Vacation rentals have become a business attracting attention worldwide. Japan, in particular, boasts abundant tourism resources—its history, culture, natural landscapes, and cuisine draw an enormous number of overseas travelers.

Although the industry temporarily slowed during the COVID-19 pandemic, it has bounced back with renewed energy following the easing of restrictions. As a result, demand for accommodations has surged, and the number of vacation rental properties in Japan is growing at a remarkable pace.

To meet accommodation needs that existing hotels and traditional inns can’t fully satisfy, vacation rentals are increasing not only in major cities but also in regional areas. There’s also a growing trend of converting vacant houses—previously used for rental or sale—into vacation rental properties.

However, when operating a property as a vacation rental, many owners find themselves wondering, “Will my property actually have enough demand?” Running a hospitality business is quite different from a standard rental agreement—it requires a relatively substantial investment in interior renovations and ongoing operational costs. To recoup that investment, it’s essential to accurately assess whether there’s sufficient demand for your property as a vacation rental.

In this article, we’ll walk you through concrete methods for determining whether your property has real potential as a vacation rental.

Research the Performance of Competing Properties

The first step in researching vacation rental demand is to understand how well properties similar to yours are performing.

Use booking platforms like Airbnb or Booking.com. Enter details matching your own property—such as location, size, and maximum occupancy—and search across several dates. This will bring up vacation rentals operating in your property’s area, allowing you to check their booking status and nightly rates.

This lets you see how often competing properties are booked, what price range they fall into, and how their ratings have trended over time. If there are many similar competing properties in the same area, it suggests strong demand in that area—though you should also factor in the likelihood of increased competition. Getting a sense of potential profitability through these search results is the first step.

That said, just because other properties are succeeding doesn’t guarantee your property will do the same. When gathering information on competing properties, pay close attention to details like booking frequency, pricing, and the content of guest reviews, and clearly identify what sets your property apart. This kind of comparison becomes valuable input for decisions about pricing and equipment investment.

Take an Honest Look at Your Own Property’s Performance

Even if competing properties are earning high revenue, you can’t expect the same results if your property’s facilities and interior fall short in comparison. In vacation rental operations, guests place particular importance on cleanliness, comfort, and practicality. If the interior feels dated or the furniture and appliances are inadequate, guest satisfaction will suffer—even with a great location—leading to poor reviews and negative word of mouth.

Beyond researching competitors, you need to honestly assess how competitive your own property’s facilities really are. Consider how much you can invest in upgrades, and what kind of value that investment would provide to guests. Installing the latest appliances and reliable Wi-Fi, providing comfortable bedding, and thoughtfully designing the interior are all ways to differentiate your property from the competition.

These kinds of investments represent a significant upfront cost, but they’re essential for long-term success. Strong facilities are indispensable for satisfying guests, building repeat business, and earning positive reviews. In other words, running a successful vacation rental requires matching—or exceeding—the facility standards of your competitors.

Make Sure You Have a Solid Operational System in Place

Having demand and good facilities isn’t enough on its own. You also need an efficient system for handling the many operational tasks involved—booking confirmations, check-in guidance, support during a guest’s stay, cleaning arrangements, and troubleshooting. If any of these tasks fall short, guest ratings will decline, and bookings will gradually drop off.

There are two main approaches to handling operations: managing everything yourself as the owner, or outsourcing to a property management company. If you choose to manage it yourself, the key question is whether you can dedicate enough time and effort to the job. If you outsource instead, you’ll need to carefully choose a provider and understand their fee structure. Building a solid, comprehensive operational system with no gaps is essential to running a successful vacation rental business.

Contact Stay Buddy Co., Ltd. for All Your Vacation Rental Management Needs!

Determining whether your property has real potential as a vacation rental requires carefully analyzing several different factors. In this article, we covered how to research the performance of competing properties, how to evaluate your own property’s performance, and finally, how to confirm that your operational system is up to the task.

Success in vacation rentals isn’t determined by location and facilities alone. The key to long-term success lies in comparing your property against competitors to understand its strengths and weaknesses, making the necessary investments in facilities, and building a solid operational system.

At Stay Buddy Co., Ltd., we provide end-to-end support—from launching your vacation rental to day-to-day operations, guest communication, and handling any issues that arise. Whether you’re just starting out in the vacation rental business or already managing a property, we offer practical advice and solutions tailored to the challenges you’re facing. Feel free to reach out to us for support in unlocking your property’s full potential. Thank you for reading to the end!