Why Vacation Rentals Are Booming in Tennoji Ward
The Rapid Recovery of Inbound Demand and Special Market Conditions
Since Japan’s government resumed accepting foreign tourists in late 2022, accommodation demand in Osaka City has been recovering rapidly. According to case studies from vacation rental management companies, occupancy rates—which had dropped to just 20-30% at one point compared to pre-pandemic levels (set as 100%)—quickly bounced back into the 70% range and have now recovered to around 80%. This is a high occupancy rate on par with 2019 levels, and average room rates have risen approximately 30% compared to pre-pandemic prices. With supply falling short of demand, now is truly an excellent opportunity to enter the vacation rental business.
[References]
Osaka’s Minpaku Facilities Decline Then Rise Again—Operating at Higher Rates Than Pre-Pandemic | Gold Key Co.,Ltd
Special Demand from Major Events Like the Osaka-Kansai Expo
The “Expo 2025 Osaka, Kansai” is scheduled to be held on Yumeshima in Osaka City in 2025, with an expected attendance of approximately 28.2 million visitors (including around 3.5 million international visitors). During the Expo, this translates to an average of over 150,000 visitors per day, meaning accommodation demand throughout Osaka City is expected to reach unprecedented levels.
There are concerns about a shortage of accommodation facilities not just around the venue but across all of Osaka City, and this is likely to be a tailwind for vacation rental demand in easily accessible Tennoji Ward as well. Furthermore, Osaka’s Integrated Resort (IR), scheduled to open in 2029, is planning to attract approximately 19.87 million visitors annually (13.58 million domestic and 6.29 million international) by its third year of operation, meaning growth in inbound tourism is expected to continue.
[References]
[PDF] Recent Preparation Status of Expo 2025 Osaka, Kansai
How Many Visitors Will Attend the Osaka Expo? 3.5 Million Expected from Overseas – Japan Tourism Lab
[2025 Latest Edition] Is Vacation Rental Management Profitable in Osaka? Pros and Cons Explained – Minpaku Investment Info Navi by Japan Sougo Fund
Deregulation and Lower Entry Barriers
Osaka City has been designated a National Strategic Special Zone and has pioneered “Special Zone Vacation Rentals” nationwide since 2016. In 2018, the Private Lodging Business Act (the so-called “Minpaku New Law”) also came into effect, and vacation rental operations are now possible in all 24 wards of Osaka City, including Tennoji Ward. Notably, Tennoji Ward is included among the Special Zone areas that offer an exception under the Hotel Business Act, allowing year-round vacation rental operations when certain conditions are met. Crackdowns on illegal vacation rentals have also been strengthened—in 2018, Osaka City formed an “Illegal Minpaku Elimination Team” to work on removing unlicensed facilities. This regulatory groundwork, which has established a foundation for starting a business legally and with peace of mind, is another reason why now is the time to consider vacation rentals in Tennoji Ward.
[References]
Osaka City Tennoji Ward Vacation Rental / Simple Lodging under the Hotel Business Act / Special Zone Vacation Rental Regulations and Laws | Livhub | Sustainable Tourism Media
[2025 Latest Edition] Is Vacation Rental Management Profitable in Osaka? Pros and Cons Explained – Minpaku Investment Info Navi by Japan Sougo Fund
Osaka’s Minpaku Facilities Decline Then Rise Again—Operating at Higher Rates Than Pre-Pandemic | Gold Key Co.,Ltd
Tennoji Ward’s Area Characteristics and Key Points of Tourism Demand
One of Osaka’s Premier Transportation Hubs
Tennoji Ward is a transportation nexus in southern Osaka City, home to Tennoji Station and Osaka Abenobashi Station, where JR, private railways, and subway lines all converge. JR Tennoji Station handles an average of approximately 250,000 passenger boardings/alightings per day, and when including Kintetsu and subway lines, this figure exceeds 500,000—making it the fourth busiest station in Osaka Prefecture. The direct limited express “Haruka” and the Kanku Rapid Service from Kansai International Airport both stop here, and access to the Nara area is also excellent. The station also connects directly via subway and JR to major areas like Umeda and Namba, making it an extremely convenient base location for tourists getting around.
Tourist Attractions and Drawing Power
Tennoji Ward and its neighboring areas boast numerous spots popular with domestic and international tourists alike. Japan’s tallest skyscraper, “Abeno Harukas,” features the “Harukas 300” observation deck, which has surpassed 10 million cumulative visitors in just over five years since opening—a testament to its enormous popularity. Tennoji Zoo and the Osaka City Museum of Fine Arts, both located within Tennoji Park, are beloved by families and culture-seeking tourists, while Shitennoji Temple, with over 1,400 years of history, draws worshippers and sightseers year-round.
The neighboring Shinsekai area (home to Tsutenkaku Tower) and Uehonmachi area are also within walking distance, drawing many travelers seeking food and shopping experiences. Tennoji Ward enjoys strong demand as “a stay area with excellent access to tourist attractions,” and since accommodation costs tend to be more affordable than in the heart of Osaka’s downtown entertainment districts, it’s a location well-suited to attracting vacation rental guests.
[References]
Abeno Harukas Art Museum Reaches 3 Million Visitors – Kanko Keizai Shimbun (Tourism Economics News)
Osaka City Tennoji Ward Vacation Rental / Simple Lodging under the Hotel Business Act / Special Zone Vacation Rental Regulations and Laws | Livhub | Sustainable Tourism Media
Capturing Event and Business Demand
While Tennoji Ward doesn’t have a large concert venue of its own, it’s well-suited as a base for attendees of events and conferences held throughout Osaka City. The Midosuji Subway Line offers a direct ride (no transfers needed) to Osaka Dome (Kyocera Dome Osaka) and Osaka-jo Hall, and access to the Osaka Business Park area is also excellent.
For travelers planning day trips to Nara via Kintetsu Line or to Kyoto/Kobe via JR, Tennoji makes an ideal base. Additionally, the area around Tennoji Station has a concentration of department stores and large commercial facilities, making it a popular shopping destination in its own right—drawing many domestic travelers seeking accommodation nearby.
This multifaceted demand spanning tourism, events, and business provides strong underlying support for vacation rental needs in Tennoji Ward.
The Benefits and Profitability of Converting a House into a Vacation Rental
High-Profit Potential That Outperforms Regular Rental
The biggest advantage of vacation rentals is the potential for revenue that exceeds long-term rental income, even from the same property. It’s generally not uncommon for nightly rates near downtown entertainment districts in Osaka City to exceed ¥10,000, and for a whole-house exclusive rental, rates in the ¥20,000-30,000 range per night are entirely feasible. Additionally, since rates can be raised during peak demand periods, pricing at double the normal rate or more is possible during cherry blossom season, summer festivals, and the New Year holidays.
For example, one simulation calculated that operating a studio apartment in central Osaka City as a vacation rental, with an 80% annual occupancy rate and an average rate of ¥18,000/night, would generate annual revenue of approximately ¥5.256 million, with annual profit after expenses coming to about ¥2.628 million. This is more than three times the profit compared to the annual take-home income (approximately ¥864,000) of renting the same property at a monthly rent of ¥90,000. If you can further boost guest numbers and rates with a standalone house, profitability increases even further.
Flexible Operations and Owner Convenience
Since vacation rental operations can be self-managed, owners can adopt flexible strategies such as dynamically adjusting pricing during peak seasons or offering weekly/monthly discount plans for long-term stays. Owners can also use the property themselves for part of the year, unlike traditional long-term rentals where the property remains occupied by tenants continuously. Furthermore, the operational track record built through vacation rental management adds value to the property, serving as a selling point when it comes time to sell.
In fact, properties with a proven vacation rental operating history tend to be valued more highly by buyers as income-generating real estate, potentially leading to increased asset value. Since real estate prices and rents in Osaka are lower than in Tokyo, this also makes it easier to secure a strong return on invested capital (yield)—another appealing aspect. In other words, for owners of standalone houses, running a vacation rental business in Osaka’s Tennoji Ward represents a business model capable of generating high returns on a relatively modest investment.
Also an Effective Solution to the Vacant Home Problem
Osaka City, including Tennoji Ward, has seen a trend of increasing vacant houses in residential areas, and utilizing these properties as vacation rentals offers a solution for such underused real estate. Converting an unused house into a vacation rental brings people and activity to the area, contributing to crime prevention and local revitalization. Additionally, proper maintenance and profit generation can help prevent building deterioration and reduce tax burdens (through property tax reduction effects). Beyond simply renting out a house, owners can also take on the rewarding role of a host who brings tourists to the local community—making this an appealing way to manage assets while gaining a sense of fulfillment.
Regulations and Registration: Key Points to Know for Standalone House Vacation Rentals
Two Vacation Rental Systems (The Private Lodging Business Act and Special Zone Vacation Rentals)
To legally operate a vacation rental in Japan, you generally need either (1) registration under the Private Lodging Business Act (the so-called “Minpaku New Law” registration), or (2) certification as a Special Zone Vacation Rental, which is an exception under the Hotel Business Act. In Osaka City, the Private Lodging Business (New Law Minpaku) can be registered citywide, including in Tennoji Ward, and once registered, the residence can be used for lodging up to 180 days per year.
On the other hand, Special Zone Vacation Rentals are a system approved for Tennoji Ward, and by applying to and receiving certification from Osaka Prefecture, year-round operation becomes possible. Special Zone Vacation Rentals initially had a minimum stay requirement (6 nights or more, for example), but this was relaxed to 2 nights, 3 days or more following a 2016 revision of the Osaka City ordinance, creating a more user-friendly environment. However, since Special Zone Vacation Rentals have hurdles related to building structure and fire prevention performance, many standalone house vacation rentals should first consider registration under the Private Lodging Business Act.
Building and Fire Safety Standards Unique to Standalone Houses
When converting a standalone house for vacation rental use, there are regulations to observe depending on the building’s structure and the zoning of its location. Under Osaka City’s Special Zone Vacation Rental certification requirements, buildings must be fire-resistant or quasi-fire-resistant structures (meaning structures with high fire prevention performance). Wooden standalone houses often fail to meet this standard, in which case operation would fall under the Private Lodging Business (within the 180-day limit) rather than Special Zone Vacation Rentals.
Fire Safety Regulations and Various Registration Procedures
Before starting vacation rental operations, a fire safety inspection by the local fire department is also essential. Lodging facilities above a certain size are required to install **automatic fire alarm systems (smoke detectors) and emergency lighting (exit signs)**, and standalone house vacation rentals also need to properly install these and obtain a “Fire Code Compliance Certificate.” Additionally, if obtaining a simple lodging business license under the Hotel Business Act, there are requirements such as each guest room generally needing to be at least 33 square meters (25 square meters or more for Special Zone Vacation Rentals).
As part of preparing to comply with these regulations, consulting with government offices and experts in advance is essential. Registration for the Private Lodging Business can be submitted online to Osaka City, but required documents include property floor plans and materials explaining the business to neighboring residents. Osaka City actively promotes the transition to legal vacation rental operations as part of its efforts to eliminate illegal minpaku, and publishes procedural guidelines on its official website. Even first-time owners can typically complete the registration process without much difficulty by following the guidelines, but obtaining approval can sometimes take time, so early preparation is essential if you’re aiming to capture Expo-related demand.
Neighbor Relations and Operating Rules
Alongside legal procedures, consideration for neighboring residents is also important. While the Minpaku New Law only makes explaining the business to neighbors a “best-effort obligation” before opening, it’s necessary to establish and communicate rules for noise and trash disposal to prevent trouble. Specific measures might include clearly stating late-night noise prohibitions in the house rules and explaining them to guests at check-in, and setting up a system where the owner or management company collects trash on designated days.
A clearly displayed emergency contact number is also required, along with a system for responding immediately if complaints arise from neighbors. These measures are part of a business’s social responsibility, and operating soundly makes it easier to gain understanding from the local community. Osaka City also has consultation counters set up for noise complaints and similar issues, so if trouble does occur, it’s possible to seek guidance from the local government.
Renovation and Operational Know-How for Successful Standalone House Vacation Rentals
Planning Initial Investment and Renovation Points
When preparing a standalone house for vacation rental use, first get a sense of the typical initial costs involved. While it depends on the property’s condition, renovation costs commonly run in the ¥2-5 million range. For an aging vacant house, interior and plumbing renovations plus new air conditioning installation may be necessary, with costs varying accordingly based on scope. While completing renovations that ensure at minimum a clean, functional space, if budget allows, investing in interior design can help differentiate your property.
Making use of Japanese-style rooms with tatami spaces, or adding decor and information reflecting local Osaka character, can provide guests with a special experience. In fact, operators running multiple standalone house vacation rentals in Osaka City have achieved high ratings and occupancy rates by applying distinctive, theme-based designs to each property. Take advantage of the spaciousness unique to standalone houses to create a comfortable space where guests can “stay like they live there.”
[References]
Turn a Vacant House into a Minpaku! All the Knowledge on Costs and Preparation, Even for Beginners – Iwasaki Administrative Scrivener Office
Osaka’s Minpaku Facilities Decline Then Rise Again—Operating at Higher Rates Than Pre-Pandemic | Gold Key Co.,Ltd
Preparing Necessary Facilities, Furniture, and Appliances
Vacation rental properties need to be equipped with basic furniture, appliances, and facilities. In addition to beds and bedding, sofas, dining sets, and other furniture, appliances such as refrigerators, washing machines, microwaves, air conditioners, TVs, and Wi-Fi are also essential. Including these furnishing costs, initial expenses generally run around ¥500,000 to ¥3 million, depending on the size of the property.
For standalone houses, since there are typically multiple rooms, furnishing costs are higher than for a single-occupancy apartment, but this comes with the advantage of being able to accommodate more guests. Fire safety equipment should also not be forgotten. As mentioned above, installing fire alarms and exit signs is mandatory, so plan for a budget of around ¥300,000 to ¥1 million when hiring a specialized contractor. Also install fire extinguishers and evacuation route signage in preparation for fire safety inspections. Since these equipment investments directly guarantee safety and peace of mind, it’s important not to skimp on costs and to address them properly.
Operational Structure and Management Tips
Running a vacation rental involves hotel-like operational tasks such as guest service and arranging cleaning. For a standalone house, you’ll need to decide whether to handle check-in/check-out in person or use a smart lock system for contactless check-in. Recently, it’s become common to install remotely operated smart locks or key boxes and complete identity verification and check-in procedures online. This allows for flexible handling of late-night check-ins and reduces the burden on owners.
For cleaning, it’s typical to hire a specialized cleaning service. Cleaning service rates in Osaka City vary by property size and location, but generally run from a few thousand yen up to nearly ¥10,000 per visit. For example, with 20 nights of occupancy per month, total cleaning costs would need to be budgeted at around ¥100,000-150,000. Since linens (sheets and towels) are also washed and replaced during cleaning, make sure to keep sufficient spares on hand. Note that cleaning fees can also be set as a separate charge from guests, distinct from the room rate itself.
[References]
Complete Breakdown of Vacation Rental Operating Costs: From Initial Costs to Reducing Operating Expenses
Outsourcing Management Operations vs. Handling Income and Expenses
Outsourcing to a vacation rental management company is one option for running operations smoothly. Full-service management typically involves a fee of around 20% of monthly revenue or a flat monthly rate of around ¥100,000, but this covers everything from marketing and cleaning arrangements to 24-hour guest support. For owners running a vacation rental for the first time, the benefit of entrusting operations to professionals with industry knowledge—preventing trouble before it happens and optimizing occupancy rates and pricing—can be substantial.
On the other hand, taking on self-management can reduce costs and increase profit margins. For example, preparing multilingual templates for quick guest inquiry responses, or carefully managing your listing calendar on booking platforms to set weekday discounts and weekend premium rates, are strategies that can help minimize costs while maximizing revenue.
In any case, since standalone house vacation rentals involve a broader scope of management compared to a single apartment unit, efficiency-focused know-how is essential. It may also be a good strategy for those with limited experience to rely on support from a trusted management company initially, then gradually take on more responsibilities themselves.
Revenue Case Studies and Simulations Specific to Tennoji Ward
Case Study: A Successful Standalone House Vacation Rental in Osaka City
Let’s look for hints about profitability from an actual case study of someone operating a standalone house vacation rental in Osaka City. One operator started their first standalone house vacation rental in Osaka’s Minato Ward in 2019, then deliberately acquired a second property in 2021, right in the middle of the pandemic. During the pandemic, they got creative—offering the property as a quarantine facility for people returning from overseas assignments, for example—and managed to maintain a **60% occupancy rate even during the pandemic period**.
As of 2023, demand for this operator’s two vacation rental properties has recovered to the point where nightly rates on some days reach double pre-pandemic levels during peak season, and remarkably, the properties are “fully booked through April of the following year.” About 90% of guests are inbound tourists, with roughly 50% from Asia, 30% from Western countries, and 20% from mainland China—demonstrating a broad capture of inbound demand across regions. As this success story shows, providing a high-quality guest experience can generate strong word-of-mouth reviews, enabling high occupancy and premium pricing with bookings filled well into the future.
[References]
Osaka’s Minpaku Facilities Decline Then Rise Again—Operating at Higher Rates Than Pre-Pandemic | Gold Key Co.,Ltd)
Revenue Simulation for a Tennoji Ward Property
Let’s consider a revenue simulation using a model standalone house in Tennoji Ward (approximately 100㎡ total floor area, accommodating 6-8 guests). Assuming a nightly average rate of ¥20,000 and an annual occupancy rate of 75% (274 nights of operation), annual revenue would come to approximately ¥5.48 million. Budgeting for expenses—30% of revenue (approximately ¥1.64 million) for cleaning, utilities, and consumable supplies, plus another 15% (approximately ¥820,000) for platform fees and advertising costs—brings total annual operating expenses to approximately ¥2.46 million. This leaves an annual operating profit of approximately ¥3.02 million (assuming self-management). If the same property were rented long-term at an assumed monthly rent of ¥180,000 (¥2.16 million annually), operating it as a vacation rental would yield approximately 1.4 times the take-home income. When management is outsourced to an agency, profits decrease by the fee amount, but there’s still room for this to remain more profitable than long-term rental.
[References]
Operating Revenue Model – Be My Guest
Factors Affecting Revenue Fluctuation and Risk Management
Of course, revenue will vary depending on seasonality and market conditions. While peak periods (such as spring sightseeing season or during the Expo) can be expected to bring full occupancy and premium rates, off-peak periods may see occupancy drop even with lowered rates. It’s also important to keep in mind the risk of increased cancellations due to factors like bad weather or shifts in social conditions (such as another pandemic or changes in international affairs). To prepare for such revenue fluctuations, securing sufficient working capital with a margin of safety is important in your financial planning.
In particular, if you’ve acquired the property using a mortgage or other loan, take care not to rely too heavily on vacation rental income as your repayment source. Fortunately, Osaka City’s accommodation demand ranks among the highest in Japan, and as mentioned earlier, tailwinds from the Expo and IR are on the horizon. With proper pricing strategy and marketing (attractive OTA listings and dynamic pricing), you can fully aim for revenue beyond what’s projected in the simulation. For instance, during the several months of the Expo, it’s entirely possible to set nightly rates at nearly double their normal level.
By managing risk while seizing opportunities without missing them, a standalone house vacation rental in Tennoji Ward can become a stable, highly profitable business.
Future Outlook: The Osaka Expo, IR, and Inbound Tourism Growth
Massive Demand Growth from the Osaka-Kansai Expo
Turning again to the 2025 Osaka Expo, government estimates project an economic ripple effect of approximately ¥2.9 trillion, with an expected attendance of 28.2 million visitors—a national-scale event. Tennoji Ward is within about a 30-40 minute train or bus ride from the Expo venue on Yumeshima, giving it strong potential to accommodate large numbers of domestic and international visitors who want to stay somewhere within Osaka City even if a bit removed from the venue itself.
In fact, hotel room capacity in Osaka City is being expanded ahead of the Expo, but there are still indications that accommodating all expected visitors in hotels alone will be impossible. Vacation rentals are expected to play an important role in flexibly filling this gap, and standalone house vacation rentals in particular should be an attractive option for families and group travelers. Since increased tourist numbers are expected not only during the Expo itself but also before and after it, 2024 through 2025 is projected to be a period of exceptionally high vacation rental demand in Osaka.
[References]
Government Projects ¥3 Trillion Economic Effect from Expo, Based on 28.2 Million Visitors
IR Opening and Mid- to Long-Term Inbound Tourism Strategy
The Integrated Resort (IR) being promoted by Osaka Prefecture and City is scheduled to open in 2029, after the Expo, and will become a major tourism hub featuring not just a casino but also large hotels, an international conference center, and entertainment facilities. According to the plan, as mentioned earlier, by the third year of operation, visitor numbers are projected to reach approximately 19.87 million annually (including 6.29 million international visitors), significantly boosting Osaka’s overall tourist numbers.
The Japanese government has also set a target of 60 million foreign visitors by 2030, and is working to expand inbound tourism by leveraging major projects such as the IR and the Linear Chuo Shinkansen extension (Osaka opening scheduled for 2037). Tennoji Ward is positioned to benefit from these long-term trends, with the potential to build a stable inbound tourism customer base. Since affluent tourists are also expected to increase after the IR opens, there may be room to raise rates by offering higher value-added lodging services (such as premium interior design or concierge-style service).
Osaka City as a Tourism Hub for the Entire Kansai Region
Osaka City also serves as a gateway to destinations throughout the Kansai region, including Kyoto, Nara, and Kobe, and many international tourists touring Kansai choose to stay overnight in Osaka. Beyond the Expo and IR, various infrastructure developments supporting continued growth in inbound visitors are planned from 2025 onward, including expanded LCC routes departing from Kansai International Airport and the resumption of cruise ship port calls. On the tourism content side too, multiple projects are underway, including the renovation of Osaka Castle Park, redevelopment of the Shinsekai area, and the transformation of the Chausuyama area into a cultural tourism hub.
These developments also increase tourist circulation into Tennoji Ward, ultimately expanding accommodation demand. Furthermore, Osaka City is putting significant effort into attracting MICE (meetings, incentives, conferences, and exhibitions), and as large-scale events at venues like INTEX Osaka increase, business traveler demand is also expected to grow. In short, the vacation rental market in Osaka’s Tennoji Ward isn’t just a one-time boom peaking in 2025—it can be expected to remain on a growth trajectory well beyond that. Taking a long-term view, it will be important to develop domestic demand (such as telework stays and weekly use) as a buffer for slower periods, while boldly reviewing pricing during periods of strong inbound recovery—pursuing a flexible strategy aimed at sustained, long-term profitability.
Conclusion: Why Standalone House Owners in Tennoji Ward Should Consider Entering the Vacation Rental Business
We’ve discussed in detail the business viability and future potential of standalone house vacation rentals in Osaka City’s Tennoji Ward, from the perspectives of profitability, demand trends, and legal regulations. In conclusion, standalone house vacation rentals in Tennoji Ward represent a highly promising real estate strategy. Let’s recap the reasons why:
- Profitability: Given the location’s proximity to downtown areas and backed by inbound tourism demand, revenue from vacation rental operations can significantly exceed long-term rental income. Actual data shows cases where profits multiply several times over with vacation rental operations, and capturing Expo-related demand can also be expected to accelerate the recovery of initial investment.
- Demand Environment: Tennoji Ward is an area supported by demand from both tourism and business travel, offering the potential for high occupancy rates year-round. Beyond local attractions like Abeno Harukas and Shitennoji Temple, tailwinds from Osaka-wide developments such as the Expo and IR will drive inbound tourism over the next decade. Vacation rentals are expected to play a vital role in absorbing demand that hotel expansion alone can’t keep up with.
- Increased Property Value and Effective Asset Utilization: Turning a vacant house into a revenue-generating asset—rather than letting it sit idle—raises property value while also contributing to the local community. Operating legally means you can also receive support from local government, and a proven operating track record could result in a more favorable evaluation should you decide to sell the property in the future. Additionally, dedicating part of your own home to vacation rental use allows you to earn supplemental income while still keeping living space for yourself.
- Favorable Regulatory Environment for Entry: Osaka City has established both the Special Zone Vacation Rental system and the Minpaku New Law framework, creating fertile ground for starting a legal business. Tennoji Ward in particular falls within the Special Zone Vacation Rental area, meaning 365-day operation is possible once building structural requirements are met. Since registration and application procedures are well-established and publicly available, the barrier to entry for newcomers isn’t especially high.
Given all of the above, for owners of standalone houses in Tennoji Ward, entering the vacation rental business represents an attractive option in terms of both profitability and social value. Of course, advance preparation and operational effort are required, but a market offering returns worth that effort lies right in front of you. Take advantage of this moment, as Osaka draws attention from around the world, to reassess the potential of your own property. With the right strategy and hospitality, a standalone house vacation rental in Tennoji Ward is sure to achieve great success.
