questions we want to address

As we indicated in our first post, we are not building FMR as a booking website. Thus it is outside our scope to include all ryokans in Japan. The question then comes: What kind of ryokans should we include? What kind of customers are our target? That means, who will visit our site? For these travelers, what kind of content should we showcase?

All of these can be answered by travel statistics, which is readily available from different government agencies and consultant reports. In this 2nd post of the series, we will shares some of our findings, and explain how it drives the design of Find My Ryokan.

market drivers

As we all know from the news, Japan is enjoying a boom in post-pandemic inbound travel, with rapid development of new establishments in both metropolitan and rural areas.

The major drivers are,

financial

  • yen depreciation making everything in Japan look cheaper
  • rise of middle class in SE Asia, India, SE America, etc which fuels new visitors

geopolitical

  • Korea and China contribute the majority of tourists as they are close by, have lots of direct flights with cheap fare, and traveleres can hop on a plane for a long weekend trip. However, these two countries also carry major risk factors including geopolitical sentiment and local economy instability.

cyclical

  • 2025 Osaka World Expo effect
  • pent-up vacation demand after the pandemic

marketing

  • government-sponsored “soft power” campaign by JNTO to promote Japanese culture globally, with wide availability of travel-related info in different languages across most channels, resulting in more knowledgeable of Japan’s culture and geography
  • partnership with influencers driving Japan to top search keywords in many travel booking sites

traveler friendly

  • hotels covering all budgets are being built in a large scale in most tier 1-3 cities
  • concierge and travel center pop up in even smaller stations with English speaking staff
  • deployment of AI and instant translator in large transport hubs for traveler assistance
  • ease of using global digital wallets and credit cards for various things including ticket payment, dine out, shopping. This represents a vast improvement from the last decade with reliance in cash or a closed payment system only available to residents.

quality of life

  • very high public safety
  • a perceived high C/P value (relative to other countries) of goods and services in both quality and price
  • efficient public transport making traversing the country easy even for first timer
  • friendly for solo and female travelers (e.g., wide availability of solo meal sets, solo-friendly dining environment, single hotel rooms)
  • attracting digital nomads with new Digital Nomad Visa

how many visitors?

2024 set a record high for inbound tourism, bringing in 36.87 million foreign travelers into Japan, an increase of 47.1% from 2023 and 15.6% from 2019 (pre pandemic). Looking at the top five markets (compared to the same period in 2019 in parentheses), South Korea had 8.82 million (up 57.9%), China had 6.98 million (down 27.2%), Taiwan had 6.04 million (up 23.6%), the United States had 2.72 million (up 58.1%), and Hong Kong had 2.68 million (up 17.1%).

Travel expenditure also reached a record high of 8.1395 trillion yen, up 69.1% compared to the same period in 2019 and 53.4% compared to the same period in 2023. Per capita spending reached 227,242 yen, up 43.3% from the same period in 2019 and 6.8% from the same period in 2023.

Both increases in number of travelers and spending are on track to the government’s 2030 target of 60 million foreign visitors to Japan and their consumption of 15 trillion yen.

traveler sentiment

Travelers are happy too, as 96% of travelers surveyed by the government said they were satisfied or very satisfied and over 70% say they would definitely return.

30-40% of travelers do trip planning via SNS, blogs and video platforms, specifically for repeaters. First time traveler will visit JNTO and travel agencies more to source information. Most travelers looked forward to enjoying traditional cuisine, nature, onsen and historic landmarks and buildings.

lodging data

Accomodation in travel expenditure has increased to 33.6%, occupying the largest chunk of spending. This is a slight drop of 1% from 2023 but a 4.2% increases from 2019. Breaking down by country, we observe that European and North American travelers spent most in accomodation, and less than 50% of their budget in shopping, whereas Asian travelers spent equal or more in shopping vs lodging.

Most European and NA travelers stay 10+ nights and Asian travelers stay <9 nights, with the nearest countries (e.g., Korea) spent the fewest nights, which is not surprising.

In terms of per capita spending per night, travelers from Australia, USA, Italy, and Spain spend the most, all average to over 10,000 Yen per night.

For ryokan specifically, ratio of foreign visitors increased to 14.8% from 9.9% in 2019, a 49% increase. Small ryokans carry the largest increase in foreign occupany from 11.9% to 19.1%, with a 60% increase. Korean, Taiwanese and Hong Kong contribute most to foreigners staying in ryokan. Comparing with 2019, US travelers grows 79% while Korea grows 112%. Australia and Europe travelers expressed the highest inclination to stay in a ryokan.

Ryokans in Okayama (岡山県), Fukui (福井県), Niigata (新潟県) , Tokushima (徳島県), Saitama (埼玉県) & Nagano (長野県) all have the lowest number of foreign visitors (all <30%). In comparison, ryokans in Kanagawa (神奈川県) , Kagawa (香川県) , Tochigi (栃木県) , Oita (大分県), Hokkaido (北海道) & Shiga (滋賀県) enjoy the highest number of foreign visitors (all >45%).

In 2023, more ryokans are receptive of foreigners (64.2%) compared with 2019 (51.9%)., with large and medium size ryokans being most receptive at 69% and small ones at only 55%. Similarly, small ryokans are more inclined to prioritize Japanese travelers (31%) compared with large ryokans at only 7.7%.

The post-pandemic era sees a surge of luxury and boutique accommodations, both in hotels and ryokans. Many international brands are entering the market catering to high-income travelers. Solo guests are also increasing. There is a strong move to experience tourism for deeper immersion into local culture and encounters, especially in regional areas.

what that means for FMR

Based on the above data, FMR will target European and North American travelers as they tend to spend more in lodging (compared with other buckets such as shopping and food). Their spending/night is also higher than other locales, which coincides with a ryokan stay, which is more expensive than a hotel stay by at least 2x.

Data also shows that most travelers conjure up an image of beautiful nature, traditional cuisine and history when they plan their trips to Japan. This is more prominent in European and NA travelers. As the biggest growth of ryokan occupancy for foreign travelers is in small ryokans, FMR can position itself by curating small ryokans. From a traveler’s preference view, a ryokan stay will allow them to savor everything in a one stop shop. This is because by its nature, most ryokans are situated in natural environments, offering refined kaiseki ryori and onsen as the major highlights. Some ryokans are even housed in heritage buildings. Thus, FMR will showcase curations around these themes to align with traveler preferences.

The rise of lodging spending and move to more luxurious accomodation also befit the revitalization of ryokans, which have been stagnant for years. With better access to regional and rural areas, and ongoing renovation of older ryokans for new travelers, I think that ryokans have a very good opportunity to showcase their hidden treasures to the world.

data sources