Terrie's Take 982 (Tourism Edition) - Vacation Rentals Update for Japan - Maybe Airbnb Should Buy a Ship?

Terrie's Take terrie at mailman.japaninc.com
Sun Mar 3 23:03:41 JST 2019

* * * * * * * * 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. (

Tourism Sector Edition Sunday, Mar 03, 2019, Issue No. 982

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+++ Vacation Rentals Update for Japan - Maybe Airbnb Should Buy a Ship?

Since a blaze of publicity following the effective banning of publicly
hosted home sharing services (aka vacation rentals) to foreign tourists
last June (2018), I have seen very little in the news about Airbnb and the
rest of the industry. Until last week that is, when suddenly the Nikkei ran
an article declaring that Airbnb has clawed "its way back in Japan
following the 2018 listings collapse". The article reads like an Airbnb PR
department advertisement and takes at face value Airbnb's claim that it now
has 41,000 listings in Japan, 70% of the volume it had before the rules
changed. While most of us are too lazy to actually check whether Airbnb is
being honest about their recovery, I thought I'd go and take a look at
their most recent listings and count them.

The reality is that within Tokyo, previously a location with almost 20,000
private listings and certainly the biggest destination for Airbnb users in
Japan, I could barely find 200 listings that could be considered private
listings - i.e., those places where you get to stay with the owner and make
friends with them, getting their personal advice about cool places to eat,
see, and do stuff. You know, the main reason people use Airbnb in the first
place... Instead, among the sparse 306 so-called "home type" listings that
I could find for ALL OF TOKYO, many were commercially run share houses,
hostels, and pseudo-hotels.

Fair enough that Airbnb is moving with the times and adapting by securing
whatever rooms it can, but the fact is that what they have now in Japan is
just a pale shadow of the rich human tapestry they were creating in 2017.

I believe that Airbnb users know this, and although the company is saying
that 2018 was an adjustment year (room bookings were down 14% on 2017 for
the whole of Japan), implying that 2019 will be much better, the Nikkei
article says that the occupancy rate is still 0.5%-7% down in the period
July 2018 to January 2019 versus the same period a year earlier. Hmmm, only
7%? I think that with a fall from 20,000 private properties to just 200,
and with the head-on-head competition from Booking.com and other
competitors, probably Airbnb's real occupancy number is around 50% less
than it was. Maybe worse.

Although there is no way to actually know Airbnb's actual numbers, the
Nikkei used a local data analytics service called Metro Engines to get that
7% number.

[Article continues below...]

------ Terrie's Slow-Poke Cycling Tour - Kyushu -------

Last year we threatened to run a cycling tour for readers, but got too busy
to actually do it. So this year we're making amends. The first tour, which
will happen in the third or fourth week of April (just before Golden Week)
will be a 5-6 day ride in Kyushu - most likely in the Nagasaki region. This
tour, and a Hokkaido tour in late August or early September, will have a
common format.

1. The tours are potluck, not professionally run. No complaining. Jokes and
helping each other out are mandatory.
2. There will be no support cars or spare bikes or guides. Instead, we use
Google maps and take the most scenic routes to arrive at our hotels each
3. Our bags will be relayed by couriers so you can ride light. Yes, we will
have inner tubes and other basic spare parts.
4. Terrie is a slow poke, so while we will indeed be covering 80km-100km a
day, it will be take 6+ hours each day, with plenty of time for lunch,
photos, drinks, etc.
5. No hill climbing! Terrie is allergic to tall mountains.
6. Although the rides will run 5-6 days, people wanting to cut out at 3
days will be able to do so.
7. Our bikes will go with us on the Shinkansen. Terrie can show you how to
prepare and break your's down for simple transport.
8. If you don't have a road bike, you can rent one at
https://www.gsastuto.com/. [Excellent supplier, great prices.]
9. Anyone over 16, any gender, welcome.
10. There will be a JPY20,000 organizing fee per rider.
11. Other costs will all be at cost. Usually this works out to about
JPY13,000/day plus Shinkansen tickets.

If you're interested in a long, slow, fun, potluck cycling tour in Japan,
contact Terrie today and he will work with you and the rest of the group to
set the final dates and routes.

For more information, email: terrie.lloyd at japantravel.com
[...Article continues]

Yeah, so how did they do that? This is where the Nikkei's "stretch"
reporting irritates me. I don't see anywhere on the Metro Engines site a
method for them to have a direct data connection with Airbnb. Instead they
appear to be getting their data from site controllers like Temairazu and
TL-Lincoln, which means the data is coming from hoteliers who actually use
these controllers. Certainly private renters would never use this
multi-channel booking software. So the number that Nikkei is quoting is
only giving the commercial side of Airbnb's business. That minus 7% has
nothing to do with Airbnb's massive loss of private inventory.

I think that the reality is that every year will continue to be a down year
for Airbnb in Japan until it gets its mojo back. And when will that be? Not
until it can reinstate in some fashion its original business model. What
made Airbnb sparkle was the personal contacts and spontaneity. These values
have pretty much disappeared from the business. As for the Nikkei article,
I suspect it was either paid for or is a sloppy space filler created from
"drive by" journalism, where a press conference by a visiting policy head
has served as the "fact" source.

Bottom line: don't believe everything you read in the Nikkei.

Then of course there is the tsunami of competition that has hit Japan in
the last 12 months. From other shared accommodation providers, to hotel
chains building downmarket offerings, to large Airbnb vacation rentals
owners now converting to minshuku or hotel licences, and even ship hotels.

There are now at least 8 major websites competing with Airbnb who are
officially in Japan. The biggest of these are China's Tujia and Zizaike,
Home Away, Agoda, Hyakusenrenma, Rakuten Lifull, and others. Add to this
the numerous "grey" listing sites which have high visitor traffic overseas
but no legal representation in Japan and thus no fear of government
retribution. For example, VRBO has almost as many Tokyo private vacation
rental listings as Airbnb Japan does (a tad under 300). Flipkey and others
have hundreds more.

On top of the share accommodation marketplaces, we also have significant
hotel building activity across the board, from JPY2,000 per night hostels
to palaces with JPY1,500,000 suites. According to a CBRE Japan report, in
the 4 years from 2016 to 2020 there will have been an incredible 38%
increase in the number of hotel rooms across the nation's eight largest
cities (including Tokyo, Osaka, and Kyoto), for a total of 330,000 rooms.
The report reckons that Tokyo will still be slightly short of rooms while
the other cities will be comfortable or in surplus. So, outside of the
Olympics, we may in fact be looking at a hotel room glut in two year's
time. Not that this should worry Airbnb too much, since their model is to
not own anything made of bricks or mortar.

http://bit.ly/2XyTl2S [CBRE 2020 report. This is a quick read.]

The ship hotels thing is interesting. After it became clear that the
government was going to allow the Airbnb model to be killed off, JTB
scrambled in June last year to rent a huge ship, the Sun Princess, which
now has the right to dock in Yokohama, presumably for the Rugby World Cup
then perhaps for the 2020 Olympics later. The ship has 1,011 rooms that are
expected to be priced between JPY70,000 and JPY600,000 - a steal compared
to the hotel prices that have been jacked up 300% on shore. JTB is being
joined by Swiss-based MSC, which is going to put a hotel ship in Tokyo Bay,
near the Games village. That ship, the MSC Lirica, apparently has 992
rooms. Ironically the Olympics were the main reason that Abe's Cabinet
Office supported the Airbnb model back in 2014, but now that their position
has caved so badly their focus is on quick and dirty solutions to ramp up
the supply of rooms.

The Mizuho Research Institute reckons there will be a 14,000-room shortage
for the Olympics, so the government is removing bunch of regulatory
controls over ship cabins. For example, those rooms with no natural
lighting (any cabin in the center of the ship - of which there are plenty)
will be temporarily allowed for local occupancy. Furthermore, immigration
procedures governing crew members will be modified to allow crew to
disembark on a regular basis. The plans for these ship hotels are on a
grand scale, with five ports along the Kanto coastline being opened up. The
furthest location will be Chiba. While this is a pragmatic approach to the
accommodation pinch it will also make traffic a nightmare for 6-8 weeks. If
you have friends considering a ship cabin as an alternative, especially out
in Chiba, you might want to tell them to think twice about it.

...The information janitors/

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Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)

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