Behind the Historic Feat: “Structural Change” and the Magnetism of a Weak Yen

On December 17, 2025, Japan’s tourism industry reached an unprecedented historical turning point. According to data released by the Japan National Tourism Organization (JNTO) and the Japan Tourism Agency, the estimated cumulative number of inbound foreign visitors from January to November 2025 reached 39,065,600, surpassing the previous all-time annual record set in 2024 (36.87 million) with more than a month still remaining. This figure is not merely an indicator of recovery from the pandemic—it signals that Japan has firmly established itself as one of the world’s leading tourism powerhouses in both name and reality.

Even looking at November alone, inbound arrivals surged at an astonishing pace to roughly 3,518,000 (up 10.4% year-on-year), marking the highest November total on record.

The biggest factor supporting this explosive growth remains the continued benefit of a historically weak yen. Japan, long perceived as an “expensive country,” has transformed into a destination that offers “the best cost-performance in the world with high-quality experiences.” This economic pull is drawing travelers not only from nearby Asian markets but also strongly from long-haul regions such as North America, Europe, and Australia.

Equally notable is a dramatic shift in market structure. Japan’s inbound tourism market previously depended heavily on four East Asian sources—China, South Korea, Taiwan, and Hong Kong—but 2025 data shows a significant diversification of that balance. The rise of the U.S. market has been especially striking: cumulative arrivals from January to November surpassed 3 million for the first time ever. This means the United States has firmly settled in as the fourth major market after China, South Korea, and Taiwan, offering clear evidence that Japan is reducing reliance on any single country while moving toward a more stable inbound “portfolio.”

Another major theme is Japan’s proven “resilience” to geopolitical risk. In the China market, headwinds emerged after Prime Minister Sanae Takaichi’s comments regarding a Taiwan contingency, prompting the Chinese government to discourage travel to Japan. Under conventional assumptions, this could have dealt a devastating blow to inbound numbers. Yet in reality, November arrivals from China exceeded the previous year—demonstrating that individual travel demand can outweigh political messaging. Supported by the recovery and expansion of air routes, the limited impact of political turbulence on actual cross-border movement suggests that Japan’s tourism brand has become strong enough to absorb political risk. With 2025 inbound arrivals now widely expected to break the 40 million threshold for the first time in history, Japan is stepping into uncharted territory.

From “Bakugai” to Immersion: Experience-Based Spending and Regional Dispersion Powering a ¥10 Trillion Market

Alongside record-breaking arrival figures, the composition of inbound spending is undergoing a qualitative shift. Total inbound consumption in 2025 is on track to approach the ¥10 trillion level, growing into a massive pillar supporting the Japanese economy. In the July–September quarter of 2025 alone, spending reached ¥2.131 trillion, and a quarterly level consistently exceeding ¥2 trillion is becoming the new norm.

In the past, the symbol of Japan’s inbound boom was “bakugai”—bulk purchasing of electronics and cosmetics. Today, however, the main driver of spending has fully shifted to “koto consumption”: travelers spending on uniquely Japanese cultural experiences, accommodations, and food.

According to the Japan Tourism Agency, accommodation now holds the largest share by spending category (36.6%), pulling far ahead of shopping (25.5%), which used to be number one. This reflects a clear change in values: travelers are placing more importance on “where and how they spend their time” than on “what they buy.”

Wealthier travelers from Europe, North America, and Australia in particular are seeking experiences that allow them to immerse themselves deeply in local culture, not simply check off famous sights. Looking at per-capita spending by nationality, Germany (about ¥435,000), the United Kingdom (about ¥360,000), and Spain (about ¥355,000) rank among the top, lifting Japan’s tourism revenues as high-value markets. These travelers tend to favor longer stays and spend generously on premium accommodations, hard-to-book restaurants, and private-guide tours offering exclusive experiences.

This shift in consumption style is also accelerating the dispersion of visitors into regional areas. Previously concentrated on the “Golden Route” of Tokyo–Osaka–Kyoto, travel demand is now spreading as visitors seek a deeper Japan beyond the major hubs. For example, in Hakuba Village, Nagano, nearly half of winter ski-season visitors are now foreign tourists, creating a boom driven by inbound demand for powder snow.

The rapid growth of the Vietnam market is also significant. Per-capita spending has risen by more than 60% year-on-year, as inbound demand from a growing middle class is emerging as new purchasing power. In addition, “post-trip” consumption—continuing to buy Japanese products through cross-border e-commerce after returning home—is expanding, broadening economic effects beyond the travel period itself.

The weak yen is not only making Japan’s goods and services feel more affordable; it is also encouraging travelers to upgrade to higher-end hotels and dining. The result is a rise in spending per visitor—and a stronger contribution to the overall economic impact.

The Pain of Growth and New Rules: “Dual Pricing” and the Question of Coexistence

An unprecedented visitor volume of 39 million has brought economic benefits across Japan, but it has also produced a serious side effect: overtourism. Examples continue to mount—overcrowded buses in Kyoto, congestion on Mt. Fuji trails, and dangerous photography at railway crossings in Kamakura—worsening residents’ living environments and pushing some areas toward the limits of coexistence between locals and tourists.

In response, 2025 has become a turning point in which Japan began searching for a concrete balance between “fair compensation” and “restraint,” stepping into the once-taboo territory of price differentials. The symbolic development is the introduction of dual pricing.

In Japan, “same service, same price” has long been an entrenched business practice. Yet a movement to set different prices for foreign tourists and domestic residents is spreading rapidly. A high-profile case is the large theme park JUNGLIA, scheduled to open in northern Okinawa in July 2025. The park announced a dual pricing model for one-day tickets: ¥8,000 (excluding tax) for non-residents and ¥6,300 (excluding tax) for domestic residents. This is seen as a strategic decision intended to balance returns to local communities with appropriate revenue capture from higher-spending inbound visitors—sparking debate over how pricing should work in Japan’s tourism industry.

Debates around admission fee revisions for the World Heritage site Himeji Castle also symbolize the issue. Himeji City initially considered raising admission for foreign tourists to four times the existing level, but ultimately moved toward a structure that differentiates between “city residents” and “non-residents” (with non-residents raised to around ¥2,500).

Behind these discussions is a practical reality: maintaining and managing cultural assets is costly, while for inbound visitors benefiting from the weak yen, even a few thousand yen in increases may not significantly diminish the sense of value. Internationally, differential pricing between tourists and residents is not unusual—examples include Diamond Head in Hawaii and the Taj Mahal in India. Japan, too, can be said to have finally entered a phase of moving away from “underselling tourism resources” and seeking appropriate compensation based on the beneficiary-pays principle.

At the same time, concerns remain—such as “encouraging discrimination” or “undermining the spirit of hospitality”—meaning careful implementation is essential. The Japan Tourism Agency has also prioritized overtourism countermeasures in its FY2026 budget request, accelerating both “hard” and “soft” measures such as systems to visualize congestion and demand dispersion through regional tourism promotion.

From the Osaka–Kansai Expo Toward 2030: The Future Vision of a True “Tourism Nation”

No discussion of Japan’s 2025 tourism landscape is complete without the Osaka–Kansai Expo. The Expo has served as a catalyst to disperse inbound flows that were heavily concentrated in Tokyo, redirecting movement into Kansai and across western Japan. Triggered by the Expo, wide-area itineraries have gained attention—not only Osaka and Kyoto, but also Wakayama, Nara, and even the Setouchi region—driving the development of high-value, experience-based content in regional areas. As a result, inbound visitors are increasingly able to discover Japan’s diverse attractions without concentrating in a limited set of locations.

The government has set extremely ambitious targets: 60 million inbound visitors and ¥15 trillion in spending by 2030. Reaching 40 million in 2025 suggests these goals are not mere fantasy, but adding the remaining 20 million will require strategies beyond simple extension of past trends. The key is achieving both “regional attraction” and “sustainability.”

In its FY2026 budget request, the Tourism Agency is placing emphasis on promoting longer stays in regional areas, developing content for affluent travelers, and strengthening efforts to attract MICE (international conferences and exhibitions). In particular, “sustainable tourism”—enjoying travel while contributing to the protection of natural environments and cultural heritage—is becoming a standard expectation among travelers from Europe, North America, and Australia. For Japan to remain a country that continues to be chosen, changes in mindset on the receiving side are indispensable.

The record-breaking numbers of 2025 prove Japan’s overwhelming appeal to the world. Yet to carry that appeal forward without wearing it down, Japan must not become intoxicated by the euphoria of “quantity,” but must calmly pursue “quality.”

With no guarantee that the tailwind of a weak yen will last, the real question is whether Japan can continue offering its essential value—rich nature, deep history, refined culture, and the warmth of local communities—under appropriate pricing and a sustainable environment. The year 2025 will likely be remembered as a major litmus test: whether Japan can evolve from “a fun and inexpensive country” into “a country worth visiting even at a higher price.”