Where Airbnb gets to play full house
In June, around eight in 10 Airbnb listings in cities like Osaka and Tokyo were entire homes, up 6 percentage points on a year earlier. But there are already signs that an Airbnb crackdown may be coming in Japan.
In June, around eight in 10 Airbnb listings in cities like Osaka and Tokyo were entire homes, up 6 percentage points on a year earlier, according to new data.
It’s a trend that may not last. In other cities where landlords took homes on the regular rental market to put on Airbnb, such as Berlin, regulators took action to protect the supply of rental homes for residents. This year Berlin regulators banned rental of entire homes on Airbnb. As a result, the proportion of Airbnb listings that were entire homes fell 12 percentage points in the year to June to 52%, the most severe decline anywhere, data shows.
If the same thing happened in Japan, Airbnb would need to expand outreach to amateur hosts renting out spare bedrooms. Among the 15 cities with the most Airbnb listings, on average 66% of listings were for an entire home this year. That’s according to an analysis of Airbnb listing data compiled by the analytics company Airdna. But in Japanese cities like Osaka, it’s much higher—about 85% of listings in Osaka and 78% of listings in Tokyo were entire homes in June. It unclear what proportion of those listings are only rented when Airbnb hosts are away from their home, but the country appears to be "dominated by property manager types," said Kameron Bain, head of growth at Beyond Pricing, a startup that helps vacation rental managers optimize prices.
It makes more economic sense for some property owners to rent units to tourists rather than to long-term residents in those cities. The number of Chinese visitors to Japan grew over the past year by 26% in June, according to the Japan National Tourism Organization, just above the 23% growth of international visitors to the country overall. Tokyo has also had a hotel shortage, said Scott Shatford, CEO of Airdna.
Japan’s popularity with Chinese tourists makes the country strategically important to Airbnb. The company wants to be the top choice of vacationing Chinese millennials so they’ll choose to open up their own home for vacationers back in China, said one person briefed by top executives at Airbnb.
But there are already signs that an Airbnb crackdown may be coming in Japan. Japanese politicians are mulling imposing a 180-day limit on how long homes owned by landlords can be listed on Airbnb. Some Japanese cities have already imposed a seven-to-10-night minimum stay for Airbnb listings, which didn’t appear to hurt Airbnb’s growth there.
If lawmakers bolster regulations, property management companies there say they don’t expect to follow the rules. “No one will follow [the law], and we’ll create separate accounts and run the whole year with two different accounts,” said Ryoma Machida, who runs Zens, a real estate company that manages about 100 Airbnb listings in Japan. “I don’t think Airbnb will provide that kind of information to the government so this kind of restriction is useless again.”
But there are also signs the market might correct itself. The rush of landlords into the Airbnb market has sent prices down for Airbnb listings, hurting existing hosts, Mr. Bain said. “When [overall] listings triple in a year, demand doesn’t triple in a year pretty much no matter what. Our Osaka hosts that were there prior to massive growth were hurting,” Mr. Bain said.
Mr. Machida said the increase in competition has pushed more investors to make their listings more high-end to attract higher prices. “Hosts that don’t have unique offerings or [customer] service have trouble making money compared to last year,” Mr. Machida said.