Rakuten, the Japanese e-commerce giant, is making ambitious moves to building the Rakuten STAY, a vacation rentals model, where it will own, manage and operate its inventory across Japan and worldwide – its accommodation powered by services within the Rakuten eco-system.
In a report by Phocuswire, Munekatsu Ota, CEO of Rakuten STAY and an online travel and vacation rental veteran says, 90 per cent of operating cost regarding the Rakuten STAY accommodations are already powered by Rakuten services.
“Inside the accommodation, we have e-commerce services where people can buy immediately via QR code. There’s Rakuten Music, Books, etc. Only water and gas are out of the Rakuten eco-system and with Rakuten working on energy – solar power and gas – everything will be provided by Rakuten.”
The idea too is that these Rakuten STAY villas and apartments will be fully unmanned – no humans necessary, said Ota.
“This is a model only Rakuten can do,” said Ota, who said he’s studied various models including OYO and who is now based in Singapore to head the global expansion of the new business.
STAY
Rakuten STAY was previously called Rakuten LIFULL STAY, a vacation rental marketplace it operated in partnership with LIFULL. Last year, it acquired LIFULL’s 49 per cent stake and rebranded it Rakuten STAY to create a new real estate model to own and operate its own brand of “wide spaces”, be it private villas or apartments, on top of the marketplace which has 100,000 Vacation STAY listings.
“We wanted to create a new real estate model because we believe Rakuten STAY can be a bigger business than Vacation STAY in the longterm,” said Ota.
There are currently roughly 600 rooms of Rakuten STAY accommodations and the plan is to expand this to 10,000. These range from high-end private villas to apartment stays “which offer different kinds of experiences”.
“Our customers are usually multi-generational because our wide spaces can accommodate between eight and ten people generally,” said Ota.
Of the current 43 properties, eight are owned by Rakuten, and Ota wishes to increase this share. While other hotel management companies may eschew the asset-heavy model, Ota believes that the Rakuten STAY model, in which services are provided by the parent company – including data analytics to market and manage the customer experience – has the opportunity to provide high return on investment.
He admits though that scaling to 10,000 organically will take time and thus, is on the lookout for acquisitions to speed up the expansion. “Now that we know how to maximise ROI, we can move faster,” he said.
Alongside Rakuten STAY, Ota is also CEO of Rakuten Travel Xchange, a wholesale bed bank which came out of the acquisition of Zumata four years ago, Rakuten Travel Xchange works with more than 900 OTAs and wholesale bed banks across 90 countries to distribute accommodation inventory globally.
“This is also a growing global business which will support the global expansion of Rakuten STAY beyond Japan,” said Ota.
As for what his stint in China in which he was responsible for expanding Rakuten into China, taught him, he said, “It’s not easy for a foreign company to do business in China, with restrictions around licences as well as the eco-system. It’s a huge market but doing domestic business is difficult for foreign businesses.”
For now, his mission is to build Rakuten STAY into a new kind of vacation rental model which will be “unmanned by using technology to increase operational efficiencies”.
“During Covid-19, people felt safer staying in places that didn’t have a lot of people, were unmanned and with wide spaces, That’s the future – no humans in these type of private accommodation.”
