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Will Minpaku Survive in Time for the 2020 Olympics?

Olympics in JapanDespite recent economic pitfalls, Japan’s skyrocketing tourism industry is undeniable. In 2012, 8.4 million foreigners visited the country. This figure has more than doubled in just three years, setting a record of 19.7 million tourists — with no signs of slowing down. An estimate by investment banking firm Goldman Sachs Group Inc. plots a steep trajectory for the country on the road to the 2020 Olympics, stating that the country may see as much as 35 million visitors in a year.

But, those 35 million people need somewhere to stay. Hotels in Tokyo, Osaka and other major Japanese cities are already experiencing shortages today. Tourists are now turning to locals willing to partake in home sharing, or minpaku. With new minpaku guidelines put forth by the Japanese government, renters are finding difficulty in distinguishing the move as a way of doubling down, or cracking down on Japan’s saving grace in hospitality.

A Pre-emptive Gamble

Airbnb, an online accommodation service, has swept the world of shared lodging, and rocked the hotel industry to its core. Now the third largest start-up on the planet, Airbnb has seen great success in major Japanese cities. Analysts from Sumitomo Realty & Development Co., Ltd. explain this surge in the country’s sharing economy by noting how Airbnb’s ease of use coupled perfectly with tourists who are unable to find hotel rooms, driving the local minpaku market to an unprecedented level of pervasiveness.

But, right at the door of their heyday, the Japanese government asked home-sharers to set seven days as the minimum amount of time lodgers can choose to stay — a duration that applies to only a fraction of all minpaku patrons.

A Divided House

‘The hotel industry had very serious concerns, so we set the minimum number of nights at a level that lowers the chances for competition. Of course, there’s a possibility we may shorten that minimum going forward,’ says Democratic Party Representative Masaaki Taira.

The guidelines will not apply until local municipalities ratify them, but there is already a divide among minpaku operators on how they would handle the onerous condition. ‘If the government is serious about fixing the accommodation shortage before the 2020 Olympics, it can’t place minpaku operators at a significant disadvantage’, says Aileen Jeffery, a Tokyo resident.

Takuya Kawamura, spokesperson of Tomareru Inc., a rival of Airbnb, expresses his optimism regarding the future of Japan’s sharing economy. ‘While it’s better not to have that handicap, rather than thinking of it as a big hurdle we think of it as something we’ll have to get over’, he says.

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