Japan Hospitality: 2024 Review

APRIL 2025

Salter Brothers Research looks back on a record year in Japan’s hospitality market. Record international visitation, record room rates and record property acquisition volume delivered broad-based benefits to the sector across all regional markets and property types. Positive momentum remains in place for a strong 2025, with supply-demand dynamics favouring ongoing growth.

Economic Overview

It was a year of major change for Japan, with the Bank of Japan bringing an end to the era of negative interest rates and a scandal-induced national election ushering in a new Prime Minister overseeing a minority government. Amidst this shifting monetary and fiscal environment, Japan experienced mixed performance among its key indicators, with progress on wage growth the stand-out story of the year.

Demand

Demand rose strongly in 2024, driven by record international visitation eclipsing pre-COVID-19 peaks by almost 5 million. The story was less positive for domestic demand, falling slightly in the face of cost-of-living pressures and competition from international visitors.

Supply

Annual new supply continued to contract from its 2019 peak, with the current pipeline indicating further continuation of this trend. New supply remains heavily concentrated among upscale+ properties, with a particular focus on luxury growth.

Market Performance

Key indicator growth in Japan’s hospitality sector marked it as a global leader in 2024. Growth was well spread across the market, headlined by the key tourist cities and properties in the midscale and upscale segments.

Transactions

2024 was a record year for acquisition volume in the sector, with strong overseas and institutional interest. Volume was driven by high deal activity, with over 170 properties transacted, as well as the completion of a number of major deals, three of which came in at over US$400 million.

Outlook

Favourable supply-demand dynamics should continue to drive strong sector performance. It remains to be seen whether the market can continue to sustain high room rate growth, with gains in 2025 potentially being funnelled into lagging occupancy recovery.