Japanese Hospitality Brand Raises US $ 1 Million Launch, Outperforms Hotel Market Through COVID-19 Pandemic
After completing its first year of operation at 80% occupancy, Section L, a Tokyo-based hotel and cohabitation operator, has lifted its seed funding round.
TOKYO, JAPAN, December 1, 2021 /EINPresswire.com/ – After completing its first year of operation at 80% occupancy, Section L, a Tokyo-based hotel and cohabitation operator, has raised its seed funding round for a total amount of $ 1 million. The cycle was led by Feedback Ventures and Amane Nakashima, president of Kewpie Corporation. Section L will use the product to develop its property management business and create its proprietary community software.
[A Short-Term Rental and Co-Living Business that launched and thrived during the pandemic]
Section L opened its first hotel, Section L Ginza East, in July 2020 in Chuo-ku, Tokyo. The building was converted from a multi-family residential building to a hotel and achieved a cash return of 6.2% in the first year (compared to 2.7% if it had remained as a normal multi-family building). It also achieved an average monthly occupancy rate of 80%, while Tokyo’s larger hotel market saw its occupancy rate drop to 39% during the same period. Its ADR (Average Daily Rate) also maintained more than double the number of competing facilities across the city.
(Data citation: Japan Tourism Agency, Accommodation Statistics Survey)
In March 2021, Section L opened its second location, Section L Asakusa East in Sumida-ku, Tokyo.
With inbound travelers being excluded from Japan, Section L turned to the Japanese domestic travel market, attracting business and leisure travelers for short stays. The company’s hotels are also capturing longer-term tenants with stays of up to 7 months. When inbound travel does eventually return, the company expects a sharp increase in occupancy and room rates.
[Property management, powered by original software]
Section L plans to expand its property management activities by converting multi-family housing to licensed housing and cohabitation facilities. In addition to managing the facilities on behalf of investors, the company can also negotiate transactions, as it holds a Japanese real estate license. Currently, L section hotels are owned by a Taiwan-based real estate private equity fund. The company is in advanced talks with several foreign and Japanese institutional investors on real estate partnerships.
At the same time, Section L launched InterSection, its proprietary software suite. This allows the company to perform unmanned guest check-in as well as remote customer service, resulting in reduced operating costs. The Section L properties are operating at a gross operating margin of 70%.
The main feature of InterSection is its community networking capabilities. Anyone staying at the L Section properties will be able to create a simple profile and connect with other guests or tenants to organize events, outings and even provide each other with helpful recommendations.
âWhether you’re a bright-eyed traveler or a long-time resident, everyone has something to gain from the community,â says Howard Ho, co-founder and CEO, âand our software helps turn strangers into neighbors, in a safe environment facilitated by our community team.
The company is in advanced talks to license its software to other Japanese hotel operators by the first quarter of 2022.
[Plans for the Future]
With the proceeds of its seed funding, Section L has already grown its team from 4 to 15, including key roles in software product, community management and real estate operations. The company plans to develop a chain of hotels and apartments in Japan and throughout Asia, as well as providing software solutions to other like-minded operators, with a focus on strengthening the community.
[About K.K. Section L]
KK Section L is a hotel company created in March 2020.
The founding team is a group of hospitality management professionals, made up of Cornell University Hospitality School graduates and alumni of major hotel chains such as Shangri-La and Four Seasons. The main businesses are the operation of Section L brand apartment hotels and the development of operating software / community platform.