Over 14.6 million international visitors went to Japan between January and May, according to the Japan National Tourism Organization. In March alone, almost 3.1 million people visited the country, the highest Monthly total since records began in 1964.
If this trend continues, Japan will surpass its record of 31.9 million tourists set in 2019, just before the COVID pandemic.
Total incoming tourism expenditure rose to 1.75 trillion yen ($10.8 billion) in the first quarter of the year, making tourism Japan’s second-largest “export,” just behind cars and ahead of products such as semiconductors, according to Fortunes Calculations and data from Oxford Economics.
It’s the first time since the last quarter of 2019 that tourism spending has come in second, notes Norihiro Yamaguchi, senior Japan economist at Oxford Economics. Domestic travel nearly ground to a halt during the pandemic, but quickly recovered after Japan began easing its COVID controls in September 2022. Japan lifted all restrictions in April 2023.
Tourists in Japan currently have high purchasing power as the yen has hit record lows against the U.S. dollar, making hotels, sightseeing and family meals cheaper for foreign visitors than before the pandemic.
But Jeremy Bek, global head of Japanese travel platform Rakuten Travel, believes that the boom in Japanese travel is not just due to a weak currency.
Visitors today want unique, social media-friendly experiences, not just food and shopping. “It’s because of Instagram culture, right?” says Bek. “It’s not about what you eat or do. It’s about what people see when you eat and do. And Japan is beautiful. There are so many beautiful things to post on Instagram.”
How does a weak yen help tourism?
The yen, long a safe haven for investors in times of crisis, has lost value against the dollar. A year ago, one US dollar was worth 140 yen; today it is worth around 161 yen.
The US Federal Reserve’s “higher for longer” interest rate policy is making the US dollar more attractive to investors and putting pressure on many Asian currencies.
Japan has resisted raising interest rates in its decades-long battle against deflation. The Bank of Japan kept its benchmark interest rate in negative territory even as other central banks tried to follow the Fed’s moves during the rate-hiking cycle between 2022 and mid-2023.
In March increased interest rates above zero for the first time in 17 years. The rate hike came after Japanese companies agreed to big wage increases, raising hopes that Japanese consumers might start spending more and stimulate the economy.
Japanese companies have previously viewed a weak yen as a positive, as it lowers the cost of exports and increases the value of profits repatriated abroad. But now the yen may be too weak for Japanese companies’ liking, as expensive imports squeeze margins and depress consumer spending.
Even Japan Airlines – a company whose revenue is based on travel – is increasingly suspicious the weak yen, as overseas travel becomes prohibitively expensive for many Japanese.
Why does Japan complain about overtourism?
Rakuten Travel is benefiting from the boom in Japanese travel. Bookings increased by 75% in the first quarter of 2024 compared to the same quarter in 2019, before the COVID pandemic, says Bek. Gross transaction value also increased by 200% in the same period.
According to Japanese government data, most tourists come from South Korea, mainland China, Taiwan and Hong Kong.
According to Bek, tourists are looking for authentic and more immersive experiences rather than the big attractions of Tokyo and Osaka. Off-subway bookings are increasing faster than on-subway bookings as travelers seek out experiences such as kaiseki dinners, hot springs and nature experiences in second- or third-tier cities, Bek says, citing data from Rakuten Travel.
Some Japanese grumble about the rush of tourists, complaining about overcrowding and bad manners. (Several other tourist destinations, such as Spain And Greeceare also experiencing a backlash against “overtourism.”)
In Kyoto, a major tourist attraction, a mayoral candidate even won office thanks to complaints about tourists. Koji Matsui opposed Overtourism refers to the dissatisfaction of tourists who drag their suitcases into overcrowded public transport.
In another case, the Japanese city of Fujikawaguchiko erected a barrier block a famous photo spot at Fuji. Locals were angry at the ever-increasing number of tourists littering, trespassing and ignoring traffic laws in their pursuit of a social media-worthy photo.
Nevertheless, tourists are not deterred and continue to search for the perfect photo. People drill holes in the barrier to take photos, says Bek.
Due to the influx of visitors, some attractions and businesses have considered introducing dual pricing: a standard price for Japanese residents and a higher price for tourists.
Himeji is consider asking Foreigners are being asked to pay more to visit the 400-year-old Himeji Castle, a UNESCO World Heritage Site, ostensibly to finance necessary maintenance work.
Kyoto Mayor Matsui urges for higher tariffs for tourists to relieve public transport; the city has also introduced Express sightseeing buses that stop only at the main tourist attractions.
However, Bek believes that concerns about overtourism are mainly limited to big cities like Tokyo, Kyoto and Osaka. Lesser-known cities are not yet “overpopulated,” he says.
Fortunately for tourists, the hotels he works with are not thinking about imposing higher prices on foreigners. Bek notes that hotels still have enough capacity to serve both incoming and domestic tourists. Despite the travel boom, he believes Japan’s hotels are playing it safe when it comes to capacity.
“They don’t want a repeat of the COVID situation,” he says. “If they rely too much on international tourists and then everything closes, they’ll be left without customers.”