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.