Minpaku (private lodging) services — in which accommodations in private residences are rented out to travelers — are being counted on as a solution to a shortage of hotel rooms to serve the growing numbers of inbound tourists, particularly as the nation prepares to host the 2020 Summer Olympic and Paralympic Games in Tokyo. Ahead of the implementation in June of the law enacted last year to lift the tight regulation on minpaku services across the country, prefectural governments next month will start accepting notifications from people who plan to rent out accommodations to tourists.

While regulations on such services have been gradually eased in recent years, some residents of communities with minpaku services harbor concerns that their living environment might be disrupted. Complaints have been filed with authorities concerning visitors making noise at night and ignoring community rules for garbage disposal. Out of concern that such problems may increase, some local governments have imposed more restrictions on minpaku services in their areas. For the minpaku business to take root, gaining the understanding of local communities will be crucial. People engaged in the minpaku business must make sure they follow the rules stipulated under the new law. To gain public support for the system, the government and municipalities should monitor and crack down on those who rent out accommodations without registering with the authorities.

Under the new law, property owners who have notified their prefectural governments of their intent can rent out accommodations for up to 180 days a year. If they want to provide the service beyond this limit, they will be required to get a license to run simple lodging facilities under the Hotel Business Law. The owners or businesses commissioned to run the service are also obliged to post relevant signs on the properties and to deal with any complaints from local residents. Businesses that provide web-based intermediary service between the property owners and their prospective customers need to register with the Japan Tourism Agency.

Until now, people who wanted to engage in the minpaku business either had to get permission under the Hotel Business Law or seek approval under the special deregulatory zone scheme. It is believed that many have engaged in the service illicitly to avoid such procedures and various requirements.

Demand for the minpaku service has been growing as room occupancy rates at hotels have spiked in popular tourist destinations such as Tokyo, Osaka and Kyoto, causing a shortage of accommodations. A Tourism Agency survey in the last July-September period showed that 12.4 percent of foreign travelers used minpaku accommodations during their stay. In Kyoto, where a record total of 14.15 million tourists stayed at hotels and inns in 2016, more than 20 percent of whom were from overseas, the city estimates that 1.1 million others used illegal minpaku lodgings — believed to number around 3,000. The number of cases in which local governments nationwide probed suspected illegal minpaku accommodations in fiscal 2016 topped 10,000.

Along with the rules set under the new law, each of the local governments can impose additional restrictions on minpaku services in their respective areas — and the reactions vary widely among prefectures and municipalities. The municipal government of Kyoto, for example, has enacted a local ordinance limiting minpaku services in the city’s exclusively residential areas to a two-month period from mid-January to mid-March — when tourism demand is low — except for lodging services in machiya (traditional-style townhouses). The city of Osaka, which has already started a minpaku service under the special deregulatory district scheme, will not impose additional restrictions.

The responses are also mixed among Tokyo’s 23 wards. Ota Ward has passed an ordinance that bans minpaku services in exclusively residential areas. The national government warns that imposing excessively tight regulations runs counter to the purpose of the new law. Meanwhile, some municipalities that are home to ski resorts or hot springs are exploring restricting the minpaku services to limit competition with hotels and inns.

These additional regulations may be confusing and negatively affect the potential of minpaku to provide lodging for tourists. But they also reflect a sense of caution on the part of local communities and businesses toward the service. The property owners and businesses involved in minpaku services need to address such concerns by following the rules and obligations under the law. There is concern that many property owners might still be tempted to offer minpaku services illegally if regulations are too tight. That must be averted for a healthy development of the minpaku business.

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