Japan – The Billion Dollar Vacation Rental Opportunity

Once famed as the home of the minuscule pod hotel, visitors to Japan are now looking for more space and comfort in their choice of holiday accommodation. Very much the antithesis to the coffin stacks of one-person hotel drawers, vacation rentals are expected to become a solution of the problem of increasing visitors to some of the world’s most densely populated and largest cities. Japan has a tourism strategy that intends to increase the number of foreign visitors threefold. Major European cities are plateauing or even actively trying to reduce their number of visitors. Japan is considering nurturing the expansion of vacation rental businesses in order to accommodate these new visitors. Today we’re looking at how property managers can take advantage of Japan's growing vacation rental market.

The vacation rentals already in existence are popular. The average occupancy rate is reported to be 75%. Anecdotally, guests looking to book for trips less than a month away are frequently left disappointed. However, there are just 4000 Airbnb listings for the entire country. If you compare this with the 40,000 Airbnb listings in Paris alone, it’s clear to see there is real opportunity here. Expansion is possible and the next decade looks set to be an unprecedented boom time for short term rentals in Japan. This comes from not just the natural popularity and growing awareness, but the government’s desire to drastically increase the amount of foreign visitors. Vacation rentals are mostly limited to the major cities. Rural Japan is considered difficult to navigate for tourists, especially if you do not speak Japanese. What Japanese cities lack is space. Space is at a premium and the hotel industry has been building up for years to combat the problem. Now, the government has seen the opportunity in short-term rentals to increase their capacity for tourism without having to sprawl their cities out further, or push new skyscrapers into an overcrowded skyline. What’s more, there are currently 8 million vacant homes in Japan that could be used to generate income for the local economy as well as providing accommodation that requires no further addition to the infrastructure of crowded cities.

Connect and work with Japanese property management agencies to extend your inventory into Japan. Airbnb is already popular with visitors and agencies in Japan, but there are large sectors of the market that remain unexplored. The short-term rental market is thought to be worth an initial $840 million, with the planned tripling of international tourism over the next decade, vacation rentals are turning into a multi-billion dollar opportunity.  As well as this planned expansion,  the 2020 Olympics are being held in Tokyo. This means that the next five years will be crucial in establishing vacation rentals as the most desirable places to stay for the planned surge in foreign visitors to the country. The 2012 games in London attracted 685,000 extra visitors for the period of the games with an 11% increase in the income associated with overnight stays. If vacation rental property managers can establish their brands as popular choices before the planned expansion then the rise in visitors should be reflected in bookings of vacation rental properties.

The government is currently debating removing the regulations. However, there are still some hurdles for current business owners. For rentals of fewer than 30 days, a license must be acquired and properties must have hotel-style reception desks. However, the government is considering deregulating the industry in an effort to open up more accommodation options for visiting tourists. Whilst an initial proposal to allow unlicensed rentals of between 7 and 30 days was initially rejected,  they are openly trying to develop cheaper accommodation for foreign tourists. In 2013, Japan had around 10 million foreign visitors, their goal is to triple this by 2030. This targeted rise in visitors, plus the encouragement of short-term rentals is likely to drive a booking spike in an already profitable market. This means that now is the most opportune time for property managers to consider expanding their businesses into this market, and for existing property managers in Japan to take advantage of this upcoming spike in bookings by developing their businesses. The next decade could spell an exponential rise in the vacation rental industry.

Whilst Kigo maybe more familiar to some as the mention of a season in a Haiku, it is also a powerful software that helps property managers control and expand their businesses through our network of portal websites, reservation management system. It is the perfect tool to use as you expand your business for a growing market, allowing you not only great management tools to save you time but real resources that will drive bookings, revenue and even increase your property inventory. Kigo can help you expand your business into new and exciting markets, becoming a force in a developing market.