Feeling out of place and alienated in a foreign culture isn't in itself xenophobic (let alone racist). Especially considering both characters, IIRC, are supposed to be in Japan for external circumstances (he's there for work, she's there because of her boyfriend).
Less distinguished mentally-challenged fellowed than all those movies turning the tourist week experience of a place, into a cartoon representation of what that place is actually like.
That said, Lost in Translation is one of those movies that became annoying because of how many people jerk off to it (figuratively) so as a contrarian, one is naturally bound to hate it.
Feeling out of place isn't xenophobic.
But making the native people the butt of every joke certainly is.
This is further accentuated by the fact that the film having sparse dialogue to help create a tone. But it also makes the characters hyper under developed. They're mostly just a canvas for the setting. Further, due to sparse dialogue it's the type of film where you can read what you want to read. What I read, due to constant mockery of Japanese people, is racism and xenophobia. The whitest of films.
Watch the film again. Is there a single positive Japanese character in the film? No, they're the butt of every joke. The message is "this place is weird". My conclusion: Lost in Translation is a xenophobic film.
"If you have a message, call Western Union." as the quote goes.
Arguing about what a film's "message" is supposed to be, is always a tedious affair, so i'll avoid that aspect (art is supposed to be deeper than that, anyway).
The film is from the point of view of two alienated foreigners, in a strange land (yes, strange from their specific point of view).
What the hell would be the point of inserting a Japanese character who is "positive" (?) just so you're spoon fed a moral out, for what is an intentionally awkward and uncomfortable situation for both the main characters? The Japanese culture is seen as weird and comical by the two main characters, and is thus depicted that way for the audience, who is asked to inhabit their shoes for 2 hours.
Having to bend this, so that the audience doesn't feel uncomfortable, is absurd.
And i don't even particularly like the movie, but i like even less the constant dumbing down this type of reading demands, which gives us all that shit art talking down to their audience like they're children.