The Most Detailed Breakdown Anywhere: The Difference Between the Private Lodging Business Act and the Hotel Business Act

Anyone who has decided to start a minpaku (private lodging) business inevitably faces the same major hurdle first: deciding which of two laws to operate under—the “Private Lodging Business Act” (also known as the Minpaku Shinpou, or New Minpaku Law) or the “Hotel Business Act” (specifically, the simple lodging category).

Let’s start with the conclusion of this article.

This choice will determine the profitability, operating style, and future potential of your entire minpaku business. Here’s the basic guideline:

• Want to start easily as a side business → The “Private Lodging Business Act” (New Minpaku Law)
• Want to maximize profits as a serious business → The “Hotel Business Act” (Simple Lodging)

In this article, we’ll explain exactly why, comparing the two laws in thorough detail across seven key perspectives—providing you with the clearest decision-making framework available anywhere, so you can determine which path is right for you.

Why Understanding These Two Laws Is Your “First Hurdle”

Don’t think of this legal choice as a mere procedural difference. The number of days you can operate, the initial investment required, your operating style, and even your ability to expand the business in the future—all of these are determined by this initial decision.

If you’re aiming for serious business revenue but choose the New Minpaku Law, you’ll quickly hit the 180-day operating cap, and your plans will fall apart. Conversely, if you just want to start out casually but aim for the Hotel Business Act, you may find yourself stuck before you even open, unable to meet the strict requirements or afford the high initial investment.

That’s exactly why accurately understanding the differences between these two laws is the first step toward success.

【In-Depth Comparison】New Minpaku Law vs. Hotel Business Act – 7 Key Perspectives

Let’s take a detailed look at the differences between the two across seven specific criteria.

1. Operating Days – The Biggest Factor in Determining Profitability

• New Minpaku Law: The annual operating cap is 180 days. This means your maximum possible occupancy rate is only about 49% (180 days ÷ 365 days), placing a clear ceiling on your revenue. This restriction exists because the law was originally designed as a time-limited measure to address the surge in lodging demand while making effective use of vacant homes.
• Hotel Business Act: There’s no limit on operating days—you can run your business 365 days a year. This allows you to maximize revenue and pursue minpaku as a serious, full-scale business.

2. Procedures – The Major Difference Between “Notification” and “Permission”

• New Minpaku Law: The administrative procedure is a “notification”. This means that as long as you submit documents that satisfy the legally required conditions, your application will, in principle, be accepted. The process is relatively straightforward and can even be completed entirely online.
• Hotel Business Act: You need to obtain government “permission”. This means the authorities will review whether you meet strict requirements and grant approval only if you pass their examination. Much like a school entrance exam, this is a high-hurdle process—preparation alone doesn’t guarantee you’ll pass.

3. Building Requirements – Which Law Fits Your Property?

• New Minpaku Law: This applies to “houses meant for residential living.” This includes currently occupied homes, vacant houses no one lives in, and weekend vacation homes. The facility requirements are relatively lenient—you just need standard residential amenities like a kitchen, bathroom, toilet, and washbasin.
• Hotel Business Act: This requires meeting more specialized “lodging facility” standards. For example, the total floor area of guest rooms must be at least 33㎡ (though there’s a relaxed provision allowing 3.3㎡ per guest if you host fewer than 10 guests). While this relaxed provision may make it possible for smaller properties to obtain a permit, the standards remain strict overall.

4. Zoning – Can You Even Operate in That Area?

This is often the biggest obstacle for those pursuing a Hotel Business Act permit.

• New Minpaku Law: Since this law is designed around using existing homes, it generally allows operation even in “exclusively residential zones.” Since most homes are built in these areas, this significantly widens your options for properties.
• Hotel Business Act: Since this classifies your property alongside hotels and inns, operation in “exclusively residential zones” is generally prohibited in order to protect the peaceful living environment of the area. Areas where operation is permitted—such as commercial zones and neighborhood commercial zones—are limited, making it very difficult to find a suitable property.

5. Safety Measures – Fire Codes and Emergency Response

The fire safety standards required to protect your guests also differ between the two laws.

• New Minpaku Law: You’re required to install emergency lighting and clearly mark evacuation routes.
• Hotel Business Act: In addition to the above, in most cases you’re also required to install an automatic fire alarm system. This installation can cost anywhere from several hundred thousand to over a million yen, significantly increasing your initial investment. Regardless of which law you operate under, consulting with the fire department beforehand and undergoing an inspection after construction is completed are both mandatory.

6. Owner Obligations – “Host-Resident Type” vs. “Host-Absent Type”

• New Minpaku Law: If the host doesn’t live at the property (a “host-absent” arrangement), the law requires you to outsource day-to-day operations, guest support, and on-site response to problems to a licensed “residential lodging management business.”
• Hotel Business Act: The owner can serve as the manager themselves, but a management structure must be in place—such as living nearby or staying on-site—to ensure a proper response in case of emergencies.

7. Local Municipal “Add-On Ordinances”

Beyond national law, you also need to pay attention to rules that individual municipalities set on their own.

• New Minpaku Law: Municipalities can enact “add-on ordinances” that further restrict the areas or periods in which you can operate. For example, “Kyoto City limits operation in exclusively residential zones to 60 days during winter (mid-January to mid-March)” and “Osaka City restricts weekday operation within 100m of schools.” These kinds of restrictions can significantly reduce the profitability of operating under the New Minpaku Law.
• Hotel Business Act: In principle, ordinances don’t restrict operating days, but some municipalities have established their own guidelines—for example, regarding front-desk requirements—that are stricter than the national law.

Which One Is Right for You? A Quick Comparison

Based on everything we’ve covered, let’s organize which type suits you best.

《Best Suited for the New Minpaku Law》

• You want to make good use of an unused room in your home or a vacation home you’re not using
• You want to start easily, first as a side business
• You want to keep initial investment as low as possible
• You want to leave most of the operations to a management company
• You want to use a property located in an exclusively residential zone

《Best Suited for the Hotel Business Act》

• You see minpaku as a serious business and want to maximize revenue
• You’re planning to operate multiple properties or expand your business from the start
• You want to operate freely, without restrictions on operating days
• You can secure a property that meets the requirements outside of exclusively residential zones
• You’re prepared to take on the initial investment and complex procedures involved

Conclusion: The Right Legal Choice Is Your Compass to Minpaku Success

The Private Lodging Business Act and the Hotel Business Act—neither is inherently superior to the other. Your business goals, your property’s situation, and the resources you can commit will naturally determine which path is right for you.

Use this article as your compass, weigh it against your own circumstances, and chart the best course forward. Making the right decision from the start is the single most important step toward guiding your minpaku business to success.

Will Your Property Actually Qualify for a “Permit That Lets You Earn”?

“I want an expert opinion on whether my property can obtain a Hotel Business Act permit.”

“I was originally planning to go with the New Minpaku Law, but now I’m interested in trying the Hotel Business Act.”

“I don’t have the confidence to navigate these complex laws and ordinances and complete the procedures on my own…”

As explained in this article, the requirements for both laws are complex, and since ordinances and interpretations vary by municipality, it’s extremely difficult for an individual to make the optimal decision and complete the procedures alone. In particular, the most critical question—**”Can this property actually obtain a Hotel Business Act permit?”**—carries significant risk without advanced expertise and experience negotiating with local authorities.

We at Stay Buddy Inc., a minpaku management company, are professionals in minpaku operations with an extensive track record of successfully obtaining Hotel Business Act (simple lodging) permits for numerous properties, primarily in Osaka City.

We provide comprehensive, one-stop support—starting with a strategic assessment of your business goals and your property’s potential to determine whether the New Minpaku Law or the Hotel Business Act is the better fit, followed by handling the complex administrative procedures on your behalf, and continuing all the way through to maximizing your revenue once operations begin.

Before you waste your valuable time and investment on the wrong legal choice, please reach out to us for a consultation. We promise to dramatically increase your chances of success in the minpaku business.