Japan's Tourism Boom Faces Headwinds: Rising Costs, Dual Pricing, and Stronger Yen Could Deter International Visitors

Japan's popularity as a tourist destination has exploded, particularly with a 60% increase in Australian visitors this year. However, this surge may be short-lived as rising costs threaten to make Japan a less affordable destination. Several factors are contributing to this shift. The strengthening yen, following intervention by the Bank of Japan, is increasing travel expenses. Inflation is also playing a role, pushing the economy towards a stronger currency. Adding to the financial burden, Japan is introducing a dual pricing system in July, charging international tourists more than locals at popular attractions. While common in other countries, this is a significant policy change for Japan. Furthermore, accommodation taxes are expanding, with nine new cities and two prefectures approved to impose the tax to combat overtourism. These taxes can range from JPY 100 to JPY 500 per night, with luxury hotels in Kyoto potentially facing a JPY 10,000 tax for high-end rooms starting in 2026. These combined factors could make the once-affordable dream of a Japanese vacation a thing of the past.