Airbnb Japan May Be Shut Down By Insanely Strict Laws: Sharing Economy Battle Rages On

Sally Elliott

Japan is the fastest-growing Airbnb market in the world; a shortage of visitor accommodations in the densely-populated country means that affordable, private places to stay are in high demand. The current boom in tourism exacerbates that shortage -- in Japan's capitals, body-sized, bed-only pods have been installed in lieu of uneconomically spacious rooms -- and stringent regulation of accommodation establishments makes hotels somewhat homogeneous in decor, design, and service.

Recent outcries from locals, politicians and even the Prime Minister opposed to the intensification of urban development and the influx of tourists due to Airbnb and its counterparts in the tourism boom now put Japan's Airbnb market at risk. Airbnb Japan may be forced to shut down by insanely strict regulations proposed by national authorities.

Prime Minister Shinzo Abe's government has released rules for homesharing -- minpaku, in Japanese -- through Airbnb and the like, which would subject Airbnb to the same regulations which homogenize hotels and contribute to its popularity, reports Bloomberg.

"Airbnb hosts would only be allowed to rent to guests who stay for a week or longer, a minuscule slice of the market. The national guidelines only become law if local municipalities decide to ratify them, but that is beginning to happen," says Bloomberg in yesterday's article on Airbnb in Japan.

When Airbnb got started in Japan, the market grew slowly. Japanese culture led hosts to place bizarre restrictions on Airbnb guests, and hosts willing to open their doors to strangers were scarce. However, market insiders predict that Airbnb in Japan faces an astronomical growth period in the lead up to the Olympic Games of 2020, according to New York Times Magazine.

"In five years, Tokyo will host the Summer Olympics, and with that will come a wash of what the Japanese government predicts will be eight million or so eager visitors on a trip-of-a-lifetime binge, all needing places to stay," said Sarah Corbett of New York Times Magazine.

Airbnb provides visitors with an alternative to the tired hotel experience, the tiny bed-pods, the sardine-like cramming of bodies into hostels. Hosts could subvert the 70-year-old laws that restrict the design, layout, appearance, and activities of hospitality institutions by renting out rooms in their own homes. Having made 20 million bookings worldwide last year alone, and with an estimated 1,500 employees, Airbnb becomes more and more popular every week, and Japan's Airbnb market is no exception to rising popularity. In fact, Airbnb is currently the third most valuable start-up in the world with an estimated value of $13 billion.

Japan Times reports that enterprising business people have seen an augmented opportunity in Airbnb; former real estate analyst, Aileen Jeffery, invested in condominiums in Japan's capital cities and took to the site to rent individual rooms out primarily through Airbnb. Jeffrey has since expanded her operation, and her next Airbnb condominium, a seven-story complex, is currently under construction in Sumida, part of Tokyo suburbia.

Jeffrey's plans to continue her entrepreneurship through Airbnb in Japan, could come to a screeching halt if, like the muncipality of Osaka, more cities embrace the Airbnb embargo imposed by Prime Minister Abe.

While Airbnb may be shut down by these insanely strict laws in Japan, many have joined the conversation about the sharing economy and its future. When the laws come into effect in Osaka in April, many Airbnb bookings will essentially be illegal, which would pose a huge problem to Jeffrey and her fellow Airbnb hosts in Japan if the muncipality of Tokyo opts to outlaw or heavily regulate Airbnb hosting. All she can do is wait.

[Image by Chris McGrath/Getty Images]