Japan’s growth in RevPAR has remained extremely impressive over the past 15 months – a function of a later opening post-pandemic, above-average inflation, and an influx of international demand.

That’s largely reflected in average-daily-rate (ADR) growth, although through much of 2023, the first and third points helped drive double-digit occupancy increases as well.

Occupancy growth has trailed off, however, with single-digit increases or declines year over year for the past five months. At the same time, rates have grown more than 20% year over year for each of the past 19 months and show no signs of deceleration.

Indexing performance provides further insight into what’s happening. Even as the ADR index continues to climb, the occupancy index has languished at around -10% for the past six quarters, suggesting that present-day occupancy levels are the new baseline for Japan.

Occupancy growth has largely stabilized across all days of the week, further supporting this theory. Weekends are slightly weaker – befitting the end of revenge travel – but there’s not significant variance in growth levels between days of the week.

In other words, there’s no lopsided or single demand driver propelling the industry and putting future demand growth at risk.

Analysis by Kelsey Fenerty, STR

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