How Japan became one of the world’s great budget destinations

The decrease in the yen's value has led to concerns of overtourism in Kyoto's Gion district - Getty

The words “weak” and “yen” generally spell out a litany of negatives for Japan – from soaring import costs to household spending cuts due to inflation.

Yet, there is one silver lining to its ever-sliding currency: droves of overseas tourists are tapping into Japan as a destination that is surprisingly good value for money.

In today’s post-pandemic world, Japan is firmly shedding its decades-long reputation as one of the world’s most expensive destinations, a long-lingering legacy of its champagne-flowing, chandelier-swinging, pre-crash 1980s.

This is reflected in the record levels of overseas tourists heading to Japan, drawn in part by the weak yen – enabling them to enjoy refreshingly low price tags across the spectrum, from food to fashion.

The yen’s decline is well documented. Fuelled partly by the government’s maverick policy of extra-low interest rates, the yen recently hit a 34-year low of 160.2 against the dollar – and a nine-year record low of 197.74 against the pound.

As a result, tourists are flocking to Japan. Admittedly, one consequence of this is increasingly loud concerns about overtourism, particularly in popular hubs across the country, from Kyoto’s Gion district to Mount Fuji viewing spots.

But at the same time, there is little doubt that the weak yen is leaving a positive imprint in terms of high spending levels among tourists.

The figures speak for themselves: inbound foreign tourist numbers topped 3 million in March for the first time, marking a surge of 11.6 per cent since March five years ago, before Covid hit.

Meanwhile, the total spending amount per person soared 52 per cent between January and February this year, compared to the same pre-pandemic period in 2019.

It is free, or only few pounds, to visit main temples and gardens - Getty

“Japan often surprises people in that it wasn’t as expensive as they thought it would be,” says James Mundy, of InsideJapan Tours. “It has a reputation of being an expensive country that dates back to the ‘bubble jidai (era)’ in the 80s.

“The weaker yen means that once in Japan, it is even greater value than usual and that potentially people can experience more for their money. One of the big holiday spends is food and drink but you will often see lunch sets at cafes or bowls of ramen for a 1000 yen, which is around £5, or ‘kaiten’ conveyor sushi plates for 150 yen – less than a pound.

“As well as the cheaper costs, the quality of food is usually much better than we have, not to mention the service. Main temples and gardens are often free or cost a couple of pounds.

“Subway journeys in Tokyo often cost less than a pound and again, unlike the UK, everything runs on time. Some of the higher end, more exclusive experiences such as a day with a sword master or tea with a geisha will be more accessible for visitors with the better exchange rate. Despite the big price tags such as flights and accommodation, it is a great time to experience Japan.”

Tourists buying subway tickets in Shinbashi, Tokyo - Getty

Hotels are one area that is still likely to squeeze wallets. Japan is home to some of the world’s priciest hotels, particularly when it comes to its cloud-brushing high-rise luxury establishments. The average daily room rate for a hotel in Japan in February 2024 was 18,915 yen (£96) – marking a 25.5 per cent increase compared to the previous year – and over 35 per cent higher than 2019, according to STR, the hotel industry tracker.

For many visitors, however, other benefits outweigh the rising cost of accommodation – namely, shopping, with the biggest spenders per capita confirmed as Australians, followed by visitors from Britain and Spain, according to the Japanese tourism agency.

Among visitors recently tapping into the weak yen is Katia Lelievre, a tourist from France, who explains to AFP, in Tokyo’s Asakusa district: “I bought three pairs of shoes, which is something I would never normally do.”

While the shoe brands she bought (Converse, Nike, Adidas) are available in Europe, she decided to splash out due to the strong exchange rate, adding: “It was really worth it.”

Japan’s famous cuisine is also increasingly accessible, even when on a budget. Dominique Stabile, 31, from Italy, says: “The food is really cheap. I tried everything I wanted. I had a budget set and I didn’t exceed it, so I’m happy.”

For local businesses, the rise of tourists spending money is a welcome turnaround. Saori Iida, who works in a store selling traditional secondhand Japanese clothing, describes how a customer the previous day bought 15 kimonos.

“A lot of people do the maths and when they see the equivalent in their country’s currency, they say ‘wow, I’m going to buy that too’,” she says.

One other impact of the weak yen is the fact that tourists are opting to spend longer in Japan, while also becoming more adventurous in venturing off the beaten tourist trail in search of deeper experiences.

Carolyn Addison, head of product at the luxury tour operators Black Tomato, tells The Telegraph: “Our clients are certainly appreciating the great value of travelling to Japan at the moment and with the currently weak yen we’re seeing them benefit on the ground in myriad ways from the favourable exchange rates.

“Many are opting to stay longer and journeying further to multiple destinations beyond Tokyo and Kyoto, to places like Osaka, which is gaining popularity among clients as a third city stop where they have the option of eschewing Michelin-starred eateries in favour of the city’s established street food scene.

“Additionally,  we’re relishing being able to highlight Japan’s better value as a way to encourage travellers to adventure to lesser known parts of the country.”

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