If you’re considering opening a simple lodging facility (kani shukusho) in Hokkaido, the first thing you’ll want to understand is what this business category actually means and how it differs from other types of accommodation. A simple lodging license, granted under the Hotel Business Act, is the permit typically obtained by operators of guesthouses and hostels. In recent years, driven by the recovery of inbound tourism and the revitalization of regional travel, the number of new openings in Hokkaido under this category has been steadily rising.
This article provides a comprehensive overview—from the basic definition of a simple lodging license, to concrete differences from ryokan, hotel, and minpaku operations, and on to the specific advantages and considerations unique to opening a business in Hokkaido. For anyone thinking about entering the accommodation industry, we’ll break things down by cost, effort, and operational flexibility so you can choose the business format that best suits your goals.
A simple lodging license allows for year-round operation while keeping initial investment relatively low—making it a particularly powerful option in a region like Hokkaido, where tourist demand shifts dramatically with the seasons. Read on for practical insights backed by real figures and examples.
What Is a Simple Lodging License? Its Position and Basic Requirements Under the Hotel Business Act
A simple lodging business is one of four categories of accommodation operation defined under Japan’s Hotel Business Act (the other three being hotel operation, ryokan operation, and boarding house operation). It refers to facilities whose structure and equipment are primarily designed for shared use by multiple guests—think guesthouses, hostels, capsule hotels, mountain lodges, and ski lodges. Following the 2018 revision of the Hotel Business Act, hotel operation and ryokan operation were merged into a single “ryokan/hotel operation” category, but simple lodging operation remains its own distinct classification.
To obtain a simple lodging license, a facility must meet certain requirements: total guest room floor area of at least 33 square meters (or at least 3.3 square meters per person if fewer than 10 guests are accommodated), adequate ventilation, natural light, lighting, humidity control, and drainage facilities, and the provision of bathing facilities (though nearby public bathhouses may sometimes serve as a substitute). Notably, there is generally no requirement to install a front desk, making the equipment standards considerably less demanding than those for ryokan/hotel operation.
Key Comparison Points to Understand Before Opening a Simple Lodging Facility in Hokkaido
Differences from Ryokan/Hotel Operation
Ryokan/hotel operation is the merged category that once distinguished between hotels (Western-style rooms) and ryokan (Japanese-style rooms). The biggest difference from a simple lodging license lies in the minimum room size requirement—at least 7 square meters per room (9 square meters or more is recommended for Western-style rooms)—along with the practical requirement to install a front desk or reception area scaled to the number of rooms. When you factor in staffing costs for the front desk and interior construction, this typically adds an extra ¥1.5–3 million per room in equipment investment. A simple lodging facility, by contrast, permits dormitory-style shared rooms, making it easier to increase total guest capacity per building. This allows for a business model that generates revenue through high occupancy rates even when the per-room rate is relatively low.
Differences from Minpaku (Home-Sharing Business)
Minpaku operations under the Private Lodging Business Act can be started relatively easily through a simple notification process, but they come with a significant restriction: a maximum of 180 operating days per year. This means the business can only operate about half the year—a serious limitation in a place like Hokkaido, where operators want to capture demand from both the summer cool-retreat season and the winter ski season. Obtaining a simple lodging license, on the other hand, allows for 365-day operation, and it’s not uncommon for annual revenue projections to show more than double the figures achievable under minpaku. For example, at a property charging ¥8,000 per night with a 60% occupancy rate, a minpaku operation would generate roughly ¥860,000 annually (180 days × 0.6 × ¥8,000), whereas a simple lodging facility could generate roughly ¥1.75 million annually (365 days × 0.6 × ¥8,000)—about twice as much revenue.
Comparing Costs and Timelines for Obtaining a License
Filing a minpaku notification is free of administrative charges, and the process—from preparing documents to receiving confirmation—typically takes two to four weeks. Applying for a simple lodging license, on the other hand, involves an application fee that varies by municipality, generally around ¥22,000 within Hokkaido. On top of that, you’ll need to budget ¥300,000–¥800,000 for fire safety equipment installation and inspection, and if a change of building use under the Building Standards Act is required, an additional ¥500,000–¥1.5 million for design and application fees. The process from initial consultation through application, inspection, and approval usually takes two to four months. Ryokan/hotel operation, with its stricter equipment standards, often requires 1.5 to 2 times the initial investment of a simple lodging facility and typically takes four to six months or more to open.
Concrete Benefits of Opening a Simple Lodging Facility in Hokkaido
Diverse, Year-Round Tourist Demand
Hokkaido offers a rich array of tourism draws across all four seasons—from the lavender fields of Furano and Biei and the natural beauty of Shiretoko in summer, to ski resorts like Niseko, Furano, and Tomamu in winter. Annual visitor numbers to Hokkaido hover around 50 million, and the region consistently ranks among the top prefectures nationwide for the number of foreign overnight guests. Because a simple lodging license allows for 365-day operation, businesses can capture both of the two major peak seasons—summer and winter—a significant advantage over minpaku operations, which are capped at 180 days.
Relatively Low Property Acquisition Costs
Outside of central Sapporo, real estate prices in Hokkaido are notably affordable by national standards. In cities like Otaru and Hakodate, for example, used detached houses can be found in the ¥3–8 million range, and it’s entirely possible to open a simple lodging facility—including renovation costs—for a total investment under ¥15 million. Securing an equivalent guest capacity in Tokyo could easily cost ¥30–50 million or more for the property alone, which makes Hokkaido an attractive option from an investment-recovery standpoint as well. Depending on location and management approach, some operators have reported gross yields of 15–25%.
Ease of Capturing Inbound Demand
Hokkaido enjoys exceptionally strong brand recognition overseas, and for travelers from across Asia in particular, it carries powerful appeal through associations with “snow,” “fresh seafood,” “hot springs,” and “vast nature.” The Niseko area, popular with skiers from Australia, Europe, and North America, is home to guesthouses charging ¥15,000–¥30,000 per night. Simple lodging facilities can span a wide range of price points—from dormitory-style backpacker accommodations at ¥3,000–¥5,000 per night to premium, mostly-private-room offerings at ¥10,000 or more—allowing operators to tailor their business flexibly to their target guest segment.
Availability of Municipal Support Programs
Some municipalities in Hokkaido offer subsidy and grant programs to support the opening or renovation of accommodation facilities. For example, subsidy programs aimed at repurposing vacant houses may cover one-third to one-half of renovation costs, up to a cap of roughly ¥1–3 million. There are also financing programs geared toward tourism promotion, such as startup support guarantees from the Hokkaido Credit Guarantee Association and the Japan Finance Corporation’s New Business Startup Loan program (up to ¥30 million, unsecured and without a guarantor). Consulting with your local municipal office or chamber of commerce before opening can significantly ease your financial planning.
Points to Watch When Opening a Simple Lodging Facility in Hokkaido
Checking for Additional Local Ordinance Restrictions
On top of the standards set by the Hotel Business Act, individual municipalities may impose their own additional restrictions through local ordinances. In Sapporo, for instance, opening a simple lodging facility in exclusively residential zones may come with extra restrictions. Some municipalities also require operators to hold prior briefings for nearby residents. Before acquiring a property, be sure to consult in advance with both the local health center and the city planning department. These consultations are free, and once you provide a specific address, staff can confirm the applicable zoning and walk you through the relevant equipment standards.
Winter Utility and Snow-Removal Costs
Hokkaido’s harsh winters can put real pressure on a business’s finances through heating costs. For a 10-room simple lodging facility using kerosene or gas heating, monthly heating expenses can reach ¥150,000–¥300,000. On top of that, outsourcing snow removal on the property can cost ¥100,000–¥300,000 per season. Choosing a well-insulated property, and incorporating features like double-glazed windows or pellet stoves from the outset, can go a long way toward keeping running costs down—and ultimately determines profitability.
Strategies for Managing Seasonal Demand Swings
Hokkaido is a region with a pronounced gap between high and low tourist seasons. While occupancy rates during summer (July–August) and winter (December–February) can exceed 80%, it’s not unusual for them to dip into the 30–40% range during spring and fall. Effective countermeasures for the off-season include offering workation-friendly plans (with reliable Wi-Fi and long-stay discounts), partnering with local events, and flexibly adjusting pricing. Some simple lodging facilities that have successfully tapped into workation demand have managed to raise their average off-season occupancy rate to 50–60%.
The Process for Opening a Simple Lodging Facility
Preliminary Consultation and Property Selection
The first step is a preliminary consultation with the local health center and fire department covering your planned opening location. This will confirm the applicable zoning, whether a change of building use is required under the Building Standards Act, and the types and quantities of fire safety equipment needed. Property selection typically happens in parallel, but since renovation costs vary significantly depending on the building’s structure (wood, steel-frame, or reinforced concrete) and age, it’s most efficient to narrow down your property choices based on the results of this initial consultation.
Design, Construction, and Various Applications
Once you’ve selected a property, the next step is design and renovation work to bring the facility up to simple lodging standards. If a change of building use is required, you’ll need to file a building confirmation application (for facilities over 100 square meters), followed by a fire safety inspection once the required equipment is installed. In parallel, you’ll submit a hotel business operation license application to the local health center; approval is granted following an on-site inspection. The process from application to approval typically takes about one to two months, but when construction time is factored in, you should plan for a total of three to six months.
Business Registration and OTA Listing
Once you’ve obtained your operating license, you’ll need to file a business opening notification with the tax office (for sole proprietors) or complete corporate registration (for companies), while simultaneously registering your facility with OTAs (online travel agencies) such as Booking.com and Airbnb. Data shows that having professional photography and listing copy prepared can boost post-listing booking rates by 20–30%. Since new listings tend to have few reviews at first, a common and effective strategy is to price your rooms 10–15% below market rate for the first one to two months to prioritize gathering reviews.
For Questions About Opening or Operating a Simple Lodging Facility in Hokkaido, Contact Stay Buddy Inc.
Opening a simple lodging facility requires navigating multiple overlapping laws and regulations—the Hotel Business Act, the Building Standards Act, the Fire Service Act, and various municipal ordinances—and handling the necessary procedures correctly. This is especially true in Hokkaido, where different municipalities across a vast area each maintain their own distinct rules, making a partner with deep knowledge of local conditions essential to a successful launch.
Stay Buddy Inc. is a specialist company handling operational management for minpaku and simple lodging facilities, offering end-to-end support that spans property selection, license application assistance, OTA management, cleaning coordination, and guest support. We also offer pre-opening revenue simulations and can accompany you to preliminary consultations with local authorities, ensuring that even first-time entrants into the accommodation business can get started with confidence.
If you’re considering opening a simple lodging facility in Hokkaido, or if you’ve already acquired a property and are unsure how to structure your operations, please feel free to reach out to Stay Buddy Inc. Our experienced staff will propose the optimal plan tailored to your specific situation.
