How Stripe is powering a hospitality subscription service in Japan

With over 200 businesses under its umbrella
spanning transportation, real estate and hospitality, Tokyu Corporation saw an
opportunity to optimize revenue streams, particularly during off-peak periods,
by filling vacancies at its hotels and resorts. 

The 100-year-old conglomerate – with annual
operating revenue exceeding $6 billion – recently partnered with financial platform Stripe to introduce TsugiTsugi,
a flat-rate accommodation subscription service.

Speaking to WiT, Paul Harapin, Stripe’s
chief revenue officer for Asia Pacific and Japan, said, “The idea for
TsugiTsugi emerged from an in-house entrepreneurship initiative to spur
employees to come up with innovative ideas to shape the company’s future. The
service constitutes subscription plans that allow customers to book anywhere
from two to 30 nights per month at any of Tokyu and their partner
companies’ more than 140 locations, which include city hotels, resorts, ryokans [Japanese traditional inns] and glamping facilities.”

“Customers also receive travel and
accommodation recommendations through an [artificial intelligence]-backed concierge service adorned
with ukiyo-e design,” Harapin said, who also highlighted TsugiTsugi’s more
recent inclusion of B2B services.

“New subscription plans allow corporations to
purchase nights in bulk and share them with employees. Tokyu is also planning
to expand TsugiTsugi to include more accommodation facilities as well as
workspaces, plane tickets and local guides.”

On Stripe’s tech contributions, Harapin said,
“By integrating Stripe’s billing software, Tokyu can offer a more convenient
and efficient subscription-based model, streamlining the booking process and
improving customer engagement.” 

TsugiTsugi is also tapping into multiple
Stripe solutions including Checkout and Radar to enhance user experience while
addressing critical business needs such as subscription management and fraud
prevention.

Takaji Hataba, senior manager of business
strategy for Tokyu’s hospitality division, emphasized the significance of
Stripe’s involvement.

“Stripe is not just about payments, it’s about
giving large businesses like ours the tools to innovate quickly,” he said. By
leveraging Stripe’s solutions, Tokyu improved its checkout conversion rate by
20%, streamlining the booking process and enhancing revenue management
efficiency.

“The potential market size for a subscription
service for accommodation in APAC [the Asia-Pacific region] is substantial, considering the region’s
growing demand for travel and tourism,” Harapin said.

He further explained: “In Asia, regional
hub cities including Tokyo and Singapore experienced hotel
occupancy growth over 100% year on year in 2023 compared to 2022. Tokyo
commands the highest average room rates in the region, averaging $281 a night.
At the same time, the region’s monthly occupancy rate is still below
pre-pandemic levels, suggesting significant growth potential.”

“Statista estimates
that APAC’s monthly occupancy rate in September 2023 reached 67% compared to
2019 levels,” continued Harapin. “This means that businesses have the
opportunity to create innovative solutions to identify and capture new customer
demand as consumer confidence returns.”

At the core, the partnership between Tokyu and
Stripe is built on the premise of flexibility – with so much customization and personalization
being demanded by today’s travelers, a subscription service like TsugiTsugi
needed to be able to accommodate different consumer behavior patterns on the
fly.

“Ideal customers for TsugiTsugi include
frequent travelers, digital natives and individuals seeking convenience and
flexibility in their accommodation bookings,” Harapin said. 

“To maximize the customer experience for these
audiences, Tokyu needs to ensure it can have the flexibility to add and remove
subscription plans, change fees during sales promotions, collect recurring
fees and manage customers’ plans. Tokyu initially tried to do this with its
existing payments provider but found the process to be slow and unreliable. To
solve this, Tokyu turned to Stripe for the flexibility, automation
capabilities and speed of its platform, both to improve customer experience,
but also for back-end productivity improvements of its business operations.”

Harapin, having started and scaled various
companies across the pan-Asian region over almost 30 years, which include
VMware and Tivoli Systems, highlighted the burgeoning demand for travel
post-pandemic and emphasized the need for businesses to innovate to meet
evolving customer preferences.

Moreover, he made it clear there’s
plenty of room for growth in the current travel landscape, especially with a
renewed urge to explore and heightened demand for tech-based solutions to gaps
in the travel and hospitality space. 

According to Harapin, “With the global travel
sector estimated to increase by 50%
from 2022 to 2033 and APAC leading the sector, we are optimistic of the
opportunities for businesses to tap on the growing demand for
subscription-based services. 

“However, similar to other industries, travel
and tourism businesses will also need to tackle challenges such as maximizing
customer experience, maintaining competitive pricing and addressing regulatory
hurdles.”

And he said, “The most innovative businesses
are those that are able to find creative ways to utilize unused resources to
stay ahead in a dynamic and competitive market landscape. TsugiTsugi is a great
example of this.”

*This article originally appeared in WebinTravel.