Tokyo is fast emerging as Asia’s luxury travel capital. With record tourist arrivals, surging hotel rates, and high-end openings like Fairmont and Bulgari, what’s driving the demand?
Japan’s capital is experiencing an unprecedented boom in its luxury hospitality sector.
The recent opening of the Fairmont Tokyo, its first in Japan, is emblematic of a broader trend that’s transforming Tokyo into one of the world’s most desirable destinations for high-spending travellers.
With record-breaking tourist arrivals, sky-high room rates, and increasing foreign investment in upscale accommodations, Tokyo’s hotel market is in the midst of a transformation that reflects both the resurgence of global travel and Japan’s strategic repositioning as a luxury destination.
At the heart of this boom is the influx of international tourists. In 2024, Japan welcomed a record 36.9 million visitors, surpassing its pre-pandemic high of 32 million in 2019.
These travellers spent a historic ¥8.14 trillion (~$56 billion), nearly double the amount recorded before COVID-19 disrupted global tourism. Tokyo, as the primary gateway to the country, is naturally at the epicentre of this resurgence.
Approximately half of all hotel stays in the capital are now accounted for by international guests, a sharp increase from pre-2020 levels. This surge in demand is driving both room prices and occupancy rates to all-time highs.
A key driver behind Tokyo’s luxury appeal is the weakness of the Japanese yen. As the currency depreciates, tourists, particularly from the U.S., Europe, Australia, and the Middle East, are finding that their money stretches significantly further.
Luxury hotels, fine dining, and designer shopping in Tokyo have become more accessible, positioning Japan as a “value-luxury” destination.
This dynamic is especially attractive to travellers seeking world-class experiences without the price tags typically seen in Paris, New York, or Dubai.
Consequently, hotels have responded by raising prices: average daily rates for luxury accommodations in Tokyo now range from ¥75,000 to over ¥100,000 per night (~$500–700+), more than double the average in 2019.
Fairmont Tokyo’s opening on July 1, 2025, in Minato’s Shibaura waterfront district, is a strong signal of this luxury pivot. Housed in the sleek Blue Front Shibaura tower, the hotel offers 217 rooms and suites, with amenities including an infinity pool, wellness spa, and five upscale restaurants. Fairmont’s entry into Tokyo is part of a broader wave of high-end hotel investments.
Brands like Bulgari, JW Marriott, Waldorf Astoria, Dorchester Collection, and 1 Hotel are all expanding in Japan to capitalize on rising demand.
Bulgari Tokyo, which opened recently on the 40th floor of Midtown Yaesu, has entry-level rooms priced at around ¥280,000 (~$1,780) per night—comparable to the most exclusive offerings in the world.
Spending patterns among tourists reflect this trend. Between July and September 2024, the average foreign tourist spent ¥227,000 (~$1,490), up from ¥163,000 pre-pandemic.
British, Australian, and Spanish travellers emerged as top spenders, with average individual expenditures of over ¥370,000. The biggest contributor to Japan’s tourism revenue remains China, whose visitors alone spent ¥1.73 trillion, or about 21% of the total.
Other major markets include Taiwan, South Korea, Hong Kong, and increasingly, the U.S. and Europe. As Tokyo grows more appealing to high-net-worth individuals, luxury hotels report a marked shift in guest composition—with properties like The Imperial and Palace Hotel now hosting up to 75% of foreign guests.
Tokyo’s rise in luxury hospitality has triggered a wider conversation: is it cannibalizing other tourism regions in Japan? The short answer is no—at least not yet. Rather than stealing demand from cities like Kyoto or Hokkaido, Tokyo appears to be functioning as a luxury magnet that attracts global travelers to Japan, many of whom then branch out to other destinations.
The Japanese government is actively supporting this distribution by improving regional airport connectivity, subsidizing domestic tourism, and promoting events like Expo 2025 in Osaka. Tokyo’s boom appears to be lifting the entire tourism ecosystem, spreading awareness and demand throughout the country.
Still, the success comes with challenges. Japan’s Fair-Trade Commission recently fined 15 hotel operators, including international chains, for anti-competitive practices such as price and occupancy data sharing. Additionally, while a weak yen fuels inbound tourism, it also imports inflation—raising operational costs for hotels and squeezing profit margins.
Infrastructure strain in popular neighbourhoods and overtourism fears in certain districts like Shibuya and Asakusa are prompting calls for smarter crowd management and potential tourism taxes.
Looking ahead, the government has set an ambitious target of 60 million tourists and ¥15 trillion in spending by 2030. Achieving this will require balanced growth, smart regulation, and a strong focus on sustainability.
