Japan Inbound Tourism Declines 5% y-o-y in Q2 2026 driven by 58% Drop in Chinese Visitors

• In H1 2026, foreign visitors to Japan totaled 21,084,345, down 2% y-o-y. Q1 growth from Taiwan, Hong Kong, India, and the Middle East offset Chinese visitor declines amid strained bilateral ties. However, Q2 fell across all months, with Chinese visitors down 58% y-o-y.
• Per JNTO, Q1 2026 foreign guest nights in Tokyo rose 8% y-o-y, while domestic guest nights fell 3.5%, limiting overall growth to 3%. Domestic stays continued last year’s decline. Foreign guests comprised 57.1% of Q1 total, up 2.8 percentage points y-o-y.

No additional international luxury hotel openings were observed in Tokyo in Q2

• In Q2 2026, several limited-service and apartment hotels opened, while no upscale or higher-tier hotels launched during the quarter.
• Major luxury and Upper-Upscale hotel openings are planned: Pullman Tokyo Ginza and Waldorf Astoria Tokyo (2027), Canopy by Hilton Tokyo Akasaka, Dorchester Collection, and Raffles Tokyo (2028), plus Capella and Rosewood (2030) in Roppongi.

ADR growth decelerating across all segments

• During H1 2026, hotel performance saw ADR peak in March and April across all segments before a seasonal decline, though y-o-y growth still continued. OCC improved overall, proving that market diversification successfully offset the impact of the decline in Chinese visitors.
• Compared to the same period last year, the luxury segment maintained an occupancy rate of about 75% despite a slight decline. While ADR growth slowed in other segments, the luxury segment recorded double-digit growth, continuing to show strong pricing power.

Outlook: Momentum is expected to continue despite geopolitical tensions

• Although geopolitical risks persist, inbound demand is expected to remain robust, supported by the weak yen. While Chinese visitor recovery may lag, growing source markets including European and Southeast Asian markets should mitigate hotel performance impact.
• Robust inbound demand should sustain ADR growth in 2026, though slower. Recent rapid ADR increases have eroded Tokyo’s value advantage versus global markets. Geopolitical risks—Middle East tensions and China-Japan relations—warrant close monitoring.