How to Capitalize on Japan's Tourist Boom

When everyone's digging for gold, invest in the shovel maker. In this article I'll give you the most undervalued "shovel makers" benefitting from Japan' tourist boom.

Please note: This article is for informational purposes only and is not intended as investment advice. The mention of specific stocks is not a recommendation to buy or sell any securities.

Love it or hate it, but Japan’s tourist boom keep reaching new heights every day!

Since fully reopening, Japan has consistently recorded over 3 million visitors per month in 2024, with a total of 25 million international tourists from January to September—a stunning 65.9% increase over the previous year.

Despite an uproar from the general population, Japan’s government is doing everything to increase the number, now projecting that it will reach 33 million by the end of the year and aims for 60 million by 2030.

These visitors aren’t just passing through though; they’re spending big!

With tourist expenditures estimated at 2.1 trillion yen ($13.5 billion) from April to June 2024 alone, up 73.5% from the same period in 2023. Hotels, too, are capitalizing on this boom, with average daily rates (ADR) reaching new highs. For example, the ADR as of early 2024 was 35% above 2019 levels, hitting around 18,403 yen ($124) per night.

While this demand-driven surge has made direct tourism stocks like hotels and airlines shoot up to crazy valuations, there are still a lot of undervalued stocks if you look a bit deeper; the indirect plays.

As the saying goes, when everyone’s digging for gold, it’s the shovel makers who strike it richest.

Below are three stocks, each benefiting from Japan’s tourism growth indirectly, offering high returns on invested capital (ROIC), stable financials, and competitive advantages—perfect for value-focused investors: