Japan inbound tourism growth slows to 1.4% in Q1 2026 amid 55% drop in Chinese visitors

• According to JNTO, foreign visitors to Japan from January to March 2026 reached 10,683,481, up 1.4% Y-o-Y. However, the previously robust growth in inbound tourism demand was curtailed by deteriorating Japan-China relations since late 2025, resulting in a 55% decline in Chinese visitors.
• According to MLIT, total overnight stays in Tokyo in 2025 remained nearly flat versus 2024. An 8% decline in Japanese guests was offset by an 8% increase in foreign guests. The proportion of foreign guests, which first exceeded 50% in 2024, rose from 51.2% to 55.7%.

The opening of new international luxury hotels in Tokyo continues

• In Q1 2026, 1 Hotel Tokyo opened on 5 March.
• Many international luxury hotels are scheduled to open in the coming years. These include the Pullman Tokyo Ginza and Waldorf Astoria Tokyo in 2027, Canopy by Hilton Tokyo Akasaka, Dorchester Collection and Raffles Tokyo in 2028 and The House Collective Tokyo in 2029.

ADR growth remains strong across all segments

• Q1 2026 hotel performance showed continued ADR growth across all segments, supported by rising foreign guests, though growth rates decelerated. OCC improved slightly across all segments except luxury, suggesting that source market diversification successfully offset reduced Chinese visitation.
• The luxury segment saw a slight occupancy decline, likely due to the impact of the Middle East conflict. However, while other segments experienced flat or decelerated ADR growth, luxury posted 14.1% growth, demonstrating strong pricing power amid market challenges.

Outlook: The impact of global uncertainty on performance is being closely monitored

• Although geopolitical risks persist, inbound demand is expected to remain robust, supported by the weak yen. While the recovery of Chinese tourism may be postponed, growing source markets, including the US and South Korea, are expected to mitigate the impact on hotel performance.
• ADR growth is expected to remain stable through 2026, supported by robust inbound demand, though at a decelerating pace. The impact of the Middle East conflict remains limited currently, however rising flight costs may affect overall performance going forward.