Only Osaka Lost Foreign Guests as Japanese Stays Rose｜First Signs of a Way Out of Inbound Dependence

The world has entered a great age of tourism, and at last, here in Japan too, something is stirring toward what might be called “the next tourism.” The place trying to lead that movement is Osaka.

Let me begin by stepping back to look at the situation as a whole. In 2025, Japan received about 42.68 million foreign visitors, and much was made of the fact that the figure had passed 40 million for the first time. The government, however, has declared that it will raise the number to 60 million by 2030. That target comes from the “Tourism Vision to Support the Japan of Tomorrow,” drawn up in 2016 under the Abe administration, which set goals of 40 million visitors spending 8 trillion yen by 2020 and 60 million spending 15 trillion yen by 2030. The current Takaichi administration sees itself as the rightful heir to the Abe government, so it shows no sign of revising them.

The pandemic interrupted things, but Abe’s strategy of putting “Japan on sale” ironically became the engine of a massive influx of visitors, and because the government, local authorities, and businesses looked at nothing but the numbers, the bill is now arriving in the form of distortions everywhere. No city has kept up with the sudden surge. In truth, most have simply stopped functioning, and the country has split, like a mosaic, into overtourism zones and everywhere else. Yet what matters most to people, long before tourism, is daily life.

Prices were already high. Abenomics had brought an extreme weakening of the yen and years of stagnant wages, and while people’s lives were being worn down by both, crowds of visitors arrived with strong currencies such as dollars and euros and pushed prices higher still, until hotels in Tokyo climbed beyond what ordinary Japanese people can afford. As travelers roam in search of “local experiences” and “hidden gems,” quiet neighborhoods are being eaten away, and finding a place to rest is becoming impossible. The cafés in Osaka that I used to visit every day have, over the past few years, all either been sold or taken over by foreign tourists, and the particular “distance between people” that Osaka once had now belongs entirely to the past.

The same trend is growing in Tokyo and Kyoto, not only in Osaka. Can Japan really withstand the government’s plan to push the number to 60 million? However you look at it, it is not sustainable.

The problems that this polarized situation has produced come down to two wishes. One is “we want tourists to move around,” and the other is “we want tourists to come.” Every local authority is struggling with one or the other, but none has found a way to solve it or even a prospect of one, and the government and local authorities of present-day Japan, where bureaucracy runs deep, cannot move as fast as the visitor numbers grow. Because the burden falls entirely on people’s daily lives, it is only gradually being recognized as a problem at all.

The tourism industry, meanwhile, went through the external shock of a pandemic just a few years ago, yet it has neither changed course nor reflected on what happened, and it carries a structural flaw that leaves it defenseless against another external risk, the oil crisis brought on by the Iran war. Anyone can foresee that unpredictable swings in travel costs will strike tourism directly and hard, yet each business can do little more than pray. The influence of geopolitics is just as blatant. Just as the souring of relations between Japan and China has been shown to sway the choices of Chinese travelers directly, an industry that seems at first glance to be making money turns out to be remarkably fragile and unstable.

Even on the simplest view, epidemics, oil, and war are not problems any single business can solve, so the industry ought to accept that its structure is fragile and unstable and act with an eye on what comes next. Nothing of the kind is happening. The likely result is that the government will reach its numbers while the polarized problems remain structurally unsolved, and only the distortions will grow. Since leadership from the center leads nowhere, it is at the prefectural level, where the external shocks actually land, that a willingness to face the problem is finally beginning to appear here and there. Foremost among these prefectures is Osaka.

Why is Osaka trying to take the lead? Part of the reason is that the existing tourism strategy has begun to falter, and part is that new movements have begun to appear.

Look at the number of foreign overnight guests in 2025. Tokyo was up 4.9 percent on the previous year (about 59.59 million), Kyoto Prefecture up 10.7 percent (about 18.75 million), Hyogo Prefecture up 29.3 percent (about 1.95 million), Wakayama Prefecture up 13.8 percent (about 890,000), and Nara Prefecture up 25.5 percent (about 500,000). Osaka Prefecture, by contrast, was down 4.7 percent (24.2 million). While almost every major tourist destination in the country grew, Osaka alone was sliding further downward.

Shift the view away from foreign visitors, though, and a different picture comes into focus. In the combined count of Japanese and foreign overnight guests, Tokyo, in first place, fell 3.3 percent, while Osaka Prefecture, in second, rose slightly, by 0.3 percent. In absolute terms, Tokyo is overwhelming, at more than 100 million against Osaka Prefecture’s 57.6 million, but Kyoto Prefecture, the epicenter of overtourism, is also showing signs of decline, down 0.7 percent.

Now look at Japanese guests alone. Tokyo fell sharply, by 12 percent. Hokkaido and Okinawa, which soared by 24.3 and 25.2 percent respectively in foreign guests, are struggling with Japanese guests, down 4.9 percent in Hokkaido and 3 percent in Okinawa Prefecture. Kyoto Prefecture, equally reliant on foreign visitors, saw its Japanese guests drop sharply, by 11.9 percent. Amid all this, Osaka Prefecture alone rose, by 4.2 percent, giving it a stronger pull on Japanese travelers than any other prefecture in the country.

The prevailing view credits the Osaka Expo, held in 2025, for this. Put the other way around, however, without the Expo, Osaka might have ended up worse off than other regions, which is why 2026 is the year when the true state of Osaka’s tourism will come to light.

At the same time, the recent pattern looks as though Japanese travelers, holding their weak yen, are moving about so as to slip past the gaze of the enemy, the foreign visitors who roam freely with their strong currencies. In other words, a situation in which the Japanese pay the price for foreign visitors moving at will, with hard currency as their weapon, has already become reality. Naturally, people in the tourism industry look only at the visitors who bring in money.

After a year like 2025, which laid these trends bare, it is Osaka that has begun looking for a way out of its excessive dependence on foreign visitors. Some of this surely comes from Osaka’s own native character as a place where people with a talent for business have always gathered, but for better or worse, it is a sign that Osaka has started searching for “a new way to make money.” It also suggests that, with the exceptional year of the Expo behind it, the city is finally running out of moves. For Osaka, the next four years, from the 2025 Expo to the integrated resort (IR) scheduled to open in autumn 2030, will be a trial in the most literal sense. And in a world as unstable as this one, there is no guarantee whatsoever that autumn 2030 will arrive as planned.

Tokyo and Kyoto are both heading toward collapse through their dependence on foreign visitors, with Hokkaido and Okinawa following fast behind. Against that backdrop, the movement now emerging from Osaka, however late, may turn out to be the first shoot of “the next tourism.”

Yet Osaka, which earned easily for years from foreign visitors and from spot tourism, has no next idea either, any more than the other prefectures do. From the many accounts I have heard, I have come to understand that this is the challenge every tourism strategy now faces. Money and tourists simply fell from the sky without anyone doing much of anything, so no one developed the ability to propose what comes “next.” Incidentally, the place in Japan most deeply infected by this malady is Kyoto.

Come to think of it, about fifteen years ago, Kyoto was boasting that “people come to us on their own, without our lifting a finger.” Osaka saw the opening and a chance to grab serious money. Accepting that “we have nothing,” it thoroughly built up its hotels and its restaurant trade and positioned itself as the “base” where foreign visitors would stay while traveling between Kyoto and Nara, the cities with the famous sights, and it was enormously successful. Kyoto, rattled at being left behind, hurried to build hotels of its own, but by then it was too late. On top of that, tourists visit only a small part of Kyoto City, so Kyoto Prefecture as a whole is badly hollowed out, and even within the city’s tourism, there is a structural flaw in that the revenue of the temples does not contribute to the finances of Kyoto as a whole. That is why Kyoto City, which looks so prosperous from tourism, is facing the danger of financial collapse. My personal impression is that Kyoto is now the most rattled local authority of all, and indeed it is desperately trying to send tourists on to places outside the city.

What will become of Japan’s tourism industry from here? The key to thinking about it lies beyond two questions. Will reaching the 60 million mark four years from now really contribute to the lives of the Japanese people? And where, after all, did the true form of kanko lie, the Japanese word for tourism whose characters mean “to view the light”?

Watching these policies without a strategy, I suspect the moment when every crack bursts open at once may not be far away.