Japan is developing 50 luxury hotels to cash in on the 40 million visitors it expects next year, and it signals that the country's hotel boom is finally hitting its stride

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Tokyo at night.

• The number of visitors to Japan has increased significantly in the past few years and is expected to reach 40 million in 2020, the Economist reported.
• The upcoming 2020 Tokyo Olympic Games have placed Japan in the spotlight as a major travel destination.
• Earlier this month, Japan announced that it would invest in opening 50 new luxury hotels across the country.
• Japan is looking to cash in on an increasing number of well-to-do travelers, according to travel research site Skift.
• While new hotels are slated to open in the future, Tokyo is currently facing a 14,000-room per day hotel shortage during the Olympics.
• Visit Business Insider's homepage for more stories.

Tourism to Japan has increased exponentially in recent years.

The country was host to 31 million international tourists in 2019. That's nearly five times more than it was in 2011 - and it's expected to reach 40 million in 2020, the Economist reported. The 2020 Tokyo Olympics alone is expected to draw 10 million tourists.

Many of Japan's visitors will be "well-off" financially, The Economist noted. Skift's Raini Hamdi similarly observed that Japan is becoming more popular among "well-heeled" travelers.

However, the country hasn't seen tourist spending increase in proportion to the number of visitors.

"The government wants to address an 'imbalance' of Japan welcoming more foreign arrivals but not necessarily more spending," Hamdi reported for Skift in July.

It's time for Japan to cash in on its tourism boom

Earlier this month, Japan's government announced a new initiative to cash in on luxury tourists. Japan will develop 50 "world-class" hotels through a series of investments and loans, according to Chief Cabinet Secretary Yoshihide Suga.

Japan currently has 32 five-star hotels, the Wall Street Journal notes, citing data from CBRE Hotels. For comparison, Thailand has 112, France 127 and Italy 187. The US has a staggering 793.

The announcement comes on the heels of what the Wall Street Journal calls a "luxury hotel boom" in Japan. Luxury hotel brands like Four Seasons and Marriott International have announced plans to open hotels in the country, and existing luxury hotels are renovating to keep up with the times. The Okura Tokyo Hotel opened in September after a $1 billion renovation with rooms costing as much $28,000 per night.

"Compared to other cities like New York and Paris, Tokyo still has very few luxury hotels," Miwako Date, chief executive of real-estate company Mori Trust Co. told the Wall Street Journal.

One reason for this is that mass tourism hasn't been a priority of Japan's.

"For decades the government pushed industrial growth, so the country's cities filled up with drab business hotels that catered to armies of salarymen. Property developers dominated the real-estate market and clung to most of the prime city-centre spots," the Economist wrote.

While Japan's plan to build 50 new luxury hotels signals its commitment to broaden - and capitalize on - its tourism market, these new hotels won't debut in time to solve the existing scarcity of hotel rooms.

Currently, Tokyo is facing a shortage of 14,000 hotel rooms during each day of the Olympic Games, Business Insider's Katie Warren previously reported.

To alleviate the demand for housing during the Olympics, luxury cruise ships will serve as floating hotels, and a new Airbnb partnership with the International Olympic Committee will also create "hundreds of thousands of new Airbnb hosts," Warren noted.

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