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Business

Chief disrupter Airbnb faces a backlash on three fronts

Room sharing pioneer needs to contend with industry reaction

Zhang Yu, center, takes part in a sushi-making workshop with a group of other tourists in Tokyo.

TOKYO/SINGAPORE It is a warm June morning and Zhang Yu, 35, is walking through a small neighborhood supermarket in Tokyo, wondering what ingredients would be needed for lunch.

She had arrived from China a few days beforehand and, despite being on her first visit to Japan, she could easily have been mistaken for a local.

Having booked her accommodation through Airbnb, she was staying with a Japanese family and getting a taste of the local lifestyle.

The home-sharing website also offers users the chance to connect with locals through experiences such as cooking lessons, guided walks and outdoor activities.

Zhang's shopping trip was part of a cooking day she had booked through the site and was taking along with four other participants from Thailand, Hong Kong, Singapore and New Zealand.

"Don't squish the rice. Let it soak the vinegar in gently," said the host, Yukari Matsushita, as the group prepared sushi. "We don't want wet, mushy rice."

Zhang is one of the growing number of independent travelers who only need a smartphone to seek out unique experiences unavailable through package tours.

"Travel lovers come to Airbnb," said Yasuyuki Tanabe, Airbnb's Japan chief. "They enjoy cross-cultural exchanges and want to interact with local people," he said.

Established in San Francisco in 2008, Airbnb has caused unprecedented disruption in the travel industry. In Asia, its supply of inexpensive accommodation has been embraced enthusiastically.

A shopping trip is included in the workshop offered through Airbnb.

The number of guests using the service in the region reached 10.8 million in 2016, up 177% from the year before. Malaysia alone saw a rise of 231% to 700,000, while 774,000 people used the site in Thailand, up 115%.

But it is here in Airbnb's fastest-growing region that the company perhaps faces the sternest competition from both established players and local startups.

"We do compete with other travel agencies, but our focus is on providing experiences, not just accommodation," Airbnb's Tanabe stressed. The experience programs have expanded into China, Vietnam, Thailand and Singapore.

Airbnb has 3 million listings worldwide, but it is quickly being overwhelmed in China by the local version. Set up in 2011, Tujia already has 450,000 listings in China and elsewhere, having established a partnership with HomeAway.com, a unit of U.S. online travel agency Expedia.

"I've never used Airbnb, but have heard about it," said Yu Nan, a 30-year-old nurse from Beijing who was staying in Tokyo's Shin-Okubo district with her friend, Huo Te, 28. The area, famous for its Korean town, has Tokyo's biggest concentration of rooms for rent.

The two had rented a small apartment through Tujia and were splitting the bill of 400 yuan ($60) per night.

The room had two beds, a sofa and a sink where they could do their own cooking. The landlord also helped them find places to see and things to do.

According to Tujia, the average Chinese tourist spends 52% of their budget on shopping and just 20% on accommodation.

BACKLASH Public opinion is still divided on home sharing. In Japan, rooms can only be used for short-term lets if the owner has a hospitality license. To let rooms on a commercial basis, the property has to be located in a commercial district, have a supervisor present at all times, and gain consent from other households if it is in an apartment block.

Many landlords, however, continue to let private rooms regardless, and there are growing complaints from neighborhood groups regarding security, noise and littering.

New legislation passed in June is meant to legalize home sharing and encourage homeowners to register their activity. The law is set to come into force next year, but regulating the sector is a work in progress as details have been left for local governments to decide.

For the hotel industry, the rise of home sharing has been a wake-up call.

Marriott International is scrambling to expand its new brand Moxy, which is targeted at millennials. The hotels have shared lounges where guests can mingle and enjoy movie nights on the couch.

Singapore-based serviced apartment operator Ascott, owned by property developer CapitaLand, is collaborating with Singapore Management University, using its student center as a test bed for younger guests. The center now features a boxing ring, "stress buster" rooms equipped with virtual reality games and guitars, and plenty of beanbags to relax on.

Back in Shin-Okubo, E-Hotel Higashi Shinjuku has experienced a downturn in customer traffic in the past year or two and room rates have had to be lowered. Four out of five guests at the 253-room hotel come from outside Japan.

General Manager Naoyuki Hirano is philosophical rather than bitter. "Home sharing provides services hotels do not," such as cheap accommodation, cooking facilities and opportunities to interact with the hosts.

"We need to highlight our own strengths," such as safe, secure experiences and reliable services, he said. Simply copying Airbnb is not a solution. Keeping it simple and focusing on what you do best is, in his view, the way to react.

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