* * * * * * * * 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, Mar 19, 2017, Issue No. 888

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+++ Big Changes Afoot – Minpaku and Airbnb About to Become Legal

The week before last, the Prime Minister’s office made a momentous
decision by approving new rules governing subletting of private homes
and rooms (“Minpaku”) to tourists. In what will probably become dubbed
the “Airbnb Law”, the cabinet office has said that they will allow
private citizens to rent out their spare rooms and properties for up to
180 days a year. The new rules are expected to be rubber stamped by the
Diet in the next few weeks.

Airbnb must be ecstatic that their lobbying efforts and off-shore
impunity (to anyway virtually unenforced local laws) have paid off so
handsomely. There is no doubt that the 28,000 or so listings they have
online presently will soar over coming months. In fact, our prediction
is that the market will grow at least 10x nationwide in the next 3
years, as Hyakuzen Renma, Chinese room-sharing firm Tujia, Rakuten, and
others jump in to join the Minpaku surge.

I think the new Minpaku law will have far-reaching effects:

* People owning homes in areas under served by hotels (pick almost any
countryside area in Japan) will now be able to step into the breech and
offer accommodation with little/no development cost. This will
significantly increase the flow of tourists out to more remote areas,
which of course will be a shot in the arm for local economies.

* 180 days a year means that the average household out in the
countryside could make up to JPY900,000 or so a year (JPY5,000 average
per night) that would have been impossible otherwise – and with very
little outlay – thus offering a low barrier to entry per household. This
new income source multiplied by 200,000+ locations will really help the
national economy and make it possible for remote areas to attract new
residents to service the tourist traffic. Of course not all 200k
locations will be making income. Currently Airbnb does about 15,000
bookings a month in Japan, so the utilization rate appears to be just
one stay every two months. But I expect this to rise significantly as
home owners start to get with the program and start improving facilities
and the spread of locales.

* There will be a regional property boom, at least in those areas which
have visually attractive tourist assets, and this will encourage other
regions who haven’t preserved their traditions to do more conservation
work to pull visitors. In ten years time, Japan could have several dozen
reestablished communities as authentic as Shirakawago village, and in so
doing will delight tourists and keep them coming back. Many of the
investors will be foreigners, particularly Chinese, who now will have a
means to pay off their properties’ upkeep while they are not using it.

* There will be a rebuilding boom, as relatives of hospitalized elderly
and the recently deceased start to realize that instead of allowing a
home to decay into a rotting ruin, it can be restored and rented out to
local and foreign tourists. I would not be surprised to see some
enterprising banks start to offer Minpaku home reform loans in the near
future.

[Continued below…]

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——— From Veggie Burgers to Carrot Cake ————–

Our commitment at Alishan Organics is to give our customers the best of
western organic foods, but prepared with a Japanese twist. That’s why
our menus cover such a broad range of styles and tastes. If you’re just
getting to know us, why not visit our cafe by the river in Saitama? That
way you can try out a variety of dishes and decide for yourself. Choose
from an Amy’s organic pizza straight from the oven, a mouthwatering
veggie burger packed with seasonal greens and reds, or if you’re feeling
chilly, a filling vegetable curry with rice. And although we’re healthy
minded, we don’t skimp on desserts. Favorites include Jack’s scrumptious
carrot cake, vegan brownies (of course with vegan ice cream), and baked
banana cheese cake.

Our Cafe: http://bit.ly/2m0r8z7
———————————————————–

* There will be a surge in demand for rental cars, as the proximity of
accommodation to the train station no longer determines where you want
to travel. For first timers this is a non-issue, since these people will
continue to stick to Tokyo-Kyoto-Osaka. But for repeat travelers, the
availability of somewhere nice to stay after a remote coastal drive in
the countryside will be a huge draw – especially for east-Asian urban
dwellers. Witness the flood of Chinese travelers to east Hokkaido
already… And who, btw, are buying houses and land in the area as well.

* There will be a surge in demand for services to maintain Minpaku rooms
and to look after foreign guests. These services already exist in the
major cities (even though Airbnb is technically illegal, cleaning the
rooms is not), and these will spread. I expect that the most successful
services will be marketplaces that match room renters with locals
wanting to clean and entertain. Lancers and Crowdworks should pay
attention to this opportunity.

* The Minpaku boom may or may not have an effect on hotel charges and
occupancy rates in the larger cities, but it will in any case force
hoteliers to start thinking more about their value proposition. You can
already see significant shifts in thinking by early adopters: Prime
Pod’s “luxury” capsule hotels in Kyoto and Tokyo, Hoshino’s glamping
hotel in the Mt. Fuji area, UDS’s art hotels, and of course HIS’ Weird
(“Hen-na”) robot-run hotels. We will see many more themed hotels show up
over the next few years, with much better value and services than is
typical today.

Glamping (glamor camping) will also start to take hold in Japan, as
hotel operators start to realize that people want an outdoors luxury
experience and that they don’t mind a rustic environment to get it. So
long as, however, they get nice rooms, air conditioning, clean linen,
room service, and hotel-level cooking…! Take a look at the new Hoshino
Resort glamping facility located at the foot of Mt. Fuji to get an idea
of what direction Japan’s newer glamping resorts are likely to take. At
about JPY50,000/person for a full 3-course chef-cooked dinner and
breakfast, a huge balcony in the woods, privacy, pajamas, music, a
fireplace, and rubber boots in case it rains, what is there not to like?

http://hoshinoyafuji.com/en/.

So is Minpaku and Airbnb in particular hurting hotel revenues? Anecdotal
evidence suggests that there may be some impact. The Nikkei ran a story
saying that during Chinese New Year, usually a peak travel period,
hotels in Tokyo and Osaka had to cut their prices by 10%-20% to fill
rooms. The impact was biggest in Osaka since this is a particularly
favored destination for Chinese travelers, and a recent Osaka Convention
and Tourism Bureau survey found that 17% of inbound travelers are now
using Minpaku rooms. But, at the same time, construction starts on new
hotels around the country rose to an 18-year high in 2016. About 1.96m
sq. m. of new hotel space is being built, an increase of 210% over hotel
starts in 2015. So I think you need to take the dire warnings about
hotel earnings with a grain of salt.

Instead, we should look at the big picture. Airbnb had about 16,000
listings in Tokyo last month and 12,000 in Osaka. Given that most hotels
are enjoying occupancy of 80% or more, probably there are not enough
hotel rooms in all of Tokyo to satisfy existing demand anyway, so
Minpaku provides a useful buffer. This demand-supply gap is going to
become even more pronounced as we draw closer to the Olympics. Coupled
with the economic benefits to regular wage earners, Minpaku appears to
be set to bring huge social benefit for the country.

…The information janitors/
———————————————————–

———- ICA Event – Thursday 23rd March —————-

Speaker: Thomas Nevins – Founder and Chief Consultant. TMT Inc
Title: “Doing Hard Labor in Japan”

Details: Complete event details at http://www.icajapan.jp/
Date: Thursday 23rd March, 2017
Time: 6:30pm Doors open
Cost: 1,000 yen (members), 2,000 yen (non-members). Open to all. No sign
ups at the door!!!!!!!
RSVP: By 5pm on Monday 20th March 2017
Venue: Room F, 9F, Sumitomo Fudosan Roppongi Grand Tower, 3-2-1
Roppongi, Minato-ku, Tokyo, 106-0032
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***********************************************************
END

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+++ ABOUT US

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