In 2025, lodging industry bankruptcies reached 89 cases — the second consecutive year of increase — and combined with 178 voluntary closures and dissolutions, total market exits totaled 267. With inbound demand running at record-high levels, why are bankruptcies rising? This article combines MetroEngines Research data tracking 6,239 ryokan (traditional Japanese inn) properties with Teikoku Databank bankruptcy statistics and the Japan Tourism Agency’s business succession survey to surface the structural challenges facing long-established ryokan and the common traits of those that survive.

89 Bankruptcies & 178 Closures: A Quiet Exit Behind the Polarization

According to Teikoku Databank’s “Lodging Industry Bankruptcy and Voluntary Closure/Dissolution Trends (2025)” published in February 2026, lodging industry bankruptcies (debts of ¥10 million or more, legal proceedings) totaled 89 cases in 2025, exceeding the previous year’s 78 by 11 and marking the second consecutive year of increase. Adding 178 voluntary closures and dissolutions brings annual market exits to 267 lodging businesses. The report notes that while the market reaches record size on the back of inbound recovery, “management polarization” is becoming increasingly clear, with attrition concentrated among properties unable to make capital investments.

The geographic distribution of exits is also distinctive. According to Teikoku Databank, 75.3% of bankruptcies occurred in “regional” areas outside the Tokyo, Keihanshin, and Chukyo metropolitan zones — close to the pre-COVID 2019 level (77.2%). Over the past five years, 14.6% of bankruptcies have been linked to causes including “aging facilities,” “repairs,” and “equipment failure,” indicating a structural pattern in which delayed capital investment is squeezing regional ryokan operations.

Source: Compiled by HotelBank Editorial Team based on Teikoku Databank “Lodging Industry Bankruptcy and Voluntary Closure/Dissolution Trends (2025)”

Importantly, the figure of 89 bankruptcies is only the tip of the iceberg. In Japan Tourism Agency surveys, roughly 30% of ryokan and hotel operators answered that “succession is desired but not progressing,” and about 10% answered that they are “considering closure without succession.” Furthermore, around 30% of those considering closure cite successor problems as the reason, and so-called “profitable closures” — in which businesses are forced to shut down despite being in the black — are increasingly visible among long-established ryokan in regional areas.

Structural Vulnerabilities of Ryokan: Debt Dependence and the Mid-Size Trap

According to Teikoku Databank’s “National Ryokan/Hotel Market Trend Survey (FY2025 Outlook),” the industry’s overall market size will reach a record ¥6.5 trillion in FY2025, while the share of insolvent companies has risen to 28.6%, exceeding the pre-COVID FY2019 level (24.8%). Companies with revenue growth account for only 32.4%, widening the gap between businesses that grow and those that fall into insolvency. Smaller operators with thin capital bases tend to have higher debt dependence, and they now face the simultaneous pressure of repaying COVID-era zero-interest loans alongside rising labor, utility, and food costs.

So, where does the ryokan sit within the hotel category landscape in terms of pricing? Comparing March 2026 ADR by hotel category using MetroEngines Research data, the national average ADR for ryokan is ¥31,200 — less than half of luxury hotels (¥85,200) and auberges (¥66,900). On the other hand, it is more than double business hotels (¥14,700), placing ryokan squarely in a mid-tier price band sandwiched between “high-end categories” and “low-cost categories.” When food and labor costs rise due to inflation, the squeezed mid-tier band has the hardest time securing margins.

Source: Compiled by HotelBank Editorial Team based on MetroEngines Research (March 2026, all-plan average, N=21,000+ properties)

In addition, ryokan have fewer rooms per property than other categories. Because the per-property revenue base is small, ADR must compensate for the lack of room-count scale, but mid-size regional ryokan (21–40 rooms) tend to be caught between both constraints. Neither the small-scale, premium-rate strategy nor the leverage-of-scale operational efficiency strategy fully fits — the mid-size segment is the most squeezed.

What Review Data Reveals About Surviving Ryokan

From here, we move into the core of this article: the relationship between review data and property structure. Using guest review data on ryokan compiled by MetroEngines Research, we segmented ryokan with 300+ reviews by score band and compared property characteristics. The dataset covers 4,728 actively operating properties (excluding properties with unknown founding year).

Source: Compiled by HotelBank Editorial Team based on MetroEngines Research (N=4,728, ryokan with 300+ reviews)

What clearly emerges from this comparison is the strong correlation between “room count” and “review score.” High-rated ryokan with scores of 4.5+ average just 19.7 rooms and 71.1% have 20 rooms or fewer. By contrast, the low-rated band (below 4.0) averages 38.2 rooms — nearly double the size — with only 43.3% having 20 rooms or fewer. Since average years in operation are roughly 50 in both bands, “room count scale” — not “longevity” — is the stronger driver of review evaluation.

Source: Compiled by HotelBank Editorial Team based on MetroEngines Research (N=6,209, ryokan with 100+ reviews)

Segmenting room count into five bands and viewing the average review score, ryokan with 10 rooms or fewer score the highest at 3.88, while large-scale ryokan (41–80 rooms) score the lowest at 3.60 — a nearly monotonically declining structure. Mid-size ryokan (21–40 rooms) average 3.62, a 0.26-point gap below small-scale properties. This likely reflects the structural operational constraint that “mid-size ryokan struggle to deliver attentive service to each guest.”

In other words, the typical regional long-established ryokan profile of “30–50 rooms / 50 years old” is the most squeezed — both in demand-side and management-side terms. The larger the room count goes unfilled, the more severe labor shortages become, and depreciation outpaces affordable repair investment. Yet boosting food and service quality is also difficult precisely because scale prevents close oversight.

Prefectural Crisis Map for Long-Established Ryokan

Looking at this structure by prefecture, situations clearly diverge by region. Nagano (509 properties) and Shizuoka (395 properties) have many ryokan with average scores in the low 3.7s. Hokkaido has an average of 40 rooms per ryokan — large by national standards — and a score of just 3.48. By contrast, Oita (which includes Yufuin) averages just 15.9 rooms, the smallest nationwide, with a high score of 3.88. Gifu (Shirakawa-go, Gero, etc.) averages 22.1 rooms and 28 years old — relatively young — with a score of 3.82. These can be described as areas where “room counts are kept small and renovations effectively reset building age.”

Source: Compiled by HotelBank Editorial Team based on MetroEngines Research (N=4,160, prefecture aggregation of operating ryokan with 100+ reviews)

Particularly notable is Ishikawa Prefecture (147 properties including Noto, Kaga, and Kanazawa), which has an average of 36.9 rooms, average years in operation of 64.9, and an average score of 3.28 — among the toughest figures nationwide. This reflects the structure in which large-scale onsen ryokan in the Kaga Onsen Region and Wakura Onsen have maintained operations while bearing heavy repair-investment burdens. Including the impact of the Noto Peninsula earthquake, the long-established large ryokan of the Hokuriku region represent the most critical area for future succession and revitalization.

Conversely, areas like Oita and Gifu where average building age is younger and room counts are kept small are likely to have a high share of properties that have already completed generational handovers or rebrandings over the past 20–30 years. Yufuin has seen conversion to small-scale, premium-rate ryokan, while Shirakawa-go and Gero Onsen have advanced revitalization through traditional folk-house renovations. These serve as reference samples of “regions that overcame the crisis.”

→ Atami Ryokan Market 2026: 76 Properties, 2,508 Rooms ADR Analysis

M&A and Non-Family Succession: Integration with Major Brands Accelerates

For long-established ryokan with no successor, three main paths exist beyond closure: (1) external succession via M&A, (2) brand integration with major hotel chains, and (3) acquisition and renovation by funds. Below is a summary of representative cases that surfaced during 2024–2025.

Source: Compiled by HotelBank Editorial Team based on company press releases, TRAICY, Nikkei, and Tourism Economic News

Notably, transfers between major hotel chains are increasing. Patterns like “Kai Kawaji → TAOYA Kawaji,” in which Hoshino Resorts REIT (3287) brings the property to market by switching the operator and Ooedo Onsen Monogatari acquires and rebrands it, reflect the spread of the asset-light management model that separates ownership from operation. The property is a 7-story building constructed in 1994 on 8,671 sqm of land, with a transfer price of ¥1.26 billion. Ooedo Onsen Monogatari reopened it with all-inclusive pricing.

Foreign fund entry is also accelerating. Rihga Royal Hotel Osaka partnered with U.S.-based Bentall GreenOak (BGO) and converted to InterContinental’s “Vignette Collection” after a ¥13.5 billion renovation. In 2024, Hyatt announced a new onsen ryokan brand “ATONA (吾汝),” with planned openings in Yufu, Yakushima, and Hakone. With MUFG Bank also investing, a structure is emerging in which Japanese financial institutions back “foreign brand × regional onsen” packages.

The common threads across these cases are: (1) the property could be transferred while real estate value remained, (2) the acquirer had operating know-how and a brand, and (3) renovation funding could be secured. Conversely, regional small-scale long-established ryokan that lack these elements — especially properties with aging buildings, low land values, and depleted cash — face high risk of failing to find a buyer and ending in closure.

Five Strategic Directions for Survival, Drawn from the Data

Drawing on the data and cases above, we summarize the conditions for long-established ryokan to survive. These are correlations the data points to — not absolute prescriptions — but multiple indicators clearly point in the same direction.

Source: Compiled by HotelBank Editorial Team based on MetroEngines Research (N=6,150, ryokan with 100+ reviews aggregated by grade)

(1) Reduce room count and raise rates. 71.1% of high-rated ryokan with scores of 4.5+ have 20 or fewer rooms. A renovation strategy of enlarging rooms (combining two rooms into one) and raising per-room rates likely contributes to both review scores and ADR. Even within the luxury grade, properties scoring 4.5+ average just 22.6 rooms, indicating that “keeping scale small” drives reviews regardless of grade.

(2) Switch to all-inclusive pricing. Like “TAOYA Kawaji,” pricing that bundles dinner alcohol, soft drinks, and lounge service into the room rate is a tactic that targets both higher per-guest revenue and higher satisfaction. It is one option for breaking out of the mid-tier price band (¥15,000–¥25,000).

(3) Partner with a major brand. Management contracts and franchise contracts that retain ownership while delegating operations to a brand serve as middle-ground solutions for long-established owner families — “introducing professional operations without fully letting go of the family business.” With foreign brands like Hyatt’s “ATONA” and IHG’s “Vignette Collection” entering Japan’s onsen ryokan market, options have unmistakably expanded.

(4) Consider non-family / third-party succession early. Per Japan Tourism Agency surveys, 30% of operators say “succession is desired but not progressing.” Many assume family succession; for those who cannot find an heir, starting early conversations with non-family succession, M&A intermediaries, and succession funds is the key to broadening options. Ryokan-specialized support institutions like the RQ Ryokan Revitalization Fund and Business Succession Promotion Organizations are also expanding.

(5) Regional collaboration and DMO-led area revitalization. In areas where stand-alone survival is difficult, cases of regional DMOs and municipalities leading cross-property revitalization are increasing. Following models from Yufuin, Gero, and Kusatsu, a shift in mindset from “surviving alone” to “preserving the area as a whole” is becoming necessary.

Summary

Behind the 89 bankruptcies and 178 voluntary closures in 2025 lies the structural vulnerability of the typical long-established ryokan profile: “mid-tier price band, mid-size scale, 50 years old.” Review data clearly shows that smaller-room ryokan tend to earn higher scores, placing “scale reduction and rate increase” at the heart of survival conditions. Furthermore, with succession schemes via major hotel chains, foreign funds, and specialized funds now in place, the option of considering external succession before reaching closure has clearly expanded. Whether the 30% of operators who, per the Japan Tourism Agency, “want succession but cannot progress” can step toward succession and revitalization — rather than closure — will be the dividing line that shapes the future of regional tourism.

References & Related Links

• Teikoku Databank, “Lodging Industry Bankruptcy and Voluntary Closure/Dissolution Trends (2025)” https://www.tdb.co.jp/report/industry/20260206-hotel25y/
• Teikoku Databank, “National Ryokan/Hotel Market Trend Survey (FY2025 Outlook)” https://www.tdb.co.jp/report/industry/20260330-ryokanhotel/
• Japan Tourism Agency, “Survey on Initiatives to Improve Working Practices in the Lodging Industry” (Business Succession & Management Improvement Case Studies) https://www.mlit.go.jp/kankocho/content/001621209.pdf
• JTB Group, “Decision to Make LP Investment in RQ Ryokan Revitalization Fund” https://www.jtbcorp.jp/jp/newsroom/2024/02/29_rqfund.html
• Ooedo Onsen Monogatari Hotels & Resorts, “TAOYA Kawaji Grand Opening February 2025” https://prtimes.jp/main/html/rd/p/000000457.000018653.html
• Hyatt “ATONA (吾汝)” Opening Plan https://prtimes.jp/main/html/rd/p/000000117.000008031.html