Japan's Ryokan and Hotel Market Projected to Reach ¥6.5 Trillion in FY2025, Setting New Record; Market Expansion Faces Challenge of Early Financial Restructuring as 'Insolvent' Companies Account for Approximately 30%

Teikoku Databank, Ltd. conducted a survey and analysis of market trends and corporate activities (business conditions, sales) in the nationwide 'ryokan and hotel' industry, based on its proprietary corporate credit research report files 'CCR' and other data.

### SUMMARY

The domestic ryokan and hotel market for fiscal year 2025 (April 2025 - March 2026) is expected to reach 6.5 trillion yen in operator sales, setting a new record high. Driven by robust inbound tourism fueled by the weak yen and a recovery in domestic tourism and business travel demand, approximately 30% of companies reported 'increased revenue' from the previous fiscal year. However, about 30% of companies remain insolvent, indicating a persistently high level. Improving financial health and establishing operational systems that account for labor shortages are seen as crucial factors influencing future trends.

### Ryokan and Hotel Market Expected to Reach ¥6.5 Trillion in FY2025, Setting New Record

The ryokan and hotel market in FY2025 is highly likely to set a new record. Based on company performance trends and forecasts up to the end of February 2026, the domestic ryokan and hotel market (based on operator sales) for the full fiscal year 2025 (April 2025 - March 2026) is projected to reach 6.5 trillion yen. This would exceed the previous year's record of 6.0652 trillion yen, marking the fourth consecutive year of increase.

Among approximately 3,800 domestic ryokan and hotel companies whose FY2025 performance (including forecasts) was known as of the end of February, 32.4% reported 'increased revenue' from the previous fiscal year. The business environment surrounding the domestic ryokan and hotel market was supported by the expansion of inbound tourism due to the weak yen, robust domestic tourism and business travel demand, and increased visitor numbers from large-scale events such as live concerts and sports. Notably, in major metropolitan areas like Tokyo and Osaka, as well as famous tourist destinations like Kyoto, room rates remained high due to tight supply and demand. Furthermore, in regional cities, the increase in foreign visitors seeking 'local experiences' rooted in local nature and unique culture led to solid accommodation demand, contributing to the overall market uplift. In terms of operations, there was a growing trend towards package-type products emphasizing experiential value, such as introducing 'room-only' plans focused on occupancy rates, or 'all-inclusive' packages that include meals, drinks, and activities in the accommodation fee, which contributed to improved guest satisfaction and higher average spending per customer.

On the other hand, the proportion of companies experiencing 'decreased revenue' exceeded 10% for the second consecutive year. Facilities in regional tourist areas or those with accessibility challenges saw limited inbound tourism and low occupancy rates. Due to weak demand, they were hesitant to raise prices for fear of losing customers, making it difficult to pass on rising operating costs, such as labor expenses. Additionally, a certain number of companies saw decreased revenue due to constraints on their acceptance capacity caused by chronic labor shortages and intensified competition from the rush of new openings by major hotel chains.