Loco Partners, which manages the members-only luxury hotels and ryokan booking site, Relux, will use the latest 500m yen (about US$4.5m) raised to expand its service for Japanese users as well as expand its inbound business for overseas visitors, signaling a step-up in the competition for inbound tourism in Japan.
With Prime Minister Shinzo Abe doubling targets for Japanese inbound tourism – the new goal is 40 million by 2020 – Japanese OTAs are clamouring to shift their business to the inbound sector.
Last year, close to 20 million visitors arrived in Japan and that had been the original target for 2020. Outbound travel is also stagnating in Japan with an ageing and declining population and tougher economics at home.
Foreign OTAs such as Booking.com, Expedia and Hotels.com have had the advantage in the inbound sector given their outreach to global markets and their scaling of inventory in Japan in recent years, and now the market looks set to become more competitive as Japanese OTAs move into the space.
The latest round of 500m yen, in a new round of investment from the KDDI Open Innovation Fund, brings to 900m ($8.2m) the total raised since the startup, headquartered in Minatoku, Tokyo, was founded. Relux was the first WIT Japan Startup of the Year in 2013 when WIT launched its competition in Tokyo.
Takaya Shinozuka: “We have our own strengths.”
Takaya Shinozuka, CEO & co-founder, said, “We clearly see the opportunity in inbound and the speed of change is very steep.”
Asked how he would compete against the foreign OTAs, he said, “Foreign OTAs have their own strength, as they have the users and their preferences. Yet we have our own too, which is we are based here and have strong ties with locals.
“We believe that Japan has a lot of things which are yet to be discovered, and we believe we can bring them out to deliver good surprises and and build new ties between overseas customers and local experiences in Japan.”
He said they’d do “everything we can” from marketing, B2B sales and building partnerships with foreign companies to increase their share of foreign inbound business.
His message that he will deliver at the upcoming WIT Japan & North Asia on June 2-3, “We are now expanding a lot in global scale.”
Last year, Relux expanded into China and Shinozuka said, for the past 12 months, the business has been growing at more than 30% month-on-month. China now makes up 15% of gross sales at Relux, “It has grown strongly since we started our business.”
Relux was the first mover into the ryokan space and now offers quality hotels as well. It offers its members exclusive plans when they book on the site. In 2015, 80% of Relux’s members use the services via smartphones, both websites and applications.
The investment by KDDI comes with a partnership around a KDDI service called “au Smart Pass” for smartphone users. With a fixed monthly fee, customisers can use the discount coupons available at multiple shops and online services. Relux has always offered this discounting programme but with the investment, the two companies will deepen this partnership.
The fact that Relux has grown in a market dominated by giants has clearly been gratifying for Shinozuka and his team. “Everything was against us when we started as we were the latest OTA to enter the market. The goal we set was very high and we had very limited resources.
“But we found our own sweet spot in the SNS marketing to grow our user base and transactions.”
Now, opportunities are everywhere, he said. “The speed of the market change is quite high, and there’s a lot new technologies, which can be applied in travel industry. At the same time, challenges are also everywhere, both internally and externally but as our company values state, we accept the challenges, enjoy hacking, with rocket speed.”