Demand for monthly hotels designed for long-term stays is expanding rapidly. From a real estate and hotel investment perspective, the growth of this market is creating new opportunities for operating models for lodging assets and conversion strategies. This article explains the definition of monthly hotels, market trends, and an analysis from investment and operations perspectives.
What is a monthly hotel?
A monthly hotel is a hotel designed for long-term stays of one month or longer. While maintaining the convenience of a standard hotel check-in and check-out experience, guests can stay at reasonable rates through long-stay and early-booking discounts.
The main differences from a monthly apartment are as follows.
- Cost：Monthly hotels offer discounts for early bookings, while monthly apartments usually have fixed costs
- Room size：Hotels have standardized specifications. Apartments can be chosen from a variety of layouts
- Housekeeping：Hotels include bed-making and cleaning services. Apartments are self-managed
- Contract format：Hotels use lodging contracts under the Hotel Business Act, while apartments use lease contracts
Why is demand for monthly hotels expanding so rapidly?
The COVID-19 pandemic and the spread of remote work
Because hotel guest numbers fell sharply during the COVID-19 pandemic, hotel operators lowered rates to attract long-term guests. As remote work spread, a “location-independent way of working” became established, and the number of workation users treating hotels as both workplace and residence increased.
Growth in foreign long-term guests
Against the backdrop of a weaker yen and a recovery in tourism, the number of foreign long-term guests is increasing. For foreign residents who find it difficult to enter into lease contracts, the convenience of monthly hotels is highly valued.
Expansion of corporate use
Corporate contract use for business trips, training, and project assignments is increasing. This also benefits hotels because they can expect a stable occupancy rate.
What position do monthly hotels occupy from investment and operational perspectives?
A middle market between hotels and monthly apartments
Monthly hotels are a hybrid market positioned between the short-stay lodging market and the long-term rental market. They combine the efficiency of hotel operations with the comfort of residential services and are also drawing attention from the standpoint of diversifying vacancy risk.
Conversion opportunities for existing hotels
More cases are emerging in which city hotels with low occupancy and older business hotels are renovated for monthly stays. As an exit strategy in an era of inflation and rising construction costs, repurposing existing buildings has become a strong option.
Stability of the revenue model
Combining short-term stays with long-term stays can improve annual occupancy rates. However, when a single room is occupied for longer periods, turnover declines, creating a trade-off in which optimizing pricing and occupancy management becomes the key to operations.
The user perspective on monthly hotels: who they suit
- Employees and companies with frequent business travel or relocations
- Foreign residents and freelancers who find it difficult to enter into lease contracts
- People who need temporary housing during renovation work
- People with a workation or multi-base style of working
- People who need temporary housing for caregiving or nursing reasons
Related reading
- Real estate exit strategies in an era of inflation and rising construction costs｜Should you sell or hold?
- Reducing vacancies by accepting foreign tenants｜A guide to improving occupancy in rental management
- Market analysis of luxury apartments over 200 square meters｜Price per tsubo, layouts, and investment value
Frequently Asked Questions (FAQ)
Q1. What is the difference between a monthly hotel and a weekly apartment?
A weekly apartment is rented on a weekly basis and is generally structured under a lease agreement. A monthly hotel, by contrast, uses a lodging contract as a hotel and, because it offers higher service levels and convenience, tends to cost slightly more.
Q2. What is the typical cost range for a monthly hotel?
For business-type properties in central urban areas, roughly 10万〜25万円 per month is a useful benchmark. In some cases, early booking and long-stay discounts can reduce costs.
Q3. Are corporate contracts available?
Many monthly hotels support corporate contracts. Because the costs can be booked as expenses, corporate use for business trips and training is increasing.
Q4. Can the monthly hotel business work as a real estate investment?
It depends on location, facilities, and operating costs, but if occupancy is stable, returns can exceed those of conventional rentals. Securing the required Hotel Business Act permits and establishing an appropriate operating structure are prerequisite conditions.
