The prospect of snatching up one of Japan’s abandoned homes is a well-trod exercise in “what if,” but reviving a dilapidated hotel or traditional ryokan inn is still best left to the pros.

These undertakings saddle those involved with massive costs, and projects around the country rely not only on state subsidies but the “furusato nozei” (hometown tax) framework.

Bathing tax revenues, which typically go toward maintaining hot springs, has even been redirected to give these rundown plots a second life.

However, regional communities are finding that redeveloping a site is only the beginning of a much longer journey.

‘OUT OF PLACE’

The multi-facility Hotel Ichiyotei in Gunma Prefecture’s Minakami Onsen resort area is one fallen giant attempting to reclaim its faded glory after shuttering in 2019.

During its heyday in the 1960s when Japan was making significant leaps in economic growth, Minakami Onsen earned the nickname “Kanto’s inner retreat,” a nod to the traditional “zashiki” tatami parlor.

Hordes of guests regularly booked group stays in the onsen hot spring resort along the Tonegawa river, all in the town it shares its name with.

Despite this, the area saw successive closings of these once-grand hotel and ryokan after the asset-inflated bubble economy collapsed in the early 1990s. Further financial difficulties meant a number of them remained standing when demolition was not possible.

Though it managed to hold out longer than some of its neighbors, all seven stories of Hotel Ichiyotei, five above ground and two below, sat deserted at the center of the hot spring resort area.

Launching a revitalization project took the combined efforts of four entirely different groups. The town of Minakami, Gunma Bank, major real estate entity Open House Group Co. and the University of Tokyo signed a comprehensive partnership agreement over the hotel’s six buildings in 2021.

The hotel’s recreation building was torn down in December 2024 as part of the deal while its remaining five structures underwent modifications such as reducing the number of floors.

In downscaling the entire facility, the site is said to now have an unobstructed panoramic view of Mount Tanigawadake. The property is expected to host accommodation spaces, a day spa and a restaurant in its new form.

In Ikaho Onsen in Shibukawa, Gunma Prefecture, an even more historical structure is enjoying ongoing fanfare since reopening that same month.

After a long period of disrepair, the four-story Ichikawa Ryokan was reimagined into the commercial complex Ikaho House 166 by the area’s iconic cobblestone street.

Lines for a dessert shop, cafe and traditional "kokeshi" doll studio that are part of the building can be spotted even on weekdays.

Constructed out of wood and over a century old, Ichikawa Ryokan sat vacant after ceasing operations before its elderly owner consulted Gunma Bank.

This exchange would bloom into not only the ryokan’s acquisition and renovation, but the founding of a company dedicated to improving townscapes that is supported by joint investments from various entities in the onsen industry.

“This used to be the sole space in the midst of the bustling town that looked lonely and out of place,” a project insider recalled. “It has since been converted into a hotspot that attracts people of all ages.”

NATIONAL SUBSIDIES

The central government began a project in fiscal 2021 to extend a helping hand to tourist destinations heavily affected by the COVID-19 crisis. Its intended aim was bearing demolition costs of decrepit buildings as well as other procedures.

Under this project operators can receive subsidies that cover half the removal expenses for old facilities with a cap of 100 million yen ($660,000). These sites must also be repurposed for the sake of tourism.

As many as 335 projects won subsidies totaling 5.14 billion yen by fiscal 2023. Gunma Prefecture has the most with a reported 37 cases, followed by 30 in Nagano Prefecture and 24 in Hokkaido.

One location that found itself ineligible for this golden opportunity, however, is Kinugawa Onsen in Nikko, Tochigi Prefecture.

The city explained that although there are three hotels by the Kinugawa river that closed for good sometime between 1999 and 2008, it is unclear whether redevelopment is feasible.

Dismantling each hotel is projected to cost upward of 1 billion yen. On top of that, their cliffside location makes repurposing the land difficult, rendering the hotels unable to receive government support.

Complicating the problem further is that videos and photos apparently shot by trespassers have gone viral online. Additionally, the buildings are occasionally graffitied.

“All we can do is simply ask their owners to adequately maintain their properties,” a city official lamented.

MAKING IT WORK

Hotel revival initiatives are increasingly combining these state subsidies with crowdfunding and bathing tax revenues in the quest to cover huge expenses.

Tenninkyo Onsen, a picturesque destination within the Daisetsuzan National Park in Hokkaido, drew up a plan to transform a plot of land occupied by a pair of closed hotels into a recreational zone.

Both buildings and their facilities are by a road leading to a waterfall. They were referred to as “spoiling the surrounding landscape and posing a risk of exterior wall collapse.”

This spurred discussions between the central government, Hokkaido and its towns of Higashikawa and Biei on what to do with the property.

The final agreement led to tearing down nine buildings at a cost of 1.37 billion yen.

As the central government’s subsidy does not fully cover this, Higashikawa launched an ongoing crowdfunding campaign under the hometown tax donation system. The town puts out regular appeals for donations as it still needs to raise funds to redevelop the site of the former hotels.

In Aizu-Wakamatsu, Fukushima Prefecture, a total of six abandoned hotels and ryokan remain in the Higashiyama Onsen and Ashinomaki Onsen areas.

Reckless investment choices during the bubble economy were the main reason they shut down, and in 2023 the city worked out an action plan to improve the landscapes around onsen.

The municipality decided to raise 2.6 billion yen through the bathing tax to clear dilapidated hotels and plant trees. The tax rate is set to be lifted from the current 150 yen to 350 yen for a 10-year period starting in October 2025.

An estimated 1.4 billion yen in new tax revenues will be allocated to a fund. From there, involved parties will be able to carry out demolition and reconstruction work with specialized subsidies using this fund.

Tomoya Umekawa, a professor of sightseeing studies at Kokugakuin University’s Faculty of Tourism and Community Development, noted that many hotels and ryokan were forced to shutter after they were unable to flexibly respond to trends of the time.

“Many operators gave up their businesses because they expanded their scales during the bubble economy but found it difficult afterward to win over individual visitors instead of those coming for group stays,” Umekawa said.

He also pointed out that the public needs to actually use these finished spaces for the government subsidy program to be truly successful.

A Finance Ministry survey revealed a series of instances of redevelopment projects, often parking lots or novel accommodations, But in many cases, sites of abandoned hotels or ryokan have yet to be utilized.

“Now in question is the ability to raise property values, discuss revitalization plans among locals and smoothly forge ahead with the strategies devised,” Umekawa said.

(This article was written by Maki Hoshii, Takefumi Ishihara and Michiko Yoshida.)