"These days, when I have a domestic business trip, I worry more about the hotel than the schedule," said a prominent journalist from a major Japanese newspaper. The surge in foreign tourists visiting Japan has made securing accommodations for business travelers increasingly difficult. With few available rooms and skyrocketing hotel prices, this journalist's newspaper has set a maximum lodging expense of 12,000 yen (approximately $90) per night. While it is still possible to find business hotels in smaller regional cities, this budget is often insufficient in major urban areas like Tokyo and Osaka, forcing travelers to book hotels far from their work locations or, in urgent cases, stay in capsule hotels.
The average room rate for business hotels in the Tokyo metropolitan area has risen approximately 52% over the past five years, from 10,779 yen in September 2019 to 16,409 yen in September 2024. This average rate is now 4,409 yen higher than the maximum lodging expense set by the journalist's newspaper, which was previously 1,221 yen lower than the average. Five years ago, travelers could afford to stay in a standard business hotel, but now they must pay over 4,000 yen out of pocket. The upward trend continues, with the Ministry of Internal Affairs and Communications reporting a 3.1% increase in accommodation costs last month compared to the same month last year. According to private research firm Metro Engine Research, the average room rate for business hotels nationwide in April this year was 36% higher than in April 2019, with rates in Tokyo and Kyoto exceeding 40%.
While hotel prices have surged, Japanese companies have not adjusted their business travel expense policies accordingly. A survey conducted by expense management firm Concur in October and November last year found that over 70% of respondents felt that company lodging expense limits were inadequate, with 77.5% of those responses specifically related to domestic travel.
Even high-income professionals, such as doctors, are feeling the pinch between rising hotel costs and stagnant travel expenses. A survey by medical media outlet m3.com in April last year revealed that 50.1% of 1,767 physician members reported increased lodging costs for business trips compared to a year prior. Some doctors mentioned having to cover approximately 30,000 yen out of pocket for a single domestic conference due to high hotel prices, while others reported being pushed to locations like Hachioji or Machida when trying to attend conferences in Tokyo. Complaints about needing to leave early in the morning due to staying in the suburbs were also common. In particularly expensive Kyoto, some expressed a desire for conferences to be canceled altogether.
The rise in hotel prices is not only affecting accommodation choices but also altering how conferences are attended. Some doctors are opting to skip in-person attendance for online courses required for professional certification renewal, while others are choosing to participate only online from the outset due to cost concerns. There have been reports of a significant decrease in conference travel as online streaming becomes more prevalent, indicating that rising accommodation costs are not only causing inconvenience for attendees but also reducing in-person participation.
Shortage of Hotel Rooms
The increase in hotel prices in Japan is not solely due to the rise in tourist numbers. The lengthening stays of foreign visitors and a shift from group to individual travel have concentrated demand in urban hotels. For instance, the average length of stay for Chinese tourists increased from six days in the third quarter of 2019 to seven days in the same period of 2024, with per capita accommodation expenses rising from 44,583 yen to 77,783 yen. While group tourists can stay in hotels on the outskirts via charter buses, individual travelers prefer the convenience of urban locations. The number of foreign overnight stays in Japan's three major metropolitan areas rose from 6.78 million in July 2019 to 10.39 million in July 2024, creating competition for hotel rooms between tourists and domestic business travelers.
The problem lies in the inability of hotel supply to keep pace with the surging demand. Economic commentator Keiichi Kaya noted that a hotel shortage was anticipated even before the influx of foreign visitors, but uncertainty about sustained demand has led the industry to hesitate on large-scale investments, delaying supply expansion. Even if construction is expedited now, it will be challenging to meet the shortfall in the short term, suggesting that high accommodation costs are likely to persist.
Cost pressures are also significant. A labor shortage has driven up the cost of outsourcing room cleaning, and wage increases are being passed on to accommodation prices. Since the minimum wage was revised to exceed 1,000 yen for the first time nationwide from October last year to March this year, the pressure to transfer costs is expected to continue this year.
Currently, there are no straightforward solutions. Experts suggest that business travelers may need to endure inconveniences. They recommend abandoning urban hotels in favor of roadside hotels or container hotels near highway interchanges, or expanding options to outer cities like Tachikawa, Funabashi, and Ichikawa in the Tokyo metropolitan area.
The most fundamental solution would be for companies to raise their lodging expense limits to match the increased hotel prices. However, many companies are unable to adjust their travel expense policies immediately in response to rising hotel costs. Once a limit is raised, it is as difficult to lower it as it is to reduce wages.
Consequently, more companies are opting to manage travel rather than increase costs. They are encouraging spending at average levels by disclosing minimum, average, and maximum transportation and lodging expenses by department or shifting in-person meetings to remote formats. For example, the consumer goods company Unicharm announced in June that it would cut domestic and international business trips by half, saving hundreds of millions of yen annually.
Japan's domestic business travel system has long been designed around low and stable prices. As the premise that companies could secure urban business hotels at set lodging expenses has collapsed, the burden of excess costs has shifted to employees, leading to outer-city accommodations and long-distance travel. Companies now face a choice between adjusting lodging expense limits to reflect reality or reducing travel. The sight of business travelers searching for capsule hotels is not merely a reflection of accommodation difficulties; it underscores the disruption of long-standing travel practices that relied on the notion of 'affordable Japan' amid inflation and a surge in foreign visitors.
* This article has been translated by AI.
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