E-commerce giant Rakuten Inc. is teaming up with global online travel agent Booking.com as it prepares to take on Airbnb Inc. in the increasingly competitive market for private short-term minpaku lodging services.

Rakuten Lifull Stay Inc., a Rakuten group company that provides vacation rental services, said Monday it reached an agreement that will see it list properties on its tentatively titled Vacation Stay service, available on Booking.com.

The firm plans to launch the service in June, when a new law that legalizes home rentals in Japan will take effect.

“Japan is a very important market for us, and has grown remarkably as one of the most popular travel destinations in the world,” Gillian Tans, Chief Executive Officer of Booking.com, said in a statement. The U.S. company says its website is available in over 43 languages and offers more than 1.5 million properties in 229 countries and territories.

The partnership is the latest in a series of collaborations with vacation rental platforms that Rakuten has announced since entering the home-sharing business this year.

The company has reached similar agreements with Expedia Inc.’s vacation rental site, HomeAway, Taiwan’s AsiaYo and China’s Tujia. Late last month it launched Rakuten Stay, a comprehensive property management service for landlords looking to rent space to travelers.

Japan’s home-sharing market has so far been dominated by Airbnb. The San Francisco-based company lists approximately 4 million properties in over 190 countries. In Japan alone Airbnb lists over 56,000 properties, and is by far the largest such provider in the nation.

Short-term lodging services occupy a legal gray zone in Japan, and operators face the risk of running into regulatory hurdles.

While Japan has no laws specifically outlawing such services, the Hotel Business Law sets out conditions few private homes can meet. That has kept risk-averse Japanese companies at bay from the business model.

But those uncertainties are clearing after the government passed a new law in June allowing short-term housing rentals under certain conditions.

Once enacted, the bill will allow people to rent out properties for a maximum of 180 nights a year if lodging providers register with local governments.

Service platforms like Airbnb will be required to register with the tourism agency, which plans to create an online system to monitor the accommodation situation at all minpaku businesses.

The upcoming regulatory change, which is designed to create a more level playing field, has prompted a host of new players to announce their entry into the market.

Last month Airbnb said it had been raided by authorities in October on suspicion of violating antitrust laws by asking property management agencies to refrain from dealing with other home-sharing platforms. Airbnb denied any wrongdoing, but the case reflects intensifying competition in the field.

Japan is currently experiencing an unprecedented tourism boom.

As of October the total number of foreign visitors entering the country reached 23.8 million, and is almost certain to surpass last year’s record 24 million visitors by year-end.


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