So you want to become a Professional Jerry, and buy a Ski Lodge in Japan? Well, this guide covers everything I wish I could have known before I started down this path, a path that as of writing this in November 2019, I am still actively building.
I will continue to update this article as I learn more, and my first-hand experiences progress through the upcoming challenges around negotiations and legal processes.
This sounds way too hard/expensive/risky/crazy!
Yep, there is going to be some hard work involved, I can’t deny that. You are starting a business, what did you expect?
This one is pretty relative. If you live in Sydney, Melbourne, Auckland, London etc then you are going to fall off your seat when you see how far your dollar goes on Japanese property (in a good way!)
Maybe, but probably not in the way you are thinking. Economic risks are my biggest concern, with climate a relatively distant second.
Only to those who haven’t done their research.
Is owning a ski lodge right for you? I can’t answer that, but I can probably answer many questions that will help you answer this for yourself.
This has been a dream of mine for some time, and snow runs deep in my blood with my parents and grandparents all being active skiers throughout their lives. That explains why I want to run a business in the snow, however, running a lodge is a new challenge for me. It is however a challenge that I know brings me pleasure, as I learned during my time as a ski instructor how much I enjoy introducing people to the snow, and especially introducing existing snow lovers to the kind of snow we get in Japan!
Some of that may resonate with you. Maybe you love snow too, have always wanted to run your own business, but you are not sure doing what? Or maybe you have already thought of becoming a Professional Jerry, but the costs of starting a business in the snow were just too high?
Whatever it is that excites you, it was enough to get you reading this post, so thanks and welcome to the APJ gang (Aspiring Professional Jerry).
Getting into the Ski Lodge Business
Assuming you are buying a ski lodge to run as a business, and not just an elaborate chalet as an amazing holiday home, the first thing you are probably wondering is what are the realities of such a business? What do I need to know? Am I qualified? Do I need to speak Japanese? What hours will I need to work?
4 Month vs 4 Season
The most important item to address is that for most foreign ski lodge owners in Japan, this is a 4-month business, not a 4 season business. The money is in hosting other foreign guests, and these guests only visit ski towns in winter. What this means for a potential lodge owner, is that your commitment to be in Japan is only 4 months a year. The other 8 months will require a not-inconsiderable amount of time and effort devoted to your business, but this does not need to be done from Japan, or mutually exclusive of other work.
A 4 month season might look like this – early December arrive in Japan and setup, open for guests in mid-December, close to guests in mid-March, pack up lodge and depart Japan by the end of March.
I want to call out two important notes on this business model. First, any lodge purchase will likely require substantial renovation and the first year or two may require frequent visits or longer duration in Japan. The second is the impact of this business model on the Japanese community. Establishing yourself in the local community and contributing is important, especially in a small rural village. No one wants to visit a village full of boarded-up buildings, and closing your lodge may be contributing to the challenges of the area to attract summer guests. Consider visiting any area you are looking at purchasing in during the summer season and think about how your business could best contribute to the local community.
Day to Day
So now you know that this doesn’t need to be a full-time job, what will those 4 months really look like? Getting into this to go riding every day but wondering how will that work if you are cleaning guest rooms all day?
I will greatly generalise and say that in a wonderful piece of counter-intuitive logic, the smaller lodge you buy, the harder you will work. Wait, what? Yep, you read that correctly. The revenue of a smaller lodge typically makes the overhead of additional staff uneconomical, with the staff requirements scaling up generously in favour of larger properties. As I said, this is a major generalisation and is influenced by your style of accommodation (budget vs luxury) and additional products such as a restaurant and transfers.
Here is an example. Last season I worked in a 3-star lodge with 15 guest rooms and a small bar/restaurant. This was staffed by 5 full-time staff, 2 of whom were the owners and the other 3 of us were casual labour. A typical day involved the 3 staff sharing housekeeping duties, with the owners often starting the breakfast shift and running the bar/kitchen in the evening. This meant that the staff were free to go riding most days, starting anytime from 10am – 2pm depending on workload and the owners were able to go riding most days until 3pm when they didn’t have other duties such as food prep, shopping etc.
Running a ski lodge is a large amount of common sense, combined with a good dose of problem-solving and a healthy appreciation for customer service. If you have all of this, then a lack of qualifications or prior experience is not enough to prevent you from being successful. Your job is to make sure your guests enjoy themselves, it’s that simple. Don’t get me wrong, there is an absolute art to standing out from the crowd and making an excellent business in a sea of average, but you don’t need to be Banksy to make your first statement.
A quick note on alternative accommodation options. Self-catered accommodation is an underserved market in Japan, it is the opposite of traditional Ryokan Inn and is not something that foreign owners are offering in any considerable volume yet. It is definitely worth considering as I expect the demand will grow as the western tourism mindset continues to quickly mature from seeing Japan as an exotic destination and instead as a surprisingly westernised and easy to self-travel destination. Don’t expect to just set up an Airbnb listing though, a crack-down in 2018 saw the introduction of regulations to Airbnb listings that require a vague licensing process to be completed.
Japanese culture is amazing. There is so much to love about it, the word ‘politeness‘ just does not feel big enough to cover the behaviour you observe in Japan. The traditional concept of honour still runs deep and combined with limited foreign visitation until recent decades, crime is almost non-existent. This requires a lot of respect from foreign business owners and visitors, a small community with a history of respect and adherence to the many unwritten and unspoken rules does not warm to actions that conflict with this. My observation is that lodge owners who make an effort to integrate and contribute to the community are rewarded with assistance in the many challenges of running a foreign business.
As a typical English first language speaker, I am fluent in a grand total of 1 language. I marvel at the many multilingual people I know, but after several attempts throughout my life, I accept that I do not have a natural inclination to learn languages. So how can I consider running a business located in a country that does not speak English? My experience in Japan tells me that this is not a show-stopper as I have witnessed many foreign small business owners and workers who do not speak Japanese succeed. My approach to this involves 4 areas:
Learn – Make an effort to learn the language. By keeping my goals realistic (I don’t need or expect to be able to read Japanese or speak it fluently) I feel can make significant progress from my current level. I can’t comment on Japanese as a language being more or less difficult to learn than other languages, as I find all languages hard to learn. I do know the more time I spend in the country and make an effort to use my limited vocabulary at every opportunity, how quickly even I progress.
Politeness – As discussed above, the Japanese people are famous for their politeness. I have found that my feeble attempts to use Japanese words are widely accepted, and I am never too shy to ask for clarification of a word. I have struggled in other countries where the locals prefer to switch to English than trying to understand my attempts at their language.
Technology – Google Translate. It ain’t perfect, but wow does it come in handy. I have come across many translation apps and they all have their weaknesses, but I cannot recommend enough that you have your favourite languages downloaded offline and you learn how to use the conversation mode in Google Translate. I am also considering a device that I have used in a number of Japanese <> English interactions called a Pocketalk as my impressions of this are that the translations are much better than any Apps I have used.
Agents – There are many multi-lingual people in Japan who are willing to work as an agent to help foreigners navigate the language and other areas. Where an agent is used to help with any formal business activities like finance, tax or property I would recommend someone who speaks Japanese as a first language, and English second. The paperwork and bureaucracy require an infallible grasp of the language and process that requires a native speaker of Japanese.
I will be honest, the detail of the law, visas, business structure etc are the area I am the least qualified. I will expand this section as I learn more and gain first-hand experience, but I will summarise my current knowledge below.
There are no show-stoppers for Australian or New Zealand citizens, and I assume many other nationalities. There is more than one way to structure a potential property and business, and in the same way that you would in your home country, the best advice here is to seek professional help. Recognise the reason these properties are so affordable and that provincial Japan needs tax dollars so that you don’t become another Australian making headlines for the wrong reasons.
Do you want the good news or the bad news? The good news is that property in Japan is cheap. I am talking about a 10 room lodge at the edge of a ski slope for less than a 1 bedroom apartment in Sydney cheap. The bad news is that you can forget asking your bank for any help. Japanese banks are not going to lend to you as a foreigner, and it is highly unlikely your domestic bank will provide finance for this endeavour. Cash really is king in Japan.
So, we need cash, but how much? Some things your read online would make you believe that cheap ski lodges in Japan are a thing of the past and that there are no deals left. Fake news! There are still countless amazing opportunities, you just need to be prepared to look outside of Niseko etc and do your fair share of research.
Set yourself realistic expectations; purchasing a lodge with beds for at least 20 guests, in good structural condition and within walking distance of a ski lift can start around AUD $200,000 in a relatively small and unknown resort, and up to $500,000 for a well-known resort like Hakuba, Myoko or Madarao. Renovation costs for a used lodge can vary substantially depending on it’s condition and where you want to sit on the Budget – Luxury scale. Assume for a lodge that requires new carpet, paint, a few bathroom updates and maybe some internal walls moved around that you need to have at least another $200,000 to bring it up a comfortable 3-star level.
Starting a basic lodge could be as little as $300,000 AUD and easily up to $1M for a luxury property in an established location. This may sound like a huge amount of money for some people, and trivial for others. If you are like me and don’t happen to have a spare $1M burning a hole in your pocket you might need to consider other ways to finance the shortfall, like this GoFundMe page that got Dan & Andy Solo started with the highly successful Snowball Chalet in Madarao.
Where to Buy
Honestly, I think this is the hardest question to answer, and it is easy to stall with indecision. The number of opportunities, the infinite pro’s and con’s, and the fun/challenge of doing the research all compound into a realisation that there is no perfect location, but you can’t help but keep searching for one that is better than your current pick.
My recommendation is to start with a business plan. What is the product you want to offer, and who is your target demographic? Looking for the most intrepid guests? – start your research in some of the less well-known regions like Tōhoku. Wanting to service those elusive higher spending advanced level guests? – Sapporo is probably your destination. After the lion’s share of families and less intrepid guests? – Hakuba and Myoko will serve you well. These are some massive generalisations, but the idea is that your business plan will influence your location and property characteristics.
There is a large scale of risk vs reward to be considered. Typically Japanese real estate does not appreciate, in fact, most rural areas have seen significant depreciation in recent decades. Purchasing a property in an established resort like Niseko, Hakuba, Myoko etc will come at a premium to buying in less known areas, but with significantly less risk. In Japan, you need to consider the risk of a ski resort going out of business or staying active but closing lifts and pistes as they are no longer financially sustainable or due to a natural disaster.
There is also a consideration required for climate change with many resorts in the lower latitudes and with lower elevations at risk of shorter and shorter seasons. There are plenty of high elevation resorts with northerly aspect (low sun) that will have many decades of good skiing to come, and as the impact of climate change is felt in other markets, like Australia it may actually result in increased traffic to these resorts that are better protected.
What to Buy
When it comes to buying a used lodge in Japan there are four categories, ranked from cheapest to most expensive:
There are a lot of abandoned buildings in Japan. You can expect a lot of effort in locating the owner, a lot of effort in repairing the building (there will be damage!) and a lot of unknowns as you peel back the layers of that old building.
Due to an ageing population, and large movement from the rural areas into the cities, provincial councils have been left with a shortfall in funding from local ratepayers to keep the lights on. Many local councils have setup Akiya Banks – a database of vacant properties available incredibly cheap, and often free! Each Akiya Bank has its own rules, and some require a commitment to live full time in the property. Remember, this is about restoring the community.
Finding an abandoned building that does not require demolition, within walking distance of a ski lift is unlikely. And if you do, locating the owners is a whole other challenge. That said, there are some amazing opportunities for those who are prepared to put in the effort and take the risk. I know personally of a beautiful abandoned building which was purchased this year by two young Australian guys with big plans.
A Non Operational hotel is a building that no longer runs as a hotel, but has not been left vacant. There are many properties in this category, often with elderly owners living in the property, but only utilising a small part of the building. You can expect these buildings to also require substantial repair and renovation is it is likely that maintenance will have been neglected or substandard for a number of years. Check out this post from Annie and Dutchie over at JP Snowsports on some of the surprises they uncovered in their lodge purchase.
The big advantage in a Non Operational property is that with people living in the property it is unlikely to have major issues with burst pipes and water damage that can be expected from a property that is left vacant, especially without proper decommissioning of the water and heating systems. You can expect that the owners will be motivated to sell, it is a common scenario that due to the decline in the domestic ski market, lodge owners have not had the revenue to maintain the property and keep the business open, and also have had no potential exit with falling property prices. A fresh investment of capital and renovation to target the growing international tourism market is the best chance of restoring these properties, and often the towns and ski hills that they are associated with.
Properties that are still active and taking guest bookings, however without any recent renovation or amenities that are expected by international guests, such as en-suite bathrooms etc. On the surface, these properties can represent great value, as you could open the property for business ASAP without a major renovation. I would recommend caution, as many of these properties may require similar investment to the non-operational properties to be competitive. Look out for dated heating infrastructure, single-pane windows, spongy floorboards etc.
A great opportunity in this category is properties that already have international guest customers. Purchasing a property with an active account on booking.com with good reviews is going to jump-start your business, assuming you agree to purchase the business as a whole and continue without a re-name etc.
Got the money to buy a fully renovated lodge? You will save yourself countless hours in doing this for yourself, and potentially a whole lot of stress. Debatably you will pay a premium, however, if purchasing in an established market where property prices have increased in recent years you might find this adds up to actually be quite competitive compared to current prices of used properties and renovation costs . A few examples of renovated turn-key properties available on the market at the moment – Aya Lodge in Madarao, and this slopeside property across the valley in Ryuoo.
It is worth mentioning here that there is a growing number of new build properties entering the market. Currently, this is limited to the well-established locations such as Niseko and Hakuba where the prices for quality accommodation can justify this. Purchasing a vacant lot or neglected property in an up and coming resort with the expectation to build in the future is definitely worth consideration for those with aspirations of a new property and the financial means to develop.
Once you have taken the decision to pursue the purchase of a Ski Lodge in Japan, you have done your research and are ready to start looking at some properties, how do you start? How do you actually buy a ski lodge in Japan? There are limited online listings for suitable properties, by all means spend some searching online but be prepared that you will need to be on the ground in Japan to take action.
I would recommend making contact with other property owners in the areas you are looking to buy. My experience is that other property and business owners are overwhelmingly helpful, especially in growth areas that will benefit from further local investment and an increase in market share of those ski dollars. Just don’t expect a lodge owner to have a huge amount of time for you in peak season, when they aren’t working they are out riding!
Talking to a few real estate agents, browsing the more obscure online listings, and speaking with other local owners will undoubtedly lead to some knowledge of properties that could be on the market. For those of us who don’t speak Japanese, it’s time to brush up. It is a daunting prospect knocking on someone’s door to ask them in a language you don’t speak if they would be interested in selling their home. Get a Japanese friend to write down the basics of your opening script in case your well practised script has some pronunciation issues…
A huge thank you to all the wonderful people who have contributed so far to my education on this subject. Having been on this journey for a few years now, the assistance and guidance I have received from those with far more experience has been incredible. I write this blog to do my best to return the favour and try to share what I have learned.
I would love to hear from other Professional Jerry’s or Aspiring Professional Jerry’s out there, so please leave a comment below and tell me about your journey.