Hotel and Ryokan Market to Reach 6.5 Trillion Yen in FY2025, Setting a New Record; Early Recovery of Financial Health is a Challenge, with Approximately 30% of Companies in Excess Liabilities

Teikoku Databank, Ltd. conducted a survey and analysis of market trends and corporate trends (business conditions, sales) in the nationwide "Ryokan and Hotel" industry, based on its corporate credit research report file "CCR" and other data. SUMMARY The domestic ryokan and hotel market in FY2025 (April 2025 - March 2026) is expected to expand to 6.5 trillion yen based on operator sales, setting a new record. Driven by robust inbound demand due to the weak yen and the recovery of domestic tourism and business travel, approximately 30% of companies reported an "increase in sales" compared to the previous fiscal year. On the other hand, companies with excess liabilities remain at a high level, accounting for about 30%, indicating that improving financial health and establishing operational structures that account for labor shortages will be crucial for future trends. Ryokan and Hotel Market Expected to Reach 6.5 Trillion Yen in FY2025, Setting a New Record The ryokan and hotel market is highly likely to set a new record in FY2025. Based on the performance trends and forecasts of companies as of 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 figure surpasses the previous record of 6.0652 trillion yen in the last fiscal year and is expected to mark the fourth consecutive year of growth.

Among approximately 3,800 domestic ryokan and hotel companies whose FY2025 performance (including estimates) was known as of the end of February, 32.4% reported an "increase in sales" compared to the previous fiscal year. The business environment for the domestic ryokan and hotel market has been supported by the expansion of inbound tourism due to the weak yen, coupled with steady domestic tourism and business travel demand. Furthermore, the hosting of large-scale events such as live performances and sports events has underpinned market growth. Notably, in major metropolitan areas like Tokyo and Osaka, as well as popular tourist destinations such as Kyoto, room rates remained high due to tight supply and demand. In regional cities as well, an increase in overnight stays driven by inbound visitors seeking "local experiences" such as regional nature and unique culture has provided a solid foundation for demand, contributing to overall growth. Operationally, there has been a growing trend towards shifting to package-style products that emphasize experiential value, such as introducing "room-only" plans that prioritize occupancy rates and adopting "all-inclusive" packages that include meals, drinks, and activities in the accommodation price. These initiatives have contributed to increased customer satisfaction and higher average spending per customer in some cases.

On the other hand, the proportion of companies reporting a "decrease in sales" has exceeded 10% for two consecutive years. Facilities in regional tourist areas or those facing challenges with transportation access have seen limited success in attracting inbound tourists, leading to low occupancy rates. Concerns about losing customers due to price increases stemming from weak demand made it difficult to pass on rising operational costs, such as labor costs, to prices. In addition, a certain number of companies experienced a decline in sales due to constraints in their service capacity caused by chronic labor shortages and intensified competition from the rapid opening of new facilities by major hotel chains.

Approximately 30% of Companies Have Excess Liabilities, Widening Disparities by Scale Looking at prefectures, the highest percentage of ryokan and hotels reporting an "increase in sales" in FY2025 was in "Tokyo" (54.1%), followed by "Shiga Prefecture" (47.6%), "Osaka Prefecture" (47.2%), "Okinawa Prefecture" (45.6%), and "Kyoto Prefecture" (44.3%). Three of the top five prefectures are in the Kinki region, indicating...