'Dynamic pricing' drives up Tokyo hotel rates, but still room to rise in dollar terms
Ideas:
For foreign tourists, with the weak Japanese yen, and hotel prices in Japan, that might not be so bad but for the Japanese and the domestic economy the hotel prices might be seem very high.
Unfortunately, it seems understandable that hotels increase their prices as demand increases and at the same time, energy costs, increased wages at hotels, along with other costs have forced hotels to pass-on their costs to the retail customer.
Also because the pandemic hit the hotel and service industry very hard, many hotels might be trying to re-coup their losses during the pandemic with higher hotel prices now, and why not, as again record number of foreign tourists are coming to Japan.
What it comes down to is simple supply and demand, meaning as demand increases, and it has significantly with record numbers of foreign tourists, its logical that hotels in Tokyo increase their hotel prices.
Also, in Japan maybe food prices have gone up too and so maybe again, because of the weak Japanese yen, 3,000 for ramen meals might not be that much to foreign tourists, but its a lot for the average Japanese in Japan.
Inflation has increased the price of everything in Japan, so maybe that too at some hotel restaurants they are taking advantage of the foreign tourists, and maybe the 3,000 yen price is like food prices at airports, which are always way too high.
Yes, maybe in rural areas in Japan along with areas without a lot of foreign tourists prices might not be as high as in Tokyo or Osaka.
However, at the hotel I usually stay at in Yokohama, which is adjacent to Tokyo, prices usually are the same except for Saturday which is a little higher. Yokohama is a city of 3.5 million people so its not a rural area but part of the Tokyo metro area.
Dynamic Pricing is of course used a lot in the airline industry with prices being different on different days a long with seat prices and luggage prices depending on how many of luggage you take on your trip.
Movie theaters have used dynamic pricing too with some days cheaper than other days a long with morning times less that afternoon or evening times for movies.
Yes, again the increased demand for foreign tourists has been a contributing factor in the increase in prices, but at the same time, increased energy and other utility costs have forced hotels to pass-on their costs the the retail customer.
And then add in the increase in labor shortages in Japan, has forced many hotels to increase their wages to get the best talent possible, which means they have to pay for the increased wages by passing-on the wage increases to the retail customer with higher room rates.
These factors alone would be enough for any business to increase costs, but it must be understood just how much the service sector including the hotels were damaged by the pandemic in Japan, as Japan was basically shut-off from the outside world for up to 3 year with almost no foreign tourist able to enter Japan.
Again, at the hotel I stay at in Yokohama, has increased to about 10,000 yen per might for a twin but before it was much less than that. And its even higher on Saturday too.
The hotel I stay at is considered a business man's hotel with all the basics needed including breakfast in the mornings, with the usual quality service by at Japanese hotel. It was a mid-price hotel at a moderate price for a very long time, but like many hotels in the Tokyo metro area, their prices are much higher now.
As I scan the hotels in Yokohama, I used to be able to find many hotels with moderate prices, but maybe those days are long gone in Japan as it seems all hotels in the Tokyo metro area have increased their prices now.
Now days in Japan, there doesn't seem to be a off season, as foreign tourists entering Japan each month seems to be setting a new record every month, and have passed record levels that were recorded in 2019.
Looking for accommodations and checking the rates at many hotels online, used to be a simple process, but now all the hotels seems to have the exact same prices or similar prices so there doesn't seem to any real good choices related to prices, except to find a hotel in area you want to visit in the Tokyo area.
Related to prices becoming too high, its seems that hotels in Japan, know that foreign tourists have more purchasing power, meaning they can spend a lot, so hotels, logically takes advantage of the weak Japanese yen, and increase their hotel prices.
Its understandable to compare New York prices with Tokyo prices, but some or many foreign tourists going to Japan don't go to New York and don't care about New York prices, as they only care about the price of their hotel in the Tokyo area.
There is such as thing as price elasticity, meaning the percentage of change in demand as prices go up. For now, maybe price elasticity or even the change in demand with the higher prices is not that big meaning potential customers are not yet turned off by the increased hotel prices.
But that potentially could change if hotels get greedy and continue to increase prices, as some day potential customers who want to go to Japan might begin to think hotel in Japan are just too high and we can't afford to go there.
Have nice day!
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