While Japan has enjoyed a prolonged period of outperformance in hotel demand in recent years, many worried that would come to an end when Chinese officials urged China's citizens to not visit amid diplomatic tensions.
But even as Japan lost more than half of the travelers from its top source market, the country managed to replace that by cobbling together increased demand from other countries, said Matthew Burke, STR regional director for the Asia Pacific region.
Speaking during the latest episode of the CoStar News Hotels podcast, Burke said tourism demand to Japan has been remarkably resilient.
"They've been able to, from a collection of different parts of the world, essentially replace all of that international demand," he said. "South Korea, that's up 20-odd percent. Taiwan's up 20-odd percent. The U.S. is up 10%, and I could go on."
While some Japanese destinations have seen a overall drop, others have actually grown significantly with occupancy up in the double digits, he said.
Currency exchange is still heavily weighing in favor of international demand into the country, with the Australia-based Burke saying travelers from his home country are essentially enjoying a 10% discount on trips to Japan for that exact reason.
Closer to home, Burke said his native Australia is facing some headwinds from perceptions of fuel costs making travel more difficult, but he notes Australia still has plentiful options for air travel, and costs have remained manageable.
The bigger question for Australian demand, he said, is where interest rates will trend, although that was answered in part Tuesday when the Reserve Bank of Australia increased rates citing inflation concerns.
Rates "have a much stronger correlation to overall demand," he said.
For more from the interview with STR's Matthew Burke and Jesper Palmqvist, listen to the podcast above.