IGNITION Staff
Specializing in high-end accommodation across Japan, Relux aims to increase its overseas user base.
by IGNITION Staff
An amalgamation between ‘Relax’ and ‘Luxury’, Relux is a hotel reservation service that specializes in luxury Ryokan (traditional Japanese Inn) and hotels. Its goal is to improve hotel customer satisfaction for those once in a life time holidays.
But why did this startup decide to enter an already crowded market of hotel booking sites? What do they have planned for the future? We caught up with founding CEO Takaya Shinozuka to hear what he had to say.
Zero Planning
You’ve probably heard this before, but it all started with the great east Japan earthquake (3 years ago). I thought to myself ‘What can I do to help? What do I have to offer?’ Previously, when I was working for Recruit*, I was in charge of the Fukushima area. During that time I had built relationships with a lot of the hoteliers and Ryokan owners there and seeing them struggling to make ends meet made me want to help. I knew what I wanted to do and so I set up a company, albeit with zero planning.
*Recruit is a multi-discipline company providing services such as publication, web services, recruitment and training.
This is how Shinozuka recalls Relux’s roots (a Loco Partners company). Loco Partners itself stems from his ambition of becoming a partner for local businesses; ‘Loco’ meaning ‘local’ in Hawaiian.
Shinozuka joined Recruit soon after graduating from university. He was initially assigned to Jalan, one of Japan’s largest hotel reservation services. Being assigned to sales and services, his role involved frequent travelling across Japan to negotiate with owners of hotels and ryokan not yet a part of the Jalan network.
“Although my office was in Tokyo,” explains Shinozuka, “I was actually in charge of around 6–7 other areas including, Gunma, Niigata, Saitama, Aichi, Gifu and Fukushima. Unsurprisingly, I spent the majority of the time travelling between these but once every month or so, I’d be assigned to new area.”
Shinozuka founded Relux after working at Recruit for 4 years and spending just under 1 year as CEO of a friend’s startup specializing in social media games. During his time at Recruit, Shinozuka learnt many key skills such as pricing analysis, advertising and marketing. These skills enabled him to establish a huge network of hotel owners for Jalan and the company subsequently entrusted him with their largest hotels and clients during his last 2 years there. After Recruit, Shinozuka transitioned to becoming a CEO of a friend’s startup that specialized in social media games. Although an unfamiliar genre for him, he doesn’t regret being taken in by his friend’s enthusiasm as it gave him invaluable experience in producing web content.
Shinozuka explains that each and every one of these experiences has contributed in some way to Relux.
“When we first setup the company it was just me. I did everything from consulting with hotel and ryokan clients to contracting work from Recruit, my previous employer. The company only really started to shape around a year later when Kazuki Shiokawa joined as head of client liaison.”
Why hotel reservation?
Even after Shiokawa joined, for a while they continued to use a simple Facebook based content management system, charging clients on a monthly basis. However, that changed in February 2013 with the launch of Relux Beta.
“Even though we started with zero planning, we did decide on which market to focus on; leisure and tourism. The reasoning for this goes back to when I was thinking about what I could do to help rejuvenate the areas left devastated by the earthquake. Fundamentally, there are 2 ways to achieve this: 1, increase the inherit population, 2, increase visitors to the area. The latter made more sense for us as a company as this is what I had the most experience in. Often, e-commerce is the first thing that comes to mind when trying to bring money into an area. But in reality, increasing actual visitors and getting them to spend during their visit yields far greater results.”
Shinozuka explains that their business idea had to fulfil these 2 criteria; increased expenditure as well as increased visitors. For them, hotel reservations not only fit the bill but was also the most scalable. Other ideas such as restaurant comparison sites, local activities sites and review sites fell short of the scalability and success rate they were looking for. However, greater scalability also means greater competition. Major competitors such as JTB, Kintetsu Tourist, and Japan Tourism all have a highstreet presence. Online giants such as Jalan, Rakuten Travel and Ikyu continue to dominate the web. With such high barriers to entry and countless variables, it comes as no surprise that startups are shying away from this market. Trying to organize let alone negotiate with hotels nationwide is no easy task. Prices, room types and offers change on a daily basis like the stock exchange whilst cancelations and reservation changes only add to the complexity.
“With such high barriers to entry, we struggled at first. Our initial investment was only 9 million yen which made our goals extremely challenging to achieve. We thought of other ideas like a price comparison sites for hotels but reservations made more business sense. We knew the market and competition would be unforgiving, but were up for the challenge.”
The road to Relux
When starting Relux, Shinozuka made it a point to do things differently. Whilst the competition was focusing on the amount of information, their aim was to focus on the quality.
Relux staff only select and feature hotels with the best customer feedback that they have stayed in
“Because I was involved with Jalan during my time at Recruit, my friends would often ask me to recommend hotels or places to stay. From their perspective, I was a reliable source of information as I was involved in hotel reservations and they would always stay in one of the 3 to 4 places I recommend.”
Holidays or tourism is often referred to as a low frequency genre. As a result, even if they write a review of a hotel, it has little to no credibility without actual user or customer feedback.
“Most people only go on holiday once or twice a year on average. We stay at various hotels each year totaling more than 100 days. SO naturally we believe our reviews and recommendations carry more weight than other. At the time Curation Media was gaining popularity and we decided to follow their hotel reservation model.”
Only the finest
Relux staff only select and feature hotels with the best customer feedback that they have stayed in. This ensures that Relux users will find only the best rated hotels with the highest user satisfaction.
“Effectively were producing content about hotels, much like a magazine. Although producing content involves editing, we keep this to a minimum and focus on quality information regarding user experience.”
Despite their thoughts on user reviews, they do rely on them to some degree in that they approach hotels with the highest or best ratings first.
“If a hotel is rated 5 out of 5, it has a much better chance of having a high customer satisfaction rating.”
Relux uses mainly 5 criteria to judge each hotel: rooms, baths, food, space and service . Rooms are judged based on view, baths on whether it’s an Onsen or Open-air bath, the food on choice and/or variation as well as overall furnishings, accessories and exterior appearance.
“We start with the hotels that have high rankings so it’s rare for one to fail. But we have had occasions where the actual hotel looked very different from the photo or the services were sub-par. unfortunately, these we have to fail.”
Traditional Ryokan/Hotels; the gems of Japanese culture
Relux currently has 6 staff members tasked with travelling to and negotiating with hotels nationwide. Shinozuka commented that the process is slower than he’d like but numbers are slowly increasing: currently their hotel network stands at around 250 with more than 80,000 registered Relux users.
For Shinozuka and his team, the biggest concern is how to advertise and market Relux to increase its users. Most people only go on holiday once or twice a year so launching an app wouldn’t yield the same results as other services. Relux isn’t something a user needs every day either which makes retaining and reaching out to users all the more difficult.
However, they do have plans to expand their services to visitors from overseas. Starting from September 2014, Relux is now available in 10 languages and payments are now accepted in 12 different currencies. The timing coincides with the run up to the Tokyo Olympics for which the government’s Visit Tokyo scheme estimates 20 million foreign visitors will come to watch. Reaching out to these visitors will no doubt contribute greatly to their business.
available in 10 languages
Ryokan are like Japanese theme parks. Everything is quintessentially Japanese; from the exterior to the décor, from the baths to the food. Promoting Ryokan is something I’m passionate about personally and something I feel is a must for Relux. We’ve still got a lot of other hurdles to overcome but I think this is definitely something we can do.
When looking for Ryokan, say in Hakone, the commonly used Jalan or Rakuten Travel have too much information, making it almost impossible to choose. That’s where Relux comes in.
“When you think that most Japanese people struggle with choosing a Ryokan through these reservation sites, what chance to foreign visitors have?!”
Relux endeavors to provide the same hotel information in all the languages it offers. If the client Ryokan doesn’t wish to have certain information listed, it’s simply removed as opposed to applying a strikethrough.
The future of Relux and Loco Partners
“Relux still has a lot of hurdles to overcome and for the next year or so I’d like to focus on addressing those first. Ideally I want Relux to someday become the number one user satisfaction based hotel reservation site.”, states Shinozuka.
With competitors such as Jalan and Rakuten Travel bringing in 500 billion and Ikyu seeing around 50 billion, Relux has hopes of reaching similar numbers in the years to come.
“E-commerce sites traditionally have a bad reputation when it comes to user satisfaction. We want to go against that trend to provide only the best to our users. Once Relux becomes mainstream, we can see ourselves extending our services to flights, rent-a-cars, bus services as well as the food and beverage industry.” — Shinozuka –
(translation: Atsushi Fujii)
Originally published at ignition.co.