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Senso-ji Temple, located in Taito Ward, Tokyo, is one of Japan's oldest and most renowned Buddhist temples. As a cultural symbol of Tokyo and a major tourist landmark, Senso-ji attracts tens of millions of visitors annually for worship, sightseeing, and experiencing traditional Japanese culture. The large red lantern at the Kaminarimon gate has become a must-photograph spot for tourists. With the full recovery of Japan’s tourism industry, accommodation demand in the Asakusa area has surged, fueling a boom in the hotel and guesthouse market. Property prices with hotel licenses have repeatedly hit record highs.
1. Japan’s Tourism Recovery and Asakusa’s Rising Popularity
In recent years, as global tourism rebounded, Japan emerged as one of the hottest destinations. In 2024, Japan welcomed a record-breaking 36.86 million international tourists, surpassing the pre-pandemic 2019 figure of 31.9 million by nearly 16%. As the capital and main entry point, Tokyo attracted a large number of visitors, with Senso-ji Temple as one of its top landmarks and a must-visit location for many travelers.
This surge in tourists has driven accommodation demand in the Asakusa area. In 2024, the average daily rate (ADR) for Tokyo hotels exceeded ¥26,000, more than 50% higher than before the pandemic. In Asakusa, as a top tourist destination, both hotel and guesthouse occupancy rates have continued to climb, with some peak periods seeing nearly no availability.
2. Accommodation Demand Drives Guesthouse Market Boom
Facing a surge in demand, traditional hotels fell short in capacity, prompting guesthouses and small inns to become attractive alternatives for travelers. Asakusa guesthouses, thanks to their prime locations, have been especially popular.
With the continued growth in accommodation demand and ADR, property prices for licensed hotel-use properties in Asakusa have risen rapidly. Over the past two years, properties with hotel operating licenses have seen significant price increases. Even older or structurally outdated buildings, simply by having a hotel license and a “X-minute walk to Asakusa” label, are often listed at prices double those of pre-COVID times. This reflects the market’s strong expectations for high-yield, high-traffic areas—but also hints at the risk of a potential disconnect between market prices and asset fundamentals.
3. Can Asakusa Hotel Properties with Inflated Prices Be Sustained by Hype Alone?
The soaring prices of hotel properties are largely based on an assumed model of “full occupancy at high rates.” But such assumptions are not necessarily sustainable long-term. While 2024 saw record-breaking tourist numbers, the tourism industry is inherently sensitive to global economic shifts, currency exchange rates, geopolitical tensions, and more. If inbound demand cools and occupancy or ADR drops, returns could shrink quickly. Properties purchased at high prices and reliant on strong cash flow from high operations may reveal their weaknesses just as fast.
2023–2025 Monthly Occupancy Rates of Accommodation Facilities in the Asakusa Area
From an investment return perspective, properties in the Asakusa area are often marketed with projected “10%+ annual yield,” which may appear attractive at face value. However, in actual operations, net returns are frequently much lower due to the following factors:
- Platform commissions: Major short-term rental platforms like Airbnb, Booking.com, and Agoda charge service fees of around 15%, directly deducted from host income.
- Cleaning costs: With Japan’s ongoing labor shortages in the service industry, it’s increasingly challenging to hire and retain reliable cleaning staff. Even for small standalone guesthouses, cleaning, sanitizing, changing sheets, and disposing of trash after each checkout often require outsourcing. For a standard ~20m² double room in Tokyo, nightly rates range from ¥15,000–¥30,000, with per-cleaning costs typically between ¥4,000 and ¥7,000 depending on room type and service level.
- Utilities and consumables: Internet, water, electricity, gas, and daily supplies are fixed costs. In summer and winter, when energy use for AC and heaters spikes, operating costs can rise significantly.
- Operational management: Managing guest inquiries, check-in/check-out guidance, and troubleshooting issues also adds to operational load. If outsourced to a property management company, management fees typically cost around 20% of gross revenue.
Taking all these into account, a property advertised with a 10% yield may in practice deliver net returns of just 5% or less. In a high-price environment, investors must assess whether such returns are reasonable—and whether they justify the investment risk and payback period—through careful pre-investment simulation.
Furthermore, Asakusa’s hospitality market is highly competitive. Many institutional investors are rapidly developing new properties. Mid- to large-scale professional players are increasingly active, leading to frequent price wars. Without strong differentiation in design, quality service, or stable operations, simply relying on location is no longer enough to win customers. Platforms like Airbnb, TripAdvisor, and Google Reviews rely on algorithm-driven exposure based on ratings—meaning a listing’s score directly impacts booking volume and revenue.
Number of Accommodation Facilities in Taito Ward (Including Vacation Rentals, Hotels, and Inns) from 2022 to 2025
4. The Safety Cushion in Real Estate Investment: The Underlying Asset Value
Whether used as a shop, inn, office, or for any operational purpose, rental property should never be evaluated without considering its intrinsic asset value. In evaluating operations, investors must account for off-season scenarios or potential business failure, and assess whether the property has the flexibility to be converted into standard residential or commercial use. This flexibility is key to determining whether the asset holds long-term value.
Going further, evaluating the long-term value of a property requires looking beyond hotel income projections. One must always consider a “Plan B.” A seasoned investor will ask themselves before purchasing: “If this building can no longer operate as a hotel, what else can it be used for?”
Here, fundamental property conditions and local rental market levels become essential. Properties with flexible uses—even if short-term hospitality income underperforms—can be converted into rentals, offices, galleries, cafes, etc., offering an asset-level safety cushion. In contrast, properties that have been heavily modified for hotel use, with irregular layouts, no windows, or very old buildings, may be nearly impossible to repurpose or sell once hospitality operations cease—potentially becoming “low liquidity asset traps.”
5. Conclusion
The current popularity of Asakusa hotel properties undoubtedly reflects the strength and potential of Japan’s tourism recovery. However, if prices continue to diverge from actual usability and operational income, bubble risks become inevitable. Investors should avoid blindly chasing the hype, and instead return to fundamentals—evaluating each project from the perspectives of operational capability, real returns, and risk management mechanisms.
While short-term trends may be tempting, only properties with the potential for long-term, stable returns are truly worth holding.
Data Sources:
- AirDNA report on submarket performance: Taito Ward
- Urbalytics Area Analysis: Asakusa, Type: Multi-unit Buildings
