Relux, a “satisfaction-guaranteed online marketplace for Japanese inns”, won first prize in the first ever travel start-up competition in Japan held in conjunction with WIT Japan last Friday in Tokyo.
Relux, started up by LocoPartners in March this year, beat five other start-ups in the WIT Japan Start-Up Pitch.
The market for Japanese inns or ryokans is the hardest segment to crack in Japanese accommodation and Relux, founded by Takaya Shinozuka, is making a go of it. Shinozuka and his team have travel experience, having worked with brands such as Japan Travel Bureau and Travelzoo.
Indication of the strong interest in this segment is evident – Loco Partners has so far secured 60 million yen (about $615,000) in funding fromCyberAgent Ventures and Recruit Incubation Partners.
Shinozuka said he started Relux because “I love to visit to Japanese inns and ryokans, but there are no websites where you can easily find them. This is why I think there is an opportunity to make our business.
“Also lots of Japanese inns find it difficult to increase their profits with other OTAs. They need to spend marketing costs with them. Our model is different.”
Relux is a members-only service. Users apply for membership using Facebook credentials. Shinozuka says most members are in their 30s to 40s, with many being doctors, lawyers, and top executives. Membership is free.
Relux charges a 15% commission – which sits between that of Japanese OTAs (about 10%) and that of foreign OTAs (in the 20s). “We wanted to be higher than Japanese OTAs because we aim to provide more value by doing better marketing promotions and lower than the foreign brands.”
According to Shinozuka, Relux has three points of difference:
1. Satisfaction Guarantee
2. Best Rate Guarantee
3. Members-only special offers
Its team negotiates with ryokans to create exclusive travel plans. The average rate per person per night is 40,000 yen including dinner and breakfast. Its packages range from 30,000 yen to 100,000 yen. It also curates what it calls “high satisfaction” ryokans by taking into account reviews “based on recommendations by executives who use such accommodation more than 100 times a year, as well as thorough research of online and offline reviews, and actual usage or a visit by a Relux representative”. (See article)
And if customers are not happy, they can ask for money back – making them the first in the Japanese travel industry to have such a policy.
Relux’s aim is to eventually make Japanese inns accessible to foreign travellers and “popular all over the world and grow their business”, said Shinozuka. It plans to launch an English website soon.
Asked why they’re the best team to make this happen, he said, “We have a lot of experience and we have the strong passion to do it. We love Japan, we love Japanese Inns, and we love travel!”
The WIT Japan Start-Up Pitch included one-on-one mentoring and coaching by a panel of judges and Stephan Ekbergh, CEO of Travelstart (pictured right), the coach to Relux, said, “I believe their model has got legs. It’s up there with Kiwi Collection, Tablet, etc. It’s proven. Some issues remain regarding payments and collection of commissions.”
As to what went into the coaching session, Ekbergh said, “We looked at everything. Their value proposition, the customer promise, what differentiates Relux from other OTAs like booking.com.
“I suggested that just like the fact that ryokans are simple and zen so should Relux be in everything – it should ooze simplicity. We went through the presentation, cut a couple of slides here and there and added more about the whole team to show that they are actually a full team.
“I also suggested that they should go after the international market, since we all believe the international influx of visitors will increase and that’s a big opportunity.”
Kei Shibata, CEO of Venture Republic (pictured left), which sponsored the Start-Up Pitch and was one of the judges, said, “I like the team and the fact that this is a high margin business and the model is already proven by Ikyu that it can make real money.
“The key to success is execution and the quality of curated contents ie can they really do a good job of selecting REALLY good ryokans and stick with them? Their challenge long term is scalability. Obviously the more curated the content, the less scalability of the business they face.
“They might have to end up going outside Japan at pretty early stage for pursuing scale especially given that they are already funded by VC.”
See Relux presentation here
