How a Lack of Guesthouses Can Limit Tourism Potential

One of the oddest things about traveling in smaller towns in Japan is the lack of family guesthouses. While national hotel chains are present throughout the country's many towns and cities, they are able to keep prices relatively high because consumers, outside major tourist attractions, have few choices other than staying in those national chains. And considering that big chains will only invest in massive multistory facilities that are consistent with their brand images, little towns with little out-of-town traffic simply will not be considered for future investments.

The situation in Japan cannot be any more different from Uzbekistan, where I was traveling few months ago. While international chains are certainly present and cornering the market for high-end accommodation, in cheaper segments, thousands of small family guesthouses compete for guests, driving down prices and maintaining good services. Indeed, with almost every other family residence putting up a "guesthouse" sign, travelers have plenty of choices even in the most obscure destinations.

Japan is understandably reluctant about having family guesthouses popping up everywhere. The country, with its strict regulations on cleanliness and safety standards, want to keep the accommodation industry open for only those who are proven to be able to provide satisfactory service. Monitoring hundreds of thousands of family lodging across the country is simply not something government regulators can afford to do. As such, the country has played on the safe side, strictly limiting who can operate lodging to such a large extent that many listings on Airbnb Japan had to be deleted.

Of course, those national chains are surely happy about the lack of competition, but consumers face a big problem. Even medium-sized cities with relatively little tourist or out-of-town business traffic can be prone to sudden influxes that swamp the little hotel infrastructure that the big chains bothered to put up. The chains benefit by minimizing investments in locations with little demand normally, but gain handsomely in those few occasions that 100% occupancy brings. Spontaneous travelers who do not book ahead find themselves without a single available bed in the entire city on some days.

The fear of getting stranded in an unfamiliar city without a place to stay for the night, then, discourage spontaneous travelers from going to out-of-way places. After a few negative experiences being turned down by multiple hotels in one day, casual backpackers may be less inclined to go to smaller Japanese towns with few hotels. Yet, it is precisely those small towns with few hotels that are most desperately in need to tourism revenue to stem the negative impact of a declining population and closure of traditional industries.

Clearly, a solution to the problem can be relaxing the regulations that make operating guesthouses out of reach for most families. Airbnb has provided the world with a ready platform to match empty rooms in people's homes with those spontaneous travelers looking for a place to crash on the cheap. For those with spare rooms, it has shown itself to be a great way to make some good money, without lavish investments that big hotel chains undertake to accommodate thousands.

What about safety and quality concerns with family guesthouses and Airbnb listing that cannot be quickly checked by government officials? Given the prominence of internet reviews today, it can be posited that those who offer bad services and facilities will quickly by publicly criticized on reservation and review sites, so that they are forced to quickly change their operations for the better or be outcompeted by other lodgings at similar price range in the same locations. Even without regulators, internet-savvy travelers have stepped into the role, using the power of the market and online reviews to shut down unfit guesthouses.

Global tourism has become more and more bipolar in recent years, with famous landmarks suffering over-tourism while many equally worthy places getting little tourist traffic. One of the reasons why smaller places do not get enough tourists is because regulations are in place to prevent enough accommodation to be built to house a larger tourist flow. But by relaxing regulations on family guesthouses and allowing the market to decide what is good and bad about local lodging options, countries like Japan have a cheap, effectively, and rapidly scalable way to rapidly increase accommodation in out-of-way places and allowing locals in those places to get a growing share of the country's overall tourism revenue.