Bloomberg on love hotels

(UPDATED final paragraph for accuracy)

“Chris Cooper and Makiko Kitamura” of Bloomberg deliver this suspiciously well-researched report on Japanese love hotels. This comes hot on the heels of a recent Bloomberg article on the pachinko industry, and if you don’t mind me saying so it’s some of the best reporting on Japanese society I’ve seen in a while. I guess it takes a no-BS investor’s perspective to get the proper balance on these topics – none of the all-too-common falling back on superficial cliches, insensitive moralizing, and sensationalism that exaggerates the phenomenon or makes it seem uniquely strange.

Anyway, here are the relevant takeaways:

  •  There are 25,000 love hotels in Japan. (more than double the number of normal hotels counted in govt stats! (PDF from source provided in the report)
  • Stays range from 3,000 yen for several hours at low-end places to 50,000 yen a night for a “romance package” at the Westin (that hotel’s attempt to cash in on demand from the love hotel sector).
  • A London-based company called Japan Leisure operates love hotels in Japan and is traded on AIM, the London Stock Exchange’s deregulated market for startup companies. Other foreign investors are apparently also involved in the love hotel industry.
  • Love hotels are popular for their anonymity and convenience, as Japanese urban-dwellers (60% of the population) have trouble bringing dates home to often tiny apartments. The hotels also often offer a luxurious experience and amenities that would be inconvenient to keep at home. (” As well as the intimation of a Leonardo-Kate liaison, Japan’s love hotels lure customers with lower rates, jacuzzis and even maid-costume rentals.”)

Earlier this year, a mini-scandal erupted as police cracked down on hotels that registered as business hotels or ryokan (traditional Japanese lodges) but in fact operated as love hotels with hourly rates and all the rest. They had to do this in order to operate in zones within 200 meters of schools or libraries, where the construction of love hotels is banned under the law regulating fuzoku (adult entertainment and other restricted entertainment such as video arcades, mahjong parlors, and dance clubs) and local ordinances.

18 thoughts on “Bloomberg on love hotels”

  1. Fuzoku does not exactly mean adult entertainment, as it also includes game parlors and other similar businesses which cater to minors. I’m not there there is an accurate way to translate it into a single English phrase.

  2. Actually game centers are only included in the definition if they “arouse the passion for gambling” (射幸心をそそる). Cafes can be classified as fuzoku if they have a low light level or can’t be seen from the outside.

    The full legal definition is in Wikipedia at this link.

  3. Oh and btw, based on the numbers I looked up for the pachinko industry:

    There are almost twice as many love hotels as pachinko parlors, or one for every 5,000 or so residents.

    And again compare that to:

    3,800 McDonald’s stores

    1,102 Sukiya beef bowl stores

    12,000 7-11s and at least 50,000 convenience stores

  4. Thus Japanese people want sex 6.5 times more than they do Big Macs, but only 1/2 as much as being able to buy a tall-boy of Asahi at any time of the day or night. Statistics don’t lie.

  5. These things are almost as prevalent as ATMs.

    You could think of them as super-secret extra rooms in people’s apartments that it costs 3,000 yen to enter.

  6. It’s also worth noting that the main source in this article was the operator of that London-based startup company, so there’s a good chance the guy chatted up the reporters as a way to build buzz for future fundraising.

  7. The website for JLH is rather informative for what is essentially an asset management company advertising to investors.

  8. Nice “pensive Japanese girl wearing a pinky-ring” masthead on that site.

    I JUST realized they are using the word “leisure hotel” as a euphemism. ::smacks forehead::

    And yeah that’s an informative history section in the second link. Didn’t know the term only originated in the 70s.

  9. What that article doesn’t make clear is the difference between officially registered love hotels and hotels which operate as love hotels but aren’t officially registered. Specifically, if you want to put a mirror on a ceiling or have a vending machine with vibrators in the room then you need to be registered as a love hotel. The establishments busted in places like Hyogo only had ordinary hotel licences but boasted all the accoutrements which required them to register as love hotels. Here’s a paragraph from Jeff Kingston’s review of Mark D. West’s “Law in Everyday Japan”:

    “Love hotel regulation demonstrates just how powerful law can be in altering public attitudes and practices, even in an activity most regard as a private matter. He points out that the 1985 Entertainment Law de-stigmatized love hotels. Previously seen as seedy and shameful, the new law encouraged operators to upgrade their premises to make them more appealing to a wider clientele. The official imprimatur also reassured those who might have concerns about illicit scams. By making love hotels more acceptable, the authorities have brought amateur sex indoors. Apparently, before World War II, parks were full of practicing amateurs while professionals remained indoors. Getting most of these couples inside has translated into an era of prosperity and growth in the industry. The number of statutory love hotels has declined from 11,000 in the mid-1980s to about 7,000. The silver lining has been the surge in extra-legal love hotels — some 30,000 — that can avoid official designation as a love hotel if they met certain criteria. Local authorities have control over statutory love hotels so there is every incentive to design establishments that serve the same needs without risking official scrutiny. Ever wonder why many have small lounges and cafes on the first floor? Why the glitzier new establishments lack rotating beds and mirrored ceilings? Legal incentives have shaped design and operations, and in doing so ‘created a healthier overall market for love hotels.'”

    If you are really interested, you might want to read Kim Ikkyon’s (金益見) undergraduate thesis “The Evolution of the Love Hotel” (ラブホテル進化論) which was published by Bungei Shunju in early 2008 and is still available on Amazon for 767 yen. It doesn’t hit any great academic heights but you’ll find out important facts like when the sukebe isu (スケベ椅子) was introduced.

  10. Thanks Mulboyne. Those sounds like two books I might want to pick up some time. After seeing that Bloomberg report and your added info I feel a lot more ignorant about love hotels than I had before.

    Now, is there any particular reason they cluster where they do? In some cases it’s obvious, i.e. near nightlife districts, but sometimes I run across a cluster of love hotels in locations where I just can’t figure out any logical reason for them to gather there.

    For example in Kyoto just east of Okazaki Zoo. Is there some legal reason, or is it just a historical process in that specific reason that I’m not aware of?

  11. I’d imagine that there are some random reasons for love hotel locations as well as zoning restrictions. Kim Ikkyon noted that while zainichi Koreans (she is one herself) manage a number of love hotels, there are a large number managers in the Kinki region who originally hailed from Ishikawa prefecture. Some locations might match where these people settled. Incidentally, I think there are some love hotels which are nominally in illegal zones because they were there before the new laws were passed or else structures were subsequently built around them.

    There was an interesting court case recently on zoning. A pachinko operator in Ibaraki was about to open a parlour in Moriya in 2001 but an orthopaedic clinic opened nearby which meant the parlour’s location broke local ordinances and so it did not get the go-ahead. However, it transpired that the clinic was opened at the behest of a rival pachinko parlour operator. The Supreme Court ruled last year that this constituted an abuse of free competition rules and awarded damages.

  12. By the way, if you’re investing in them, you do call them “leisure hotels”. Part of that reason is in the tendency for institutional investors to put chrome on caca (Cf. ‘Non-standard’ aka subprime housing loans), and part of it is in the fact that many of those who use these hotels are not in fact schtumping, but instead taking advantage of the low rates, free video games. karaoke, etc.

    The industry itself has its own regular data and research publications, and so a host of people just like our friends from Bloomberg make their rounds to the composite hotels in their portfolio, making sure business is being done and [insert silly investment/sex innuendo here]. Truth is, given the sheer numbers of these hotels (this goes for pachinko parlors as well), it is fairly easy to warehouse pools of commercial loans to these places, and begin pushing them through the big financial conduit.

    Or it use to be easy, at least. As time goes by, a love hotel that is throwing off cash can soon become a money pit, with consumer demand not only affected by competition by other hotels, but also by construction on highways, newly established speed traps or ‘kenmon’. Needless to say, there is no love or leisure in the due diligence and management of these places…

  13. Nice post on Love Hotels… Earlier this year, a mini-scandal erupted as police cracked down on hotels that registered as business hotels or ryokan (traditional Japanese lodges) but in fact operated as love hotels with hourly rates and all the rest.

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