Although urban tourism policies have embraced sustainability, most frameworks often overlook the political-economic arrangements that determine the governance of sustainability and its implementations. This is most pronounced in Asian cities, given the highly diversified institutional pathways and state–market relationships. To address this gap, this study explored how the implementation of sustainable urban tourism in Jakarta and Seoul is affected by specific configurations of capitalism. Utilizing the concepts of variegated capitalism and developmental environmentalism, the study explained how the two megacities with contrasting political economies of sustainable tourism address the environmental, social, and governance aspects of sustainable tourism. Based on qualitative interviews, policy documents, and national statistics, the study finds that Jakarta is predominantly a hybrid neoliberal setting with fragmented regulation, CSR-oriented environmentalism, and donor–recipient community partnerships. Conversely, Seoul adheres to a developmental state model that incorporates sustainability into the core of culture and smart urbanism policies as a part of its long-term planning. The differences in the implementation of the four pillars of sustainable tourism emphasize the limited applicability of universal or prescriptive governance models. The study positions sustainable tourism within the institutional pluralism of capitalism and, in doing so, advances the political economy of urban sustainability for metropolitan policymakers to balance economic growth, social equity, and ecological sustainability. © 2025 Bina Nusantara University. All rights reserved.