The room stock within a 2 km radius of Hitoyoshi-Onsen Station fell from 547 rooms at 19 properties in 2019 to 506 rooms at 16 properties in 2020, then recovered to 543 rooms at 18 properties after two small inns with 37 rooms opened at Iwai Onsen in 2024–25. Of the 603 rooms at 22 properties listed on booking sites within this radius, however, 495 rooms at 18 properties (82.1%) stand inside the Kuma River system’s flood inundation zone (maximum assumed scale), and 427 rooms at 15 of those properties fall in the 5–10 m depth band. In July 2020, torrential rain damaged 26 of the 37 lodging facilities in the city. This article overlays the recovery of the room stock, the distribution of inundation risk, land prices, estimated ADR and booking pace onto a single picture, and sets out how to evaluate reinvestment now that the Kumagawa Railway resumed full-line service on September 20, 2026.

The room stock in this article covers lodging facilities with 10 or more rooms (excluding leisure/love hotels) within a 2,000 m radius of Hitoyoshi Onsen. “Operating” refers to properties whose selling rates were observed on major booking sites in the most recent 3 months (September–November 2026) (as of November 10, 2026; MetroEngines Research).

The inundation assumptions use the “Flood Inundation Zones (maximum assumed scale)” layer of MLIT’s National Land Numerical Information, retrieved via the Real Estate Information Library. We determined which inundation-depth band each property’s location falls in; where zones of multiple rivers overlap, the deepest band was used. The five depth bands are under 0.5 m / 0.5–3 m / 3–5 m / 5–10 m / 10–20 m, and do not reflect the number of floors, foundation height or flood barriers of individual buildings.

In short, the Hitoyoshi Onsen 2 km area is one where “room count has returned to 99% of the pre-flood level, but commercial land prices are down 19.7% since 2020, and 80% of rooms stand in a zone assumed to flood deeper than 5 m.” On the demand side, guest nights across the 10 municipalities of Hitoyoshi-Kuma reached 225,000 in 2025, 96.5% of 2019, and the estimated ADR of ryokan in Hitoyoshi City was up 7.6% YoY in October 2026. Whether reinvestment pays depends on how much ADR must rise once renovation unit costs and flood-protection costs are loaded in; our estimate shows that converting a 24-room ryokan to rooms with private open-air baths requires a premium of just over ¥10,000 per night. Whether that gap can be explained by the difference between the Kumamoto Prefecture ryokan median (¥17,600 in October 2026) and the Hitoyoshi City ryokan median is the dividing line for lending and investment decisions.

Room Stock Trend — 41 Rooms Lost in 2020, 37 Rooms Back in 2024–25

We first track the room count in the area year by year. According to MetroEngines Research, lodging facilities with 10 or more rooms within 2 km of Hitoyoshi-Onsen Station totaled 537 rooms at 18 properties in 2017–18 and 547 rooms at 19 properties in 2019. In 2020, three properties with 41 rooms dropped out, leaving 506 rooms at 16 properties, a level that held for four years through 2023. Yunoyado Sakura (湯の宿 さ蔵, 24 rooms) opened in 2024 and Business Hotel Hinokiya (ビジネスホテル ひのき屋, 13 rooms) in 2025, both at Iwai Onsen in the southern part of the area, bringing the total to 543 rooms at 18 properties in 2025–26. That is 99.3% of the pre-flood 2019 level, with one fewer property.

It is worth clarifying the difference between three figures. “543 rooms” is the total of properties deemed to be operating in each year based on opening and closing years, and is used to read the stock as a time series. “603 rooms at 22 listed properties” is the total of properties listed on major booking sites as of November 2026, including some with no recent sales observed. “456 rooms at 15 operating properties” is limited to properties whose selling rates were observed in the last 3 months (September–November 2026); reading these 456 rooms as the rooms actually supplied to the market is closest to reality. Effective supply in the area is therefore just over 80% of the pre-flood 547 rooms.

By segment, ryokan are the largest group at 237 rooms in 10 properties, with 212 rooms at 8 properties operating, so 90% of ryokan rooms are on the market. Business hotels, by contrast, have only 110 rooms at 5 properties operating out of 216 rooms at 9 listed, the widest gap between listed and operating of any segment. By size, properties with 50 rooms or fewer account for most of the area at 394 rooms in 19 properties, while only three properties have 51–100 rooms (209 rooms: Hotel Sun Hitoyoshi 79, Ayunosato 75, Hananoso 55). The 1990s is the most common opening decade (165 rooms at 8 properties), but what sets the town apart from other regional onsen areas is that inns with buildings of registered-tangible-cultural-property calibre form its core: Nabeya (鍋屋), founded in the Edo period (1829), and Hitoyoshi Ryokan (人吉旅館, 1934) and Yoshino Ryokan (芳野旅館, 1931) from the early Showa era.

Site Assessment — 82% of Rooms in the Kuma River Maximum-Scale Flood Zone, 70% at 5–10 m

Next is a site assessment that assumes a repeat of the July 2020 floods. According to MLIT materials, the peak discharge of the Kuma River at the Hitoyoshi gauge in the July 4, 2020 flood was estimated at about 7,900 m³/s, and the inundation depth near Aoi Aso Shrine exceeded the July 1965 flood by about 1.5 m, reaching a historic level comparable to the 1669 (Kanbun 9) flood. Along the Kuma River, the inundated area was about 1,150 ha and about 6,280 households were flooded. Direct deaths in Kumamoto Prefecture numbered 65, of which an estimated 50 were in the Kuma River basin. According to the Hitoyoshi Onsen Tourism Association at a prefectural hearing in November 2020, 26 of the 37 lodging facilities in Hitoyoshi City were damaged, with ryokan expected to reopen as early as the following spring and, for some, not until the following autumn or later.

Mapping the maximum-scale inundation zone onto a 250 m grid, 116 of the 225 meshes in the 2 km area (51.6%) lie inside the zone, with 61 meshes in the 5–10 m band and 3 in the 10–20 m band. At the property level, 495 rooms at 18 of the 22 listed properties (82.1%) are inside the zone, and 427 rooms at 15 of those are in the 5–10 m band — locations where flooding above the second-floor level must be assumed. The 108 rooms at 4 properties outside the zone are split between Iwai Onsen in the south and higher ground on the east side, and the two properties with 37 rooms added in 2024–25 are both in Category 1 residential zones outside the assumed zone. Only one property with 10 rooms lies in a landslide warning zone; the area’s main natural-hazard risk is concentrated in river flooding, not landslides. An approach that translates inundation depth into the floor placement of equipment such as substations and emergency generators and into additional investment per room is set out for five station areas including Kumamoto Station in 5 Station Areas, 29,764 Hotel Rooms: 24% Face 3–5m Flood Depths.

The flood-control timeline also needs to be overlaid on the investment horizon. MLIT applied for project approval of the flow-through dam on the Kawabe River in May 2025 and included related project costs in the FY2026 budget request, and reports indicate that a tender notice for the main works may be issued as early as November 2026 ahead of main construction starting in FY2027. Completion is targeted for FY2035, and the project is proceeding as basin-wide flood control combining channel excavation and raising of residential land. In other words, the payback period (around 10 years) of renovation investment started in 2026 largely overlaps with the period of operating under pre-dam flood-safety levels. The realistic design approach is to assume the depth bands on the hazard map will not change for now and to build flood barriers, upper-floor placement of electrical equipment and evacuation planning into Capex.

Land prices are the indicator that has carried the flood damage the longest. The official land price at Kokonoka-machi 41-1 (commercial zone, FAR 400%, building coverage 80%), close to the centre of the onsen town, was flat at ¥38,500/㎡ in 2019–20, fell to ¥34,400/㎡ (−10.6%) in 2021, and kept declining — −2.0% in 2022, −3.6% in 2023, −3.4% in 2024, −1.0% in 2025 and −0.6% in 2026 — to ¥30,900/㎡. The cumulative decline from 2020 to 2026 is 19.7%; the rate of decline is narrowing but has not reversed. Meanwhile, the prefectural benchmark site at Kon’ya-machi 106-2 (commercial zone) was ¥26,100/㎡ in 2026, up 0.4% YoY, so a few central sites are starting to tick up. The residential site at Minami-machi 24-5 eased gently from ¥19,700 (2019) to ¥19,100 (2026), about −0.5% a year, showing that the flood impact has been concentrated on commercial land. For anyone acquiring land to rebuild, commercial land costs about 20% less than in 2019, and this is an upside factor for reinvestment.

Demand — Hitoyoshi-Kuma Guest Nights at 96.5% of 2019 in 2025; Korea 79% of Foreign Guests

Demand has recovered a step ahead of supply. According to the “FY2025 Hitoyoshi-Kuma Tourism Survey” by the Hitoyoshi-Kuma Regional Tourism Development Council, guest nights in the 10 municipalities of Hitoyoshi-Kuma fell from 233,166 in 2019 to 66,623 in 2020, then built up every year — 103,560 in 2021, 128,399 in 2022, 196,728 in 2023, 204,726 in 2024 and 224,989 in 2025 — reaching 96.5% of 2019 and +9.9% YoY in 2025 (the 2025 survey was sent to 86 properties, with 58 responding). Foreign guests numbered 28,911, or 12.9% of the total, and 79% of them were from South Korea. By month, 2025 had three peaks: November at 22,408, August at 22,070 and March at 21,405 — autumn Kuma River boat rides and foliage, the summer holidays, and spring.

For Kumamoto Prefecture as a whole, guest nights in the Japan Tourism Agency’s Overnight Travel Statistics Survey fell from 7.63 million in 2019 to 4.73 million in 2020, then rose to 8.44 million in 2025, +10.5% vs 2019. Ryokan occupancy, however, was 42.1% in 2025 versus 43.2% in 2019 (simple monthly average), and like business hotels (79.3% → 73.8%), ryokan occupancy across the prefecture has not recovered as much as guest numbers. Combined with Hitoyoshi-Kuma guest nights at 96.5% of 2019, the ryokan in this onsen town can be read as being at a stage where “guest numbers are nearly back, but occupancy still has room to grow.” Our analysis of how listings and rates recovered month by month after the 2026 earthquake elsewhere in Kumamoto Prefecture, Kurokawa Onsen After the Quake: 63 Listings Held, Sep ADR +8.7% YoY, is also a useful reference for the recovery pattern of onsen towns in the prefecture.

The full reopening of the Kumagawa Railway adds rail access to this demand. The company, whose Kuma River No. 4 Bridge (322 m long) collapsed and all five of its rolling stock were flooded in the July 2020 floods, reopened the 18.9 km Higo-Nishimura–Yunomae section first in November 2021, and then resumed full-line service over the 24.8 km Hitoyoshi-Onsen–Yunomae route on September 20, 2026. Restoration cost about ¥5 billion, 97.5% of which was effectively borne by the national government. With Hitoyoshi-Onsen Station once again functioning as the terminus of the Yunomae Line, day-trip and overnight flows from the inland Kuma area (Nishiki, Asagiri, Taragi and Yunomae towns) and rail-focused travel demand will return. Note, however, that the Yatsushiro–Hitoyoshi section of the JR Hisatsu Line remained suspended at the time of writing, so restoring the main rail route into Hitoyoshi remains an open issue.

The base of local demand is thin. The resident population within 2 km is 16,215 in 2025 and projected at 13,020 in 2040 (−25.1% vs 2020), with 38.8% aged 65 or over. Only 8.2% of the 11,518 employees are office-type workers, so this is not a location where business travel can lift occupancy. In other words, lodging demand here depends almost entirely on visitors from outside the area coming for sightseeing and the hot springs, and the key variables for post-reinvestment occupancy will be Hitoyoshi-Kuma guest nights — back to 225,000 in 2025 — and growth in foreign guests, led by South Korea.

Rates and Booking Pace — Ryokan Est. ADR in the ¥15k Range, 70% Already Filled at LT45

The estimated ADR of ryokan in Hitoyoshi City (N=15 properties) was ¥15,700 in October 2026, up 7.6% from ¥14,600 a year earlier. That said, 2026 had months well below the prior year before summer — ¥10,300 in June and ¥10,000 in July — and the trailing-12-month average (November 2025–October 2026) was ¥13,700, 3.4% below the ¥14,100 of the prior-year period. Rates peak in the August high season (¥17,600 in 2025) and in autumn–winter (¥15,300–¥15,900 in November–January), and the 1.8x gap versus the low season is a wider seasonal swing than for ryokan across the prefecture (Kumamoto Prefecture ryokan median ¥17,600 in October 2026, N=237 properties). The estimated ADR for Hitoyoshi City as a whole (median of all segments including business hotels) was ¥6,300 in October 2026 (N=25), only 56% of the prefectural ¥11,300 (N=408), showing that the area is polarized between low-rate limited-service lodging and mid-priced onsen ryokan.

Ranking the 15 operating properties by rate, Ayunosato (75 rooms, ¥17,400) and Nabeya (37 rooms, ¥17,100) sit together in the ¥17k range, followed by Yoshino Ryokan (18 rooms, ¥14,200) and Hitoyoshi Ryokan (21 rooms, ¥14,100) in the ¥14k range. All four were damaged in the 2020 floods: Ayunosato reopened in August 2021 after repairs and renovation; Hitoyoshi Ryokan partially reopened with the 8 rooms that escaped flooding and resumed accepting guests in all 21 rooms after restoration work was completed; and Yoshino Ryokan fully reopened on November 1, 2022, adding Western-style rooms while preserving the character of its registered tangible cultural property building. Guest reviews remain highly rated — Yoshino Ryokan at 4.78 overall (N=362 reviews), Hitoyoshi Ryokan at 4.46 (N=1,109) and Nabeya at 4.45 (N=1,739) (HotelBank Editorial Team research) — and the product strength after rebuilding is supporting rates. Meanwhile, 305 rooms at 11 properties are concentrated in the sub-¥10,000 band, where some inns are rising, such as Sakura (¥7,000, +41.1% YoY) and Central Hotel (¥6,300, +12.9%).

Bookings in this area follow a distinctive shape. For October 2026 stay dates, the unsold-room ratio for Hitoyoshi City (12 properties, 235 rooms, based on listings on major booking sites) was already 30.8% at LT45 (45 days before the stay), lower than the 33.9% for Kumamoto Prefecture ryokan overall (145 properties, 2,719 rooms). At LT14, however, it was 22.7% vs 16.4%, and at LT1 18.3% vs 11.3% — the order reverses, and last-minute pickup falls short of the prefecture’s ryokan. It is a curve with strong early booking but weak last-minute capture. October 2026 occupancy (estimated, based on OTA-listed inventory, 15 properties / 330 rooms) averaged 81.7% for the month; weekends such as October 17 (99.1%), October 10 (97.4%) and October 11 (96.9%) were close to full, while weekdays ranged from 68% to 89%, with a string of 70%-range weekdays in the first half of the month. Tiered pricing of last-minute weekday inventory is a revenue opportunity that can be captured first, without any renovation. Note that these are estimates based on the sell-through of inventory sold on OTAs and differ from each property’s actual occupancy.

Reinvestment (Capex) Estimate — ADR Increase Needed to Renovate a 24-Room Ryokan

We now distil these inputs into one estimate from the perspective of someone considering the turnaround or succession of an onsen ryokan. The 10 ryokan in the area have 237 rooms, an average of 23.7 rooms, so we assume acquiring or succeeding to an existing 24-room ryokan and renovating it. Because published data on renovation unit costs is scarce, we start from the planned construction cost of lodging buildings in MLIT’s Building Construction Starts Statistics (all-structure average of ¥1.955 million per tsubo in 2024) and a new-build guideline for ryokan of ¥1.6–2.5 million per tsubo (HOTELISM), and assume ¥6 million per room for interior/plumbing-focused renovation and ¥15 million per room for conversion to rooms with open-air baths. Reflecting the industry view that GOP margins tend to be high at business hotels and lower at ryokan, where F&B and bathing operations are heavier (Relo Hotel Solutions), we assume 70% of the rate premium added by renovation drops to GOP (70% flow-through). For occupancy, we take a midpoint between the 42.1% of Kumamoto Prefecture ryokan in 2025 and the 81.7% listed-inventory-based figure for Hitoyoshi City, and assume 55% year-round.

Reading the results, the interior and plumbing upgrade in Scenario A requires a post-renovation ADR of ¥19,800 — a 40% premium over the current ¥14k range — to secure a GOP uplift equal to 10% of the investment. That level is only slightly above the Kumamoto Prefecture ryokan median of ¥17,600, and given the product strength of the area’s ryokan, which have maintained review scores of 4.4–4.8 since rebuilding, it is within reach. Scenario B, conversion to open-air-bath rooms, requires ¥24,400, which means stepping into the “Gap 1” price band that does not exist in the area. It is 40% above the Kumamoto Prefecture ryokan median of ¥17,600, and the question is whether the high review scores held by the area’s inns can be converted into price. It would be the investment that opens that band in Hitoyoshi for the first time. Scenario C adds ¥60 million of flood protection, raising the required premium to ¥12,200, ¥1,800 more than B. Given the 5–10 m band inside the assumed zone, a design that places electrical and mechanical equipment on the second floor or above and uses ground-floor finishes that are easy to restore after flooding is worth devoting around 15% of the investment to, from the standpoint of insurance premiums, financing terms and BCP. A framework that compares the payback period of disaster-prevention Capex against hazard and ADR across multiple markets is a useful next step when evaluating this trade-off.

Looking across both axes, if occupancy stays at 45% and flow-through falls to 50%, the required premium is about ¥17,900 and the post-renovation ADR exceeds ¥30,000. Conversely, if operations can be tightened to 65% occupancy and 80% flow-through, the premium shrinks to about ¥7,700, and the post-renovation ADR of ¥21,700 stays within 1.2x the Kumamoto Prefecture ryokan median (¥17,600 in October 2026). The success of Scenario B depends more on how far post-renovation occupancy and operating efficiency can be raised than on the renovation unit cost.

On the funding side, Kumamoto Prefecture’s “Livelihood Reconstruction Support Subsidy” (なりわい再建支援補助金), which covers the restoration of facilities damaged in the July 2020 floods, is accepting FY2026 grant applications from April 1 to November 27, 2026 for businesses that were unable to apply by FY2024 due to factors such as public works. Retroactive application has ended, so work must start after the grant decision. For facilities with unstarted post-disaster restoration, whether this window can be used changes the amount of equity required, so in succession or acquisition due diligence it is advisable to confirm eligibility and the timing of the grant decision first.

Investment Summary — Recommended Scenario and Risks

Reinvestment in the Hitoyoshi Onsen 2 km area carries three upsides — “commercial land is 20% cheaper than in 2019,” “demand is back to 96.5% of 2019 and the railway has fully reopened,” and “there is a gap band in ryokan rates” — alongside three constraints: “80% of rooms are in a zone assumed to flood deeper than 5 m,” “the resident population falls 25% by 2040,” and “last-minute booking pickup is weak.” Our recommendation, premised on succeeding to or acquiring an existing ryokan, is to lead with Scenario A (interior and plumbing upgrade) combined with flood protection, build a 1–2 year track record of review scores and rates, and then move in stages to Scenario B (open-air-bath rooms). The Gap 1 price band is attractive, but with no precedent in the area, converting 12 rooms on a trial basis to build a sales record is easier to get through lenders’ credit review than betting everything on that band with the first investment.

Finally, the timeline. Starting in November 2026, the standard schedule would be design and the subsidy grant decision, construction in 2027 and reopening in spring 2028. Because this overlaps with the start of main construction on the Kawabe River dam (planned for FY2027), construction vehicles and materials procurement may compete across the region, so schedule and cost estimates should include a buffer. The next steps are threefold: confirm the floor-by-floor inundation assumptions and equipment layout of the target property, confirm eligibility for the Livelihood Reconstruction Support Subsidy, and obtain room-level sales results for the most recent 12 months.

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