At the beginning of June 2018, Airbnb in Japan went from more than 62,000 listings to just 13,800.
With such high demand for rooms ahead of the Tokyo 2020 Olympic Games, it seems to be a trend that defies logic.
So, what exactly did happen to vacation rentals in Japan that saw Japan's Airbnb listings drop by 80% almost overnight? And what does this mean for your own Airbnb bookings in Japan?
From Airbnb's fastest growing market to bust?
Airbnb started booming in Japan in 2015, when the popular accommodation rental site saw 500% growth. Japan has been Airbnb's fastest growing market for the past several years, and many were seeing the potential in renting out their rooms and homes in the midst of a huge surge in foreign tourism.
There are a couple of reasons why Airbnb really took off in Japan. One is that there is a great lack of hotel rooms in Japan, especially in urban centers, where occupancy rates average 80-90%. And the second is that with the unprecedented number of foreign arrivals to the country, hotels simply cannot keep up with demand.
To give you some perspective, let's look at a few telling statistics.
In 2008, the government announced that it would be aiming to have 20 million foreign arrivals a year by the Tokyo Olympic Games in 2020. It was a target that seemed ambitious at the time and one they have been pushing hard. So much so that “20 million by 2020” was basically achieved in 2015, five years ahead of target, when Japan had a record 19.73 million foreign tourists to the country. That was up an incredible 47.3 percent from the previous year.
When we look back over the past several years, we can see 2015 as a kind of turning point in the tourism industry in Japan and one that the country is still struggling to come to grips with. However, the numbers were impressive, far exceeding initial expectations, and the government has continued to revise its target upward as milestones are met. First it was 30 million and now 40 million, double the initial target. According to the most recent government estimates, Japan can expect 53 million inbound tourists in 2020.
Think just how quickly this growth has been achieved. In 2013, just 5 years ago, the fact that the number of foreign arrivals exceeded 10 million was big news. In August 2018, we had already surpassed 20 million to date this year, this was one month ahead of the previous record set in 2017 that saw 28.7 million visitors over the 12-month period. In 2018, Japan is set to surpass 30 million foreign visitors for the first time ever.
It's from looking at the rapid growth in the number of foreign arrivals in Japan, that we can truly begin to understand both why Japan was such an ideal market for Airbnb and also where problems have stemmed from.
Japan's accommodation crisis
Ever since the huge boom of 2015, Airbnb has caught the attention of homeowners in Japan. Many locals saw the potential for renting out their properties and foreign tourists were quick to jump on them. Of course, price was one factor. Oftentimes, although not always, tourists could find Airbnb rentals in Tokyo and other large cities for a much more affordable price than hotels.
However, Airbnb's “overnight success” in Japan, also has to be credited to the sudden and huge demand for hotel rooms. When hotels are basically full all-year-round anyway, and then in one year the number of foreign tourists increases by 10 million, you can see the math problem here. Japan holidays now require extreme planning and it can be practically impossible to get a hotel room during busy periods without booking far in advance.
With the additional factor of many airlines increasing their services to Japan and offering cheap last-minute tickets, we have an accommodation crisis on our hands. It's easy to see how Airbnb was able to swoop in and fill that gap to some extent. No matter your thoughts on Airbnb itself – I'm aware that the effects have not been all positive around the world – it's clear that it did provide a much-needed alternative for those that couldn't get traditional accommodation, even if they wanted to.
Is Airbnb legal in Japan?
Airbnb's incredible performance in Japan in 2015 didn't go unnoticed by the hotel industry, and there has been huge debate over recent years about where minpaku – private accommodation rentals – fall in terms of the law, because at the time of Airbnb's rise, there was no specific legislation in Japan that regulated home sharing.
Some believe that minpaku such as Airbnb should fall under the Hotel Business Act of 1948, but others have stated that amendments to the act have not kept up with the changing business and tourism environment, and that new laws need to be implemented.
While many claimed that Airbnb was illegal in Japan, the website was able to maintain its hold in the Japanese market by operating in what was essentially a legal grey zone. Technically, homeowners were both breaking and not breaking the law, and until legal clarity could be sought on the issue, there was little that was going to stop the minpaku industry from expanding.
Navigating the grey zone in Japan's accommodation laws
In 2016, Ota Ward in Tokyo was the first municipality to win an exemption from Japan’s hotel law, by limiting the situations in which homeowners could rent to tourists. Hosts must register with the local authorities and agree to inspections, and visitors have to stay at least one week.
The idea of a one-week minimum stay was introduced as a national guideline for minpaku in 2016, however, as it needed to be ratified by local governments in order to become law, it didn't become a widespread requirement.
The guideline was issued in response to many complaints from local residents who disliked tourists checking-in and out every couple of days, the increased noise, among other concerns over security and foreign visitors not understanding local etiquette, particularly in regards to Japan's complicated trash separation systems, which can vary in each municipality.
It was also in an attempt to temper anger from the hotel industry, who were upset that anyone could essentially set up an accommodation business without needing to go through any of the paperwork or legal hoops that strictly regulate the traditional hotel sector.
The new “Minpaku Law”
A new home sharing law was passed in 2017, finally providing a legal framework for the previously unregulated private accommodation sector. The newly devised minpaku law came into effect on June 15, 2018.
What it means is that property owners who wish to rent out their private accommodations are required to submit complex and lengthy registration documents, which include landlord permission, on-site inspections and meeting strict health and safety requirements.
Only after meeting all the requirements will the government provide the property owner with a notification number. Home owners are now required to prove they have this approval and provide their notification number to Airbnb in order to keep their listing up and to continue taking future bookings.
There is also the additional requirement that the property can only be rented out for a maximum of 180 days a year, although local laws may provide further restrictions. For example, weekday rentals in Shinjuku are prohibited and in Shibuya rentals will only be available during school holidays. In Kyoto, rentals are only allowed between January and March in residential areas.
Chaos as thousands of listings disappear from Airbnb Japan
While the hotel sector and many of those living in apartment buildings with properties operating as Airbnbs welcomed the decision, there was very little time for homeowners to prepare for the changes. Applications for registration were only available from mid-March and approvals are suffering significant delays.
Many listings were preemptively taken down by the property owners themselves, who presumably didn't have or couldn't get the necessary permissions to operate, or who didn't want to go through the hassle. Others were taken down by Airbnb, who responded to a government notice issued on June 1st, just two weeks before the new law was to come into effect, informing the home rental industry of the new requirements.
In the two weeks prior to the mid-June adoption of the new law, 80% of the site's listings had been removed. While the minpaku law is said to pave the way for more people to legitimately operate a minpaku in Japan, it seems that registration request rates point to a crippled industry, rather than one opening up more possibilities.
As of May 30, Kyoto had approved just three registrations out of a total of 27 applications. A city official stated that most of the applicants had submitted incomplete forms, which required proper measurements of their properties and submitting an English map to the host's house so foreigners would not have to ask neighbours for directions.
At the time, Tokyo's Shinjuku Ward also had just three registrations and the popular shopping district of Ginza had none whatsoever.
What to do if you have a booking with Airbnb Japan
If you have an active booking with Airbnb Japan, even if you made it prior to June 15th, 2018, be sure to check the current status of your reservation.
✓ Check whether the listing is still up
✓ Contact the homeowner to re-confirm your stay
✓ Confirm they have a notification number
After an official notice from the Ministry of Tourism on June 1st informing accommodation rental providers of the new law and how they needed to comply with it, Airbnb shocked homeowners by taking swift and decisive action two weeks ahead of the June 15th deadline.
In an email sent to those with properties listed on the site on June 2nd, homeowners were informed that due to the new minpaku law, Airbnb would be de-listing anyone who didn't already display a notification number or a valid hotel license on their listings and they would not be able to take further bookings until they did so (or provided evidence as to how they are complying with local laws). This saw the listings on Airbnb Japan go from more than 62,000 to 13,800 virtually overnight.
There was of course the secondary issue of reservations that had been made prior to the changes for dates after June 15th. We had an Airbnb booked for a summer stay, and despite the property still being listed and the homeowner assuring us that our booking was secure, our booking was cancelled by Airbnb just nine days before our trip. It seems some homeowners may have submitted intention to comply with the new laws, but facing delays and obstacles with the new process, haven't been able to complete the necessary registrations in time to honour existing bookings.
The listings on Airbnb are liking to be pared down even further as homeowners fail to comply with the new legal requirements, and Airbnb reviews them. Just because a listing is no longer appearing on the site, however, doesn't necessarily mean that your booking is no longer valid. Some listings may have been removed as a precaution while the paperwork is being completed. Therefore, it is advisable to contact the homeowner directly and enquire about the notification number to know where you and your reservation stand.
Homeowners who have successfully completed the registration process and are continuing to take bookings on Airbnb are now required to display their notification number on their listings. Be sure to check it is there before making future bookings. Since the number of private homeowners who have official permission to operate is currently very small, the notification number is a way for their listings to stand out and to allay fears of potential guests, who are understandably uneasy about using the site for their Japan stays given the number of reservations that have been cancelled so far.
What happens if your Airbnb in Japan is cancelled
In order to assist travellers to Japan who are impacted by the changes to the new law, and in acknowledgement of the fact that they may need to change their travel plans and be out of pocket because of it, Airbnb has announced a $10 million support fund.
If a guest receives a cancellation for a reservation on or after June 15th due to the listing not having a notification or license number, Airbnb will provide a full refund and a coupon worth 100% of the booking value to use on a future Airbnb trip. In addition, these guests will receive a $100 coupon for an Airbnb Experience. Refunds and coupons will be processed within 10 days.
If you have any questions or concerns regarding your Airbnb booking in Japan, you can contact their 24/7 support team via the following email address: firstname.lastname@example.org.
The future of accommodation and tourism in Japan
It was only a matter of time before local governments started regulating Airbnb, and Japan is not the first to battle this uncharted territory. On many fronts, a system that is now guided by a clear legal framework allows for Airbnb guests in Japan to be protected in ways they weren't before, especially in terms of health and safety. But where do we go from here?
What does it mean for the future of tourism in a country where the increase in tourists is showing no signs of slowing down? And despite showing an unprecedented rate of growth that is crippling Japan's hospitality industry, and amid protests from cities already bearing the crushing weight of over tourism, the government continues to push for bigger numbers.
Think about this. Even with 29,000 new hotel rooms being built, Tokyo will still have a 35,000 room shortage in 2020. The shortage is not just due to foreign tourism. In 2016, Japan accommodated 60 million travellers, and only a third of them were foreigners. The fact is, Japanese people love to travel in Japan, and an increasing number are opting to go on domestic trips rather than travelling abroad.
In 2017, in a downward trend, only 18% of the Japanese population left Japan for overseas trips. With many hotels booked up with domestic tourists, the potential for hotels to adequately accommodate the additional rise in foreign tourism remains very limited at best.
Airbnb may not provide all the answers, and regulation is undoubtedly important going forward, but it remains unseen as to how Japan is going to both limit accommodation options to foreign visitors while simultaneously pushing for more to come.
Do you use Airbnb? Have you used Airbnb in Japan? What have your experiences been like as either a guest or homeowner around the world?
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