Shiga Prefecture’s accommodation market has been moving in the opposite direction to its neighbours since the start of 2026. The settled-ADR estimate compiled by MetroEngines Research (July 2026, N=160 properties) was up 3.3% year on year. In the same month Kyoto was down 12.8%, Osaka down 30.7% and Hyogo down 3.0% — of the six prefectures that make up the Kinki region, Shiga was the only one above its year-earlier level. New supply, meanwhile, has barely moved. Business-hotel openings in 2026 amount to two properties and 91 rooms, just 1.5% of the existing stock of 75 properties and 6,030 rooms. This article identifies where — in which areas and at which price points — this combination of “rising rates, frozen supply” shows up as an investment opportunity, using employment data, inventory sell-through data and land prices.

New Supply Is 1.5% of Existing Stock — Frozen Supply Leaves Room for Investment

Start with supply. Within the scope MetroEngines Research tracks, two business hotels totalling 91 rooms opened in Shiga in 2026 (confirmed via OTA listings): 47 rooms in January and 44 rooms in April. Against the existing 75 properties and 6,030 rooms, that is 0.8% and 0.7% respectively, or 1.5% combined. Ryokan added one property and one room against an existing 60 properties and 967 rooms (0.1%); guesthouses added three properties and nine rooms against six properties and 29 rooms; whole-house rentals added three properties and three rooms against five properties and 21 rooms; and cottages added one property and one room against four properties and 26 rooms.

In other words, the only meaningful supply addition in Shiga on a room-count basis is the 91 business-hotel rooms — and even that is 1.5% of existing stock. Set against a national hotel supply-growth rate of 1.5-1.7% (JLL, held down by construction-cost inflation), Shiga sits within the same low-supply band as the country as a whole. For incumbents that means a stable competitive environment; for anyone weighing entry it means the market remains one where no first mover has staked a claim.

To check where this frozen supply is heading, we also referenced planning data based on the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) Building Construction Dynamics Statistics Survey. Because building confirmation applications are normally filed one to two years before opening, however, counts for future years are structurally undercounted. They should be read as a floor for the confirmed pipeline as it stands today; property and room counts are likely to rise as further applications are filed.

The Only Kinki Prefecture Above Last Year — Seven Straight Positive Months in H1 2026

Now to pricing. Shiga’s settled-ADR estimate for July 2026 was ¥8,122 (N=160 properties), against ¥7,866 (N=163 properties) a year earlier — up 3.3%. Tracking H1 2026 month by month: January +10.9%, February +4.5%, March +4.8%, April +0.6%, May +2.6%, June +1.7% and July +3.3%. All seven months were above the year-earlier level. This is a sustained trend, not a single-month blip.

Lining up the same July 2026 across the six Kinki prefectures, Shiga was the only one above last year. Kyoto came in at ¥12,161 (−12.8% YoY, N=604 properties), Osaka at ¥8,761 (−30.7%, N=647), Hyogo at ¥12,027 (−3.0%, N=545), Nara at ¥10,395 (−13.3%, N=131) and Wakayama at ¥9,218 (−3.0%, N=218). Osaka’s sharp correction includes the payback from large-event demand in 2025, and the declines in Kyoto and Nara likely reflect the same shift in how demand is distributed across the wider region. That Shiga alone sits above last year suggests its demand originates somewhere other than wide-area tourism events.

Breaking the figures down by property category shows what is driving the increase. Settled-ADR estimates for July 2026 were ¥7,425 for business hotels (+4.5% YoY, N=82 properties), ¥12,389 for city hotels (+0.4%, N=12), ¥23,632 for resort hotels (+7.7%, N=11) and ¥13,134 for ryokan (−5.9%, N=54). Both business hotels, which carry the weight of property numbers, and resort hotels, which carry the highest rates, are growing.

Splitting the Prefecture into Three Layers — Rate Structures Differ Across Business, Middle and Leisure Belts

Treating Shiga as a single market misreads its structure. Geography and industry divide it cleanly into three layers. First, the business belt of Konan and Koto (Kusatsu, Ritto, Moriyama, Yasu, Konan, Higashiomi, Hikone, Omihachiman and Koka). The Meishin and Shin-Meishin expressways, National Route 1 and the Tokaido Main Line run through it, and inland manufacturing and logistics cluster there. Second, the leisure and through-traffic belt of Kosai and Kohoku (Takashima, Nagahama, Maibara and Taga), driven by lakeside resorts and hot springs plus traffic heading for the Hokuriku region. Third, Otsu sits between the two: as the prefectural capital it carries office demand alongside leisure demand from Ogoto Onsen and Mount Hiei.

Laying out the numbers layer by layer shows how differently listed prices and settled-ADR estimates relate to each other. In Takashima, in the leisure/through-traffic belt, the listed price of ¥32,065 (84 listed properties) is the highest in the prefecture, yet the settled-ADR estimate of ¥6,786 (N=13 properties) is among the lowest. That is because much of Takashima’s listed inventory consists of whole-house rentals, pensions and cottages, which fall outside the five categories covered by the settled-ADR estimate (business, city, resort, ryokan and capsule). It is a textbook case of a high listed price not translating into a high achieved rate.

Within the business belt the highest rate is Hikone at ¥9,124, and its +14.0% year-on-year increase is also among the largest. Kusatsu (¥8,125), Ritto (¥8,050) and Moriyama (¥8,120) — the three cities along the Tokaido Main Line — sit at broadly the same level. Konan (¥6,936), Higashiomi (¥6,938) and Yasu (¥5,720) are close to industrial parks and their rates are the lowest within the business belt. Higashiomi (+20.5%) and Konan (+9.8%), however, rank near the top on growth. They are improving from a low base, which makes them worth watching in terms of headroom on price.

Identifying Business Districts by the Worker-to-Resident Ratio — Hikone, Nagahama and Otsu Have More Workers Than Residents

To quantify the depth of business demand, we pulled employment data within a 1 km radius of the prefecture’s main stations (Economic Census for Business Activity, Ministry of Internal Affairs and Communications / Ministry of Economy, Trade and Industry) alongside resident population for the same 1 km radius (MLIT National Land Numerical Information, projected population by 250 m mesh). All eight stations are covered in the data (coverage verified), so there is no undercounting from missing records.

Three stations turned out to have more workers than residents within 1 km — the “more people work here than live here” pattern: Nagahama (12,261 workers / 11,792 residents, ratio 1.04), Hikone (7,977 / 7,745, 1.03) and Otsu (14,362 / 14,102, 1.02). By contrast Kusatsu is at 0.45, Moriyama at 0.37 and Minami-Kusatsu at 0.35, with residents far outnumbering workers. Kusatsu, Moriyama and Minami-Kusatsu are residential and university locations with dense housing; on the measure of employment density within 1 km of the station, they are hard to call business districts.

On the share of office-type workers, Otsu stands out at 27.3%, concentrating office demand from the prefectural government, local financial institutions and branch offices. Hikone follows at 14.2% and Ritto at 12.2%. Nagahama, at 8.8%, and Minami-Kusatsu, at 3.6%, are low, indicating that their workforces lean towards manufacturing, retail and services. A location such as Nagahama, with a low office share but a large total workforce, is more likely to see business travellers coming for plant and on-site work rather than head-office meetings — a different character of accommodation demand.

What matters here is combining this with the 2040 population projection. Within 1 km of Nagahama station the projection is −18.8%, and around Hikone station −11.3%: resident populations are set to fall. Yet workers already outnumber residents today. That is a structure of “fewer people living in the town, but people still commuting in to work,” which means business demand is relatively more durable than leisure-led accommodation demand. Conversely, the areas around Kusatsu (+6.2%) and Moriyama (+5.5%) stations are projected to gain residents, so accommodation demand tied to residency — extended stays, family visits, university entrance exams — may accumulate there instead.

Prefecture-wide industrial trends support this. According to METI’s Factory Location Trend Survey, there were 22 factory sitings in Shiga in 2025, two more than the previous year and a second consecutive annual increase against a declining national trend. Site area came to roughly 500,994 m², up 18,272 m² year on year. By region, Konan and Koto led with seven each, followed by Higashiomi with four, Kohoku with three and Koka with one. By industry, fabricated metal products led with five, followed by food manufacturing, textiles and production machinery with three each. The concentration falls precisely in Konan and Koto — the area this article defines as the business belt.

Geographic Imbalance in Supply — Property Counts in the West, Room Counts in the East

Mapping the distribution of supply shows that property counts and room counts do not line up. Takashima, on the western shore, has the largest number of properties in the prefecture, but most are small whole-house rentals, pensions and cottages. The business-belt cities of Hikone, Kusatsu and Ritto have fewer properties but a much larger room count per property. The map below plots the 127 properties with 20 or more rooms across the four main categories (business hotels, city hotels, resort hotels and ryokan).

Demand Differs in Kind — Business Hotels Build Over 90 Days on Weekdays, Ryokan Spike Late

Next, when demand actually books. Taking two settled past dates — Wednesday 8 July 2026 and Saturday 11 July 2026 — we compared booking curves (occupancy by lead time) for business hotels and ryokan in the prefecture.

On the Wednesday, business hotels (75 properties, 6,593 rooms) had already reached 60.8% occupancy at LT90 (estimated for 8 July 2026 check-ins; 2,586 rooms remaining), then filled gradually to 66.3% at LT30, 71.7% at LT14 and 85.4% at LT1 (963 rooms remaining). Roughly 25 points accumulate over 90 days — a two-stage demand structure in which corporate contracts and early business-trip bookings lock in inventory well ahead, with a further tranche arriving close in.

Ryokan (39 properties, 888 rooms) on the Wednesday look quite different: 64.5% at LT90, 63.1% at LT45 and 67.3% at LT21 — essentially flat to LT21 — then a sharp climb from LT14 onward, 71.7% to 74.2% (LT7) to 86.7% (LT1). Weekday ryokan demand is a last-minute decision; 90 days out, almost nothing has sold. Saturday (44 properties, 1,071 rooms) starts at a similar level, 67.9% at LT90, but runs consistently higher than weekdays thereafter: 72.5% at LT45, 82.4% at LT7 and 91.7% at LT1.

From an investment standpoint the implication is clear. Entering the business belt with a business-hotel product means the base occupancy underpinning revenue forecasts is already visible 90 days out, so the business plan carries relatively high confidence. Entering the leisure belt with a ryokan or resort product means revenue hinges on how precisely last-minute demand is captured, so the quality of the revenue-management operation widens the dispersion of investment returns considerably.

Positioning Analysis — All 40 Business Properties Sit at or Below a ¥12,600 Settled-ADR Estimate

Next we match price against supply and demand at the individual property level. For business hotels in the prefecture we pulled inventory sell-through data for four settled weekdays (Monday to Thursday, 8-11 June 2026). Restricting to properties whose OTA-released allocation is at least 30% of total rooms, 78 of the 131 covered properties had observation data and 51 passed the filter. Of those, the 40 properties for which a settled-basis ADR estimate was available for the most recent six months (February to July 2026) were plotted with the settled-ADR estimate on the horizontal axis and the average early sell-out LT across the four weekdays (the mean lead time at which remaining rooms first hit zero) on the vertical.

The result is unambiguous. All 40 properties fall at or below a ¥12,600 settled-ADR estimate; only two exceed ¥11,000 and only three exceed ¥10,000. At the top is a 362-room converted resort-type property in Nagahama at ¥12,592, followed by a 126-room property in Omihachiman at ¥11,618 and a 129-room property in Hikone at ¥10,924. The remaining 37 properties fall below ¥10,000, with the modal band at ¥6,500-¥8,500. Meanwhile, in the same prefecture, ryokan as a category reach a settled-ADR estimate of ¥13,134, city hotels ¥12,389 and resort hotels ¥23,632.

This is where the gap lies. There is effectively no accommodation-led product in the prefecture that sits in a business location and achieves a settled-ADR estimate of ¥11,000-¥16,000. Of the two properties above ¥11,000, the higher is a conversion from a resort format, leaving just one pure business or select-service property aimed primarily at business demand above ¥11,000. Since ryokan and city hotels already clear the ¥12,000 mark, it is not that Shiga’s accommodation demand will not pay this rate. The price point exists; there is simply no product at that price point in a business location. For a comparable reading of price-band structure in other prefectures using the same ADR x early sell-out LT framework, see Miyazaki & Saga Hotel Investment Whitespace.

The depth of demand is also visible. The fastest sell-out over the four weekdays was a 245-room hotel at the east exit of Hikone station: an average early sell-out LT of 26.8 days, sell-outs observed on all four days and 71 cumulative sell-out observation days. As noted above, the 1 km radius around Hikone station is a business core where workers outnumber residents, and demand is deep enough for a property of this size to fill four weeks ahead on weekdays. Similarly, a 129-room property in Konan recorded an average early sell-out LT of 22.5 days over 25 cumulative days, and a 126-room property in Omihachiman 15.2 days over 19 days — mid- to large-sized properties in the business belt selling out early on weekdays. All of them carry settled-ADR estimates in the ¥7,200-¥11,600 range.

Land Costs — Kusatsu Commercial Land Up 6.84%, Hikone Up 0.75%, a Threefold Price Gap

Now the land prices that set the entry cost. According to MLIT’s Published Land Prices (2026), the average for commercial land in Shiga is ¥117,009/m² (¥386,806 per tsubo), up 2.80% year on year. By municipality, Kusatsu stands out at ¥241,222/m² (+6.84%), followed by Otsu at ¥179,490/m² (+5.03%), Moriyama at ¥133,800/m² (+4.80%), Ritto at ¥99,650/m² (+4.02%) and Hikone at ¥81,110/m² (+0.75%). The gap between Kusatsu and Hikone is roughly 3.0x.

Commercial land in Kusatsu has been accelerating: ¥210,277/m² (+3.61%) in 2024, ¥222,766/m² (+4.06%) in 2025 and ¥241,222/m² (+6.84%) in 2026. The highest-priced point near the station is 80 m from Kusatsu station at ¥510,000/m² (+11.84%), zoned commercial with an 80% building coverage ratio and 600% floor area ratio. Hikone, by contrast, is flat at +0.75% for commercial land, which makes it considerably more attractive on land acquisition cost. As established in the previous section, the 1 km radius around Hikone station is a business core where workers outnumber residents, and early weekday sell-outs have been observed there. That combination — strong demand indicators with land prices standing still — raises Hikone’s relative standing within the business belt.

Development Scenario — The ADR and Yield That Work for 100 Rooms in a Business Location

We model the economics of entering the identified whitespace (settled-ADR estimate ¥11,000-¥16,000 x business location) with a 100-room accommodation-led product. All of the following are simplified calculations; an actual investment decision requires a detailed feasibility study.

Assumptions: 100 guest rooms, 22 m² of exclusive area per room, guest-room area at 65% of the total, gross floor area 3,385 m² (1,024 tsubo). Site of 1,000 m² with a 400% floor area ratio. Occupancy of 80% (set conservatively against the 85.9% estimated occupancy for Shiga business hotels in July 2026). Non-room revenue (breakfast, vending, parking and so on) booked at 10% of room revenue. GOP margin of 50% (the midpoint of the 40-60% industry benchmark for business hotels, per Relo Hotel Solutions). FF&E and soft costs booked at 12% of construction cost.

Construction cost (stage 1: 2025 actuals). Based on MLIT’s Building Construction Statistics, 2025 hotel construction costs were ¥2.026 million per tsubo for reinforced concrete, ¥2.405 million for steel frame and ¥1.952 million as the all-structure average. That is up 42% in two years from ¥1.375 million per tsubo in 2023, and the elevated level persists. We adopt the RC figure of ¥2.026 million per tsubo, giving a construction cost of ¥2.07 billion for 1,024 tsubo.

Construction cost (stage 2: allowing for inflation during construction). Applying Turner & Townsend’s construction-cost inflation forecast (+5.3% in 2026, +5.0% in 2027; this article assumes +4.5% from 2028 onward) and compounding to a mid-construction point of mid-2028 for a 2029 opening, the unit construction cost rises about 13.0%, from ¥2.026 million to ¥2.290 million per tsubo. Total investment and yields on that basis are as follows.

Rising construction costs also work to suppress new supply. Given that construction cost is one reason Shiga’s new business-hotel supply is stuck at 1.5% of existing stock, a high barrier to entry also means the competitive environment stays benign. Over the life of a project, cost inflation is a negative and a positive at the same time: it deters competing entrants.

Sensitivity Analysis — Does a ¥11,000 ADR at 76% Occupancy Still Hold 7%?

Now the tolerance for assumptions moving. Holding the site at Hikone (¥81,110/m²) and construction cost at stage 1 (¥2.026 million per tsubo), NOI yields at varying settled-ADR estimates and occupancy levels are as follows.

The base case of a ¥12,000 settled-ADR estimate at 80% occupancy gives 8.0%. Cutting ADR to ¥11,000 still holds 7.0% at 76% occupancy. Even the conservative case of ¥10,000 and 72% occupancy delivers 6.0%, so the structure does not collapse easily (for the perspective of working back to a required ADR from the interest-rate environment, see Policy Rate 1.00%: Break-Even ADR Across Japan’s 8 Hotel Markets). Applying stage 2 (post-inflation construction costs) to a Ritto site gives 7.1% at ¥12,000 and 80% occupancy, and 8.0% at ¥13,000 and 84% occupancy.

The ¥12,000 settled-ADR estimate assumed here is a level only the single highest-rated of the prefecture’s 40 business hotels currently reaches. This model therefore does not assume “the same product at the same price as incumbents.” Achieving it depends on product-design differences — 22 m² rooms (larger than existing limited-service properties in the prefecture), a business-belt location, and catering to weekday multi-night and corporate demand — that lift the position from the existing ¥7,000-¥9,000 band into the ¥11,000-¥13,000 band. That ryokan already achieve ¥13,134 and city hotels ¥12,389 is corroborating evidence that willingness to pay at this level exists in the prefecture.

Scenario Comparison — The Viable Range Across Optimistic, Base and Pessimistic Cases

The assumptions above are bundled into three cases: optimistic, base and pessimistic. The site is fixed at Hikone (published commercial land price ¥81,110/m², 1,000 m²) throughout, the settled-ADR estimate and occupancy take the top, base and bottom of the sensitivity table above, and construction cost takes either stage 1 (2025 actuals, ¥2.026 million per tsubo) or stage 2 (inflation included, ¥2.290 million per tsubo). No new assumptions are introduced; these are combinations of figures already presented.

The range runs from 5.3% (pessimistic) to 9.1% (optimistic), with 8.0% in the middle. The pessimistic case has the rate falling short even of the bottom of the whitespace band, occupancy at just 72% on a full-year modelling basis, and construction-cost inflation absorbed in full — and it still returns 5.3%. At the same rate and occupancy but with construction cost held at stage 1, the figure is 6.0%: that 0.7-point difference comes not from the site or from demand but from the timing of construction. Put the other way round, what most determines whether this project works is the cost at the point of breaking ground, which is why construction cost is assessed as “high” in the risk table.

Conclusion — How to Read a Market Where Prices Are Rising and Supply Has Stopped

To summarise what this article has established about Shiga’s accommodation market. First, the settled-ADR estimate was above the year-earlier level in all seven months of H1 2026, and July 2026 came in at +3.3% (¥8,122, N=160 properties) — the only one of the six Kinki prefectures above last year. Second, new supply amounts to two business hotels and 91 rooms, or 1.5% of existing stock: effectively frozen. Third, the prefecture divides into business, middle and leisure/through-traffic layers, and the business belt (80 covered properties, weighted average ¥7,883) is up 6.1% year on year, ahead of the prefecture as a whole. Fourth, three stations — Nagahama, Hikone and Otsu — have more workers than residents within 1 km, and weekday early sell-outs were observed at mid- to large-sized properties in Hikone, Konan and Omihachiman. Fifth, only two properties in the prefecture are accommodation-led products in a business location achieving a settled-ADR estimate of ¥11,000-¥16,000, while ryokan and city hotels already operate at that level.

Overlay those five and the outline of the opportunity appears. Demand rests on the durable base of business travel, prices are rising, and supply has stopped because of construction-cost inflation — and yet business locations hold nothing but low-rate product. Starting from Hikone, where land costs have moved least, a 100-room development that uses room size and product design to take a position a notch above the existing ¥7,000-¥9,000 band pencils out at an 8.0% NOI yield on 2025 construction costs, or 7.1% on an inflation-adjusted basis for a 2029 opening.

Viewing Shiga as “a low-rate prefecture” flattens its three-layer structure and its mix of property categories into a single average. Just as Takashima has the highest listed price in the prefecture but a settled-ADR estimate near the bottom, averages conceal structure. Broken apart, what this market shows is demand entering a phase that pushes rates up without the product in place to meet it — and that is precisely the room to enter.

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