From the first sunrise of Jan. 1 to the closing moments of Dec. 31, travel in Japan in 2024 was dominated by one concept: overtourism.
For many, this influx of overseas visitors — real or imagined — posed more challenges than opportunities. Taxi companies struggled to meet demand, convenience stores with picturesque views grappled with crowd-control measures and officials debated charging foreign visitors more for basic services.
However, amid all that handwringing over how to handle Japan's culmination as a global tourist hot spot, one industry spent much of last year quietly putting together the puzzle pieces of success: luxury travel.
“The Japanese luxury travel scene has undergone quite the metamorphosis over the past decade,” says Candice D'Cruz, vice president of luxury brands at Hilton Asia Pacific. “While Tokyo and Kyoto remain hot and in demand, a quiet revolution is unfolding in the country’s lesser-known corners. We're seeing a shift — luxury travelers are no longer content with the well-trodden paths (and are) discovering the thrill of exploring lesser-known destinations from Niseko to Kobe, which provide a captivating mix of urban and rural experiences.”
With rising demand comes rising supply. As part of Hilton-owned Waldorf Astoria’s global expansion strategy, Osaka will open a location of the luxury hotel chain just before this year's World Expo. Occupying 12 stories of a 39-story high-rise in the Umekita Second Project, the Waldorf Astoria Osaka will offer 252 rooms with a minimum of 50 square meters. Japan's second Waldorf Astoria is slated to debut in Tokyo’s Nihonbashi area in 2026, while new Conrad hotels are planned for Nagoya and Yokohama in 2026 and 2027, respectively.
In addition to new constructions, the Small Luxury Hotels of the World organization has incorporated 400 boutique hotels from its collection into Hilton’s Asia-Pacific portfolio, including four properties in Japan: Hinode Hills Niseko Village, Kasara Niseko Village Townhouse, Sowaka and The Tokyo Station.
While not exactly under-touristed, Osaka is becoming a major target for luxury operators.
On Aug. 1, Japan’s second city saw the Four Seasons Hotel Osaka open in the Dojima neighborhood. Following the success of Four Seasons Hotel and Residences Kyoto, which opened in December 2016, the hotel operator is also partnering with Berjaya Okinawa Development Co. Ltd., a subsidiary of Malaysian group Berjaya Land Berhad, to introduce its fifth property in Japan — the Four Seasons Resort and Private Residences Okinawa. Spanning 100 acres of beachfront along the island’s western coast, the facility’s 120 rooms, 120 residences and 40 villas are expected to open in 2027.
“The luxury travel market remains strong, and Japan continues to captivate discerning travelers with its rich cultural heritage, world-class hospitality and natural beauty,” says Rami Sayess, president of Asia-Pacific hotel operations at Four Seasons. “We are closely watching the strengthening yen and regional economic environment, especially as it influences the preferences of premium travelers, and (continuing) to see resilience from affluent consumers seeking immersive experiences in nature, food culture, craftsmanship and heritage.”
Lap of luxury
Just who will be staying at these new, ultra-swanky accommodations? Not your average tourist, that’s for sure.
According to real estate consultancy firm Knight Frank, the growth of the world's population of ultra-high net worth individuals — anyone with a net worth of $30 million (about ¥4.6 billion) or more — is expected to climb 28% in the next five years, and Asia will likely see the largest rise, with a projected growth rate of 40%.
Likewise, data from McKinsey suggests that a large and expanding demographic of young “aspiring luxury travelers” with net worths between $100,000 and $1 million are driving this demand for luxury tourism. Consequently, Asia is forecasted to experience the fastest growth in this travel segment compared to other regions.
Marriott notes that high net worth individuals “consistently prioritize quality experiences over short-term economic considerations,” with 68% of these travelers planning to increase their travel spending in the coming year — an opportunity that Japan may be uniquely positioned to capitalize on.
After welcoming more than 31 million foreign tourists from January through October 2024 — during which international travelers in Japan spent an estimated total of ¥6.3 trillion, an increase from ¥4.8 trillion in 2019 — the Japan National Tourism Organization (JNTO) is now prioritizing luxury tourism and targeting "high-value" visitors, particularly from the United States, United Kingdom, France, Germany, Australia and China, who spend over ¥1 million per visit.
Both the JNTO and Japan Tourism Agency are working to expand high-end experiences throughout the country, including luxury resorts in Japan’s 34 national parks. They are also encouraging spending in rural areas by drawing visitors to lesser-known regions beyond Tokyo, Osaka and Kyoto, which accounted for 70% of luxury traveler spending in 2019.
Cultural bang for your buck
For Japan to truly excel among luxury travelers, hotels with outstanding decor and cuisine alone won’t cut it.
“In recent years, we’ve seen a growing demand for experiences focused on cultural immersion, authenticity and wellness,” says Philip Lim, deputy managing director of hospitality management at the Banyan Group. “This is particularly true in Kyoto, a favored destination for discerning luxury travelers.”
On Aug. 19, the Banyan Group launched its flagship Banyan Tree brand in Kyoto: Banyan Tree Higashiyama Kyoto. This luxury retreat features a noh stage — the first of its kind in a Kyoto hotel — by renowned architect Kengo Kuma made from hinoki cypress. The 52 tatami-lined rooms designed by Yukio Hashimoto draw inspiration from the concept of yūgen (mysterious, quiet beauty), a traditional Japanese aesthetic closely associated with noh, and guests looking to immerse themselves in the art form can visit the studio of Mitsue Nakamura, a renowned female artisan of noh masks.
Looking ahead, Lim says plans are in place to introduce the 50-room, 113-residential accommodation Cassia Hirafu in the popular ski resort of Niseko, Hokkaido, in 2025. Following that, Banyan Tree Ashinoko Hakone, a luxury resort near Lake Ashino beside Mount Fuji, is scheduled to open in 2026.
If there’s anything to stop Japan’s luxury travel revolution, it might be the eventual strengthening of the currently weak yen.
“A rapidly strengthening yen might result in fewer international visitors, but those who visit may have higher spending power and less price sensitivity,” D’Cruz explains. “If anything, the pandemic underscored the durability of luxury.”
Aside from fluctuations in exchange rates, Atsushi Shibata, general manager of Aman Kyoto, notes that it is becoming increasingly difficult to recruit skilled staff and train guides to provide tailored experiences for luxury clients. He suggests that this issue be addressed collectively by businesses in Kyoto, in partnership with the Kyoto City Tourism Association.
Lim advocates for a long-term vision that emphasizes nurturing workplaces that promote the physical, emotional and professional development of staff.
“By prioritizing staff welfare, we see tangible benefits, including higher satisfaction and improved retention rates, which enhance the overall guest experience and set a benchmark in the industry,” he says.
D’Cruz foresees the inevitable challenge of overtourism — a concern that is particularly pressing in Japan as the demand for luxury experiences continues to rise.
“As luxury operators, we must tread lightly, prioritizing sustainable practices to minimize environmental impact,” she adds. “A key opportunity lies in the growth of sustainable and regenerative tourism, which involves engaging with the local communities to understand what works and what doesn’t.”
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