Why Does Japan Have Capsule Hotels? The TRUE Reasoning

In this day in age if you haven’t heard of capsule hotels, then you are part of a very small percentage. Capsule hotels as of today, are spread worldwide. From the USA to Belgium, from Poland to Canada, this funky hotel concept has spread like wildfire in the past decade. However, it was Japan that started it all back in 1979. With such a crazy concept, what was the reasoning? Why does Japan have really capsule hotels?

Japan have capsule hotels to provide cost-effective accommodation that caters for as many people as possible. Due to Japan’s large population, having capsules instead of full-sized rooms, allows this to be possible. They were originally created for salarymen who needed a place to stay after work.

Capsule hotels are truly an intriguing concept with so many unique features. With such a crazy and ‘out-there’ idea, who and what are these capsules really for? In this article, we look into the real reasons Japan uses capsule hotels, even still to this day. 

Why Are Capsule Hotels Used In Japan

A unique idea or concept that started back in 1979 in Osaka, Japan; went on to become a famous type of accommodation all across the world. But, is there actually a use for them? Or is the idea of them really cool, but in reality, it’s just a gimmick? 

In Japan, capsule hotels have proved to be almost essential over the past 40 years of their existence. With the population of Japan rising from 93 million in 1960 to 125 million in 2021, it is extremely clear that Japan is an ever-growing society. (Source)

With this growth, comes an added necessity for more and more accommodation. In Tokyo there are many people who travel on short stays, take business trips and even get too drunk to return home. These are the perfect reasons for Japan to use capsule hotels.

These people, despite their situations being fairly different, have two things in common. They don’t want to spend loads of money, and they need a quick and simple place to spend the night. They don’t need fancy rooms with a view from the window, they need a bed and a pillow, simple.  

Another important point to make is the fact tourism has also grown immensely in Tokyo over the years. This means that tourists are taking up the hotel rooms, therefore creating more demand which causes hotel prices to skyrocket. This is yet again, another problem that capsule hotels solve on a daily basis. 

A capsule hotel allows hundreds of residents to still be able to get a cost-effective place to stay, despite the growing population and number of tourists.

Are Capsule Hotels Really More Cost & Space Effective?

The prospect of capsule hotels sounds great, but, is it actually true? Do these funky hotels really save money and space? Let’s take a deeper look.

To start with, let’s compare capsule hotels to regular hotels that provide rooms as opposed to capsules. The average hotel room is estimated to measure around 27.8 square metres. (Source)

While capsule hotels only measure around 2.97 square metres each. As you can already see, there is a huge difference in the amount of space these hotels provide for each person. 

This saving of space allows them to reach around 100-700 capsules per hotel. An ordinary hotel could only dream of being able to accommodate this many people. 

As capsule hotels are able to accommodate more people, this means that they can lower the prices due to it being more spread out and having lower demand. For example, a hotel with 27 rooms will have much higher demand than a capsule hotel with 600 capsules, so, therefore, the hotel can get away with charging higher prices.

I did some research and gathered the average price for a 1 night’s stay in Tokyo for each accommodation type.

Capsule Hotel Traditional Hotel Room
Average price (per night) ¥6,690 ($50.50 USD) ¥21,338 ($154 USD)

As you can see above, the difference in price is 100% noticeable

So, yes, Capsule hotels are definitely more cost and space effective than traditional hotels.

Are Capsule Hotels Profitable For The Owners?

We’ve spoken already about how capsule hotels are cost-effective for the customers, but, what about the owners? Are capsule hotels a good investment and do they actually pay off?

Quite simply, the answer is yes. Capsule hotels are profitable due to the minimal maintenance costs of small-sized capsules. The capsule hotel industry in Japan alone brings in an average of ¥20 billion ($145 million USD) per year. (Source)

This type of hotel can clearly make money. 

I mean think about it, if you take that average price per night for a capsule from earlier (¥6,690) and you have 300 capsules… You would receive ¥2,007,000 ($15,150 USD) per night! (Assuming the place was sold out, of course)

Capsule hotels are also cost-effective for the owner in terms of purchasing land. Take a look at the table below, I did some thorough research and compared the average cost of land for each hotel type.

Average Price Of Land For Individual Capsule Vs Hotel Room

1 Capsule 1 Traditional Hotel Room
Avg Size In Square Metres 2.97 27.8
Avg Price of Land
(Price of Land per Square Metre in Tokyo is ¥943,246)
¥2,801,440 ¥26,222,222

Now of course, when you buy the land, you won’t be buying it based on the number of hotel rooms or capsules. However, this table does show how the average price of land for a capsule is minuscule compared to a more traditional hotel room.

When Should You Use A Capsule Hotel?

With all this being said, if you are reading this blog, you are most likely a tourist visiting Tokyo. You may be wondering “do capsule hotels have a place for tourists?” 


Although I wouldn’t recommend staying in a capsule hotel for your full stay in Tokyo, it is definitely worth experiencing for a night or two.

Click here to read my article on ‘Are Capsule Hotels Safe?’

For, the local residents, they choose to use a capsule hotel when they are: low on money, travelling, have a busy work schedule; or all of the mentioned at once. 


Capsule hotels are crucially important in today’s day in age for Japan and the workers within it. Japan has so many uses for capsule hotels; from saving money and saving space. The uses for these capsule hotels are important and noteworthy, and any other country or city struggling with a rapidly growing population should look to Japan for advice.

Recent Posts