Executive Summary — Secondary-Transport Readiness Drives a Re-rating of Regional ADR

ADR in regional hot-spring towns has entered an upward phase in step with Shinkansen line extensions and the introduction of public ride-sharing. Of eight representative hot-spring and resort areas, five posted year-on-year gains, with double-digit-class growth observed in Kusatsu Town (+17.3%), Matsuyama City’s Dogo area (+18.4%), and Beppu City (+5.8%). Conversely, in areas centered on luxury ryokan that are not within walking distance of a station, such as Yufu City (-6.7%), the lag in secondary-transport development appears to be holding back growth in the motivation to stay. This is precisely where there is operational upside: optimizing the combination of public ride-sharing and existing hotel shuttles.

Market Trends — ADR Trends Across Major Hot-Spring/Resort Areas (April 2024 – June 2026)

First, let us review the ADR trajectory of six representative hot-spring and resort areas. When overlaid with the timing of Shinkansen extensions and the introduction of public ride-sharing, the presence or absence of secondary-transport improvement shows up as a difference in medium-term trends.

Kusatsu Town (+17.3% YoY) is a hot-spring town where secondary transport is well developed, with an established hotel-shuttle network operating out of the bus terminal. Meanwhile, Sado City launched full operation of public ride-sharing (Sado-style ride-sharing) in 2024, establishing a service spanning the entire island from 7:00 to 22:00. Its most recent April 2026 ADR of ¥23,366 (+5.9% YoY) is a modest gain, but given the constraints of the property count (N=20) and the operating period (April 26 – November 30), the improvement in continuity of the stay experience is clearly having an effect.

Conversely, Yufu City’s -6.7% YoY is noteworthy. In this area, which is centered on upscale ryokan, secondary transport from Yufuin Station still relies on taxis, and a structural shortage of taxis arises during peak periods. There is substantial room to recover demand by expanding the range of shuttle options.

KPI Matrix for 8 Major Areas — ADR, YoY, and Secondary-Transport Readiness

The YoY gap is clear between “high” readiness areas (Kusatsu Town, Beppu City) and “low” readiness areas (Yufu City). Kaga City, meanwhile, is in an ADR-correction phase in the year following the Hokuriku Shinkansen opening’s rebound, but over the long term there is substantial room for recovery depending on how it leverages public ride-sharing (Kaga public ride-sharing + Uber integration).

The Subsidy Framework — Tourism Secondary Transport Upgrade Program (FY2025)

The Ministry of Land, Infrastructure, Transport and Tourism’s “Tourism Secondary Transport Upgrade Program” (FY2025 Subsidy for Management Improvement Support through Transport DX/GX) covers everything from the introduction of Japan-style and public ride-sharing at tourist destinations to multi-facility joint shuttle transport, labor-saving rental-car lending, and inter-modal tourism MaaS. Eligible applicants are municipalities, transport operators, DMOs, and NPOs; direct application by a hotel alone is, in principle, not envisaged. However, through a joint application via a DMO or tourism association, it is possible to simultaneously reduce hotel operating costs and stimulate demand.

The “2/3 subsidy” figure applies to cases tied to a separate program (a menu within the Japan Tourism Agency’s regional-visitor-promotion project); the standard subsidy rate for this program is in the 1/4 to 1/2 range. The digitalization portion of equipment (dispatch systems, multilingual support) tends to attract more generous subsidies, so integrating a hotel’s shuttle booking and dispatch management into a ride-sharing operator’s system can substantially compress the effective burden of the initial investment. As for subsidy schemes overall, several FY2026 tourism-DX subsidy menus for accommodation businesses support digitalizing dispatch and reservation systems, and combining these with secondary-transport integration is a practical way to maximize the effective subsidy.

Shuttle Cost Comparison — In-House Microbus Operation vs. Ride-Sharing Integration

For hotel operators, the most concrete decision-making input is a comparison between the cost of existing microbus shuttle / taxi outsourcing and the cost of integrating public ride-sharing. We organized the cost structure across three representative operating models.

Model A (in-house microbus) carries the heaviest fixed costs, since the hotel bears all driver labor, vehicle maintenance, and fuel costs. Model B (external outsourcing) can compress fixed costs by operating only during peak congestion hours at a microbus market rate of ¥60k-100k per day (with driver), but during peak periods it may require dispatching multiple vehicles simultaneously. Model C (corporate taxi contract) is highly demand-responsive, but carries the structural risk that taxis themselves cannot be secured during peak hours in peak periods.

Model D (public ride-sharing integration) offers a major operational advantage: in addition to using the subsidy program to effectively reduce the cost of introducing and operating eligible equipment, the multilingual support of dispatch apps (Uber, etc.) can be used as-is, eliminating the need for additional investment in inbound support. The monthly cost gap is roughly ¥1.1 million (versus Model A, after subsidy), translating into operating-improvement potential on the scale of ¥13 million per year.

Representative Case Studies — Shima, Sado, Beppu, Kaga, Kusatsu, Dogo

We organized six secondary-transport development projects in progress or under consideration across major hot-spring/resort areas, noting each area’s development phase and ADR trend.

Beppu City’s “Yukemuri Ride-Share GLOBAL” in particular is the fourth example nationwide of Uber-app-based public ride-sharing, following Kyotango, Kaga, and Shiga Kogen. Its operating conditions — 24-hour service and city-wide coverage — are becoming the standard for capturing inbound demand. In December 2025, the dispatch fee was reduced from ¥1,000 to ¥500, indicating an operational design that seeks a complementary rather than competitive relationship with hotel shuttles.

Estimating ADR Elasticity — The Demand Lift per Unit of Secondary-Transport Improvement

We make a simple estimate of the lift effect that secondary-transport development has on accommodation-demand ADR, using actual data from the past two years. The approach compares ADR trajectories across six areas with differing readiness levels and visualizes the correlation with readiness, in order to read off the YoY differential per one-step increase in readiness.

The average YoY for “low” readiness (Yufu City, Shima City) is -5.1%, “medium” (Toba City, Matsuyama/Dogo, Sado City) is +8.3%, and “high” (Kusatsu Town, Beppu City, Kaga City) is +4.1%. Excluding Kaga City’s -10.9% (the Shinkansen-opening rebound), the simple average for the “high” group is +11.6%, suggesting roughly a +5-10pt lift in ADR YoY per one-step increase in readiness. The sample size is limited and this is not a rigorous econometric analysis, but it is sufficient as a basis for indicating the direction of operator decision-making.

Particularly noteworthy is the synergy when combined with Shinkansen-station and airport access. Since the Hokuriku Shinkansen extension (March 2024), the final 1-5 km from station to hot-spring ryokan around Kaga-Onsen Station is being resolved through public ride-sharing integration, leaving substantial room for an ADR rebound from the second half of 2026 onward, after the post-opening rebound period. Likewise, around resorts near Kyushu Shinkansen stations, Naha Airport, and New Chitose Airport, areas transitioning from “medium” to “high” readiness can be expected to see ADR upside. In the Hokuriku region, the picture is bifurcating, with Tsuruga performing strongly while the Noto Peninsula recovers.

Visualizing the Operational Opportunity — Three Areas of Upside for Hotel Investors and Operators

Implications from the Investor’s Viewpoint — Medium-Term Upside in “Low” Readiness Areas

From the standpoint of considering the investment in or acquisition of hotels in regional resorts/hot-spring towns, among areas where secondary-transport readiness is currently “medium” or “low,” those where concrete pilot projects or subsidy applications are already in progress hold the potential for their ADR level to be re-rated three to five years out. Representative examples are Shima City (second year of its pilot), Yufu City (room for public ride-sharing introduction to address the structural taxi shortage), and Kaga City (the period when the Shinkansen opening is fully reflected).

In many cases, the cap rate at acquisition is priced to reflect the current secondary-transport challenges. Acquiring in that state and then, within one to two years of starting operation, lifting both ADR and occupancy through public ride-sharing integration, dispatch-system consolidation, and a DMO-routed joint application is an effective repositioning-type investment strategy rather than a development-type one. Under conditions of soaring construction costs, combining existing stock with operational improvement is a higher-capital-efficiency investment theme than new development. A similar operational-improvement-driven investment lens can be applied to regional government-ordinance-designated “second-tier” cities, where comparing ADR, supply, and yields reveals comparable repositioning potential.

On the other hand, “high” readiness areas (Kusatsu, Beppu, Kaga) may already have some of the effect of early investment priced in, so capturing additional ADR upside requires a two-stage rocket that combines high-value-added room products and experience programs. Secondary transport itself is at a stage where it is shifting from a differentiator to a “minimum standard.”

Conclusion — Secondary Transport x Shuttle Integration Is the New Standard for Regional Hotel Operation

The Tourism Secondary Transport Upgrade Program (subsidy rate of 1/4 to 1/2) and the nationwide rollout of public ride-sharing constitute a mechanism that lets regional resort/hot-spring hotel operations simultaneously achieve three things: variabilizing fixed costs, supporting inbound visitors, and stimulating demand. The ADR trends of six representative areas show that the difference in readiness already manifests as a YoY gap of roughly 5-10 points.

For hotel operators, beyond the direct cost-compression effect of reducing existing microbus/taxi outsourcing costs by up to 25-50%, the option of reallocating the freed-up funds to ADR-enhancement measures opens up. For municipal tourism-policy officers, there is room to design measures that standardize a hotel-shuttle dispatch platform via a DMO-routed joint application, thereby lifting the entire area’s length of stay and per-capita spending. For regional hotel investors, a repositioning-type medium-term strategy comes into view: acquiring in “medium” or “low” readiness areas and lifting ADR through secondary-transport integration after operation begins. By broadening the perspective from the conventional themes of construction, acquisition, and new openings toward operational opportunities, a new horizon for investment and operation is opening up.