Teikoku Databank conducted a survey and analysis on the business conditions of 931 companies in the “Ryokan and Hotel” industry, based on the company’s proprietary Corporate Credit Report (CCR) files.
The analysis indicates that the ryokan and hotel market for the full fiscal year 2023 is expected to reach around 4.9 trillion yen, reflecting a recovery to pre-COVID-19 levels. The increase in market size was driven by rising domestic travel demand and favorable factors such as the graduation travel season, although the market fell short of the all-time high of 5 trillion yen, partly due to the impact of the Noto Peninsula earthquake. Nonetheless, the market is projected to grow 1.2 times compared to the 4 trillion yen recorded in fiscal 2022, with the final figures anticipated to align with levels seen in fiscal 2019, when inbound tourism demand was high.
(Based on materials provided by Teikoku Databank)
Regarding the business performance of the 931 ryokan and hotel operators surveyed by Teikoku Databank, 52.6% of the companies reported increased revenue. However, this represents a decline from the 60.8% recorded in April 2023, with the proportion of companies showing flat results increasing to 44.5%. The percentage of companies reporting a decrease in revenue stood at 2.9%, nearly unchanged from the 2.6% recorded a year earlier. This marks a significant improvement compared to April 2021, when 75.7% of companies recorded revenue declines due to the COVID-19 pandemic.
The reclassification of COVID-19 as a Category 5 infectious disease in May 2023 has led to a recovery in domestic tourism demand and a sharp increase in inbound demand, with many companies expecting substantial revenue growth. Particularly in urban areas, business hotels are projecting revenue increases of over 20% compared to the previous year. However, the proportion of companies experiencing revenue growth has decreased from a year ago, indicating a transition from a phase of rapid market recovery to one of stabilization.
On a prefectural basis, Hiroshima Prefecture recorded the highest revenue growth trend, with 84.0% of companies reporting increased revenue. Over 80% of companies in Wakayama and Okinawa prefectures also reported revenue growth, and more than 70% of companies in Fukuoka Prefecture, which is prominent for its business travelers and inbound visitors from Asia, and Gunma Prefecture, known for its renowned Kusatsu Onsen, reported revenue increases.
According to the Japan Tourism Agency, the total number of nights stayed by both Japanese and foreign guests at domestic hotels and ryokan in April 2024 increased by 10.1% year-on-year, reaching approximately 51.9 million overnight stays. The number of overnight stays by foreign guests increased by 46.9% to approximately 14.5 million, boosted by the attractiveness of Japan as a travel destination due to the weaker yen. This suggests that the market will continue to perform well, with the possibility of surpassing 5 trillion yen in fiscal 2024.
However, labor shortages at lodging facilities remain a serious issue, making it difficult to secure front desk and kitchen staff. As a result, many establishments are unable to fully capitalize on the demand, imposing restrictions on reservations and room occupancy. Teikoku Databank’s survey indicates that more than 60% of the ryokan and hotel industry faces labor shortages, regardless of employment status, necessitating the utilization of foreign workers and investment in automation. Addressing the labor shortage is therefore considered a critical factor that will determine the success of the market in fiscal 2024.
