, and curated experiences.
Key trends:
Higher-spending guests: Wealthier leisure travelers, business travelers, and corporate events are pushing up average daily rates (ADR) and ancillary revenues. Ultra-luxury boom in Tokyo and Osaka: Many international luxury brands and high-end properties are entering these markets, increasing competition but also lifting pricing potential. New lodging taxes in Kyoto: Steep, tiered tourist taxes have raised costs in Kyoto, prompting hotels to package services and be clearer about pricing to avoid surprises for guests.
What it means:
For hotels: Focus on premium services and dynamic pricing to capture higher spending. For investors: Core urban luxury assets remain attractive, but pricing risks exist in markets with new taxes. For travellers: Expect higher prices in major cities, and consider package deals or nearby neighbourhoods to get better value. 
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