Hotel room prices in Japan are rising to unprecedented highs as more and more tourists choose to travel to Japan.
According to data from hotel industry tracker STR, the average daily room rate in February 2024 in Japan was 18,915 yen (about 124.68 USD), up 25.5% year-on-year.
This is also the 26th consecutive month that hotel room prices in Japan have exceeded the same period last year.
The main driver of Japan's strong tourism recovery is the devaluation of the yen, which has allowed tourists from the US, Europe and Australia to stay longer in Japan.
During the Lunar New Year in February 2024, tourists from Taiwan, Hong Kong and Southeast Asia also increased impressively.
The average hotel room rate in February 2024 was 35.3% higher than the same period in 2019 before the COVID-19 pandemic. The average hotel occupancy rate was 75% this month, up 2.9 percentage points from a year earlier.
Hotel room rates in Japan are expected to start trending upward in early 2022 as the impact of the COVID-19 pandemic eases, with the average daily rate reaching 20,668 yen in December 2023 during the peak holiday season.
Luxury hotels and other high-end options also saw strong demand growth from domestic tourists.
According to the Japan National Tourism Organization (JNTO), the number of international visitors to the country in February increased 89% from a year earlier to 2.78 million, up 7.1% from the same period in 2019.
Demand from domestic tourists is equally strong, especially at weekends. People living outside central areas tend to travel to major cities to attend music , cultural and sporting events.
These travelers mainly stay in more affordable places, such as business hotels.
According to JNTO, in February, Japanese tourists made a total of 36.7 million overnight stays, up 4.2% from a year earlier.
Average daily room rates are expected to continue to rise, according to Metro Engines, a Tokyo-based data analytics company. Metro Engines provides systems that use artificial intelligence (AI) to predict optimal room rates up to a year in advance based on supply-demand trends and other factors.
Many hotels are using Metro Engines' system to implement dynamic pricing.
Higher costs are also a factor in rising room rates. A severe labor shortage has forced hotel owners to raise salaries for front desk staff and managers. The labor shortage is especially severe in areas outside the city center.
Some accommodations in those areas are unable to increase occupancy rates even as demand increases due to a lack of staff.
While more facilities are set to open, some projects are being delayed or halted due to rising construction costs, according to Tomohiro Makino, CEO of consulting firm Oraga Research. A shortage of rooms in certain areas could also push up room prices.
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