“It’s Getting Harder for Japanese People to Travel…” The Homestay Business Faces Headwinds Amid Tighter Regulations: “The Real Thoughts of Operators Who Keep Going Anyway”

Bookings Fill Up Even at Over 20,000 Yen Per Night

Since the “Residential Accommodation Business Act” (commonly known as the “New Private Lodging Act”) went into effect in 2018, private lodging has spread rapidly across the country. At the same time, issues such as noise and trash have increased. Since the start of this year, regulations have been tightened, particularly in urban areas.This trend is particularly pronounced in Tokyo’s 23 wards; in Bunkyo Ward, for example, an ordinance amendment is expected to ban short-term rentals on weekdays throughout the entire ward.While the extent of these measures varies by municipality, some wards are introducing regulations such as reducing the maximum number of operating days from the previous 180 to 120, banning short-term rentals in residential areas and near schools, limiting operations to specific periods, and requiring a manager to be on-site at all times.

In response to these developments in Tokyo’s 23 wards, short-term rental operators in the city center are being forced to change course. An operator in Tokyo who has managed multiple properties for the past three years explains:

“Some operators are moving from the city center to neighboring cities. Neighboring prefectures like Saitama, which offer good access from Tokyo, are seen as prime targets. Although revenue will drop, running costs and initial investment expenses can be reduced by about 30 to 40 percent compared to the city center, so quite a few operators are considering entering the market there.”

Among these, Chiba Prefecture is attracting particular attention, as it is regarded among operators as offering “a good balance between the number of tourists and the costs required to run the business.” With 1,200 registered vacation rentals, it has the highest number in the Kanto region outside of Tokyo. A vacation rental management company explains the background.

“The number of vacation rentals expanded in anticipation of the special demand generated by the Tokyo Olympics and the Osaka Expo, but now that both events have ended and regulations have been tightened, the vacation rental market in urban areas is in a gradual decline. However, Chiba has Narita International Airport and Disneyland, so a steady flow of visitors can be expected.In fact, demand is growing year by year. In Urayasu City, home to Disneyland, properties are fully booked even at rates exceeding 20,000 yen per night. The number of vacation rentals is also on the rise in Funabashi and Matsudo, which offer good access to Tokyo, while Ichinomiya Town and Isumi City are also popular. Quite a few operators are planning to relocate to or enter the Chiba market, where regulations are more lenient compared to Tokyo.”

It is said that some operators in Chiba Prefecture are enhancing their facilities—such as saunas and BBQ areas—to attract guests. Since an increase in overnight guests leads to economic activity, some local governments are promoting vacation rentals. One such municipality is Chiba City, which is working to foster a harmonious relationship between operators and the local community.

A FRIDAY Digital reporter visited Chiba City to investigate issues related to private lodging, but found few reports of damage or complaints. Chiba City has also been operating “Special Zone Private Lodging” (private lodging with no restrictions on operating days) since 2017.According to a representative from Chiba City’s National Strategic Special Zone Promotion Division, there are currently two certified facilities, and “we have not received any complaints from local residents, and operations are proceeding without any significant issues.”

The Real Feelings About Tighter Regulations

The vacation rental operator mentioned earlier had set its sights on a different region.

“We’re focusing on the area centered around Tateyama and Kamogawa in Minami-Boso. Demand around Kujukuri Beach is also likely to grow in the future.As the travel needs of foreign tourists diversify, there are ample business opportunities—including for long-term stays—not only in central Tokyo but also in areas where people can enjoy the ocean and nature. In fact, there seem to be many inquiries from operators regarding properties available for short-term rentals in these regions, and they tend to fill up quickly.”

While Chiba Prefecture is attracting significant attention from vacation rental operators, there are voices suggesting that “regulations on vacation rentals will tighten in the future.” In July of this year, Chiba Governor Toshito Kumagai (48) announced plans to consider regulations, including the enactment of ordinances. The following comments have been heard from industry insiders.

“In July of this year, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) approved regulations allowing local governments to regulate vacation rentals on a municipality-by-municipality basis. I think this is an extremely extreme policy. There was absolutely no sign of any effort to seek a compromise or find a middle ground. Until now, there had been a movement within Japanese government ministries to promote vacation rentals. Yet here we are with this sudden policy shift.

The industry is in disarray. Private lodging contributes to local economic activity. Currently, Japanese guests account for about 40 percent of all guests. If private lodging is further restricted, it could lead to even higher prices at hotels and ryokan. This would make it harder for Japanese people to travel. It’s such a waste,” said an operator running multiple private lodging properties, primarily in regional areas.

The number of new entrants in central Tokyo is expected to decline. In response to the tighter regulations, the trend of operators moving from central Tokyo to surrounding cities is likely unstoppable. However, even in Chiba Prefecture—a region of particular interest to operators—problems such as litter and noise are arising. The cat-and-mouse game between operators and local governments over regulations seems set to continue for some time to come.