Something is wrong with Japan's tourism industry.
The data on tourists visiting Japan in April 2026 presents people with a contradictory choice.
On one hand, the official released a warning signal. The total number of tourists in a single month decreased by 5.5% year-on-year, and the number of tourists from the Chinese mainland has been shrinking for the fifth consecutive month, with a decline of more than 56%. This is also the first time since the post-pandemic recovery that the cumulative data has entered the negative growth range.
But on the other hand, Japan's official data also shows that in the same month, the nine markets of South Korea, Chinese Taipei, the United States, Singapore, Malaysia, Vietnam, India, Russia, and France all reached record highs.
The four words "reset of tourist sources" are often used by many people as the universal key to explain this change.
The coexistence of an overall decline and local surges in a market usually means that structural forces are at work.
However, the current high-level operation of Japan's tourism industry is actually being torn apart by three opposing forces.
These forces are hidden in the yen exchange rate, international relations, and capital flow respectively. They are intertwined and causal to each other, jointly forming a risk network more complex than the surface data.
Is the "engine" of the weak yen quietly leaking oil?
The high-speed growth of Japan's inbound tourism market is almost completely synchronized with the long-term depreciation of the yen.
This is not a coincidence.
On April 30, 2026, the US dollar against the yen hit a nearly 30-year low of 160.72. The Japanese Ministry of Finance was forced to intervene with about 5.4 trillion yen. Since then, the exchange rate has basically remained in the range of 160 to 165.
The yen against the Chinese yuan also remained at a historical low of 0.044.
The Japan Tourism Agency frankly admitted in its official analysis: "For inbound tourists, the attractiveness of the depreciated yen still exists."
The keyword in this sentence is "still exists."
It implies that policymakers have realized that this logic cannot be overdrawn indefinitely.
For overseas tourists holding US dollars, euros, or South Korean won, the depreciation of the yen directly means a simultaneous discount on all Japanese goods and services.
A high-end meal priced at 20,000 yen is equivalent to about $180 when the exchange rate is 110, but only $125 when it is 160. This huge gap in purchasing power forms the real foundation of Japan's tourism boom in recent years.
It is not a natural growth brought about by cultural charm, service quality, or product innovation, but an overall price cut created by monetary policy.
There is also another point that must be clarified. The exchange rate can generate traffic, but it cannot automatically generate value.
When foreigners exchange less of their own currency for the same Japanese services, Japan exports the same amount of labor, ingredients, space, and time, but the foreign exchange income it receives is shrinking.
In 2025, the cumulative income from inbound consumption and its spillover effects reached 19 trillion yen, which sounds impressive. However, this was achieved on the premise that the number of tourists continued to break records.
If the exchange rate returns to 120, to maintain the same income scale, the average customer spending needs to increase by more than one-third. However, real-world consumption surveys have shown that the increase in the average customer spending in most markets is far from being so optimistic.
More importantly, the tourism demand driven by the exchange rate is highly unstable.
It does not depend on tourists' loyalty to the destination itself, but on the change in the "cost-effectiveness" of the destination compared with other alternatives. This means that once the yen enters the appreciation channel, or if there is a greater depreciation of the currencies of neighboring countries, the markets that are on the record-high podium today will quickly recalculate their budgets tomorrow.
Actually, there are already some signs of this.
The data in April shows that the year-on-year increase in the number of tourists from the United States to Japan shrank to 0.8%, almost stagnant; the number from the United Kingdom decreased by 13.8%, that from Australia decreased by 11.1%, and those from Germany, Italy, and Spain also declined collectively.
The common characteristics of these markets are very obvious. They are all long-distance travel markets, sensitive to price changes, and their local currencies are closely linked to the US dollar. In the same April when the yen remained weak, their choices began to diverge.
If this divergence is not due to a sudden drop in flight capacity, it reflects the most fundamental issue of exchange rate elasticity.
There is also a side effect that has been repeatedly ignored, that is, the exchange rate intervention itself is consuming Japan's fiscal space.
Entering the market twice in a row in April and May, the market estimates that the total intervention scale may exceed 15 trillion yen. This scale of intervention is equivalent to subsidizing foreign consumption through the exchange rate channel with the national savings, supporting an inbound tourism market that seems "highly resilient."
Once the intervention cannot be sustained, or if international speculative capital launches a more violent reverse impact, the entire tourism pricing system will need to undergo a painful reset.
Regarding the exchange rate dividend as an eternal backdrop is a typical pro-cyclical thinking.
And the real risk is only suddenly realized when the cycle starts to turn.
Therefore, this actually highlights two problems. First, if the exchange rate dividend disappears, what will Japan rely on to support the tourism market? Second, why does the structure become fragile?
The other side of "tourism-driven nation" is "tourism bondage."
Five months ago, the Japanese government cabinet meeting decided on the fifth basic plan for promoting tourism-driven nation, setting the target for 2030 at 60 million tourists, a consumption amount of 15 trillion yen, and an average per capita consumption of 250,000 yen.
The timing of the release of this plan is very delicate because it coincides with the public opinion storm of the interruption of Chinese tourists and the frequent occurrence of tourism nuisances in various places.
What does this policy mean? I think it must be related to the long-term trend of the industrial structure.
The data in 2025 shows that the income from inbound tourism and its spillover effects has reached 19 trillion yen, which is clearly defined as the second-largest export industry after the automobile industry.
For an economy traditionally based on manufacturing, this change in ranking itself represents a structural transformation. When domestic demand continues to shrink and the export manufacturing industry faces global competitive pressure, attracting foreigners to consume in the country has become the most direct means to fill the demand gap.
The problem is that this transformation is irreversible.
With the decline in population and the long-term sluggishness of domestic consumption, the domestic consumption service sectors in Japan, such as accommodation, catering, retail, and transportation, are becoming more and more dependent on overseas tourists to maintain their operations.
What was originally a "supplementary item" for economic growth, inbound tourism, is becoming a "basic item" for many regions and industries.
Once there is a fluctuation in the external tourist sources, these sectors will face not marginal losses but survival threats.
The changes during the Spring Festival in 2026 foreshadowed this situation in advance.
At that time, the cancellation rate of hotel bookings from China was as high as 53.6%, and the number of flights decreased by 49.2% year-on-year.
Some hotels in Shizuoka Prefecture on Honshu Island directly closed their doors to customers, and the turnover of restaurants in the Kansai region shrank by about 60%.
The Nomura Research Institute estimated that if this situation continues for a year, Japan will suffer an economic loss of about 80.7 to 101.1 billion yuan, and the GDP growth rate will be dragged down by 0.36 percentage points.
By April, the decline in the number of tourists from the Chinese mainland was still close to 60%, but the overall data did not look so bad because the markets of South Korea, Chinese Taipei, Southeast Asia, and some European and American countries quickly filled the gap.
This ability to fill the gap is described by the media and some research institutions as an embodiment of market resilience.
A more accurate statement is that at the market level, there has indeed been a migration of tourist sources; but at the structural level, this migration has pushed the entire inbound tourism system into a more vulnerable state.
Why is it more vulnerable? Because the newly formed tourist source structure is highly concentrated and homogeneous. The two markets of South Korea and Chinese Taipei together accounted for nearly 40% in April, and these two markets are also deeply affected by the changes in the geopolitical environment in Northeast Asia.
Their consumption preferences and travel convenience in Japan are based on the premise of regional stability, smooth air routes, and stable bilateral relations. If there is new tension in the East Asian security situation, the tourist sources that are currently regarded as "alternative driving forces" may also change drastically in the short term.
At the same time, the social frictions brought about by the influx of a large number of tourists are intensifying.
The black curtain in front of the Lawson convenience store at Lake Kawaguchi, the online violence incident at the foot of Mount Fuji, and the continuous protests of Kyoto residents against tourism nuisances. All these seemingly scattered cases actually point to the same contradiction: while inbound tourism has become an economic pillar, it is also constantly squeezing the living space and psychological tolerance of local residents.
When the interests of an industry are highly concentrated in capital and some practitioners, while the costs are widely dispersed in the daily lives of ordinary citizens, the stance of public policies will face increasingly sharp challenges.
This contradiction is not new in the history of capitalist economy. Marx pointed out when analyzing the law of capital accumulation that the more capital is concentrated in a few sectors, the more it tends to transfer its internal contradictions outward.
Inbound tourism is exactly such a typical sector.
It has taken over the demand gap for the domestic consumption sector, while leaving overcrowding, noise, garbage, and cultural frictions in the public space. When the contradictions accumulate to a certain extent, the social backlash will bite back at the industry itself. The "indifference," "exclusion," and "differential treatment" felt by tourists are direct manifestations of this backlash.
If a country bets the focus of its economic transformation on an industry that is both subject to international politics and prone to causing social opposition, the short-term growth figures it obtains should be carefully examined.
The story of the clearance of homestays may only be half told.
If inbound tourism only stays at the level of macro policies and international relations, it may only be a debate about the industrial direction.
However, the reason why this industry is worth studying repeatedly is that it has penetrated into the balance sheets of land, real estate, and thousands of ordinary operators through specific asset forms.
So, in such an industry that is highly dependent on the external environment and embedded with multiple policy risks, what on earth are the profit-seeking capitals doing?
Anyone who studies the Japanese tourism market can hardly ignore the drastic reshuffle that the homestay industry is undergoing.
According to the data released by the Tourism Agency in March 2026, the cumulative number of registrations for residential accommodation businesses nationwide exceeded 60,000, but the number of business cancellations reached more than 22,000, with a cancellation rate as high as 35.7%. The actual number of operating houses is less than 40,000.
The number of recognized rooms in special district homestays is also less than 22,000.
This figure is frequently cited in the investment circle, and the explanatory framework used is highly consistent. It is generally believed that the high cancellation rate means that inefficient supply is exiting the market. The new compliance regulations and the tightening of systematic supervision are concentrating the market share in the hands of professional brands with large-scale operation capabilities.
Therefore, high-quality homestay assets will have a more certain prospect of appreciation and profitability, and the investment logic will inevitably shift from simply relying on the growth of tourist flow to the value competition of "high-quality assets + professional operation."
This reasoning is correct at the micro level.
Homestay operation is indeed an industry with a long chain, many links, and a low fault tolerance rate. Each node, such as cleaning and maintenance, dynamic pricing, complaint handling, and regulatory compliance, may eliminate individual operators without experience.
The policy of clearing out low-end production capacity and concentrating resources on the top is a common path for almost all service industries to mature.
But this is only half of the story.
What really determines the medium- and long-term value trend of homestay assets is not only the internal supply structure of the industry but also the external dependence of the entire inbound tourism market.
The financial model of a high-quality homestay is usually based on three key assumptions: the daily average room rate remains at a high level, the annual occupancy rate is not lower than a certain threshold, and the tourist source structure is relatively stable.
All three assumptions are strongly related to the external environment.
The daily average room rate depends on tourists' willingness to pay, and the willingness to pay is highly sensitive to the exchange rate; the occupancy rate depends on a stable tourist flow, and the tourist flow is the comprehensive result of flight capacity, international relations, and the probability of emergencies; the tourist source structure directly determines the degree of exposure of the market to a single risk factor.
Currently, there is a mismatch in the Japanese homestay market. On one hand, large-scale capitals are entering one after another, deploying homestays in popular areas such as Kyoto, Osaka, and Sapporo, pursuing a high-average-customer-spending strategy of "high-quality" and "experience-oriented." On the other hand, the core force driving the growth of tourist flow in these cities is still price-sensitive tourists.
Even though the per capita consumption of long-distance tourists from Europe and the United States is indeed more than 50% higher than that of East Asian tourists, their travel decisions are also constrained by the triple factors of air ticket cost, exchange rate, and geopolitical expectations.
The slowdown in the growth rate of tourists from Europe and the United States in April has reminded the market that long-distance high-end tourist sources are not rock-solid either.
Moreover, the high cancellation rate in the accommodation industry has another meaning.
It reflects that the basic profit margin of this industry is not high, and it may even be below the social average profit margin for a long time.
The low profit margin forces individual operators to exit. After large-scale capitals take over, they can only maintain returns through higher leverage, more refined operations, and larger scales. This will naturally lead to a decrease in risk resistance. Once an external shock occurs, the absolute losses borne by the large-scale, high-leverage leading operators are often greater, and their adjustment speed is also slower.
Therefore, I think the clearance of homestays in Japan will indeed bring a short-term window for asset revaluation. Some properties with good locations, designs, and operations that can score more than 80 points are expected to have good cash flow performance in the next two or three years.
However, if we regard this clearance as the starting point for a comprehensive upgrade and regard Japanese homestays as safe assets that can resist exchange rate risks, geopolitical risks, and consumption cycle fluctuations in the long term, we are overestimating the defensive ability of the four words "professional operation."
Because professional operation optimizes efficiency but cannot resolve systematic risks.
In conclusion
These three forces are simultaneously pulling at the pattern of Japan's inbound tourism.
The exchange rate creates a huge short-term attraction but burdens the entire market with the hidden debt of monetary policy; geopolitical changes drive the rapid redrawing of the tourist source map but expand the industrial structure's single-mindedness and risk exposure at the same time; capital accelerates the clearance and concentration at the supply end but exposes a larger asset exposure to the same external uncertainties.
There is no buffer relationship between these three forces. Instead, they may amplify each other.
The appreciation of the yen will directly weaken the price advantage and simultaneously put pressure on the occupancy rate of high-priced homestays; new geopolitical tensions will cut off the emerging alternative tourist sources, leaving the capitalized accommodation assets without a buyer; and when the society's tolerance for tourism nuisances reaches the critical point, policies may shift from encouraging expansion to tightening management at any time, and the assets deployed according to high-growth expectations will bear the brunt.
No one will ignore the above structure because of a record number in one month, and no one will not keep a distance from the popular narrative of "this time is different."
The scale of the tourism market can be boosted in a short time by price, air routes, and policies, but the real value of assets can only be revealed after going through multiple cycles.
The most pressing question that Japan's inbound tourism needs to answer at present is not whether the record numbers can be maintained until the next quarter, but whether this huge industry has a second fulcrum when the monetary environment, geopolitical luck, and capital sentiment that drive these numbers change direction.
This article is from the WeChat official