Japan Hotels See Soaring Prices as Foreign Tourists Drive Fierce Competition for Rooms, Leaving Domestic Travelers Struggling to Keep Up

Published on April 27, 2025

In recent months, hotel prices in Tokyo and other major Japanese cities have experienced significant increases, with rates rising by as much as 50% year-on-year during the latter part of 2024. This surge in accommodation costs has been attributed to a combination of factors, including a substantial rise in foreign visitors, labor shortages in the hospitality industry, and increased operational expenses. The implications of these developments are far-reaching, affecting both domestic and international travelers and posing challenges for the broader travel industry.​

Rising Accommodation Costs

Significant Year-on-Year Increases

A survey conducted by Tokyo Shoko Research Ltd. (TSR), a Tokyo-based corporate analytics firm, revealed that hotel room rates in Tokyo and regional Japanese cities had increased by over 50% compared to the same period the previous year. The survey, which covered 15 hotel brands across 13 publicly traded operators, indicated that all companies surveyed had raised their prices, with some rates increasing by as much as 1.6 times. The average rate per room at eight business hotel brands was approximately 13,986 yen (about $98), marking a 45% increase from the same period in 2019. Rates at four higher-priced “city hotel” brands also saw a rise of about 35%, reaching 20,897 yen (around $146), exceeding 20,000 yen for the first time in the last five years.​

Factors Contributing to Price Increases

Several factors have contributed to the escalating hotel prices in Japan:​

• Surge in Foreign Visitors: The number of international travelers visiting Japan has increased significantly, leading to higher demand for accommodations.​
• Labor Shortages: The hospitality industry is facing challenges in staffing, leading to increased labor costs.​
• Rising Operational Expenses: Increased costs associated with changing linens and other operational requirements have further driven up prices.​

According to TSR, there are currently few factors working to lower prices, and with numerous international events scheduled in Japan, including the World Expo in Osaka, strong demand for guest rooms is expected to persist.​

Forecasted Increase in Foreign Visitors

JTB Corp., a major travel company, has forecasted that the number of foreign visitors to Japan in 2025 will reach 40.2 million, marking an increase of about 9% from the previous year and setting a new record high for the second consecutive year. This surge in international arrivals is expected to further intensify the competition for hotel accommodations, particularly in major cities like Tokyo.​

Challenges Facing the Hotel Industry

Labor Shortages and Increased Operational Costs

The hotel industry in Japan is grappling with labor shortages, leading to increased competition for workers and higher wages. Additionally, the cost of changing linens and other operational expenses has risen, further impacting profitability. These challenges are contributing to the upward pressure on hotel prices, making it more difficult for both domestic and international travelers to find affordable accommodations.​

Intensified Competition for Reservations

With the expected increase in foreign visitors and the ongoing challenges within the hospitality industry, the competition for hotel reservations is anticipated to intensify. Travelers, particularly those planning to visit during peak seasons or major events, may face difficulties securing accommodations at desired locations and price points.​

Regulatory Concerns and Industry Practices

In a related development, it was revealed that 15 luxury hotel operators in the Tokyo area had been regularly sharing proprietary information, akin to cartel-like behavior. The Japan Fair Trade Commission is expected to issue a warning against such practices to preserve consumer trust. Tokyo Governor Yuriko Koike has urged hoteliers to maintain ethical business practices and uphold consumer confidence in the hospitality sector.​

Implications for Travelers

Increased Travel Expenses

Travelers planning to visit Japan in 2025 should be prepared for higher accommodation costs. The combination of rising hotel prices and increased demand may lead to higher overall travel expenses, particularly for those planning extended stays or visits during peak seasons.​

Need for Early Planning

Given the anticipated competition for hotel reservations, travelers are advised to plan their trips well in advance. Booking accommodations early can help secure desired locations and rates, reducing the risk of limited availability or higher prices closer to the travel date.​

Consideration of Alternative Destinations

Travelers may also consider exploring alternative destinations within Japan that may offer more affordable accommodations. Regions outside major urban centers like Tokyo may provide unique cultural experiences at a lower cost.​

The rising hotel prices in Tokyo and other major Japanese cities, coupled with the expected increase in foreign visitors, present challenges for both travelers and the hospitality industry. While the surge in tourism is a positive indicator for Japan’s economy, it underscores the need for strategic planning and consideration of alternative options to ensure a fulfilling travel experience.​