Samsung Ventures backs Japan tourism operator

Stonebridge Ventures, IMM Investment, and Shinhan Capital joined the $7 million investment, which brought total funding to date to $18 million. Previous backers include Korea’s Daesung Venture Capital and ES Investor, as well as US-based 500 Startups.

H2O began operations in 2015 with a home cleaning service in Korea under the name Wahome. It shifted focus toward hotel and vacation rental management in Japan in 2017, acquiring a number of online and offline accommodation management companies. The Japan footprint is now said to include 5,000 managed rooms and a recently opened hotel adjacent to the Universal Studios theme park in Osaka.

John Lee, H2O’s founder and CEO, attributes the momentum in part to a sharp focus on the use of technology to minimize the traditional fixed costs that lower the yield of hotel real estate while reducing friction in practical operational processes. The company manages locations with no on-site employee support by connecting guests and housekeepers with rooms online.

"We found that the way hotels have been managing the real estate hasn't changed over centuries and figured it was very inefficient,” Lee said in a statement. “I named our company H2O, which is a shortened version of Hospitality 2.0, to show people that we are aiming to develop a second generation of operational method for hospitality facilities that can be and should be managed without on-site human resources.”

The company cites growth upside in a housing and accommodation law passed by the Japanese government in mid-2018, which has allowed individuals to convert their homes into vacation rental facilities. Japan is said to suffer from a severe shortfall in vacation accommodation and is hoping to attract 60 million visitors spending JPY15 trillion ($137 billion) this year as it hosts the Olympic Games in Tokyo.

Previous venture capital investment in this opportunity set includes a JPY1.4 billion round for Hyakusenrenma, an Airbnb-style vacation rentals platform that specializes in providing rural accommodation during peak travel periods when urban accommodation is less available. Meanwhile, Metro Engines, a start-up that provides pricing tools for online booking sites, has raised JPY700 million.

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• Topics
• North Asia
• Early-stage
• Consumer
• Japan
• Samsung
• IMM Investment
• TMT