Airbnb makes case for home-sharing in Japan as regulation looms

[TOKYO] Airbnb Inc is touting its economic contribution to Japan and the pivotal role it can play during major global events like the 2020 Olympics, as the country's government considers regulating home-sharing.

The company's hosts and guests in Japan generated 236.3 billion yen (S$3 billion) in economic activity last year, Chris Lehane, a former strategist for Bill Clinton and Airbnb's head of global policy, said at a briefing in Tokyo on Wednesday.

Airbnb listings also help increase available accommodation during major events, he said.

Mr Lehane, the ex-White House crisis manager known as the "master of disaster," helped Airbnb defeat a ballot measure seeking to curb its operations in San Francisco.

The company is now trying to win over hearts and minds in Japan, its fastest- growing market last year and one where the status of peer-to- peer home rentals remains in regulatory limbo.

"We have certainly been warned by our experiences elsewhere in the world," Mr Lehane said at the briefing. "Airbnb offers a significant social value proposition in Japan."

Airbnb has argued that its services are good for tourism and benefit the communities in which they operate. Because most of the rental fee goes to the host, the revenue directly benefits the individuals and their neighbourhoods, Mr Lehane argued.

Co-founder Joe Gebbia, who was in Tokyo last month to announce a partnership with a bookstore chain, said the company is encouraging entrepreneurship.

Listings in Japan quadrupled last year to more than 35,000, hosting 1.38 million guests.

A weakened yen and the relaxing of visa requirements pushed inbound tourists to a record 19.7 million last year from 8.4 million in 2012 - and made Tokyo hotel occupancy rates tighter than Paris, Hong Kong or New York. The number of visitors will hit 35 million by 2020, according to an estimate by Goldman Sachs Group Inc.

But Airbnb's rapidly growing service has drawn its share of controversy, pitting landlords against tenants and prompting regulators to take a closer look at the world's third most valuable startup.

New York City has scrutinised Airbnb and taken steps to push back against commercial renters. San Francisco, Airbnb's hometown, voted down a divisive ballot initiative that would have restricted home sharing in the city. Airbnb neighbours the world over have complained of "party houses" that attract rowdy renters during major sporting events.

Airbnb hosts in Japan have operated in a gray market in past years, as current legislation doesn't explicitly address house rentals, called minpaku in Japanese.

The government is weighing several options, including the loosening of hotel laws and the creation of new laws to deal with the peer-to-peer or sharing economy, which includes car services like Uber.

The country is also considering a two-tiered approach to minpaku, including looser regulations for hosts who share their actual homes and others doing business on a commercial scale, Mr Lehane said. The government may set an annual 180-day cap on stays that applies to hosts without a hotel license, the Nikkei reported in May.

Airbnb is erecting a number of measures to assuage regulators. It has said it plans to collect taxes from local hosts, similar to deals struck with Paris, Chicago, San Francisco, and Portland, Oregon.

It will introduce a Japanese- language service to communicate with the police. And it plans to create a system for rapidly relaying information about disasters or disease outbreaks.

Airbnb has also rolled out a feature letting neighbors enter comments in an online form. Feedback is reviewed by a customer-support team that can take action as necessary.

Airbnb didn't say whether the information will be made public or if the identities of neighbours will be disclosed.

"We are very encouraged and excited by the approach the Japanese government is looking to take thus far," said Mr Lehane, a Harvard-trained lawyer who tried to contain the Monica Lewinsky scandal and later defended Goldman Sachs during the 2008 financial crisis.

"It can be a model not just for Asia, but potentially a global model."

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