While no final decision has been made, authorities in Kyoto are considering greatly increasing taxes on the most expensive hotels in the city, in order to discourage overtourism.
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Kyoto could add $125+ nightly tax for luxury hotels
While Kyoto has long been popular with international tourists, it has really exploded in recent years, and at this point we’re seeing just about every major luxury hotel group open a property there.
As it currently stands, hotel rates in Kyoto have a nightly consumption tax of 10%, a variable occupancy tax based on the cost of a stay, and then a lot of hotels also have a 10% service charge added on to the rate.
When it comes to the occupancy tax, that was introduced in 2018, and currently uses the following three tiered system:
- If a room costs less than 20,000 JPY, the nightly occupancy tax is 200 JPY per person
- If a room costs between 20,000 and 49,999 JPY, the nightly occupancy tax is 500 JPY per person
- If a room costs 50,000 JPY or more per night, the nightly occupancy tax is 1,000 JPY per person
Under the proposal, this system would be updated as of March 2026. This would go from a three tier system to a five tier system, with a significant increase in the occupancy tax for the most expensive hotels:
- If a room costs less than 6,000 JPY, the nightly occupancy tax would be 200 JPY per person
- If a room costs between 6,000 and 19,999 JPY, the nightly occupancy tax would be 400 JPY per person
- If a room costs between 20,000 and 49,999 JPY, the nightly occupancy tax would be 1,000 JPY per person
- If a room costs between 50,000 and 99,999 JPY, the nightly occupancy tax would be 4,000 JPY per person
- If a room costs at least 100,000 JPY, the nightly occupancy tax would be 10,000 JPY per person
Based on the current exchange rate, one USD is roughly 158 JPY. So to convert the above amounts, a hotel costing at least $634 per night would have a $63 occupancy tax per person per night. In other words, based on double occupancy, you’d be paying over $125 per night, just for the occupancy tax (and that doesn’t include the 10% consumption tax or the 10% service charge at many properties).
Note that this occupancy tax even applies to bookings with points, unlike the consumption tax and service charge.
Is this additional tourist tax unreasonable?
Kyoto’s current hotel occupancy tax scheme reportedly generates around $33 million per year, while the city estimates that the new scheme would raise around $82 million per year, so that’s quite a substantial increase. This proposal is expected to be discussed at the municipal assembly in February 2025, and if approved, it will be implemented as of March 2026.
What’s my take on the prospect of this tourist tax increasing substantially? I think the first major question is how the extra money would be spent. There’s no denying that day-to-day life in Kyoto has been changed for locals as a result of the amount of tourism. In principle, I don’t think it’s unreasonable to tax tourists in a way that makes the lives of locals better. That being said, often this money isn’t actually well spent.
Beyond that, here are a few thoughts that come to mind:
- I don’t actually think this proposal would do much to curb tourism, as I don’t think this would move the elasticity of demand for most people visiting Kyoto; hotel rates in Kyoto are through the roof, and that doesn’t seem to be deterring visitors
- This would ultimately penalize not just foreigners, but also Japanese tourists coming from other parts of the country; that has to be factored in, especially with their reduced buying power due to the weak Japanese Yen
- Perhaps in some cases it would cause more people to take day trips to Kyoto, and I’m not sure that will necessarily help with reducing tourism
Bottom line
Kyoto is considering greatly increasing its occupancy tax for hotels, in response to the amount of tourism. Luxury hotels would be hit hardest, and could see the daily per person occupancy tax increase from 1,000 JPY to 10,000 JPY. This means that a luxury hotel room with double occupancy would have a $125+ daily tax, in addition to the standard 10% tax plus the 10% service charge.
In February 2025, the decision will be made as to whether or not this tourist tax will be implemented as of March 2026.
What do you make of Kyoto’s plans to greatly increase occupancy taxes for hotels?
This is the greatest thing I’ve heard all day. Price the peasants out. And you should all be watching football.
I’ll still haunt you.
A train from Osaka to Kyoto is 20(?) minutes.
Osaka hotels about to have a price advantage.
Overrated destination.
Exactly. I spent a week there before the pandemic and it was a pleasant city but hardly deserving of the fulsome praise it is now receiving.
I’m a fan of this assuming the money is spent to help with overcrowding problems, such as increased bus frequency in and around Kyoto, increased police, etc.
I spent a lot of my 20s (2010ish - so not that long ago) in Japan and have been to Kyoto many, many times. I loved going to Kyoto when I lived in Japan. It was busy but pleasant and not overrun. I hadn’t been back since the...
I’m a fan of this assuming the money is spent to help with overcrowding problems, such as increased bus frequency in and around Kyoto, increased police, etc.
I spent a lot of my 20s (2010ish - so not that long ago) in Japan and have been to Kyoto many, many times. I loved going to Kyoto when I lived in Japan. It was busy but pleasant and not overrun. I hadn’t been back since the pandemic, so we all went for a trip in September 2024 (no Japanese public holidays near our trip in Kyoto). It was overrun and I mean overrun, mostly by other Japanese and Asian tourist. Also, an insane amount of Australians (who were generally extremely disrespectful of Japanese norms). It was near impossible to get on a bus or easily move around the city. I was ready to go back to Tokyo after 2 days - a week was almost miserable, especially bc of the obnoxious Australians (it’s sad when the Americans are the well behaved ones, lol).
So, I say tax them until they stop coming.
I’ve never met an obnoxious Australian. Are you sure you have the right country?
Sounds like you've never met an Australian
;-)
A more effective way would be to declare the whole interesting part of the city center a historical monument and sell limited numbers of passes to visit it.
Of course a certain number of exemptions for local inhabitants and businesses would have to be in place.
Hotels restaurants etc located inside the perimeter would have preferential access to permits with the permits quite expensive to attract a wealthier clientele and discourage low value...
A more effective way would be to declare the whole interesting part of the city center a historical monument and sell limited numbers of passes to visit it.
Of course a certain number of exemptions for local inhabitants and businesses would have to be in place.
Hotels restaurants etc located inside the perimeter would have preferential access to permits with the permits quite expensive to attract a wealthier clientele and discourage low value Airbnbs and day-trips.
Of course it requires gate checks everywhere and it's an awful solution to put in place and would turn the Kyoto city center in a form of Disneyland. In return it guarantees a form of revenue to make it up to the locals and can even support some sort of yield management to smooth out demand.
Also allows to put in incentives for example no restrictions to Japanese nationals etc.
I understand the reaction, but its flawed on most levels.
Europe and Asia (Japan ) will soo start to see a reduction in tourism. IMHO
We are past revenge travel... at this point.
While I am hesitant to become political. We have in the US a very uncomfortable and unknowable minimally two years ahead of us... A very large reason I am thinking there will be less outbound tourism.
Much of Northern Asia looks at...
I understand the reaction, but its flawed on most levels.
Europe and Asia (Japan ) will soo start to see a reduction in tourism. IMHO
We are past revenge travel... at this point.
While I am hesitant to become political. We have in the US a very uncomfortable and unknowable minimally two years ahead of us... A very large reason I am thinking there will be less outbound tourism.
Much of Northern Asia looks at risk as does swaths of Eastern Europe, given the incoming President.
Europe, Australia / New Zealand, the US, and Canada accounted for only ~17% of foreign tourist arrivals to Japan in 2024 (less than SE Asia + India).
This is also when travel from China is relatively less due to economic turbulence, and economic growth in many Asian countries like Vietnam, India, and Indonesia remains strong.
Point being it is very unlikely tourism to Japan slows or significantly reduces in the near future and very likely...
Europe, Australia / New Zealand, the US, and Canada accounted for only ~17% of foreign tourist arrivals to Japan in 2024 (less than SE Asia + India).
This is also when travel from China is relatively less due to economic turbulence, and economic growth in many Asian countries like Vietnam, India, and Indonesia remains strong.
Point being it is very unlikely tourism to Japan slows or significantly reduces in the near future and very likely it grows significantly in the next 5 years.
My first thought...day trips from Osaka or other nearby places.
Second, what about business travel? Yes, business travel expenses are usually covered or reimbursed, and I admittedly don't know about Kyoto's corporate market.
Finally, I've been several times to the city, and the crowds really impacted the experience...so I get it...but I don't get the solutions being tried so far...
Not sure what else you expect the Kyoto municipal government or even the prefectural government to do. Raising hotel taxes and other taxes related to tourism is basically the only lever available to those authorities in the short term. In the longer run they can restrict permitting for new hotel construction but since the existing room inventory already allows overcrowding that's not exactly a quick fix.
They can't exactly control Japan's monetary policy to address...
Not sure what else you expect the Kyoto municipal government or even the prefectural government to do. Raising hotel taxes and other taxes related to tourism is basically the only lever available to those authorities in the short term. In the longer run they can restrict permitting for new hotel construction but since the existing room inventory already allows overcrowding that's not exactly a quick fix.
They can't exactly control Japan's monetary policy to address the yen's value, they can't control how much airline capacity serves Japan or Japan's border policies, and there aren't any mechanisms or legal authority to restrict internal movement.
Raising the hotel tax won't magically fix the problem and it may not even make a significant dent in visitor numbers, but it's basically the only policy option they have. And it's possible doing this might encourage more action by the national government. Yes, it's a blunt instrument, but the only alternative is basically politely asking folks to stay away, and that hasn't exactly worked.
I think the taxes should be higher, if the goal is to control tourism numbers.
As westerners we really don’t know sh!t about f@ck in Japan which is overwhelmingly non-western tourists and only the occasional weeaboo. So whether or not this tax is a good idea is beyond our analytical capabilities.
Seems silly to allow massive unchecked hotel growth and then try to cut down on "overtourism". Maybe restrict hotel development in the first place? Coulda, shoulda, woulda I guess.
People save for a once in a lifetime trip to go to Kyoto. Adding a bit more cost is not going to do anything without restricting the total # of hotel rooms in the city.
No, that’s wrong. If you reduce tourism by lowering supply, the benefit flows to existing hotel owners in the form of higher nightly rates (this is what NYC is currently doing). If you do it via a tax, the benefit flow to the government/taxpayers (and the end price paid by tourists is the same).
I'm not exactly sure if the city of Kyoto has allowed "massive unchecked hotel growth." Yes, there are more hotels there compared to even 10 years ago, but that's because there has always been a relative under-supply of hotel rooms in the city. Also, the hoards of tourists visiting Kyoto are not really not there for their hotels.
It’s not just Japan that is feeling the pain due to over-tourism, let’s not forget the problems in Europe last year and with plans already being developed for 2025 for more protests maybe raising taxes is an option. The “Stayaway” initiative wasn’t all that effective in Amsterdam that’s for sure.
Always baffles me when people vote for higher taxes as a way of trying to be gatekeepers. If the tax was needed to maintain the infrastructure of the area or something of that nature, I'd be more supportive of it.
But this is just more a way to discourage lower incomes from visiting the area. It's not like the tax revenue is going to magically benefit locals in a way that all of the increased jobs and sales didn't.
The proposed tax structure is more progressive than the current regressive one, which disproportionately penalizes lower cost room rates (although not by much). Although lower room rates will see an absolute increase, it is still a tiny amount (max $6.34 USD at the current conversion rate).
If you are trying to limit tourism, how else would you do so other than through price discrimination? The other approach would be a raw lottery, but tourism is an economic industry as well - it is in a country and local's best interest to maximize tourism spending rather than have a diverse set of tourists visiting.
It's sad but likely the inevitable way tourism is going to head if over-tourism continues and further worsens.