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Sharing Economy

Airbnb's Japan purge threatens to trigger 30,000 cancellations

US company sets aside $10m to soothe panicked travelers

A room offered for short-term rental in Tokyo. A new law that takes effect on June 15 requires hosts to obtain a license. (Photo by Keisuke Takahashi)

TOKYO -- Airbnb's mass culling of home-share listings in Japan earlier this week could translate to more than 30,000 room cancellations by the end of the month.

On Monday, the U.S. home-sharing platform took down over 48,000 listings posted by hosts who failed to obtain special permission to accommodate guests. This comes before Japan puts into effect an amended hotel business law on June 15 requiring registration for private-home sharing, known as minpaku. The rules allow homeowners to rent out rooms for up to 180 days a year.

There were 40,000 reservations for the period from June 15 through June 30, Airbnb reported to the Japan Tourism Agency. The number grows to 150,000 through the end of the year.

Right now, there are about 13,800 Japanese properties available on Airbnb, down from roughly 62,000 in the spring. If the same 80% rate of decline is applied to June's bookings, that would result in more than 30,000 cancellations.

Airbnb's move is heavily impacting both travelers and homeowners alike. A female resident of Tokyo's Setagaya Ward received a message late Thursday from a woman from Mexico panicking over her canceled reservation. The tourist was in the middle of sightseeing in Osaka with her husband and children and they had planned to stay one week at the Setagaya home beginning June 16, an arrangement made a month in advance. The Setagaya host then received email from Airbnb after 8 p.m. confirming that the reservation was canceled.

This whole saga began June 1, when the tourism agency informed Airbnb that it needed to take down reservations made at locations that are not licensed to operate under current or upcoming rules. The company acted immediately to remove listings that cannot prove they are operating within the law.

At first, the company did not indicate it would purge pending reservations as well. But it went ahead and canceled bookings for June 15 to June 19. Subsequent reservations will be canceled if the property is not licensed within 10 days before check-in, the company said on its website.

Airbnb is fully refunding affected guests and is also reimbursing additional costs of finding alternative accommodations, as well as fees associated with rescheduling flights. Affected travelers are also privy to coupons worth 100% of the canceled booking value. Airbnb has set aside a $10 million fund to finance the redress, reportedly the first of its kind for the company.

Japanese travel agency JTB has been recruited to help stranded travelers find other places to stay. Airbnb has also set up a 24-hour hotline, along with support via email.

Back in Setagaya, the 36-year-old host is preparing to register her house. Although she has not yet been licensed, the home-cooked meals and unique cultural experience she provided made her address a go-to spot. But it will take days for authorities to issue a registration number, meaning Airbnb had no choice but to cancel her bookings.

The homeowner eventually connected the Mexican family to a nearby household that had already registered rooms under the new law. "We can't leave travelers wandering the roads with their children," said the helpful host. "Japan could face trust issues."

Another host in Hokkaido awaiting permission is critical of how both Airbnb and the government handled the surprise move. He has found himself having to politely refuse clients who expected to stay at his place.

"I wonder how well the tourism agency and Airbnb understand how huge the impact is," said the 36-year-old. "They should have informed us sooner and established a grace period."

After Airbnb's massive deletion, there has a mad scramble for the remaining lodgings. One 60-year-old reports receiving a rush of requests for his detached home in Tokyo's Toshima Ward. The dwelling, listed on Airbnb, has already been classified as a "simple lodging facility" under the stricter hotel business law. The host says potential customers grumble that they cannot find anywhere else to stay, suggesting that hotels and other mainstay facilities may be picking up leftover travelers.

Airbnb has built up a large share of the minpaku market since debuting in Japan in 2013. For the 12 months through February, an estimated 5.8 million people stayed at Airbnb accommodations listed in Japan. Some competing platforms have jumped into the fray, such as Rakuten's Lifull Stay as well as Hyakusenrenma.

But only about 2,000 applications to home-share have arrived as of Thursday. The dearth of lodging could pour cold water on the rising number of tourists coming to these shores.

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