Why Japan has cracked down on Airbnb

Japan, which Airbnb says is the top travel destination in the Asia-Pacific region for its customers, has long had a system of family-run guesthouses in which rooms are let out to visitors. Airbnb’s rapid expansion in Japan rode on the laxity in the enforcement of the minshuku (literally, inn) rules.

Written by Harikrishnan Nair | New Delhi | Published: June 15, 2018 2:53:53 am
Why Japan has cracked down on Airbnb Nathan Blecharczyk, co-founder of Airbnb, in Tokyo. (Reuters Photo)

A law that comes into effect in Japan Friday has underlined increasing concerns around the world with Airbnb, the San Francisco-based home-renting company that has in less than 10 years revolutionised the way in which tourists look at vacation accommodation, and upended the traditional dynamics of the hotel business.

Japan, which Airbnb says is the top travel destination in the Asia-Pacific region for its customers, has long had a system of family-run guesthouses in which rooms are let out to visitors. This system, called minshuku, was allowed only in certain areas, required owners of lodgings to obtain licences, and bound them to a set of tough regulations — which, however, were frequently ignored. Airbnb’s rapid expansion in Japan rode on the laxity in the enforcement of the minshuku (literally, inn) rules.

The new law seeks to regulate minpaku, or private residences, that owners rent out as short-term lodgings. It has removed many of the most stringent requirements of the minshuku regulations, including the size of the rental room and the constant presence onsite of what The Japan Times described as a “management-type person”.

But it also caps home-sharing at 180 days a year, which has raised fears of owners not being able to make a profit without raising tariffs, which in turn, might hurt the business. Again, the new law has allowed local authorities, which will register these businesses, to lay down their own sets of rules — therefore, a ward in Tokyo has banned rentals on weekdays, when authorities feel letting strangers into flats could be unsafe, Reuters reported. In Kyoto, Reuters and The Japan Times said, private lodging in residential areas would be allowed only for a small window between January 15 and March 16.

Ahead of the minpaku law coming into force, the government asked owners who did not fulfill all requirements, to cancel reservations. Accordingly, Airbnb froze what it called a “major portion” of its listings and reservations. Illegal minpaku operators face a fine of up to ¥ 1 million, or over Rs 6 lakh. In 2015, Airbnb, which does not release figures of its business, quoted a study by Waseda Business School that said the “Airbnb community” had contributed ¥ 221.99 billion in economic activity to the Japanese economy between July 2014 and June 2015, and supported 21,791 jobs.

On Thursday, Singapore-based The Straits Times quoted the Japan Tourism Agency as saying it had received, until June 8, 2,707 applications for listings from owners, and had approved 1,134. While this number was 10 times the count of a month ago, it was still lagged far behind the 62,000 listings that Airbnb had earlier this year, the paper said.

While the minpaku law is aimed at regularising the home-rentals business ahead of the massive anticipated influx of tourists during next year’s Rugby World Cup and the 2020 Olympics and Paralympics (the country aims to host 40 million tourists annually by 2020), Airbnb has run into regulatory walls in several major cities, including Berlin, London, New York and even San Francisco, with the authorities blaming it for worsening already tight housing markets, Reuters reported in February this year.

San Francisco has passed a 90-night limit on rentals and issued licensing requirements, leading to a crash in the numbers of rentals, and in Berlin, 3,953 homes were removed from vacation rental listings last year, the report said, quoting government data. Listings were down in Paris in January compared to the same month last year, and had flattened in Amsterdam.

The regulatory tightening worldwide has come alongside slowing growth in Airbnb’s business as travellers in some markets have begun to shy away from the risks and quirks of renting a stranger’s apartment, forcing the company to role out new kinds of services, the Reuters report said.

In India, Airbnb has been growing. In late 2017, a top company executive was quoted as saying that a million Indians had used Airbnb since 2008, and the company’s India business had grown nearly 200% over the last year. Airbnb now has 4 million properties in 68,000 cities in 191 countries, the executive was quoted as saying.

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