Growth continues, driven by robust inbound tourism demand

• The number of foreign visitors to Japan is expected to surpass 40 million for the first time, reaching an estimated 42.7 million in 2025. The weak yen and other tailwinds have continued to boost the increase in international visitors, leading to record highs for two consecutive years.
• According to MLIT, the number of overnight stays in Tokyo in the first 10 months of 2025 declined by 2.5% compared to the same period last year. Although the number of international guests increased by 6.8% y-o-y in YTD October, accounting for 56% of the total, the number of domestic guests declined by 12.3% y-o-y, losing majority share.

The opening of new international luxury hotels in Tokyo continues

• In Q4 2025, ‘JW Marriott Hotel Tokyo’ opened on 2 October, followed by ‘Caption by Hyatt Kabutocho Tokyo’ on 7 October. ‘Park Hyatt Tokyo’ also reopened on 9 December after closing in May 2024 for major renovations.
• Many international luxury hotels are scheduled to open in the coming years. These include the opening of ‘1 Hotel Tokyo’ in 2026; ‘Waldorf Astoria Tokyo’ and ‘Pullman Tokyo Ginza’ in 2027; and ‘Canopy by Hilton Tokyo Akasaka’, ‘Dorchester Collection’ and ‘Raffles Tokyo’ in 2028.

Continued record-high performance

• Tokyo continued to see an increase in trading performance across all hotel segments in Q4. The ongoing increase in inbound visitors has driven a sustained rise in ADR, while occupancy has also shown steady recovery.
• In the luxury and upper-upscale segments, although the pace of growth has slowed in 2025 compared to 2024, both ADR and RevPAR have continued to reach record highs each quarter. Occupancy in 2025 has improved slightly y-o-y but is still recovering to pre-pandemic levels.

Outlook: Robust inbound demand and a weak yen drive ADR growth, while occupancy recovers slowly in luxury and upscale hotels

• Although geopolitical risks persist, inbound demand is expected to remain robust, boosted by the weak yen. Strong performance trends in Tokyo’s hotel industry are likely to continue through 2026.
• Robust inbound demand and continued yen depreciation are likely to sustain the upward trend in ADR through 2026. Luxury and upscale hotels are focusing on raising ADR rather than occupancy, so the pace of occupancy recovery may remain slow.