Expanding tourist accommodations

As the number of inbound tourists to Japan continues to increase sharply, the nation’s tourism industry faces accommodation problems. Increasing the number of hotel rooms will involve difficulties. Both the government and private sector need to consider ways to prevent the issue from having a negative impact on tourism.

The number of visitors to Japan in 2015 is estimated to have topped 19 million, an increase of nearly 50 percent from 2014. The big factor behind the sharp rise is a doubling of the number of Chinese tourists on shopping sprees. For the first time since 1970 — the year the Osaka Expo was held — inbound tourists are believed to have outnumbered Japanese who traveled abroad. If the trend continues, the government’s target of attracting 20 million visitors annually by 2020, when Tokyo hosts the Summer Olympic Games, will likely be achieved this year. It is considering moving forward the target year for achieving its next goal of 30 million visitors by 2030.

While Japan appears to be on a steady path toward turning itself into a major tourist destination, one big problem stands in the way — a shortage of hotel rooms in major cities. Expanding the accommodation capacity will be indispensable if the nation is to welcome 30 million inbound tourists each year. The national average of room occupancy ratio at city hotels between January and August of last year was 78 percent, but the figure was 83 percent in Tokyo and 87 percent in Osaka. Some prospective tourists reportedly gave up coming to Japan because they could not secure hotel reservations. A think tank estimate shows if 25 million people visit Japan in 2020, there will be a shortfall of some 4,000 hotel rooms in Tokyo and some 20,000 in the Kansai region — even when hotel development plans are taken into account.

The logical conclusion would be to build more hotels to increase the accommodation capacity. But there will be limits to that effort since it is hard for the hotel industry to estimate demand into the years ahead. There can be no predicting how long the shopping sprees by Chinese tourists will last. The number of inbound tourists may suddenly fall due to unexpected circumstances such as international terrorism, war or the spread of infectious diseases. The number of domestic travelers, who constitute the base demand for hotel rooms, is on a decline due to the aging and shrinking population.

One idea to accommodate more inbound tourists without significantly expanding hotel construction is to make Japanese traditional inns (ryokan) more accessible for foreign visitors. The occupancy rate for such inns is much lower than that of hotels — 63 percent in Tokyo and 51 percent in Osaka. Internet reservations should be made easier for tourists to book rooms at these inns, staff need training to be able to properly serve such guests and signs should be written in multiple languages such as English and Chinese. In addition, Internet access for guests should be made available.

Another way to cope with rising demands for accommodations should be the institutionalization of the growing practice of tourists renting accommodations in private homes and condominiums, known in Japanese as “minpaku.” According to Airbnb, a website for renting private lodging, as many as 1 million visitors to Japan in the past year used its services. Roughly half of the visitors were from other Asian countries and their main destinations were Tokyo, Osaka and Kyoto. But a problem with the practice is that most of the hosts are offering lodgings without obtaining permission under the law controlling the lodging establishments such as hotels and ryokan. According to a government panel to work out rules to regulate minpaku operations, local governments across Japan in fiscal 2013 and 2014 issued guidances to house or condominium owners concerning 193 cases in which their property was illegally rented to tourists.

Currently houses and condominiums are often rented to tourists without anybody in charge of fire safety, and troubles are emerging between guests and neighboring residents over such matters as garbage disposal. The national government should promptly develop relevant rules, so that safety, hygiene and other problems associated with the increasingly popular practice can be eliminated.

Tokyo’s Ota Ward has passed a by-law to allow house and condominium owners to offer accommodations to tourists if they meet certain conditions. Taking advantage of the deregulation accorded to the ward’s status as a special economic zone, the ward allows the property owners to rent their houses and rooms on condition that visitors stay for at least six nights, that ward officials can inspect the properties if necessary, and that the owners deal with possible complaints from their neighbors. The Osaka Prefecture has also introduced a similar by-law. Their experiences should be monitored to see if existing regulations are sufficient.

Local governments and the tourism industry should work out strategies on how best to utilize private accommodations to attract inbound tourists to their areas. To avoid potential trouble with neighbors, the rental of private lodgings should mainly be promoted in commercial districts rather than residential areas when possible. Measures to curb illegal operators should be considered, and regulations on web-based services offering reservations for private accommodations may also be necessary.