What Is the Hotel Business Act? A Complete Guide to Its Differences from Minpaku (Private Lodging Business Act) for Hokkaido Property Owners
When considering starting a lodging business in Hokkaido, the first decision owners face is which legal framework to operate under. There are two main options—the “Hotel Business Act” (as a simple lodging establishment) and the “Private Lodging Business Act” (the minpaku law)—and these differ significantly in terms of permitted operating days, eligible areas, and facility requirements. Given Hokkaido’s vast land and rich tourism resources, choosing the right legal framework for each specific area is a decisive factor in determining profitability.
The Fundamental Differences Between the Hotel Business Act and the Private Lodging Business Act
The biggest advantage of obtaining a license as a “simple lodging establishment” under the Hotel Business Act is the ability to operate 365 days a year. In contrast, “minpaku” operated under the Private Lodging Business Act is limited to a maximum of 180 operating days per year. This 185-day gap not only directly affects profitability but also impacts the stability of the business as a whole.
Since the Private Lodging Business Act is designed to promote the effective use of existing homes, its fire safety and other facility requirements tend to be more relaxed compared to the Hotel Business Act. On the other hand, the Hotel Business Act requires stricter compliance with the Building Standards Act and Fire Service Act, along with tighter zoning restrictions. For example, in quiet residential neighborhoods such as Category 1 Low-Rise Exclusive Residential Districts, obtaining a license under the Hotel Business Act is generally impossible. Even within Hokkaido, urban areas like Sapporo have local ordinances that further restrict the number of operating days allowed under the Private Lodging Business Act in certain zones, making thorough advance research essential.
Comparison with the General Rental and Sales Market
When comparing Hokkaido’s real estate market—particularly within Sapporo City—to standard residential rental and sales markets, the unique earning structure of the lodging business becomes clear.
Property prices in central Sapporo have continued to rise, which has compressed investment yields for standard residential rentals to a range of roughly 4% to 6%. Once a tenant is secured, residential rentals offer long-term stability, but since rent levels depend on local income standards, dramatic revenue growth is difficult to achieve.
The lodging business, by contrast, derives its revenue from tourism demand. Nightly rates are determined not by local rent levels but by supply and demand on a national or even global scale. Especially with whole-property rentals, targeting large groups or affluent inbound travelers can generate revenue several times higher than standard rentals. Hokkaido boasts overwhelming drawing power as a destination, anchored by New Chitose Airport, and the nature of lodging demand is fundamentally different from residential demand. That said, because the lodging business carries significant operating costs and seasonal fluctuation risk, maintaining strong real yields requires a sophisticated management system.
Concrete Marketing Strategies for Operating as Minpaku
To succeed in the lodging business in Hokkaido, a strategic marketing approach that takes into account the region’s geographic characteristics and seasonality is essential.
Target Setting and OTA Utilization
Narrow your target to “guests seeking value that hotels can’t provide.” Specifically, this means three-generation family trips and active groups traveling by rental car. Strategically using different OTAs (online travel agencies) is also key to attracting bookings. Airbnb appeals strongly to Western travelers and long-stay guests, while Booking.com and Agoda have strong appeal among Asian guests. To reach domestic Japanese travelers, listing on Rakuten Travel and Jalan is also essential.
Pricing Strategy Based on Seasonality
Tourism in Hokkaido has extremely strong seasonality. Demand surges dramatically during the winter Snow Festival and ski season, as well as the summer cool-climate and flower-viewing season, with bookings filling up even when nightly rates are set at three to five times the normal level. Dynamic pricing that reliably captures high rates during these peak periods is what determines annual profitability. Conversely, during the off-season, measures to boost occupancy—such as introducing long-stay discounts or running promotions targeting remote work demand—become important.
Weaknesses and Risks of the Lodging Business in Hokkaido
Operating in Hokkaido comes with its own unique risks and challenges. First is the cost of winter maintenance. Snow removal expenses, measures to prevent frozen pipes, and substantial heating costs are all major factors that can eat into profits. Additionally, in urban areas such as Sapporo, local governments sometimes impose their own strict supplementary ordinances to prevent trouble with neighboring residents. As a result, there are cases where operators find they cannot operate for as many days as they had expected under the Private Lodging Business Act.
Increasing competition is another factor that cannot be ignored. Popular areas tend to attract a steady stream of new entrants, creating an environment prone to price competition from oversupply. Owners should be aware that simply “renting out a house” is no longer enough to stand out, and that this approach carries the risk of making profitability difficult to achieve. High-level professional expertise is required across every aspect of the business—from designing the property’s concept, to maintaining cleaning quality, to providing prompt multilingual guest support.
Discussing Hokkaido’s Potential Through Its Timeless Value
While trends in the lodging business shift with the times, the geographic characteristics and tourism resources that Hokkaido possesses hold a timeless value. Vast landscapes, a cool climate, world-class snow quality, and a rich food culture—these are powerful assets that will continue to attract travelers from around the world for years to come, without losing their appeal.
Transportation access also continues to improve on a broad scale, with the expansion of international flights at New Chitose Airport and, in the future, the planned extension of the Hokkaido Shinkansen to Sapporo. As a living environment as well, Hokkaido’s style—where urban amenities sit right alongside vast nature—offers an ideal setting for those seeking workations or multi-base living. If operated in a way that fully draws out the region’s inherent potential, unaffected by fleeting trends, the lodging business can become an extremely effective vehicle for long-term asset management.
Whether to aim for 365-day operation under the Hotel Business Act, or to start small under the Private Lodging Business Act, depends on each owner’s financial plan, property location, and future exit strategy. Whichever path is chosen, the lodging business represents a challenge to transform real estate into a “service business,” and the key to success lies in nothing other than thorough on-site management and strategic marketing.
Leave Your Minpaku Launch and Management in Hokkaido to Us
To all owners considering starting a lodging business in Sapporo and other areas across Hokkaido: Stay Buddy Co., Ltd. promises strong support at every stage of your launch—from obtaining a license under the Hotel Business Act or filing a notification under the Private Lodging Business Act, to property planning and construction, and daily operational management.
We are a team of professionals deeply familiar with Hokkaido’s climate, local ordinances, and tourism market trends. From luxury whole-property rentals to cozy minpaku that make the most of existing homes, we provide the optimal solutions to maximize the value of your assets. We take care of everything that comes with running a lodging business—complex legal procedures, demanding winter maintenance, and multilingual guest support—so you don’t have to.
Leave your minpaku launch and management in Sapporo and the rest of Hokkaido to us. Let’s work together to build a lodging property with value that won’t fade even years from now, and achieve stable revenue and asset growth. We welcome inquiries even at the property selection stage. Please feel free to contact Stay Buddy Co., Ltd. first. Our specialist staff will carefully propose the optimal plan tailored to your needs. We look forward to hearing from you.
