When considering starting a lodging business in Hokkaido, one of the first questions many owners face is: “Should I choose a simple lodging (kani shukusho) license or a private lodging (minpaku) registration?” Comparing the two options reveals significant differences in permitted operating days, initial costs, and operational flexibility, with the optimal choice varying greatly depending on your property’s location and investment scale.
This article provides a thorough comparison from an owner’s perspective in Hokkaido between simple lodging operations under the Hotel Business Act and private lodging (minpaku/housing accommodation business) under the Private Lodging Business Act (the “New Minpaku Law”). We’ll cover everything from differences in legal frameworks to costs, profitability, and operational burden, complete with specific figures, so you can use this as a reference for your business decision.
Note that throughout this article, “minpaku” refers specifically to the registration-based housing accommodation business under the Private Lodging Business Act. By accurately understanding each system, you’ll be better equipped to choose the option that best fits your property and business plan.
Comparing Simple Lodging and Minpaku: Differences in Legal Frameworks
The first thing to understand is that the two systems are fundamentally different in terms of their legal basis and licensing mechanisms. Simple lodging operates under a “permit system” based on the Hotel Business Act, requiring operators to obtain a business permit from the prefectural governor (or the mayor of a city with its own health center). Minpaku (housing accommodation business), on the other hand, operates under a “notification system” based on the Private Lodging Business Act, meaning operators can begin business once their notification is accepted.
The difference between a permit system and a notification system directly affects the weight of the procedures involved. Obtaining a simple lodging permit requires multiple steps, including confirming compliance with the Building Standards Act and Fire Service Act, prior consultation with the local health center, and explanations to neighboring residents. It typically takes 2 to 4 months from application to permit approval. For minpaku notifications, once you’ve gathered the necessary documents and submitted them either online or in person, a notification number can be issued in as little as 2 to 3 weeks. However, even under the notification system, requirements such as installing fire safety equipment and meeting residential housing standards still apply—so it’s not entirely “simple” either.
Impact on Operating Days and Occupancy Rates
Simple Lodging: Year-Round Operation Possible
The biggest advantage of simple lodging operations is that there’s no limit on annual operating days. You can operate at full capacity for all 365 days, enabling year-round management that covers both peak seasons and off-peak periods. In Hokkaido specifically, there are two peak seasons—summer sightseeing (June to September) and winter skiing (December to March)—and being able to operate year-round means you can capture both peaks. For example, in the Niseko area, some properties command average winter room rates exceeding ¥20,000 per night, making the absence of a day-limit a major advantage for maximizing annual revenue.
Minpaku (Housing Accommodation Business): 180-Day Annual Cap
Under the Private Lodging Business Act, annual operating days are capped at a maximum of 180 days (calculated from April 1). Additionally, some municipalities within Hokkaido have imposed further restrictions through local ordinances. For instance, Sapporo City has an ordinance limiting the permissible operating period in exclusively residential zones. The 180-day cap translates to a maximum theoretical occupancy rate of roughly 49%, meaning operators need a strategy focused on concentrating bookings during peak seasons. If you were to operate 180 days at a rate of ¥15,000 per night, your maximum revenue would be ¥2.7 million. Compare that to a simple lodging operation running 250 out of 365 days at the same rate, which would yield ¥3.75 million—a gap of over ¥1 million per year.
Comparing Initial Costs and Facility Requirements
Simple Lodging Initial Investment: Roughly ¥2 Million to ¥8 Million
Obtaining a simple lodging permit requires meeting several conditions: a change of building use under the Building Standards Act (for properties exceeding 200㎡ in total floor area), installation of fire safety equipment (automatic fire alarms, emergency exit lights, etc.), securing adequate guest room space (at least 3.3㎡ per person), and setting up a front desk or an equivalent alternative. When converting an existing single-family house, expect roughly ¥500,000–¥1.5 million for fire safety equipment installation, ¥1–3 million for interior renovations, and ¥500,000–¥2 million for design and application fees related to the change of use. Depending on the property’s condition and scale, total costs can exceed ¥8 million in some cases.
Minpaku Initial Investment: Roughly ¥500,000 to ¥2 Million
For minpaku, no major renovations are necessary as long as the property meets the basic requirements of a “residence.” The core condition is having a kitchen, bathroom, toilet, and washbasin—standards that most ordinary homes already satisfy. As for fire safety equipment, if the guest room area is 50㎡ or less, a residential smoke alarm may suffice in some cases, significantly reducing equipment costs. Typical cost breakdowns include ¥300,000–¥800,000 for furniture, appliances, and bedding, ¥100,000–¥500,000 for additional fire safety equipment, and ¥100,000–¥200,000 for administrative scrivener fees related to the notification process. For owners wanting to minimize initial costs and start small, minpaku is the better fit.
Running Costs and Profitability
Simple Lodging Operating Costs
Simple lodging requires front-desk service (or an equivalent face-to-face identity verification process), meaning owners must budget for either staffing costs or the maintenance of ICT systems such as smart locks combined with video call verification. Cleaning fees run ¥5,000–¥15,000 per turnover (varying by property size), utility costs run ¥20,000–¥50,000 per month, and booking site commissions typically range from 3% to 15% of revenue. Operators must also be prepared for periodic on-site inspections by the health center to maintain their Hotel Business Act permit. For a property generating ¥5 million in annual revenue, running costs typically amount to ¥1.5–2.5 million per year, putting the operating profit margin in the range of 50–70%.
Minpaku Operating Costs
For minpaku operations where the host does not reside on-site, outsourcing management to a registered housing accommodation management business is mandatory. Management fees typically run 10%–30% of revenue (depending on the company and scope of services), representing a cost unique to minpaku that simple lodging does not have. For a property generating ¥2.7 million in annual revenue (180 days × ¥15,000/night) with a 20% management fee, that alone amounts to ¥540,000. While cleaning and utility costs are roughly comparable to simple lodging, the 180-day operating cap means fixed costs make up a relatively larger share of expenses, generally resulting in lower profit margins than simple lodging. Owners who reside on-site and manage the property themselves can avoid outsourcing fees, but this comes at the cost of increased personal time and effort.
Hokkaido-Specific Location Factors and Business Selection
Tourist and Resort Areas
Resort areas such as Niseko, Furano, and Tomamu see high accommodation demand in both winter and summer. In such areas, the 180-day annual limit represents a significant opportunity cost, which is why many owners in these locations opt for simple lodging. Some whole-house rental properties in the Niseko area earn 60–70% of their annual revenue during winter alone (December to March), and by operating year-round to also capture the remaining months, some properties achieve annual revenues exceeding ¥10 million. If the numbers work out to recoup a large initial investment within 2–3 years, the advantages of simple lodging become clear.
Sapporo City and Urban Areas
If you’re starting with a condo unit or a single-family house in a residential neighborhood within Sapporo City, zoning restrictions or management association bylaws may make it difficult to obtain a simple lodging permit. Hotel business operations are generally not permitted in exclusively residential zones, but minpaku can operate within the periods designated by local ordinance. For owners wanting to start small with an initial investment of ¥500,000–¥1 million as a side venture, the lower barrier to entry offered by minpaku is appealing. For a studio unit in central Sapporo, a realistic model would involve pricing at ¥7,000–¥10,000 per night, operating 15–20 days per month, and targeting monthly revenue of ¥100,000–¥200,000.
Rural and Depopulated Areas
In rural parts of Hokkaido, some municipalities offer subsidies for lodging businesses that make use of vacant houses. For example, if you renovate a traditional folk house (kominka) to operate as simple lodging, you may be able to tap into a municipal vacant-house utilization subsidy (typically capped at ¥1–3 million). On the other hand, in areas where accommodation demand is limited, 180 days may be more than sufficient to achieve solid occupancy, making it a rational strategy to deliberately choose minpaku and keep initial costs down. The flexibility to concentrate operations on weekends and holidays while using the property personally on weekdays is another advantage unique to minpaku.
Procedures and Timelines
Simple Lodging Permit Process
The process for obtaining a simple lodging permit generally proceeds as follows: first, preliminary consultation with the health center (1–2 weeks); next, confirming compliance with the Building Standards Act and Fire Service Act and carrying out any necessary construction work (1–3 months); then, submitting the permit application documents and undergoing a facility inspection by the health center (2–4 weeks); and finally, issuance of the permit. The entire process typically takes 2–4 months, though it can take six months or longer depending on the property’s condition. If you engage an administrative scrivener to handle the process, fees typically range from ¥150,000–¥400,000.
Minpaku Notification Process
Minpaku notifications are submitted through the online “Private Lodging Business Management System” established under the Private Lodging Business Act. Required documents include the notification form, floor plans of the residence, a certificate of registered matters, and a fire code compliance notice. Preliminary consultation with the fire department and obtaining the compliance notice typically takes 1–2 weeks, and acceptance of the notification takes another 1–2 weeks—meaning you could be up and running in as little as 3–4 weeks. Fees for engaging an administrative scrivener typically run ¥80,000–¥150,000, though handling the process yourself is entirely feasible.
Summary: Criteria for Choosing Your Business Model
Based on the comparisons above, here’s a summary of the decision criteria. Simple lodging tends to suit owners who have a property in an area with strong year-round accommodation demand, who have the financial capacity to invest ¥2 million or more upfront, and who plan to position the lodging business as their primary occupation or main source of income.
Minpaku, on the other hand, tends to suit owners who want to start small with minimal initial investment, who see the lodging business as a side venture or a way to make use of an asset, who own a property where zoning restrictions make it difficult to obtain a simple lodging permit, or who want to combine the business with personal use of the property. A staged approach—starting with minpaku to build a track record and know-how, then transitioning to simple lodging once demand is confirmed—can also be an effective strategy.
Consult Stay Buddy Inc. for Your Hokkaido Lodging Business
Whether simple lodging or minpaku is the right choice depends on your property’s location, investment budget, and business objectives. Making the right decision requires more than just understanding the regulations—it demands an assessment of area-specific demand trends and financial projections, and having an experienced partner by your side is often the key to business success.
Stay Buddy Inc., a leading provider of minpaku management services, offers comprehensive support to lodging business owners throughout Hokkaido and across Japan—from advising on the best business model for your property’s characteristics, to supporting notification and permit applications, to full operational management after launch.
If you’re wondering “Would simple lodging or minpaku be more advantageous for my property?” or “I’d like to simulate the balance between initial costs and returns,” or “I want to minimize the hassle of day-to-day operations,” please don’t hesitate to reach out to Stay Buddy Inc.
Once you share your property details with us, we can provide specific proposals including area demand analysis and financial simulations. Let’s take the first step toward your Hokkaido lodging business together, with expert support by your side.
