Sleepless in Tokyo: Japan scrambles to resolve hotel room shortage ahead of 2020 Olympics
JAPAN is going full steam ahead with its tourism targets. The government has been unambiguous in setting ambitious goals for itself, namely pulling in 40 million visitors by 2020, or that equivalent of ¥8 trillion (US$80 billion) in spending.
Last year alone, Japan recorded 19.7 million overseas arrivals, or a 47 percent increase from the year before. Meanwhile, tourist spending last year hit a significant ¥32.6 billion (US$314 million), up by 70 percent from 2014.
Undoubtedly, the rise of sports tourism in the country will lift it closer to the “pot of gold” at the end of the rainbow. Events such as the 2019 Rugby World Cup, and the 2020 Olympics and Paralympics will aid Japan in doubling its tourism records.
The devaluation of the yen is also contributing to the country’s boost in tourist numbers, further propelling the hotel industry to greater profits.
Shiori Sakurai, Smith Travel Research’s business development manager for Japan, said, “The extended period of cheaper travel to the country has created long-term benefits for the tourism and hospitality industries.”
However, despite steps being taken to prepare for the tourism boom, hotel rooms are still very much a problem in Japan. Or in fact, the lack of them.
A report in TTG Show Daily revealed that Tokyo is likely to face a shortage of 14,000 rooms per night by 2020, indicative of the room shortage that’s sweeping across the country.
Popular destinations such as Tokyo, Kyoto and Osaka are likely to not have enough accommodation across all categories by 2020.
Tetsuya Takeda, general manager, inbound division, Nippon Travel Agency, told TTG Asia, “The basic problem we are facing is that we cannot secure sufficient hotel rooms. The rise in the number of people coming to Japan is already so steep that travel agents are not able to cope.”
He added, “Even now, we are turning down clients because we cannot secure accommodation, with the situation the most difficult during cherry blossom seasons.”
To reduce the impact of the issue come 2020, the Japanese government is implementing several new initiatives, one of which is to relax the floor area ratio of new buildings by 1.5 times.
Based on the report, the Ministry of Land, Infrastructure, Transport and Tourism announced that the new rule will effectively enable hotels with larger floor space to be built.
Local governments have been informed of the new rule, and are expected to review their own ordinances before the end of the year.
Maiko Zenzi, a spokesperson for the Japan National Tourism Organization, told the publication, “We feel that altering the laws on accommodation facilities is one way of adapting to the growing needs of visitors.”
Besides that, the international and local hotel companies have joined in on a massive development campaign to address the shortage. Work has begun on 59 hotels across Tokyo, double that of the previous year.
Rural areas are also being developed to promote inner city tourism, and the government will sponsor campaigns to lure tourists into small villages and towns.
Japan Times reported that the government will also fund adaptations at Japanese-style inns or ryokans to make them more appealing to foreigners. For instance, the Japan Tourism Agency will fund half of the costs of replacing Japanese-style toilets with Western ones.
The house-sharing model is milking the tourist boom and hotel shortage to its advantage too. Last year, Airbnb Inc. revealed that Japan was its fastest growing market with the number of guests surging by 529 percent compared to 2014. More than 500,000 guests have stayed in homes rented through Airbnb in Japan since 2010.
Yasuyuki Tanabe, the country manager of Airbnb Japan, told Bloomberg that despite the increased number of listings, the supply couldn’t quite match up to demand.
“We call it supply constraints,” Tanabe said. “We have many more people who want to come to Japan compared to the number of listings.”
However, it’s no bed of roses for Airbnb. The company has recently come under scrutiny in Japan with the hotel industry and residents concerned about the surge of foreigners in their neighborhoods.
The rapid growth has presented challenges, not just for Airbnb, but also for the Japanese government as it seeks to revise hotel regulations that were written in 1948.
Due to this, Prime Minister Shinzo Abe’s government released guidelines for home-sharing, or minpaku, thereon suppressing Airbnb’s reach in Japan.
The guidelines emphasized that Airbnb hosts would only be allowed to rent to guests who stay for a week or longer, only a small slice of the tourist market.
Major cities across Japan could decide to adopt these guidelines, leaving Airbnb hanging by a thread in the country.
Ruling Liberal Democratic Party lawmaker Masaaki Taira acknowledges that the new rules may create “severe restrictions” for hosts of the 26,000 properties in the country, but adds that the guidelines reflect the competing interests of his constituency.
He said, “The hotel industry had very serious concerns, so we set the minimum number of nights at a level that lowers the chances for competition.”
Regardless of strict regulations, a more integrated government approach with house-sharing models like Airbnb could work in its favour, and provide some respite from the room shortage.
Until then, Japan must be prepared for the consequences of a critical shortage paired with the prospect of surging room prices in the future.