Is Airbnb to become legal in Japan?
A new development of Act 13 of the Special Zones Law appears to make it likely that short-term hosting of private rooms may become legal in Japan. Since research on the matter the article has been removed with no information published by the Cabinet Officer, perhaps indicating behind-the-scenes battles in government. The Cabinet Officer had previously put forward plans to deregulate private room rentals to ensure sufficient accommodation at the Tokyo Olympics in 2020.


* * * * * * * * TERRIE'S (TOURISM) TAKE - BY TERRIE LLOYD * * * * * *

A bi-weekly focused look at the tourism sector in Japan, by Terrie

Lloyd, a long-term technology and media entrepreneur living in Japan.

(http://www.terrielloyd.com)

Tourism Sector Edition Sunday, June 28, 2015, Issue No. 810

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+++ Airbnb To Become Legal in Japan After All?

The week before last, a reader alerted us to an article on Yahoo Japan

News about a new development in the Special Zones Law, Article 13, a law

which could be easily dubbed the "Airbnb Law". The gist of the article

was that it was highly likely that short-term hosting of private rooms

to travelers would become legal, under the framework of the Special

Zones law (thus bypassing the Hotel Business law). Unfortunately, not

only was the article light on details but in the intervening 7 days, it

has also been deleted from Yahoo's news list, which is kind of strange.

We then went searching on other media about the new events relating to

Article 13, including Yahoo Japan, Google, and various Japanese news

sites, but found nothing besides the original Cabinet Office order

passed last year. That too is strange and maybe it indicates that there

is still a bit of a battle going on behind the scenes. Maybe someone at

Yahoo was a little too quick to publish the news and the rest of the

media have been told to hold their horses.

We can only imagine the machinations going on. But it's likely that the

incumbent hotelier faction (i.e., the All Japan Ryokan Hotel

Association, which hates the idea of private rentals) is fighting a

rearguard action to get Airbnb's business model quashed. Given that the

order is already law, though, the only avenue of attack we can think of

is for the incumbents to pressure the leadership of the two cities

containing those special zones: Tokyo and Osaka. And of these, Tokyo has

the most to gain and appears to be receptive to moving forward with

private rentals. So barring any unforeseen problems, it appears to be

only a matter of time before Airbnb will become semi-legal within Tokyo

at least. This is a big deal because it will up-end the hotel industry,

and maybe signal the grudging acceptance of the sharing economy as a

whole (e.g., Uber and others).

As a bit of background, the Cabinet Office last year put forward a

proposal to deregulate private room rentals as part of its effort to

ensure sufficient accommodation availability for the 2020 Olympics. This

was a prudent move, given that Tokyo hotel accommodation is already at

90% capacity, meaning that as of now (July-October) it's getting really

difficult to find vacant rooms. The subsequent Cabinet Office order was

submitted last December under the Special Zones law, a maneuver

presumably intended to avoid a full-scale battle in the Diet over

rewriting the Hotel Business Law.

Our understanding is that the order became law from April this year, so

we presume that at least two firms (local firm Tomareru and Airbnb) will

have made applications so far, and must now be waiting for acceptance

and approval by Masuzoe, the governor of Tokyo. Our guess is that he

will approve them.

[Continued below...]

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Another important consideration in the Cabinet order is that the minimum

duration of stay will be somewhere between a suggested 10 days and 7

days. Either period seems impractically long for most foreign tourists,

so even if the law is changed it may still not be of much help to Airbnb

in its quest for legal standing. But at least it will provide a

beachhead for them to continue pushing for a more reasonable minimum

stay of 2-3 days.

It's no surprise that there is a battle going on between the various

vested interests. Running a hotel is no small undertaking, and those

investing in their properties would rather to see a saturated market and

a few disgruntled foreigners than to give away market share, especially

when thinking ahead to the expected slide in numbers and glut of new

hotel rooms after the 2020 Olympics.

Currently there are four distinct categories of accommodation: Hotels,

Ryokan, Bed-and-breakfasts (Minshuku), and Boarding Houses/Homestays.

This last category includes low-cost accommodation such as capsule

hotels, youth hostels, and campgrounds. The regulations covering the

hotel industry are comprehensive and are certainly beyond the capacity

of individual renters to meet. Here are some (19) of them:

Building Standard Law (application), Building Standard Law (special

building), Fire Defense Law (fire prevention), Accessibility "Heart

Building" Law, Building Management Law (sanitation), Energy Saving Law,

Metropolitan Building Safety Ordinances, Local Fire Ordinances, Public

Services Ordinances, Buildings in School Zones Ordinances, Inns and

Hotels Law (business licenses and building standards), Law for

Improvement of International Tourist Hotel Facilities, Japan City Hotel

Association Registration Criteria, Law Concerning Regulation and Improving

of Adult Entertainment Businesses, Food Sanitation Law (business

licenses and building standards for eating and drinking facilities),

Public Bath Houses Law (covers pools, not just sento), Law Concerning

Parking Lot Businesses (licenses for paid parking lots), Barbers Law,

Cosmetologists Law (if you have beauty spa facilities), oh, and last but

not least the Laundries Law...!

There is of course a huge opportunity in deregulating casual

accommodation and Airbnb competitors (Rakuten, Daikyo, and others) are

champing at the bit, although none other than Tomareru is ready to start

yet.

We met with one of the Airbnb founders some weeks ago and suggested to

him that his company would get better political support if he was to

offer some local innovations in his business model. For example, money

and social standing "talk" in Japanese politics and getting some big

firms involved in the Airbnb model would make a huge difference in

influencing the regulators.

We suggested to him that Airbnb could enter into arrangements with a

number of property companies to build and sell entire buildings whose

rooms serve as Airbnb accommodation. Each room could be sold to a

private investor and these people could either look after the room

themselves or hire someone in like Zens, a pretty cool new service that

does everything for the renter. Tomareru has taken this teaming approach

in a tie-up with accommodation media giant, Able, which is helping them

to source, refurbish, and negotiate the homes that they put up for rent.

The Zens guys are here: http://www.en.zens.tokyo/

The Tomareru guys are here: https://tomarina.com/

The problem is that the founders of Airbnb want to stay true to their

model of renter hosting, because in their minds that reinforces the

quality of the sharing experience. No doubt this keeps users coming back

for more and we understand this. But just as Airbnb is adapting abroad

and has now started moving upmarket and away from the couchsurfing

mentality, it may also have to review its business model in countries

like Japan as well. Right now we get the sense that the company has a

good chance of being legal for stays of 7 days or more, and this will be

a huge strategic win. Add this advance to the fact that Airbnb is also

on the shortlist of companies to supply visitor accommodation to the

2016 Rio Olympics, then it will provide huge leverage for them in

negotiating better terms before the 2020 games in Tokyo.

...The information janitors/

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