Essential Knowledge Before Comparing Simple Lodging and Minpaku in Furano
When starting a lodging business in Furano, deciding whether to obtain a simple lodging (kan’i shukusho) business license or operate under the minpaku notification system (Private Lodging Business Act) is a crucial choice that directly affects your revenue. Furano, famous for its lavender fields and ski resorts, attracts domestic and international tourists year-round, giving it stable accommodation demand. However, the number of operating days permitted per year and the required capital investment differ greatly depending on which business format you choose, so it’s essential to accurately understand how each system works beforehand.
A simple lodging license is a type of business permit under the Hotel Business Act, covering establishments such as capsule hotels and guesthouses. Minpaku, on the other hand, operates under a notification-based system governed by the Private Lodging Business Act (commonly known as the “new minpaku law”), and its distinguishing feature is that existing residential properties can be used as lodging facilities as-is. Both are businesses that involve “housing guests for a fee,” but their legal status, licensing requirements, and operational restrictions differ fundamentally.
This article focuses on the Furano area, comparing the advantages and disadvantages of simple lodging licenses and minpaku, and goes into detail with concrete revenue simulations. Whether you’re considering acquiring a property or already own a vacant house, this should provide useful material for deciding on the optimal business format.
Overview of Simple Lodging and License Requirements
What Is a Simple Lodging Business License?
The simple lodging business license is one of four business categories (hotel, ryokan, simple lodging, and boarding house) defined under Article 3 of the Hotel Business Act. It is fundamentally based on the concept of multiple guests sharing sleeping quarters, but since a 2018 legal amendment, an increasing number of small-scale, private-room facilities are also obtaining simple lodging licenses. In the Furano area, it’s common to see detached houses or former pensions renovated and converted into simple lodging facilities.
To obtain a license, requirements include a total guest room floor area of at least 33 square meters, compliance with ventilation, lighting, and moisture-control standards, and conformity with fire service regulations. In Furano City, applications are submitted to the public health center (the Kamikawa Public Health Center’s Furano branch), and the license is granted after a facility inspection. The process typically takes about one to two months from application to approval, but if a change of building use is required, this can extend to three to six months since a building confirmation application must also be filed concurrently.
Estimated Costs for Obtaining a License
The cost of obtaining a simple lodging license varies significantly depending on the condition of the property. If you can convert an existing pension or ryokan as-is, adding fire safety equipment and renovating sanitation facilities typically costs around ¥500,000 to ¥1.5 million. On the other hand, if you’re changing the use of a general residential property, the total cost—including building confirmation application fees (¥200,000–¥500,000), fire safety equipment installation (¥300,000–¥1 million), and interior renovation (¥1 million–¥3 million)—commonly comes to around ¥2 million to ¥5 million.
The administrative application fee itself is not high, at ¥22,000 (in Hokkaido), but if you hire an administrative scrivener (gyoseishoshi) to handle the application process, an additional fee of ¥150,000 to ¥300,000 will apply. While total costs tend to run high, this initial investment directly relates to the revenue difference discussed later, so it’s important to evaluate the decision not just by simple cost comparison but from the perspective of investment recovery.
How Minpaku (Private Lodging Business Act) Works and Its Restrictions
The Ease of Entry Through the Notification System
Minpaku under the Private Lodging Business Act can be started by simply submitting a notification to the prefectural governor. Unlike the license-based system for simple lodging, this notification system has a relatively lower procedural barrier to entry. Regarding fire safety equipment, if the guest room area is 50 square meters or less, installing residential fire alarms may be sufficient in some cases, making it easier to keep initial costs down. The notification process itself is free of administrative fees, and even including fees for an administrative scrivener, total costs often stay within ¥100,000 to ¥200,000.
That said, the property must still qualify as a “residence” even in the Furano area. Specifically, it must be equipped with a kitchen, bathroom, toilet, and washing facilities, and must be a residential building (offices and warehouses do not qualify). Most detached houses in Furano meet this condition, but for condominium units, management regulations sometimes prohibit minpaku operations, so caution is needed.
The 180-Day Annual Operating Cap
The biggest drawback of minpaku is that the number of operating days per year is capped at 180. Furthermore, local ordinances may impose additional restrictions on top of this. In Hokkaido, ordinances have been established in residential-only zoning areas that limit operations to periods outside of school long vacations, meaning some areas can effectively operate only 60 to 100 days per year.
In Furano, accommodation demand is concentrated during the summer lavender season (June–August) and the winter ski season (December–March). With the 180-day cap, it becomes difficult to fully capture both peak seasons. Even if all 180 days could be allocated to peak season, a clear gap in revenue emerges compared to simple lodging facilities, which can operate year-round.
Advantages of Simple Lodging in Furano
Year-Round Operation, 365 Days a Year
The biggest advantage of simple lodging is that there is no legal cap on the number of operating days. Since guests can be accepted any day of the year, you won’t miss out on demand during Furano’s summer and winter peak seasons, as well as during the shoulder seasons of late-spring snowmelt and autumn foliage. The average occupancy rate for lodging facilities in the Furano area is said to be between 50% and 65% year-round, so with year-round operation, you can expect roughly 180 to 240 actual room-nights per year.
Compared to minpaku’s 180-day cap, this represents a 1.5- to 2-fold difference simply in terms of available operating days. If the per-night rate is the same, this difference in days translates directly into a difference in sales. In particular, Furano sees substantial accommodation demand even during shoulder periods such as Golden Week and Silver Week, so the benefit of year-round operation is significant.
Freedom to Set Room Rates
Since simple lodging is a legitimate accommodation facility under the Hotel Business Act, there are no restrictions on listing with OTAs (online travel agencies). Properties can be freely listed on international platforms such as Booking.com and Expedia, making it easier to capture inbound demand. While minpaku properties can also be listed on platforms like Airbnb, simple lodging facilities are listed under the “hotel/ryokan” category, which increases guest trust when booking.
During Furano’s peak seasons (summer and winter), the going rate for a whole-house rental typically ranges from ¥20,000 to ¥50,000 per night. With a simple lodging license, you can flexibly adjust pricing between peak and off-peak seasons, making it easier to implement a strategy for maximizing revenue throughout the year. You can also freely offer various pricing structures, such as multi-night discounts and long-stay plans, without restriction.
Asset Value and Ease of Business Sale
Properties with a simple lodging business license tend to be valued higher as assets compared to properties without one. When it comes time to sell the property in the future, a licensed property can be marketed to investors as an “income-generating property,” making it easier to find a buyer. In the Furano area, licensed pensions and detached lodging facilities have actual sales records ranging from ¥15 million to ¥40 million.
Since a minpaku notification is tied to the individual who filed it, the notification does not automatically transfer when the property is sold. The new owner must file a fresh notification, and this hassle can become a negative factor at the time of sale. In contrast, since a simple lodging business license is tied to the facility itself (though a name-change procedure is still required), business succession can proceed much more smoothly—a major advantage.
Revenue Simulation: Simple Lodging vs. Minpaku
Setting the Assumptions
Here, we’ll assume operating a 2LDK, 70-square-meter detached house in the Furano area as a whole-house rental. We’ll set the guest capacity at 6 people, with a peak-season nightly rate of ¥35,000, off-peak rate of ¥15,000, and shoulder-season rate of ¥20,000. OTA fees are set at 15% of sales, cleaning costs at ¥8,000 per turnover, utility costs at ¥30,000 per month, and management outsourcing fees at 20% of sales.
For simple lodging, we’ll calculate based on a 55% annual occupancy rate (roughly 200 room-nights), while for minpaku, we’ll use a 70% occupancy rate within the 180-day cap (roughly 126 room-nights). Since minpaku’s operating days are limited, we assume operations are concentrated during peak season. This simulation makes clear how much the annual revenue can differ for the same property depending on the business format chosen.
Annual Revenue Estimate for Simple Lodging
For simple lodging, with 120 peak-season nights (¥35,000 × 120 = ¥4.2 million), 50 shoulder-season nights (¥20,000 × 50 = ¥1 million), and 30 off-peak nights (¥15,000 × 30 = ¥450,000), annual sales come to approximately ¥5.65 million. Subtracting OTA fees (approx. ¥850,000), cleaning costs (200 turnovers × ¥8,000 = ¥1.6 million), utility costs (¥360,000), and management fees (approx. ¥1.13 million), the annual operating profit comes to roughly ¥1.71 million.
Assuming an initial investment of ¥15 million for property acquisition plus ¥3 million for renovation and license acquisition (¥18 million total), the payback period would be about 10.5 years. However, given the growth in inbound demand and rising room rates in Furano, this period could realistically shorten further.
Annual Revenue Estimate for Minpaku
For minpaku, assuming operations are concentrated during peak season, with 100 peak-season nights (¥35,000 × 100 = ¥3.5 million) and 26 shoulder-season nights (¥20,000 × 26 = ¥520,000), annual sales come to approximately ¥4.02 million. After subtracting OTA fees (approx. ¥600,000), cleaning costs (126 turnovers × ¥8,000 = approx. ¥1.01 million), utility costs (¥360,000), and management fees (approx. ¥800,000), the annual operating profit comes to roughly ¥1.25 million.
Assuming an initial investment of ¥15 million for property acquisition plus ¥500,000 for notification and equipment (¥15.5 million total), the payback period comes to about 12.4 years. Although minpaku’s initial investment is ¥2.5 million cheaper, since annual profit is ¥460,000 lower, the payback period actually ends up longer. This annual gap of ¥460,000 grows to ¥4.6 million over 10 years and ¥9.2 million over 20 years. The longer the operating period, the more pronounced the advantage of simple lodging becomes.
Points to Watch When Choosing Simple Lodging
Checking the Zoning District
To obtain a simple lodging business license, the property must be located in a zoning district where a hotel business is permitted. Under the City Planning Act, hotel businesses are generally not permitted in Category 1 or Category 2 low-rise exclusive residential zones. Within Furano City, license applications can proceed without issue in commercial zones, neighborhood commercial zones, or quasi-residential zones in the urban center, but operation may not be permitted in exclusive residential zones on the outskirts.
Before purchasing a property, be sure to check the zoning district with Furano City’s Urban Planning Division. Also, even if the property clears the zoning restrictions, a change-of-use procedure under the Building Standards Act may still be required. Properties with a total floor area of 200 square meters or less are exempt from the change-of-use confirmation application, so choosing a smaller property can allow you to skip this procedure.
Fire Safety Equipment and Relations with Neighbors
Simple lodging facilities are required to install automatic fire alarm systems and emergency exit lighting. Fire safety equipment installation costs vary depending on the scale of the property, but roughly ¥300,000 to ¥1 million per detached house is a general guideline. In addition, a notification of commencement of use for a fire-protected building and a fire department inspection are also required. These can be handled in parallel with the license application, but it’s advisable to build in extra time to account for scheduling with contractors.
Consideration for neighboring residents is also essential. In Furano, residential areas often border tourist areas, and there is potential for trouble involving guest noise or garbage disposal. By greeting neighbors in advance and preparing multilingual house rules to inform guests, you can help prevent trouble before it occurs. In fact, facilities that carefully manage neighbor relations tend to receive higher review ratings, which in turn contributes to improved occupancy rates.
Consult Stay Buddy Co., Ltd. for Your Lodging Business in Furano
If you’re considering obtaining a simple lodging license in Furano, or if you already own a property and are thinking about switching from minpaku to simple lodging, we encourage you to consult Stay Buddy Co., Ltd., a minpaku management specialist. We provide one-stop support ranging from property selection and license application assistance to ongoing operational management after opening.
Stay Buddy Co., Ltd. has the expertise to maximize the revenue of lodging facilities—optimizing pricing, providing multilingual guest support, arranging cleaning services, and managing OTA operations—all while minimizing the burden on property owners and achieving high occupancy rates. We can also propose operational strategies tailored to the seasonal fluctuations unique to the Furano area.
Obtaining a simple lodging license requires specialized knowledge and procedures, but with support from our experienced staff, you can achieve a smooth opening. We can also explain, using concrete figures, your initial investment recovery plan and long-term revenue outlook.
Please feel free to contact us. Stay Buddy Co., Ltd. is fully committed to supporting the first step toward a successful lodging business in Furano.
