Growth continues, driven by the full recovery of Chinese inbound tourism

• International arrivals exceeded in Q1, which was the previous record high for a first quarter, by 23.1%. The main factor contributing to this increase was the full recovery of Chinese visitors. For the first time since the end of the COVID-19 pandemic, the number of Chinese visitors in a quarterly basis surpassed the pre-pandemic levels of the first quarter of 2019.
• According to Japan National Tourism Organization, Tokyo’s total number of overnight stays reached an all-time high in 2024, surpassing the 2019 figure by 23.2%. 2024 marked a significant milestone as international visitors accounted for approximately 52% of total overnight stays, surpassing domestic guests for the first time.

Three luxury hotels set to debut in Tokyo in the latter half of 2025

• There were no openings of new international brand hotels in Q1 2025.
• International brands are still keen to open new hotels in Tokyo. The latter half of 2025 is set to witness a wave of luxury hotel openings, such as Fairmont, JW Marriott, and 1 Hotel slated to debut in quick succession.

Continued record high performance

• In Q1, Tokyo’s hotel sector demonstrated continued growth across all segments in terms of trading performance. 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, Q1 showed significant improvements compared to the same period in 2024. ADR increased by 10.6%, while occupancy rose by 6.3 points. Consequently, RevPAR saw a substantial growth of 20.1%. However, occupancy still lag behind the Q1 2019 by 5.7 points.

Outlook: Keeping a close eye on the impact of global uncertainty on performance

• While the strong performance trends continued through Q1 2025, the escalation of geopolitical risks and increasing global instability in April have created uncertainty. It will be crucial to closely monitor how these factors impact the performance of the second quarter.
• The USD/JPY exchange rate is experiencing significant volatility. Given that the previously weak Yen has been a major factor in boosting inbound visitor numbers and driving up ADR, any sharp appreciation of the Yen could potentially impact hotel performance.