Japan Moves to Meet Lodging Demand with Home-Sharing

Economy Society

The Japanese government is moving to establish rules allowing owners of private residences to rent out properties to short-term lodgers, a practice known as minpaku. While home-sharing services are technically an infringement of the country’s Hotel Business Act, Japan’s boom in foreign tourism is pushing up demand, and a growing number of owners are offering empty homes and apartments to travelers. With the Tokyo Olympics looming in 2020, minpaku is being hailed by some as a potential cure for chronic lodging shortages in major urban centers. But so far the practice, dubbed “black-market lodging,” has been riddled with problems, including complaints from neighbors and concerns over health and safety issues.

A Burgeoning Business Opportunity

In November Kyoto police questioned a Tokyo-based tourist adviser and an executive of a Japanese-style inn in Yamagata City on suspicion of illegally renting out condominiums in Kyoto to foreign tourists. According to investigators, the pair leased 36 units in a 44-unit complex for a three-month period from July, offering the condominiums for around ¥7,000 a night as accommodation for a tour run by a Shanghai travel agency. The police, who have since brought charges in the case, say 30 to 70 participants stayed at the condos each day.

With the number of unlicensed lodgings climbing, many in the tourism industry have raised the alarm about health and safety in surrounding neighborhoods, as well as pointing out the effects that such black-market establishments have on their own bottom lines. According to an official of the Kyoto Hotel Ryokan Association, unlicensed accommodations operating in the same areas as licensed hotels and inns have become a serious issue.

Internet Opens New Options for Lodging

Observers have pointed to increased minpaku-related trouble even in expensive high-rise condominiums in Tokyo, Osaka, and other major urban centers, where owners rent out property that they have purchased for investment purposes to foreign tourists and also use communal guest rooms, which residents can borrow for their guests for a fee, as black-market lodging. In both cases, the bad manners of the foreign tourists have attracted attention, and city health authorities and the police are receiving an increasing number of complaints from angry residents.

The Internet is fueling the rapid growth of minpaku by making it easier for owners with idle properties and tourists looking for a place to stay to interconnect. According to US home-sharing service Airbnb, Japanese listings on its site have quintupled to 16,000 over the last year.

Japanese law does not recognize minpaku, stipulating, among other things, that commercial accommodations must have a front desk, keep a hotel register, and equip rooms with sprinklers and other fire-prevention equipment. Even minshuku, private homes that can accept guests, must receive approval from regional authorities to operate.

Tourism Boom Triggers Shortage of Hotel Rooms

Major cities in Japan are suffering from a dearth of vacant hotel rooms as inbound tourism continues to rise. Experts point out that occupancy rates exceeding 80% hinder the ability of visitors to make reservations, and this situation has become the norm in urban centers. In August hotels in Tokyo were operating at 83.6% capacity, while the figure for Osaka was even higher at 90.4%. As Tokyo looks ahead to the Olympics and Paralympics in 2020, officials are concerned that there will be too few hotel rooms to accommodate visitors to the Games.

According to Mizuho Research Institute, Japan is on track to greet 25 million visitors annually by 2020. But 11 prefectures, including Tokyo, Osaka, Kyoto, and Fukuoka, are projected to see lodging shortfalls of around 10,000 rooms. This situation has led many to call on the government to ease restrictions on home sharing. In Tokyo, travel companies have remained hopeful of this development, with many in the industry actively looking to expand business to include minpaku.

“Special Districts”

In October a special government council considering the issue moved to establish “special districts” in such areas as Ōta near Tokyo’s Haneda Airport, stipulating, along with other conditions, that minpaku listings must have a minimum floor space of 25 square meters.

At the council meeting Prime Minister Abe Shinzō hailed the districts as the first step in regulatory reforms necessary to ensure that foreign visitors to Japan can enjoy greater convenience and comfort during their stays.

In October Osaka Prefecture moved to accept minpaku listings on condition that proprietors check guests’ passports, properties have a floor space of at least 25 square meters as well as a kitchen area and air conditioning, and guests stay a minimum of seven days. In December Ōta’s municipal council accepted similar conditions for minpaku.

While the move is a step in a new direction, issues still remain, with many wondering about the practicability of checking passports and questioning the level of demand for guests wanting to stay a week or more.

In November the health and tourism ministries began considering rules addressing safety and sanitation at minpaku listings as a way to reduce trouble. They will release their report sometime in 2016.

Estimate of inbound tourists 2015       20 million people
2020       25 million people
Hotel occupancy rate in August 2015 Nationally 70.2%
Tokyo 83.6%
Osaka 90.4%
Japanese listings on Airbnb 16,000
Conditions for minpaku in Osaka Prefecture 1.     Check guests’ passports
2.     At least 25-square meter room with kitchen space and air conditioning
3.     Guests stay a minimum of seven days

(Originally written in Japanese by Murakami Naohisa of Nippon.com and published on December 14, 2015. Banner photo: Chinese tourists shop in Tokyo’s Ginza district on June 14, 2015. © Jiji.)

Tokyo Olympics Foreign visitors to Japan Home-sharing Japan tourism Hotel Business Act commercial lodgings hotel room shortages Airbnb