Airbnb Inc.’s Chinese rival Tujia announced Wednesday it will be partnering with e-commerce giant Rakuten Inc. to expand its business in Japan following the government’s recent passage of a law giving the green light to private short-term minpaku lodging services.
Citing the large number of tourists traveling to Japan, Tujia Chief Operating Officer Yang Changle said the company is confident it can boost its presence here by focusing on serving Chinese visitors via its experience and strong name recognition back home.
“We believe the Japanese market is poised for greater growth,” Yang said during a news conference in Tokyo. “This year saw the passage of the new home-sharing law, and Tokyo will be hosting the Olympics. I believe the timing is ripe for further growth.”
Founded in 2011, the Beijing-based company has morphed into China’s largest vacation rental service and has been expanding its presence overseas, opening new offices in Asian countries such as Thailand and Singapore. Its Japan branch opened in April last year.
Tujia says it now offers over 500,000 listings in 1,100 cities across 70 nations. But while it is the leading service in China, it still lags behind Airbnb in terms of global scale.
The San Francisco-based company lists over 3 million properties in 65,000 cities in over 190 countries. In Japan alone, Airbnb lists 52,000 properties. While it has not disclosed how many properties it currently lists in Japan, Tujia said it hopes to increase the number to some 200,000 by 2025 as part of its quest to become the leading vacation rental service for Chinese tourists.
Through the new partnership, Rakuten will provide Tujia with access to properties it plans to list on its own minpaku service, tentatively called Vacation Stay and run by a joint venture called Rakuten Lifull Stay. Since announcing its plans to jump on the minpaku bandwagon in June, Rakuten has announced partnerships with vacation rental site HomeAway, which U.S. travel website operator Expedia bought in 2015, and AsiaYo, Taiwan’s largest vacation rental service.
Short-term lodging services reside in a legal gray zone in Japan and operators face the risk of running into regulatory hurdles. But those uncertainties have begun to clear after the government passed a new law in June that allowed short-term housing rentals under certain conditions. The bill, which is expected to take effect next year, will let people legally rent out property for a maximum 180 nights a year if they register their properties with local governments.
Tujia’s strong presence in China could give it an edge in Japan. Roughly a quarter of the 24 million overseas travelers to Japan in 2016 were Chinese. Prime Minister Shinzo Abe wants to increase the number of foreign visitors to 40 million by 2020, when Tokyo hosts the Olympics.
Tomoko Suzuki, chief executive officer of Tujia’s Japan branch, said that at the current pace, the number of Chinese visitors to the country could reach 10 million by 2020 and 13.5 million by 2025.
“We are aiming to attain a 50 percent share of the market for Chinese home-sharing users in Japan,” she said.
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