Hotel rates in Japan are soaring as the number of inbound tourists surges and the hospitality sector’s labour shortage continues to bite.
Attracted by the weak yen and the first cherry blossom season since Japan downgraded Covid-19 to the same level as seasonal influenza, 3.08 million international visitors arrived in March, up 11.6 per cent on the same month in 2019, according to the Japan National Tourism Organization (JNTO).
The average room rate for March was 20,986 yen (US$134), equating to almost a 20 per cent increase year-on-year, and the highest level since August 1997, according to real estate company CoStar Group.
Of 48 countries surveyed in the four weeks ending March 9, 2024 by analytics provider STR, Japan led in year-on-year revenue per available room (RevPAR) growth, along with Greece, Malaysia, the Czech Republic, and Singapore. Japan also enjoyed the highest average daily rate growth of all countries, at 30 per cent.
Analysts attribute rising rates to unprecedented demand from international arrivals, together with average hotel occupancy of 78 per cent and a shortage of hotel staff.
A survey by the Japan Federation of Service & Tourism Industries Workers’ Unions shows 85 per cent of travel and hospitality business operators are limiting their operations due to not having enough workers, with 80 per cent of hotels and ryokan inns employing part-time or temporary staff to fill the gap in regular workers.
The weak yen means international tourists are able to shell out for the higher costs of hotel rooms but travel agents fear this may hinder sustainable travel in Japan.
Ramkey, an independent luxury tour guide, told TTG Asia that his clients were paying roughly 50 per cent of their travel budget on airfares and hotels, which he described as “concerning.”
“Persuading more visitors to go off the Golden Route (to less-visited areas) will continue to be tricky if the clients’ overall travel costs remain high,” he explained.
Rising hotel rates also risk pricing out domestic travellers, who made 36.7 million cumulative overnight stays in February, up 4.2 per cent year-on-year, but mostly in business hotels, which are more affordable, according to JNTO.
