Japan's Tourism Flow: A $100B+ Liquidity Shift from the US

The global tourism industry grew 4% in 2025, but the United States is an outlier, with international tourist arrivals falling 1.4% last year. This weakness is part of a broader shift, as demand flows toward destinations like Japan, which saw double-digit growth. Through November 2025, Japan's international arrivals were up 17% year-over-year, reaching an all-time high of 42.7 million visitors.

This isn't just a headline number; it's a massive pre-travel spending commitment. American Express data shows bookings to Japan among Gen Z and millennials have surged 1,300% since 2019. That explosive growth in future spending signals a deep, structural migration of liquidity away from the US and into Japanese tourism services, retail, and hospitality.

The bottom line is a clear liquidity shift. While the US tourism sector faces headwinds, Japan is capturing a disproportionate share of global travel demand. This flow of tourist dollars represents a tangible, measurable transfer of economic activity from one major economy to another.

The Flow Mechanics: Policy Barriers and Capacity Constraints

The US decline is not just a market shift; it's a policy-driven liquidity drain. International arrivals in North America fell 1.4% last year, with UN Tourism citing weak results in the United States. This is directly linked to foreign policy and visa crackdowns, creating a tangible barrier to entry that reduces inbound travel demand and the associated pre-travel spending flow.

Japan's growth, in stark contrast, is fueled by a powerful demand driver: pop culture and a perception of civility. American Express data shows bookings to Japan among Gen Z and millennials have surged 1,300% since 2019. This boom mirrors a tripling of anime viewership, turning Japan into a romantic escape for young Americans seeking the everyday politeness and order they feel is missing at home.

This surge is hitting capacity. More than 1.5 million seats have been booked on flights from the US to Japan over the summer, straining airline supply. When demand outpaces available seats, the immediate price impact is inflationary pressure on airfares, which then ripples through the entire tourism value chain from hotels to retail.

Sector Valuation and Catalysts: The 2026 Outlook

The sector valuation story is clear: France remains the cash cow, but Japan is the growth engine. France is projected to attract about 82.6 million visitors this year, maintaining its top spot. Yet its growth is steady, not explosive. Japan, in contrast, is the fastest-growing major market, having already hit an all-time high of 42.7 million international visitors in 2025. This gap in growth rates is the primary catalyst for 2026.

The global tourism outlook is positive, with arrivals expected to grow 3-4% in 2026. But the US's policy-driven decline could widen the gap between its stagnant market and the surging demand for alternatives. While the US faces a 6% drop in foreign arrivals, destinations like Japan are capturing that diverted liquidity. The key question for investors is which stocks benefit from this structural shift versus those reliant on the US market.

Watch two critical responses in the coming year. First, Japan's ability to manage its sudden capacity crunch. With over 1.5 million seats booked on US-Japan summer flights, the sector faces inflationary pressure on airfares and hotel rates. If supply bottlenecks persist, it could cap revenue growth and margin expansion for Japanese tourism stocks. Second, observe France's response. Its sector grew 9% in revenue last year and is seeing new affluent middle-class demand from the Americas. France may need to accelerate investment in infrastructure and marketing to retain its share as the US market shrinks.