Tokyo Hotel rates surge by up to 50% amid rising demand, labor shortages – TSR

JAPAN – Hotel prices in Tokyo and other major Japanese cities have soared by as much as 50% year-on-year during late 2024, according to a survey by Tokyo Shoko Research Ltd. (TSR), driven by a surge in foreign visitors, persistent labor shortages in the hospitality sector, and rising operational costs.

The survey covering 15 hotel brands operated by 13 publicly traded companies revealed that all surveyed operators had raised their prices, with some rates increasing by as much as 1.6 times compared to pre-pandemic levels.

Average rates at eight business hotel brands were reported at approximately 13,986 yen (US$98), marking a 45% jump from the same period in 2019.

Rates at four upscale “city hotel” brands also climbed about 35% to reach 20,897 yen (US$146), surpassing the 20,000 yen mark for the first time in five years.

The report cited several contributing factors behind the price increases, including a surge in foreign visitors, persistent labor shortages, and rising operational costs such as linen services.

Tokyo Shoko Research (TSR) noted that with international events like the World Expo in Osaka on the horizon, there were few downward pressures on hotel rates, and strong demand was likely to continue.

JTB Corp. forecasted that the number of foreign visitors to Japan would reach 40.2 million in 2025, a 9% increase from the previous year, setting a new record for the second consecutive year.

Travel industry experts warned that the surge would intensify competition for hotel accommodations, particularly in major cities like Tokyo.

The hotel sector, already struggling with labor shortages, has seen increased competition for workers and rising wages.

These pressures, combined with heightened operational expenses, were reported to be weighing on profitability and further driving up guestroom prices.

Analysts warned that both domestic and international travelers would likely find it increasingly difficult to secure affordable accommodations, particularly during peak seasons and major events.

Regulatory concerns also surfaced. It was reported that 15 luxury hotel operators in Tokyo had been routinely sharing proprietary information in a manner likened to cartel-like behavior.

The Japan Fair Trade Commission was expected to issue a warning to address these practices, while Tokyo Governor Yuriko Koike urged the hospitality sector to maintain ethical standards to uphold consumer trust.

Industry observers advised travelers to plan well in advance, secure accommodations early, and consider alternative destinations within Japan to better manage rising travel costs.

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