The Kaiyotei hosted wealthy merchants, politicians, and celebrities for almost 150 years. The restaurant is believed to have opened in its present location near Sakaimachi Street between 1885 and 1890. The restaurant was expanded in the Taisho era (1912–1926), and the current structure consists of three connected wings built at different times. The banquet hall of the central building is the oldest part of the property and was likely rebuilt after a fire in 1894.
The Kaiyotei reflected Otaru’s changing fortunes as a commercial port. Its first patrons were newly wealthy merchant shipowners and fishermen enjoying their riches from the herring trade. Some existing features reflect the prosperity of Otaru in the early twentieth century, including windows set with imported glass, gaslit chandeliers, and decorative pillars made of palm wood. One of the large banquet rooms was remodeled after World War II for use as a club for the Occupation Forces. The restaurant remained in business until 2015. The Kaiyotei is currently not open to the public.