In the world of Japanese travel startups, Takaya Shinozuka stands out. The founder and CEO of Reiwa Travel, Shinozuka is not only reshaping the travel tech landscape in Japan but also embodying a spirit of rebellion and innovation inspired by his punk rock roots.
Speaking at WiT Seoul, the entrepreneur, who was the winner of the first WiT Japan Startup Pitch in 2014, disclosed that prior leaving for the US at 20, he was in a punk band. “Did you know that? I loved bands like Sex Pistols, The Clash, Rancid, and lighter ones like Green Day and Offspring.”
For him, “punk isn’t just about music – it’s a mindset”.
Takaya Shinozuka: “Innovation isn’t about making something completely new; it’s about “mixing things together that already exist” in new ways.”
That trip to the US was also a life-changing moment for a boy who hailed from a country where “people are often taught that being the same as everyone else is the right way to live”.
“Japan is a country with strict rules, and people follow them well,” said Shinozuka.
In the US, he experienced the shock of being a minority for the first time, “and I was surprised by how people in America try to solve everything by themselves”.
While his mantra about disruption isn’t as extreme as Sid Vicious (Sex Pistols) who said, “Undermine their pompous authority, reject their moral standards, make anarchy and disorder your trademarks”, Shinozuka has his own philosophy.
“Innovation isn’t about making something completely new; it’s about “mixing things together that already exist” in new ways. This is what the economist Joseph Schumpeter said. Companies like Apple, Google, Uber, and even Coupang, Kakao make new ideas by mixing things that already exist.”
This was the thinking he brought to his first accommodation startup, Relux, founded in 2013. “I wanted to improve the OTA (Online Travel Agency) model. There’s so much information on OTA sites. My first job was actually at one called Jalan. My friends often asked me, “Which hotel should I book for my next trip?” I always wondered why they asked me this, because if they checked Jalan, Booking.com, or Expedia, they could find the answer themselves.
“So, I always asked them a few questions, like their budget, what kind of food they wanted, and whether they preferred mountains or the ocean. Then, I would recommend three hotel options. They would always choose one from those three.
“Even though there are tons of hotels on other OTAs, they would choose from my few recommendations. This was surprising because it showed that people don’t need a lot of information – they just need a few trusted options.”
Three years after his win at the WiT Startup Pitch in Japan, he sold Relux to KDDI Media. Asked what lessons he learnt from that exit, he said, “My biggest success was winning with a selected OTA model, but my biggest failure was also because of it. The service grew over 20 billion JPY in transaction volume, but the market wasn’t as large as I had expected. Why? Because it was “selected”. To aim to be number one in Japan, I have to break that model completely.”
This is what he’s taken the bold step of starting his new business, Reiwa, aimed at the tour package “main market”.
“In other words, I chose to gather tons of information. It is the only way to aim for being number one in Japan and eventually number one in Asia.”
What was even bolder was that Reiwa was started in April 2021 in the midst of the pandemic. “I often think that opportunities lie in non-consensus ideas. When I started the company, most people were against it. During the pandemic, no one was traveling. It even felt like no one would travel for 10 or 20 years. But to me, it felt like a once-in-a-lifetime chance.
“There were three reasons.
A good preparation period: The travel industry in Japan is heavily regulated, requiring many licenses. Development is also challenging. I thought we could complete development and acquire the necessary licenses during the pandemic.
Struggling competitors: Many existing companies in the industry were facing financial difficulties. They couldn’t make new investments and were forced to lay off staff and cut costs.
Easier hiring: While many competitors stopped hiring, we had the freedom to hire as much as we wanted.
“From a competitor’s perspective, it was a hard time. From our perspective, it was a huge opportunity for starting.”
Reiwa was started with a $15m seed round, the biggest seed round for a Japanese travel tech startup. In September, it completed its Series A round, of around $35m. “This is a huge milestone because, during the seed round, investors were only betting on my vision. Because I didn’t have any products, human resources, only vision.
“However, in the Series A round, they evaluated both the performance and the vision from 2.5 years of releasing NEWT. We have to show results through strong KPIs.
“Also, the market environment has been really tough. Growth companies worldwide are struggling to secure financing, so I’m glad we managed to get this huge opportunity in such a challenging time.”
Reiwa’s key product is called NEWT, offering package tours and hotel booking services. “When you hear “package tours”, it might sound old-fashioned, but they’re actually really convenient. You can book a hotel, flight, and activities all at once, it’s cost-effective, and our service is super easy to use.”
The numbers would appear to bear that out. Asia accounts for 70% of the business, its top three destinations are Seoul, Thailand, Taiwan, women under 29 make up 70% of customers, the average length of stay is 4.5 days and the average price – 200,000 Yen.
Asked how these numbers might change in five years, Shinozuka said, “I don’t think the overall ratio will change significantly, but there might be some shifts in what we call the “long” areas. Right now, our biggest market is here in South Korea – Japanese people love South Korea.
“For example, one of the top accommodations or flights brings in over 1,000 customers every month. In just two and a half years, we’ve been able to generate this much traffic. That’s why we want to partner with even more accommodations and flights.
However, we haven’t focused much on Europe or the Middle East yet. We plan to focus on those areas moving forward. So, I think the overall ratio will gradually change over time.”
He sees LLMs (Large Language Models) as a disruptive tech that could propel Reiwa forward. “Most of our products are now driven by Machine Learning. For example, creating package tours used to take a lot of time, but we can now produce them with nearly 20 times the productivity of our competitors. We have 5% of the staff but produce about the same number of tours. Also, passport name checks, which can prevent you from boarding a airplane if done incorrectly, can now be done with almost 100% accuracy using LLM image analysis.
“These are very big opportunities and becoming very strong value-propositions.”
He added, “We will keep investing in package tours and in the near future, hotel segments have huge potential. But as you know, it’s a highly competitive market. We need to create new value propositions that stand out from the competition and focus on them strongly.”
The three areas he intends to invest in are technology – LLMs to be a key focus; business development by ramping up sales activities globally and in Japan; and marketing expenses. “Instead of focusing heavily on traditional ads, we will prioritize social-games and campaigns. This is where we’ll invest.
“As for Korea, it’s a critical market for us. We plan to open a sales office next year. Once the office is set up, I’ll be happy to visit Korea as much as I can, because I love it.”
This year, despite his busy schedule, Shinozuka took time out to do his MBA. “We have a corporate value called LEARN NEW, which means we must keep learning, just like kids, with curiosity and open minds. The more I learn, the more I realize how little I know,” he said, quoting Einstein.
When asked where he sees Reiwa Travel in 10 years, he said, “It’s hard to predict, but I know we’ll still be aiming for higher peaks.”
His journey is far from over, and like his punk rock heroes, he’s determined to keep breaking barriers and pushing boundaries in the “main market” of travel.
AloJapan.com