Japan’s home-sharing market is poised for a shift away from couch-surfing toward professional services after the passage of a law regulating short-term rentals.
The change will help HomeAway play to its strengths in the battle against Airbnb Inc., according to Natsuko Kimura, country manager for Expedia Inc.’s home-rental subsidiary.
The bill enacted earlier this month lets people in Japan rent out property without the risk of running into regulatory hurdles. The law limits total stays to 180 nights a year and requires that accommodation providers register with local governments. The regulations also increase oversight of absentee landlords, requiring owners to outsource property management to parties capable of guaranteeing safety and hygiene.
While Airbnb has taken the lead in Japan with 52,000 listings, HomeAway’s focus on luxury vacation properties gives the company an advantage as the market expands beyond individuals sharing spare rooms, according to Kimura. Entire homes for rent already account for about 90 percent of HomeAway’s less than 10,000 listings in the archipelago, she said.
Japan’s green light for home sharing has been accompanied by looser hotel regulations as the country struggles to accommodate an influx of overseas visitors. Relaxing rules such as the one requiring a separate bathroom for men and women could help bring new properties to the market where an aging population has resulted in about 8 million homes sitting empty.
Overseas companies aren’t the only ones sensing an opportunity: Japan’s e-commerce giant Rakuten Inc. and real-estates listing operator Lifull Co. last week announced plans to enter the home-sharing business. The two companies and HomeAway will hold a joint briefing next week to discuss new services and strategy.
“The market is going to change completely,” Kimura said. “Major real-estate companies, for example, had to stay on the sidelines before the legalization. Now, large corporations can enter the market on the supply side.”
HomeAway’s first priority in Japan is to increase supply to meet demand from overseas visitors, Kimura said. More than 24 million tourists visited Japan in 2016, topping the record for a fourth straight year, according to the nation’s tourism organization. The number will probably continue to reach records as Japan prepares to host the Rugby World Cup in 2019 and the Olympic Games the following year. HomeAway is looking to increase its listings in the country to 100,000 by 2020, Kimura said.
While HomeAway is a relative latecomer to Japan, it boasts a longer history overseas than its main rival Airbnb. Founded in 2005 and traded publicly since 2011, HomeAway was acquired by Expedia for $3.9 billion in 2015. The company’s 2 million properties worldwide attract an older, better-heeled demographic than Airbnb, making its platform more appealing to prospective hosts, Kimura said.
The two competitors have increasingly converged in their business models. HomeAway switched from charging the hosts to list on its site and now takes the same percentage of transactions as its rival. Airbnb, on the other hand, has sought to set targets on luxury tourism, airfare aggregation, group payments and guest management. The San Francisco-based company plans to launch a new service that will match guests with quality-inspected home and apartment rentals, intended to lure travelers away from fancy hotels.
HomeAway last year ran TV spots in the U.S. poking fun Airbnb with a title “It’s your vacation, why share it,” illustrating the perils of sharing economy with examples of obnoxious guests and hosts. The message would also find a receptive audience in Japan, where the culture of politeness can make it difficult for people to relax in somebody else’s home, Kimura said. She related a story of a co-worker who felt obligated to clean the host’s bathroom after using it.
“Japanese equate home sharing with cultural exchange, something young people do when they travel abroad to learn English,” Kimura said. “Our model is just the opposite: no host on premises, luxurious home sharing.”
©2017 Bloomberg L.P.