Teikoku Databank, Ltd. conducted research and analysis on market trends and corporate developments in the domestic ryokan and hotel industry across Japan, based on sources including its corporate credit research reports (CCR).
(Based on data from Teikoku Databank, Ltd. )
The domestic ryokan and hotel market for fiscal year 2024 is expected to reach 5.5 trillion yen in revenue, marking a significant record high. The market has grown due to recovery from the COVID-19 pandemic, the increase in inbound foreign tourists, and domestic travel support measures. As of the end of February, performance trends showed that 33.8% of approximately 3,400 companies experienced year-on-year revenue growth. In the Hokuriku region, although some ryokan and hotels saw sluggish earnings due to the impact of the Noto Peninsula earthquake, the weak yen boosted demand from inbound travelers, leading to price increases for accommodations. As a result, facilities ranging from luxury hotels to business hotels enjoyed strong performance. In metropolitan areas, the recovery of accommodation demand from both tourists and business travelers led to notable improvements in occupancy rates. In regional areas, domestic travel support measures contributed to higher occupancy rates at hot spring resorts and resort hotels, pushing up the overall market.
On the other hand, the percentage of companies with increased revenue declined for the first time since the pandemic, and the share of companies with decreased revenue exceeded 10% for the first time in two years. Profitability challenges have also become more apparent, such as lower occupancy rates due to labor shortages, including cleaning staff, rising labor costs to secure employees, and increased costs for energy, food ingredients, and linen supply services.
(Based on data from Teikoku Databank, Ltd. )
By prefecture, Wakayama recorded the highest proportion of companies with revenue growth in the ryokan and hotel industry, with 56.0% surpassing the previous year’s performance. Many companies in Kyushu, such as those in Fukuoka (50.0%) and Nagasaki (44.7%), also reported increased revenue. This was influenced by rising accommodation demand from inbound tourists, especially from Asia, and the capture of business travel demand from major urban areas.
While demand from inbound tourists is expected to remain strong due to the weak yen, in the domestic market, the recovery in travel demand may have peaked, and consumers’ increasing preference for saving could result in a more competitive environment for high-priced accommodations. Nevertheless, the ryokan and hotel market as a whole is expected to remain robust.
However, labor shortages are projected to become even more severe in fiscal 2025. According to a survey by Teikoku Databank, as of January 2025, over 50% of ryokan and hotel businesses reported labor shortages among both regular and non-regular employees. Many accommodation facilities are finding it difficult to secure front desk and kitchen staff, leading to more cases where room occupancy must be restricted. In response to these circumstances, greater investment in digitalization and labor-saving technologies, such as the use of foreign personnel and automation at reception, will be increasingly necessary. How businesses respond to labor shortages will likely be a critical factor determining their success or failure.