Japanese e-commerce giant Rakuten unveils unmanned vacation rentals model

Alibaba
has its future hotel, FlyZoo, launched in Hangzhou inn 2018. Tencent launched
an AI smart room at the Atour S Hotel in Beijing. There was a time when Amazon
sounded out the idea of Amazon-operated hotels.

Where
these projects are right now is unclear, but Rakuten, the Japanese e-commerce
giant, is making ambitious moves to building out Rakuten STAY, a vacation
rentals model in which it will own, manage and operate its inventory not just
in Japan but worldwide – and its accommodation will be fully powered by
services within the Rakuten eco-system.

According to Munekatsu
Ota, CEO of Rakuten STAY and an online travel and vacation rental veteran who’s
spent much of his career with Rakuten, 90% of operating costs 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
– soon, it will only be water that’s not provided by Rakuten,” laughed Ota.

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.

First,
some background.

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% 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 that 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 long term,” 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 10 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 admitted 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 maximize ROI, we can
move faster,” he said.

Alongside
Rakuten STAY, Ota is also CEO of Rakuten Travel Xchange, a wholesale bedbank that
came out of the acquisition of Zumata four years ago. Rakuten Travel Xchange
works with more than 900 OTAs and wholesale bedbanks 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.

For now,
his mission is to build Rakuten STAY into a new kind of vacation rental model
that 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 types of
private accommodation.”