$5 for locals, $30 for tourists: Japan tourist boom prompts pricing divide

Tourist taxes are hardly new. Surcharges meant to target international visitors are often embedded in hotel receipts or as visa fees. However, such policies were once unusual in wealthy Japan, where the yen has lost more than 40 percent of its value against the U.S. dollar over the past five years, resulting in a sharp disparity in purchasing power between locals and visitors.

It isn’t just public officials such as Kiyomoto proposing dual pricing for foreigners. Some private business owners have implemented different prices for tourists, with one buffet seafood restaurant in Tokyo earning headlines last month when it decided to charge foreigners roughly 1,000 yen more for its set menus.

The problem isn’t so much that tourists can spend more, but that there are so many. The Washington Post reported last month that Japan was struggling amid a post-covid travel surge during which an unprecedented 25 million tourists visited the country in 2023, straining local residents and daily life.

“If you wanted everyone to pay their fair share regardless of where they came from, an argument could be made that people from the U.S. should pay more so that they are ‘paying’ as much as the Japanese,” explained Dan McCole, an associate professor of tourism and sustainability at Michigan State University. “And rather than just single out people from the U.S. or have a different price for every currency, it’s easier to have a lower price for residents.”

Foreign tourists accounted for 30 percent of the 1.48 million visitors to Himeji Castle in fiscal 2023, local paper Yomiuri Shimbun reported this week — the highest number ever.

When visitation increases to a cultural or natural site, so does the need for restoration and management, McCole explained. These sites often then increase fees to lower visitation or spend money on investments that will increase the site’s capacity.

“Introducing a higher entry fee for international tourists can also be seen from a social sustainability perspective; the castle has a cultural value for the local people and access should be granted to them,” said Linda Osti, a senior lecturer in tourism management at Bangor University.

“Secondly, it can also be seen from an economic perspective; often cultural monuments are maintained by local authorities with the use of public money raised through taxes imposed on local people,” she added. “Therefore, in a sense, locals have already paid for the maintenance of the building or cultural asset. They should not be charged twice.”

Himeji Convention and Visitors Bureau did not respond to a request for comment.

The yen’s value compared with the dollar has fallen over the past decade and took a particularly sharp nosedive during the coronavirus pandemic. Shopkeepers and restaurant owners such as Shogo Yonemitsu, who opened a restaurant called Tamatebako in Tokyo in April, are charging foreigners more.

Yonemitsu explained to local media last month that Japanese patrons are charged 5,980 yen for an all-you-can-eat seafood course, while foreigners are charged 6,980 yen — a difference of roughly $7.

“Considering the cost of serving foreign visitors to Japan, we have no choice but to set the prices higher,” Yonemitsu told Nikkei Asia.

While the relative lightness of the yen may have something to do with these tiered pricing models, Rhys ap Gwilym, a senior lecturer in economics at Bangor University and co-author of an article with Osti about tourist taxes, thinks the social and economic profiles of travelers themselves probably also play a role.

“The international tourist has probably spent a lot of money on travel and is likely to be richer than your average local. But secondly, they may be on a trip of a lifetime, and they’re going to be less price sensitive than the local would be,” explained ap Gwilym. “Those are two good reasons why firms are going to look at tourists, particularly international tourists, and think, ‘Well, here’s an opportunity for us to charge a higher price and they’re likely to be less price sensitive.’”

Cities such as Paris and Amsterdam also have recently raised tourist taxes. This year, Venice implemented a daily visitation fee that applies to foreigners and non-Venetian Italians alike, with the express goal of challenging overtourism.

“In the past, when establishing tourism taxes, thought was given to how much visitors could be charged without losing them. Now, many places are not only okay with losing them, they are charging visitors so that fewer will come,” McCole said. “This is the new part. Residents in some destinations are seriously challenging the ‘more is better’ philosophy, and ‘taxes’ in all their forms can help to reduce visitation.”