Love hotel operators lose some loopholes

Another article on the change in the Japan leisure hotel or love hotel regulations

Some of the more interesting things to come out of this article are -

This particular business is what is called a giso (fake) love hotel, meaning that it looks like a regular hotel but operates as a love hotel. Regular hotels do not fall under the fuzoku eigyo-ho, even if couples use them for sexual trysts. So how does one distinguish a love hotel from a city or business hotel, or even a ryokan (traditional Japanese inn)? Apparently, it all has to do with structure and features. According to the fuzoku eigyo-ho, if a hotel has no kitchen and no lobby; or if its operators install vending machines selling “adult goods” and its guest rooms have features such as glass-partitioned bathrooms, rotating beds and ceiling mirrors, they qualify as love hotels. However, according to a non-profit organization called Zenkoku Giso Rabu Hoteru Nakasu Kai (The Group to Remove Fake Love Hotels Nationwide), fake love hotels have taken advantage of the wording of the law, which implies that businesses must have both special structures and special features. If either doesn’t apply, it doesn’t meet the legal criteria for a love hotel. When operators build their hotels, they include lobbies and kitchens so that they can qualify for registration as a regular inn or hotel under the ryokan gyo-ho (commercial inn law), and then after they receive certification they remodel the place with the usual love hotel fixtures, though usually only with regard to the interior so as not to attract too much attention from neighbors. Several years ago the National Police Agency said it identified about 3,600 fake love hotels operating throughout the country. The real number is undoubtedly higher.


What really distinguishes a love hotel is its fee schedule. Regular hotels charge by the night, while love hotels charge for “rests” that can last as little as an hour or two. This system is appealing to guests who only want to use the place for a brief bit of whoopie, and profitable for the hotel because it guarantees higher turnover. However, it’s another aspect of the loophole that mainly bothers the NPO. The commercial inn law that regulates regular hotels allows guests under the age of 18 to occupy and pay for accommodations.

Now, the police have more legal means to crack down on fake love hotels. On Jan. 1, revisions to the fuzoku eigyo-ho went into effect. According to the revisions, a love hotel is defined as having 1) signs indicating that rooms are available for stays of less than 24 hours, 2) no foyer, or no foyer that is not blocked from view, and 3) no interaction between guests and hotel staff, a criterion that addresses one feature common to almost all love hotels, which is payment for rooms through vending machines often located in the rooms themselves (i.e., one cannot unlock the door and leave the room until it’s paid for).

Though there are still some loopholes here — does the sign have to be on the building’s exterior? — the NPO is confident that the new revisions will lead to raids on many fake love hotels located in sensitive locations, such as the one in Nishi Ward, especially since the new law is retroactive. In fact, it’s already had an effect. The police say that of the 580 fake love hotels they identified in Tokyo as of July of last year, 75, or 13 percent, have already re-registered as bona fide love hotels.

Love hotel operators lose some loopholes | Yen for Living

2011 Revised Japan Leisure Hotel laws: What changes?

On July 6 of this year, the Diet approved proposed revisions of Japanese law regarding “adult entertainment” establishments (風俗営業等の規制及び業務の適正化等に関する法律). The laws are periodically revised as police attempt to keep up with and keep control over the country’s ever-expanding adult entertainment venues. Information on the changes is slightly difficult to come upon, but this site reportedly has the low-down on what will be different.

The upcoming revisions will hit two types of businesses that have been identified as problems in recent years: gisou love hotels and deai-kissa. Gisou love hotels are establishments registered as hotel or ryokan that are effectively operating as love hotels. They include small spaces that don’t resemble love hotels but can be rented for short-term trysts much like this unfortunate punter did. This allows the gisou love hotel to dodge regulations that bind normal love hotels to certain districts, allowing them to set up shop near schools, residential neighborhoods and other areas. Easiest way to beat the competition is monopolise an area they can’t touch, right?

While both gisou love hotels and deai kissa have trampled the grey line of adult entertainment laws, as of January 1, 2011, this will no longer be the case.

The revisions have redefined what a love hotel is in order to re-evaluate businesses and close many of the loop holes gisou love hotels have been taking advantage of. As of January 1, businesses that do one or more of the following may be classified as love hotels:

- Are available for “rest” use
- Have dining and lobby floor area that are less than legal standards set by capacity
- Have an entryway or reception area that is hidden from the outside
- Take payment through a machine or tube
- Use signage to direct customers to rooms instead of staff guidance
- Have installed a form of obstruction to prevent face-to-face interaction between customers and staff

The rules get complicated from there. For example, hotels that have signage to guide customers and obstructions so they may not come face-to-face with staff qualify as love hotels if payment for the room is made through a machine. If a hotel has very little restaurant or lobby space, displays “rest” prices, and has a reception that’s difficult to see, they must have a rotating or vibrating bed, a mirror in the room where people can observe themselves while lying down, “facilities that incite sexual curiosity” such as S&M goods or glass walls in the bathroom, and/or adult toys for sale in vending machines. Whew. Also, spaces which exist particularly to be rented at “rest” rates by members of the opposite sex fall under the love hotel article.

Some say that, under these restrictions, there are almost no entertainment district in which new businesses will be able to set up.

As a requirement, businesses must submit up-to-date blueprints or measurements of the entire premises together with their application. Other information that must be submitted includes:

- Method of doing business
- Map of the surrounding area (at least 200m)
- A diagram of the entryway and lobby
- Certificate of residence if the owner is a private individual
- In the case of a company, the above for all executives as well as company registration

Police say they will only accept applications until January 31, with all businesses neglecting to register before that presumably being slowly shut down. Ultimately, the authorities get to determine what qualifies and what does not under such complex stipulations. Whether this results in loads of shutdown or loads of bribery (or both) remains to be seen, but expect a large shift in the love hotel landscape over the upcoming year.

Memo From Jake: Every change in the law has interesting ripple effects. I can’t help but speculate on the effects this time around. There are now several “love hotel” funds–investment trusts that are involved in the love hotel industry. It’ll be interesting to see how the new laws will effect the value of those funds or whether it will have any effect at all. What puzzles me about the changes in the laws is why do the authorities even feel they are needed? I can see that there are some problems with the Deaikai cafes, but other than that, is an abundance of love hotels bad for Japanese society? Many people using love hotels are couples who live with their parents, or have room-mates and want some privacy to fool around. They are also used by married couples with children that don’t have space in the house to really enjoy their marital bliss. For a nation concerned about a declining birth-rate, you’d think Japan would actually be encouraging love hotel construction. I know of at least one child that was probably conceived in a love hotel because her over-worked father had to sneak out of the office to rendezvous with his wife on her ovulation day, knowing that he’d be trapped at the office all night. Ahem.

2011 Revised adult entertainment laws: What changes?

Valuation of Japanese Leisure Hotels Impacted by New Laws

There have been a number of recent articles about the change in the laws regulating Leisure Hotels in Japan

http://japanrealestatecommentary.blogspot.com/2011/01/leisure-hotels-law-changes-forcing.html
http://www.japantrends.com/love-hotels-to-halve-next-year
http://www.youtube.com/watch?v=Ko-2DY3RPrU

Some of the articles are predicting that the number of love hotels will halve in 2011 as hotels which are close to schools and hospitals will be forced to close and also due to many hotels not being able to pay for the necessary renovations or new licensing costs.

Japanese Article links -
http://diamond.jp/articles/-/10125
http://www.j-cast.com/2010/11/22081522.html

We first posted on this topic back in May 2010 -
http://japanrealestatecommentary.blogspot.com/2010/05/japan-leisure-hotels-law-to-change.html

The recent articles do seem to evidence that there have been significant impacts on the industry; with many operators being forced into renovation capex or additional costs arising from the new licensing procedures.

What is clear is that there seems to be a lot of confusion about the new law and its application. All of which suggests to us that valuations will be under pressure until the impacts of the new law become clear.

It will certainly be interesting to watch what happens to valuations in the leisure or love hotel sector in the next few months.