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Major Japanese, foreign firms jumping into private accommodation market

Increasing numbers of Japanese firms are planning to become intermediaries for renting out private homes to foreign visitors following the new "minpaku" law introduced in June, and before the nationwide ban on such accommodation is lifted as early as January 2018.

Rakuten Inc., KDDI Corp. subsidiary Loco Partners, and a major Chinese firm are all among those getting into this emerging market, which is expected to become more competitive as the ban's end approaches.

In June this year, Rakuten announced a partnership with real estate information website operator Lifull Co. to create a new subsidiary that will act as an accommodation intermediary, tapping the network of over 20,000 real estate brokers on the Lifull Home website to find potential properties.

"This is an opportunity to help owners of empty homes and idle properties to make use of their assets, and to also offer more accommodation options to visitors coming to Japan," a Rakuten representative stated.

Rakuten is also slated to collaborate with private home rental site HomeAway, run by the world's largest travel reservation site Expedia, recognizing the potential of the inbound tourism market.

In addition, KDDI subsidiary Loco Partners, which operates a luxury hotel and Japanese inn reservation site, also entered the market in June, looking to attract wealthy visitors from overseas. Furthermore, the giant Chinese accommodations broker Tujia entered the Japanese market last year, hoping to appeal to visitors from China.

Meanwhile, the American colossus Airbnb, which sparked the home rental craze, has begun introducing visitors to experts in calligraphy and other fields so that visitors can have a taste of Japanese traditional culture, in an effort to stay unique and competitive as new rivals enter the market.

With the number of visitors to Japan increasing, reaching a record high of some 24 million in 2016, and with the government aiming to have 40 million visitors come to Japan in 2020, the year of the Tokyo Olympic and Paralympic Games, there are concerns that there won't be enough accommodations, especially in city centers. The hope is that home rentals will fill in for more traditional lodgings.

However, there have been reports of problems with excessive noise and visitors' misunderstandings over Japan's strict garbage disposal rules when it comes to tourists staying in private homes. There have also been cases in which private accommodations have been used to hand off illegal drugs.

Airbnb plans to submit information on private lodgings that are offered through their site to prefectural authorities, but some operators face manpower shortages amid a rapidly growing market, leading to insufficient management of accommodations. Some local governments, therefore, are introducing strict rules that the intermediary firms would have to follow.

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