This week, we chat to intheHood (ITH), a finalist in the WiT Japan & North Asia Startup Pitch 2019, about its plans to become one of Japan’s top accommodation providers.
Describe the business, core products and services in one paragraph.
intheHood (ITH) designs and manages hotels and apartment-style lodging, currently in Tokyo’s best neighborhoods. Through automated check-in / check-out, mobile concierge assistance, and thoughtful in-room design, we ensure that a customer stay is seamless and easy.
Through our neighborhood relationships and community events, we offer a travel experience that is authentic and memorable. The holy grail for us is for every guest to go home with a great story to tell.
Who are your key customers?
Primarily, we receive inbound travelers with a balanced split between key Asian and Western source markets. The typical customer profile is an independently-minded, tech-savvy traveller who wants less formality in their stay and wishes to return home with a memorable story.
Who are your key partners?
Property owners, Airbnb and OTA’s.
What business are you most likely to be compared to?
In terms of commercial model, we are similar to WeWork: we take a space, design and furnish it, then rent it out to consumers. We also believe that the potential of our brand lies in the community of travelers and loyal customers that we are able to canvas.
What problem are you trying to solve for your customers?
At traditional hotels, our customers feel that they are paying for services that are not really needed (e.g., daily housekeeping, manned front desk/concierge). For these independent, self-sufficient travelers, we offer a distilled service flow that minimizes the need for human intervention.
For instance: customer contact done via text message, automated check-in / out with the use of smart keys, concise house manual to help navigate apartment amenities, etc.
While travelers are seeking unique and authentic experiences, the lodging offering in Japan is becoming more homogenous and “mass-produced” as supply growth accelerates. Not only do we want to take care of “where you stay” through intuitive hardware- and process-design, we also help
guide “what you do” and “who you meet,” via weekly community happy hours at our office, cultural experiences, jogging tours, and curated neighborhood guides featuring our favorite haunts.
What problem are you trying to solve for your partners?
For real estate investors, we provide a quick-to-launch hospitality asset, focusing on residential to hotel/private lodging conversions. By doing so, we are able to improve investment yield by 200-300 basis points over residential usage. In the beginning, we tested this thesis by acquiring small buildings with our own capital. As real estate investors ourselves, we understand the mindset and priorities of owners.
What financial support did you have to launch the business?
So far ITH has been funded by its founders.
Who validated the idea first – investors or customers?
Customers. Without the macro story of Japan’s inbound tourism boom and the shifting needs of modern travelers, it would have been much harder for our business to gain traction.
What is the revenue model and strategy for profitability?
Our income is driven by room sales and management fees. Our strategy of service automation and text message support ensure that we can scale our inventory efficiently and economically. YTD June 2019 we are generating a 50% RevPAR premium over the competition on Airbnb.
How scalable is this business?
Globally, more than 2 million travelers a day use Airbnb – that’s the rough equivalent of 100% occupancy at Marriott’s hotels worldwide. 14% of inbound travelers to Japan have used Airbnb. The indisputable rise of modern travelers, coupled with the exciting inbound arrivals prospect of Japan (40m arrivals by 2020), gives us great confidence in the future of our business.
Competitive analysis – strengths, weaknesses, opportunities and threats
Strength:
Experience / multi-national team poised for Japan + regional expansion, strong ties to overseas property investors (major driving force behind alternative lodging investment in JP), proven track record of successful operations and rapid expansion (6x inventory growth in 18 months up to March 2019).
Weakness:
Currently lacking direct booking capabilities (we’re working on it!).
Opportunities:
Bridge foreign capital with hospitality real estate investments in Japan.
Threats:
Competition from established Alternative Lodging players, especially from abroad.
Who are the team members and advisors?
Our multi-cultural team (Japanese, American, Taiwanese) comes from various corners of real estate, hospitality and tech. We’ve previously worked in the USA, Hong Kong, China, Taiwan, Singapore, Vietnam, and Indonesia. Our individual experiences include: launching
the Airbnb platform in Asia, creating and operating the Hotel Jen brand of Shangri-La Group, managing corporate rooms sales for major Asian hotel groups, and asset-managing landmark Asian hotels for major institutional investors. Our team is trilingual (English,
Japanese, Mandarin), which is an advantage not only with our multinational guests but also with our offshore property investors.
Our co-founders and advisors include former Blackstone / KKR real estate executives with extensive investment experience in Japan and Greater China.
Why do you think you are the best people to make this vision happen?
We have the right team for the job: To build a hospitality brand that travelers love, we harness our collective experiences in hotels branding, operations, and digital distribution. To grow our inventory, we continue to build on strong relationships with overseas
property investors with keen interest in Japanese real estate. Not only do we want to become a premier hospitality provider in Japan, we also have plans to bring intheHood to other major gateway cities in Asia. That is when our regional market experience kicks in.
What’s the motivation behind doing this?
As individuals, we naturally gravitate towards stories as a way of finding common ground with one another. We believe that travel – with all its variables and unknowns – is the perfect canvas for genuine stories that allow us to connect better with people.
