Japanese fintech startup with fixed price model expands to South Korea
In terms of timing, Kenji Sunada, founder and CEO of KabuK Style, couldn’t have picked a worse moment to launch his online subscription travel service in 2019. “It was very disappointing,” he laughed. “We didn’t expect that the first year, there would be no travel.”
Sunada, however, is no stranger to playing the long game, as well as perseverance and grit. His inspiration to start a travel business that would allow Japanese travellers to lock in hotel prices for a specific period with a subscription fee came from a speech John F Kennedy had given at the Space Kennedy Centre during his “Man On The Moon” moment.
Kenji Sunada: “Blockchain technology opens everything up … healthy competition is exactly what we need.”
Recounted Sunada, “When he asked the janitor what he did, the janitor replied, ‘I’m helping to put a man on the moon’. As in this story, people can find happiness by finding their purpose in something greater than themselves. Travelling can help us find that sense of purpose. But I didn’t choose to travel just for that limited purpose, it’s more of a vague feeling. If people travelled more, more wonderful things would come out of it.
“We want to develop a pricing model where people are protected from price changes so they can travel more. The reason we’re tokenising reservations is because we believe the travel industry’s increasingly complex system is raising barriers to entry due to the enormous cost of just connecting systems. Blockchain technology opens everything up. It decentralises. When new services can more easily access inventory, innovation in the industry will accelerate, guests will be better served, and the overall market size of the industry will grow. We believe that healthy competition is exactly what we need.”
It’s a formula that seems to be working. In the four years since launch, KabuK, through its HafH (Home Away From Home) programme, has sold over 300,000 room nights. Subscribers lock in a price for three months and then travel when they want. In other words, KabuK is acting like a bank, and Sunada acknowledges that it’s a very cash-friendly business.
“We are an opaque market and that makes it easy for hotels to work with us,” he said.
In March 2020, it raised 1 billion yen from top-tier investors like JR WEST INNOVATIONS and NEC Capital Solutions, and another 125m yen in April 2021. In total, Sunada said the company has raised more than US$30 million since its launch.
While its business is predominantly hotels at the moment, it conducted a trial with Japan Airlines where between August and November 2021, it offered a subscription service for JPY36,000 in which customers could book on 10 routes from Haneda Airport (Tokyo) (Shin-Chitose, Kushiro, Yamagata, Komatsu, Nanki-Shirahama, Kochi, Nagasaki, Miyazaki, Naha, Miyako).
A total of 500 HafH members signed up. “We found out that 80% of participants signed up without a destination in mind, their first trip was to a known destination but after that, the next two trips were to less known places – which gives us hope that we can diversify travel destinations and spark regional revitalization,” said Sunada.
It conducted another test from June 2022 to March 2023 and following the success of the two tests, KabuK Style and JAL will now perform direct system integration without going through other services. “We will begin beta testing for an airline subscription service that allows for immediate purchase of JAL airline tickets through HafH from May 11, 2023,” said KabuK.
It is currently working on a trial with Japan Railways to sell rail tickets in a similar model.
Sunada’s knowledge of price changes came from his trading background in financial markets. In fact, he started at 10 when he traded with his father’s account. Fortunately, he made money for Dad. Discovering this knack for trading, he went on to build a career in banking and finance, working on mega deals .
But at the back of his mind was always his desire to do something in travel, seeing it as an industry that could cross borders. KabuK Style, as an idea, was conceptualized in 2008. “I was a good trader, I loved it but I was curious about the concept of pricing. Why does price change when the product or company value does not? Why are stock prices so volatile? My personal goal is to ask why does price need to change?”
What KabuK does is get rooms at wholesale prices, fix the price and sell to consumers at a fixed subscription fee. “About 60% of our customers are in their 20s and 30s, which is a younger demographic than typical travel services, but recently we have seen a lot of use from people in their 40s and 50s. , and it’s . It’s a unique channel for younger consumers, who are influencers in their own right.”
It currently has approximately 2,000 hotels globally across 30 countries, more than half of which are in Japan. Its business is predominantly domestic right now but it is expanding to other markets, with South Korea its first stop. It acquired a local hotel revenue management system in Busan last year, and in February, it established a South Korean office and launched its service in South Korea two months after. It is eyeing Taiwan and Malaysia as potential markets.
“Technology will change the travel industry and we will continue to invest in technology to deliver on our mission of creating a diverse culture through travel,” said Sunada.
Note: Kenji Sunada will be speaking at WiT Japan & North Asia, Tokyo, July 5-6, on his expansion plans beyond Japan and how he intends to scale his fixed price model to other markets. Check out programme here and sign up here.
