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.”