Lots of Room at the Inn

Japan's traditional inns--called ryokan --are generally small, family-owned establishments that specialize in sumptuous, old-fashioned cuisine. Guests are encouraged to lounge around in yukata, or traditional cotton kimonos. But for all their charms the ryokan--some of the last vestiges of old Japan--are facing hard times. For one thing, they can cost as much as $1,000 per night. And even many Japanese don't feel like swapping their jeans or business suits for kimonos. Indeed, Japanese tourists are largely forsaking ryokan for the predictable comforts of Western-style hotels inside the country, or more-attractively priced accommodations abroad. No wonder the ryokan market shrank by 40 percent between 1991 and 2003, to what Katsuo Tobita of the Japan Ryokan Association estimates are about 45,000 inns.

Now some ryokan owners are looking to foreign tourists to keep their business alive. Many have begun advertising on the Internet. Isao Sawa, who runs a famous inn in downtown Tokyo, says that his place was on the verge of bankruptcy until he began targeting foreigners. He added optional Western-style breakfasts and printed up detailed English guides to local attractions. Nowadays, he says, 80 percent of his customers come from overseas--though the share of Japanese is starting to rise again, too. "The foreign guests are very important to our business," he says. "Without them it wouldn't work." Tobita says that the 84 ryokan in his association constantly share information on how to improve service for foreign visitors--which, so far, has included recommendations like offering larger-size yukata.

For foreigners, staying in ryokan provides a quick education in traditional Japanese customs-- something growing numbers of travelers are eager for. One clueless American once drained the bathtub when he was finished--not realizing that the hot water was meant to be shared among all the guests. Another Westerner was stunned when a live octopus was brought to their table at mealtime. "With a ryokan you go in and do it as the Japanese do it," says Jeff Aasgaard, a Japan-based American entrepreneur who's made a career out of promoting the inns. "The Hilton is the same no matter where you are."

Foreigners are also snatching up a stake in the market. Investment bank Goldman Sachs recently announced a takeover of a 92-year-old inn with an attached hot spring, betting that a bit of modern management and marketing can make the business competitive again. And Aasgaard is just one of several non-Japanese now engaged in pepping up the industry. He says that his reservation Web site, which is carefully crafted to help non-Japanese cope with traditional inn culture, is central to his strategy. "Business has been growing by 40 percent a year," he says. Sounds like there's hope for the yukata crowd yet.