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Does Airbnb Have a Future in Japan?

Airbnb’s move to enter the Japanese market was a bold one. While the country might be one the world’s most advanced cities with its incredible infrastructure and latest technology, it is also one of the most paradoxical. With everything that makes this country attractive for companies like Airbnb, there exists a stubborn bureaucratic mindset that has been doing all that it can to resist the urge to open up and internationalize. Couple that with a risk-averse culture, Airbnb’s movement to bring communities of strangers together under one roof has been slow to pick up in Japan.

Although it continues to face obstacles, Airbnb sees a bright future for itself in the land of the rising sun as Japanese millennials embrace cultural change and the government loosens its grip. As the company’s CEO Brian Chesky puts it, “We believe in a world where all seven billion of us can belong anywhere.” This philosophy just might be what the country needs as they look to host the 2020 Olympic Games.

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Visiting a city like Tokyo, one may find it hard to believe that the country’s population is in fact declining. Based on a 2008, there are nearly 7.75 million vacant properties in the country. That means 10% of the country’s real estate is unoccupied. If the pattern continues, by 2030 that number will increase to 30%. In the past year, Prime Minister Abe has recognized the economic potential as the Olympics loom.

The solution was the creation of special economic zones in large cities like Tokyo and Osaka. In these SEZs, laws and restrictions that hotels have to abide by are being loosened or skipped for certain businesses looking to rent out properties. Company’s like Airbnb rejoice at the move as it allows their business model to thrive in a once unwelcoming territory.

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Changes include removing restrictions that require establishments to have a physical reception desk. Most Airbnb rentals are private homes or apartments where there will be no such thing. As it has loosened restrictions, the government has also set guidelines for what types of properties are allowed to participate in renting. Homes or businesses looking to rent must be at least 25 square meters, have air-conditioning and a bathroom, and be available for 7-10 day stays. Some are also only allowed to rent to foreigners. These changes can only be seen as positive for Airbnb as it opens up the market for new hosts and ensures a standard of what has to be offered to guests.

The loosening of government restrictions on businesses and home looking to rent had to be done in preparation for the Olympics. It was a move that Airbnb can take full advantage of as it helps them expand. But tackling the problem of cultural norms and the attitudes towards risk-aversion may prove to be the toughest part.

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Airbnb’s model of sharing your home with a complete stranger, especially one from a foreign country, is a relatively western idea. Looking at the numbers, the number of Airbnb rentals in Tokyo is about 2,500. That’s only one-fifteenth the number of Paris! As its popularity has boomed in the last couple of years, there still remain challenges to conquering some parts of the globe. What might seem like a revolutionary idea and a romantic movement to bring out the best in humanity has been met with skepticism in Japan.

As Chesky sees it, “At a time when we’ve been told to look at each other with suspicion and fear,” he said, “you’re telling the world it’s O.K. to trust again.” Getting an entire culture to trust will not be an easy task. But Airbnb has accepted the enormous challenge and has its reputation and worldwide presence to back it up. Now the company must wait for the Japanese people to meet them halfway.

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Whether the country is ready for it or not, the Olympic Games will bring an extraordinary opportunity and challenge for Japan to show the world that it is ready to welcome them. The question remains whether Japan is willing to seize that opportunity. Airbnb’s philosophy and ideals might be what Japan needs as it looks to the near future.

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