According to AirDNA to date, Tokyo has 18,478 total listings in the city, a number that has been steadily increasing since 2014.
So far, the daily stay market has been dominated by AirBnB however recently there have been announcements that Rakuten and Lifull Homes will launch their own competitor site targeted the exact same audience.
In response, AirBnB has teamed up with Blue Lab Co., a Mizuho Financial Bank backed operation, to further bolster it’s presence as the dominant market player in the country. Mizuho Bank also has said that they are willing to offer financing products to investors looking to purchase under the new deregulation.
For existing daily stay operators, this spells increased supply in the daily stay market which will no doubt further put pressure on lowering average daily rates (ADR) for the current units.
Even since 2014, daily operators have been feeling the pinch as more and more individually operated inventory entered the market. ADR’s in 2012 were very different then ADR’s in 2015 and there wasn’t one case where rates rose.
One way that operators have been able to raise their ADR has been traditionally to stuff as many people into the smallest space possible. However now that the government is performing a controlled deregulation and larger players are coming into the market, the chance of your competition reporting your under the radar operation to the health department increases dramatically.
Scrutiny from the health department will happen naturally more than before but it doesn’t help when AirBnB says that in order to continue operating with the cooperation of the government, it will cap your ability to rent out your unit at 180 days.
In short, your listing won’t show on AirBnB after 180 days of reservations.
Which brings me to why you should go for monthly stays. Monthly stays target a segment of the total tourist number that is growing along with the total number.
Monthly stays also get owners around the regulatory hurdle of hotel licensing required by stays less than 30 days.
One thing is certain; the type of profit that has been achievable in the past with daily stays will quickly become extinct. Also, if you are currently operating daily stays under the radar, the expect more and more scrutiny from the health department and city hall.
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Editor’s Note:Takahashi San is Housing Japan’s Director of MFA (Monthly Furnished Apartments). He writes a weekly column about where this service sits in a rapidly changing regulatory environment.