The spike in the number of foreigners travelling to Japan has resulted in hotel room prices climbing nearly 20 per cent in December 2022 as compared with the same month before the pandemic.
According to The Straits Times, another reason for rising hotel room rates is the high energy prices, as well as the labour crunch that has forced some hotels to limit the number of rooms on offer, which limits supply and pushes prices higher.
These high prices are not expected to subside any time soon.
The average price of a hotel room in Japan in December 2022 was 17,127 yen (US$130), which was 10.8 per cent higher than that of the previous month.
The highest average room price last December – about 83,000 yen – was recorded at the Palace Hotel Tokyo. The Prince Hotel brand saw the January average price rise to about 13 per cent above pre-pandemic levels, while Okura Tokyo’s average room prices fell three per cent compared with December last year.
The average in December 2022 was also 18.4 per cent higher than the average in the same period for 2019, while the occupancy rate stood at 75 per cent, just under the 2019 rate of around 80 per cent.
According to the Japan National Tourism Organisation, nearly 1.4 million foreign travellers arrived last December, which is 54 per cent of December 2019.
In January, data showed that demand remained strong despite being the low season. In addition, domestic travel has also increased due to government subsidies.
Another strong month is expected for February, with Seibu Prince’s Nagoya Prince Hotel Sky Tower already seeing reservations for February rise to 2.4 times those of the same month in 2022.
For some foreign-brand luxury hotels in the Japanese capital, room rates have risen as high as 200,000 yen per night.
Japanese hotels may see raising room rates as an opportunity to raise the wages of their workers and the financial stability of operators, which had suffered throughout the pandemic. Additionally, a sudden surge in prices could also cool demand.
However, if the prices rise too high too fast, they could offset the benefit of the government subsidy programmes for the domestic market.