Why private accommodation is set to boom in Osaka

“Minpaku” may come to compensate for the low supply of budget hotels in the city.

Osaka is one of the busiest tourism hubs in Japan. In a recent report, Savills noted that Osaka attracted a record 14.6 million inbound tourist visits in 2024, far exceeding the 9.9 million visits in 2023, as well as comfortably surpassing the previous peak figure of 12.3 million visits in 2019.

Looking ahead, the government of Osaka has set a target of over 16.0 million visits in 2025, with Expo 2025 likely to be a major draw for visitors.

Here’s more from Savills:

Furthermore, the upcoming Integrated Resort development near the site of Expo 2025 in Yumeshima will help Osaka to attract a consistent stream of visitors moving forward, and have transformational benefits on the wider economy over the long term.

Given the rapid growth of inbound tourism, limited-service hotels in Osaka have been performing notably well, with average hotel ADRs and RevPARs growing well in the post-pandemic, and occupancy has nearly recovered to the tight level in the pre-pandemic.

Although inbound tourist demand is anticipated to continue growing over the coming years, the overall supply of new hotels in Osaka has been falling notably in recent years, with elevated construction costs hindering the supply of particularly budget hotels, on top of pandemic-related project cancellations.

Meanwhile, luxury and upscale hotels appear to comprise a large proportion of upcoming hotel supply, with Osaka increasingly positioning itself as a high-end tourist destination, especially with the upcoming Integrated Resort.

As such, minpaku (private accommodation) may come to compensate for the low supply of budget hotels. One strategy employed by some investors has been to acquire rental residential properties and convert them into such private rental properties.

As Osaka continues to grow as a popular tourism hub, such private rentals may come to play a greater role in the hotel mix in accommodating the ever-increasing number of inbound visitors to the city. In this situation, market players may increasingly look to acquire residential properties, with the intention of conversion, although the selection of the right partner will be key.