We need to talk about what’s happening in Kyoto.

According to recent reports, the story on the surface is straightforward. The city, a cultural treasure groaning under the weight of a record 10.88 million foreign visitors last year, is jacking up its accommodation tax. As of March 1, 2026, the per-person, per-night fee on luxury hotel rooms—those priced over ¥100,000 (about $665)—will skyrocket by an astonishing 900%, from ¥1,000 to ¥10,000 (about $6.65 to $66.55).

The city council’s stated goal, as mentioned in the press, is to “promote harmony and compatibility between civic life and tourism.” The projected revenue from this hike is expected to nearly double, jumping from ¥5.91 billion to an estimated ¥12.6 billion annually. That money is earmarked for things like better public transit and infrastructure improvements—all aimed at mitigating the pains of “overtourism.”

The Shell Game

But let’s call this what it is. This isn’t a serious attempt to curb overtourism. It’s a wealth redistribution scheme that will likely make the problem worse.

This policy isn’t a flat tax designed to deter visitors. It is a surgically precise tariff targeting one very specific segment of the market: high-end hotels. Look at the brackets passed by the city council and approved by the Ministry of Internal Affairs and Communications:

• • Under ¥6,000 (~$40): The tax remains unchanged at a negligible ¥200.
  • ¥20,000 to ¥50,000 (~$133 – $332): The tax doubles from ¥500 to ¥1,000. A noticeable but manageable increase.
  • Over ¥100,000 (~$665): The tax explodes by 900%.
   

The mechanics of this tell a different story than the headlines. This isn’t about stopping tourists from coming; it’s about changing where they sleep. For years, the big international hotel chains have captured the lion’s share of tourist spending. This new structure creates a massive financial incentive for travelers to abandon them.

Unintended Consequences

Think about it. Even travelers who can afford a $700-a-night room will pause at a mandatory $67 tax on top of it. It feels punitive. Why pay that when you can book a charming, high-end ryokan or a boutique hotel for ¥99,000 and pay a tax that’s 60% lower? This isn’t just about saving money; it’s about not feeling like you’re being taken for a ride.

The immediate effect is predictable. Price-conscious travelers, which includes pretty much everyone making less than a quarter-million a year, will flock to the smaller, less expensive venues. The initial revenue spike for the city will last a few months, fueled by pre-existing bookings and a lack of awareness.

But word gets out fast. Travel bloggers will post about the “Kyoto luxury tax hack.” The big hotels will see their occupancy rates dip, and you can bet their well-funded lobbyists will complain far more loudly and effectively to the city council than any resident concerned about crowded streets.

And here’s the kicker: this policy will likely increase the strain of overtourism. By pushing visitors out of centralized hotel districts and into smaller inns scattered throughout the city’s neighborhoods, the physical footprint of tourism will expand. Quiet residential streets will suddenly be filled with the clatter of rolling suitcases at all hours.

Furthermore, by making Kyoto seem more affordable to a wider range of people (as long as you avoid the big hotels), this could actually encourage more budget and mid-range tourism. The demand will fuel supply, leading to more homes converted into guesthouses, ultimately increasing the city’s total tourist capacity.

A Misdiagnosis

The city has misdiagnosed the illness. They’ve treated overtourism as a disease of luxury hotels when the real issue is the sheer volume of people. Their “cure” is a shell game that shuffles tourists around the board while creating economic incentives that may very well invite even more people to the city, making the underlying problem worse for the very residents they claim to be helping.