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FOCUS: Japan’s new law may dampen sentiment for “minpaku” private lodgings

  • June 15, 2018
  • , Kyodo News , 12:24 p.m.
  • English Press

Japan’s new law on the “minpaku” private lodging business took effect Friday but stringent rules may dampen the entry of homeowners despite hopes that it could help counter a shortage of accommodations amid a growing number of foreign tourists.

 

The new law enables private homes to be offered as accommodation for tourists only if the owners submit the necessary paperwork to prefectural governments or designated major cities.

 

Previously, offering accommodation in private homes was allowed in Japan only under the Hotel Business Law, except for private lodging services in specially deregulated zones. The Hotel Business Law requires property owners to obtain accommodation licenses.

 

The new law is designed to cope with a sharp increase in foreign visitors and a consequent shortage of hotel rooms, a trend expected to continue toward the 2020 Tokyo Olympics and Paralympics. Registrations can also be made online.

 

“Through setting steady rules, we aim to expand the healthy minpaku business while making sure of the safety and security of users,” Nobuhiko Hohokabe, an official at the Japan Tourism Agency, said in a news conference promoting traditional Japanese houses.

 

The minpaku business is expected to better meet the needs of foreign visitors hoping to experience Japanese culture up close, said Hohokabe, who is in charge of minpaku services, adding this would lead to more repeated visits to Japan by overseas travelers.

 

The number of foreign visitors to Japan surged 19.3 percent in 2017 from the previous year, hitting a record high of over 28 million, according to the Japan Tourism Agency. The government has set a target of 40 million foreign visitors by 2020, when Tokyo hosts the Olympics and Paralympics.

 

In line with the enforcement of the new law, companies are also trying to exploit new opportunities, expecting the minpaku market will expand.

 

Expedia Inc.’s vacation rental service subsidiary HomeAway and Rakuten Lifull Stay Inc. will jointly renovate and certify old Japanese-style houses known as “kominka” for vacation rentals. Rakuten Lifull Stay is a joint venture of Japanese e-commerce giant Rakuten Inc. and real estate information service company Lifull Co.

 

Seven-Eleven Japan Co., the country’s biggest convenience store chain, has tied up with Japanese travel agency JTB Corp. to allow foreign tourists to receive and return room keys at its convenience stores.

 

However, restrictions set under the new law, such as offering accommodation in private homes for a maximum 180 days a year, could throw cold water on the entry of property owners and dilute the attraction of the private lodging business.

 

In addition to the 180-day cap, owners must abide by other rules, including keeping a registry of guests, maintaining hygienic conditions and responding to complaints, if any, from neighbors.

 

Depending on the local situation, municipalities can also set their own restrictions, such as banning the minpaku business in certain areas or limiting rentals to a shorter term. If the minpaku business does not take off as expected, it could lead to higher hotel prices overall, experts say.

 

“Nonprofessional renters, who were doing minpaku in the way of homestays, have to give up rentals,” said Takuya Ichikawa, senior researcher of the Daiwa Institute of Research. “The minpaku market is expected to shrink in the short term.”

 

Ichikawa also said the new rules may prompt more professional business operators to enter the market, contrary to the original ideal of a “sharing economy” in which nonprofessionals can gain money avocationally by using their homes and the internet.

 

Prefectural governments and major cities began accepting registrations from property owners on March 15 in advance of the enforcement of the new law.

 

Keiichi Ishii, the tourism minister, recently said there were an estimated 3,000 nationwide registrations as of June 8. In the last tabulation as of May 11, there were just 724 registrations.

 

Industry sources estimate more than 60,000 properties have been offered as accommodations. The number is expected to fall to 20 to 30 percent of the total even if lodging houses permitted under the Hotel Business Law are included, they said.

 

Without obtaining licenses under the Hotel Business Law, operating in specially deregulated zones or registering under the new minpaku law, offering accommodation is considered illegal.

 

As a result, U.S. online home-rental service Airbnb Inc., which has built up a large share of the minpaku market since debuting in Japan in 2013, has cracked down on thousands of previously listed lodgings in the country, which had not registered under the new law.

 

It will spend a total of 1.1 billion yen ($9.9 million) to compensate affected travelers.

 

“Given the adjustment period that we are in, we are doing everything in our power to take care of guests and hosts. And there are a number of guests who have been impacted by the cancellations,” said Nathan Blecharczyk, co-founder and chief strategy officer of Airbnb, in an interview with Kyodo News. “Our hope is that we don’t have to cancel more reservations.”

 

Rayce Francis and Mariah Miller, both 20, a couple from California on a two-week trip to Japan, said they preferred staying in a private apartment partly because it is cheaper than a hotel room. They booked a lodging near Shinjuku through Airbnb.

 

Airbnb’s delisting of its lodgings may cause some foreign tourists, especially young people, to think twice about using minpaku in Japan, Miller said. “If I really come here again, it would be kind of a shame as there are fewer options,” she said.

 

Meanwhile, hotels and renters with accommodation licenses welcome the new regulations, expecting that the number of their customers may increase as stricter rules are imposed on those who want to rent out their homes to tourists.

 

Liang Yingxi, who has lived in Japan for more than 20 years and established Chika Capital LLC, a company renting a total of 30 solitary houses across the country, including in such popular tourist destinations as Kyoto and Hokkaido, said his company is not subject to the 180-day limit and other restrictions.

 

“The new law sounds like good news for us,” Liang said, adding that the new law intends to protect the hotel industry, which has opposed private homes being used as accommodation for foreign tourists.

 

Daiwa’s Ichikawa said fostering a healthy sharing-economy is the government’s goal over the medium and long term. The rules such as the 180-day cap may be eased somewhat if they do not meet demand for rising foreign travelers, he said.

 

“For the further development of healthy minpaku, how to improve the effective use of vacant rooms will be a major future task,” Ichikawa said.

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