The Real Reason I Started "NOT A HOTEL"
The other day, I finally released NOT A HOTEL, and I am feeling a bit relieved.
What is "NOT A HOTEL"?
It is a completely new base for living that can be your home, a vacation house, or sometimes even a hotel.
What we are envisioning is a world view of "Your home all over the world."
I think it would be wonderful if we could build "NOT A HOTEL" in every corner of the globe and create a state where you have your own home anywhere in the world.
Realizing "D2C" for housing
A distinctive feature of NOT A HOTEL is that each room is sold "online." We sell the housing "directly" to the owner.
In other words, it is "D2C for housing."
While you might see apartment catalogs on websites, a site with a shopping cart to sell housing has hardly existed until now, has it?
Since I started my business in 2007, I have been working in "e-commerce." I originally ran a service specializing in "apparel EC," and in 2015, I was able to join the ZOZO Group.
"Next, what can I sell through EC?"
As a result of thinking about that, the idea of "selling housing" emerged. So, I created an intuitive site where you can "add to cart" a product called housing.
However, with the announcement the other day, the impact of "buy a house right now" took on a life of its own (which I am grateful for!), so I felt it was necessary to explain it a bit more carefully.
So, in this note, I would like to talk in detail about what kind of business model NOT A HOTEL has and what kind of world it is aiming for.
How is "NOT A HOTEL" as an investment product?
At the time of the release the other day, a discussion arose about "How is NOT A HOTEL as an investment product?"
So, I will share our perspective on that.
To start with the conclusion, it is that "it is not attractive as an investment product."
For example, there is a room called SURF where you can use NOT A HOTEL for 30 days every year for 35.8 million yen. When you calculate the yield with the simulator, the figure is around 2%.
A 2% yield on a 35.8 million yen investment...
This is likely not a good figure. Therefore, it makes no sense to view NOT A HOTEL as a simple investment product. I am also very clear with our customers, telling them,“I do not recommend purchasing this as an investment product.”I tell them this directly.
The proposal of "making a hotel your home"
However, what if you think about it this way?
Many people spend hundreds of thousands of yen a year on travel. A good hotel can cost hundreds of thousands of yen per night. There are probably people who spend over a million yen a year just on travel expenses.
What we are proposing is that“making a hotel a place to live” is the most economically advantageous option.
For example, a 35.8 million yen room at NOT A HOTEL is a “super suite” by regular hotel standards. It is about 300 square meters and comes with a pool and a sauna.
If you were to stay there for 30 days a year at 200,000 yen per night, it would cost 6 million yen. This means that if you use it for more than six years, the cost would exceed the purchase price of 35.8 million yen.
While it may seem subtle if you look only at the “yield” as a simple investment product,I believe there is a significant economic benefit when you consider “total leisure spending, such as travel.”
A “third asset” that you can enjoy while using it yourself
Moreover, NOT A HOTEL does not just sell “hotel usage rights.” Since you are “owning an asset,” it is also possible to buy and sell it like regular real estate.
If, after a few years,you were able to sell it for the same amount you bought it for, it would be as if the hotel stays you enjoyed until then were free.
Of course, the risk of a price drop can happen with any real estate. I think what we can do iscreate a secondary marketplace that is easy to trade in*and create a new value whereworks by famous architects “become assets.”(*I would like to write more about the secondary market in a future note.)
Bonds and stocks are assets that seek yield, but NOT A HOTEL is“a third asset that you can enjoy while using it yourself.”I hope to provide a new option for everyone.
Rethinking the business model of hotels and vacation homes
I am from Miyazaki, but I often came to Tokyo from Miyazaki for work. I would stay in hotels for about 100 days a year there.
That is why I really love hotels.
However, a slightly nice hotel can cost over 100,000 yen a night, even if it is not that spacious. I was always wondering,“Why does it cost this much?”When I looked into it, several reasons became clear.
One isthe existence of vacancies.
It goes without saying that it is difficult to keep a hotel's occupancy rate at 100% at all times. If the occupancy rate is 50%, there is a cost to maintain the 50% vacancy. In the business model, someone has to bear the cost of that portion.
Also, when a hotel is built using bank loans, the interest costs are sometimes passed on to the hotel rates.
There are other reasons as well, but when you consider the hotel business model in this way, the rates inevitably go up.
Another thing I've been thinking about is vacation homes.
They say that due to the pandemic, vacation homes have been more active in the last few decades than ever before. However, when I asked a management company for vacation homes in Karuizawa, they said the average annual usage by owners is only about 20 to 40 days.
I think that's a bit of a waste, too.
When you look at the business models for both hotels and vacation homes, there are inevitably parts that feel like a "waste." I'm hoping that NOT A HOTEL can help solve those kinds of issues.
"You can't beat someone who loves what they do" Lessons from Mr. Maezawa
Let me also talk a little about how NOT A HOTEL came to be. The person who has truly influenced me is ZOZO founder, Mr. Maezawa.
Mr. Maezawa would always tell everyone at ZOZO, "You can't beat someone who loves what they do." Nowadays, everyone is talented enough on their own. So, he taught me that unless you are doing what you love, you won't be able to stand out from the crowd.
Even after leaving ZOZO, Mr. Maezawa was the one who practiced this most closely and showed me the way by launching various businesses and taking on the challenge of space travel.
It's true that "ZOZO" is full of people who love fashion. Looking abroad, it's clear that "Spotify" was created by people who love music, and "Shopify" also started when the founder built a system to sell his own snowboards. That has now become a company worth trillions of yen.
When I thought, "Well, what is it that I love?", I realized it was "hotels," where I was staying 100 nights a year, and also "food" and things like that.
And so, I decided to go into the hotel business.
I couldn't borrow money from the bank
Around that time, it just so happened that I had decided to lease hotel land from Miyazaki City. It's a place called "Aoshima" in Miyazaki City.
I went to the bank with a plan close to the current architectural design, but to make a long story short, I couldn't borrow the money.
It was a plan for "300 square meters per room," but the bank told me, "We could consider it if you split it into ten 30-square-meter rooms." That was when I realized, "Oh, maybe that's why all hotels in Japan are the same."
I had no choice but to start thinking about ways to raise funds other than through banks.
And then, "Why don't we sell to owners first via D2C?" was the idea that came up.
I also knew that "vacation homes are only occupied for about 30 days a year." That means we should operate them as hotels for the remaining 330 days. By doing that, the developers can secure lower interest rates, and there is no waste for the owners.
The fact that I couldn't get a loan from a bank was also one of the triggers for the current business model.
If I had built ten 30-square-meter rooms back then, it would have been a completely different model. It might have become "THE HOTEL." "Let's build something that isn't a hotel" was the reason behind the name "NOT A HOTEL."
Is "Airbnb" not good enough?
When I explain the NOT A HOTEL business model, people sometimes say, "But there's Airbnb." They say, "If you buy a vacation home or a house, you can just rent it out and make money, right?"
But Airbnb is actually quite difficult when you try to rent it out. It might not comply with the Hotel Business Act, making it impossible to operate as a hotel, or the management might be cumbersome. Even if you try to do it, it's hard to get started, and many people give up because the operational costs are too high.
What is the difference between NOT A HOTEL and Airbnb?
The difference is that Airbnb is a service primarily designed for "people renting a home" or "people staying as hotel guests," whereas we are a service built with "the owner's side" in mind.
When you want to operate it as a hotel, the NOT A HOTEL team handles all the operations.
Initially, we had a tagline: "Switch between your home and a hotel with one tap." Now, we've even removed the "one tap" part, and it's a system where it automatically becomes a hotel when the owner isn't using it.
All the owner has to do is check their earnings. There is no need to arrange cleaning or anything else.
If you set the days you want to use the room, it will automatically start operating as a hotel for the rest of the time. I think this is quite convenient.
Income when not in use is "fixed"
"But if it's not used as a hotel very often, you won't make money, right?" you might think.
But actually, the income when not in use is stable.
If you don't use the property as your home, it automatically becomes a system where "number of unused days x fixed amount" is received as "income when not in use".
It doesn't matter if the hotel was actually booked or not. We provide a guarantee to buy out the days it wasn't occupied. This is also often misunderstood. The income when not in use is "fixed".
If you rent out a property as a hotel for half the time, the monthly management fees you pay and the income from when it's not in use will break even. Including utilities, it will break even.
That is why it is designed so that if you enjoy it yourself for half the time and rent it out for the other half, you won't have any running costs.
I want to reach those who love architecture and technology
I often end up talking about economics, but what I really want you to focus on is the "architecture".
The architectural design also draws a line from the gaudy styles of traditional luxury hotels. It is not about the image of being at the top of a hierarchy, but rather about cutting-edge "new affluence". I want those who understand that to be the first to become owners.
The people who are currently interested in NOT A HOTEL are, if anything, those who “love it as architecture”.
NOT A HOTEL is better than paying for hotels or vacation homes. On top of that, if people buy it because they appreciate the excellence of the architecture and technology, I believe we currently have no competitors.
Once the hotels are actually built, I am sure you will be moved. You will surely understand, "This price is definitely justified."
I hope you look forward to the completion.
The way of living in the future that we envision
Your home, all over the world.
That is the future way of living we want to create.
When you buy one NOT A HOTEL property, you will be able to “mutually use” other NOT A HOTEL properties.
Usually, when a new property is built, people tend to think, "Oh, I should have bought that one!" But with NOT A HOTEL, every time a new property is built, you can think, “I have another home I can stay in!”
Just by choosing “Where shall I live tomorrow?” on the app like this, it gets exciting.
It is the feeling that "I have gained a home not only in Miyazaki, but also in Nasu," or "Now I have homes in Hokkaido and Okinawa as well."
Eventually, we want to build NOT A HOTEL properties overseas as well. I am fair-skinned but I love summer, so I fantasize about how it would be fun to have a home in Australia so it could be summer all year round.
"I want to live in New York," "I want to live in Rome," "I want to live in Dubai"... until now, those dreams have remained just dreams.
But with NOT A HOTEL, that can come true. You can experience the feeling of having your own homes increasing all over the world.
Economic logic is necessary to make a dream a reality
This has become a bit long, but did I convey what I wanted to say?
The real reason I started "NOT A HOTEL".
It is not because I want to spread investment properties. Rather, I am creating a new lifestyle, a worldview of a new way of living, in and of itself.
And that requires "economic logic."
A system was needed to rent it out when not in use. That is by no means "to earn a yield," but rather"to make a new lifestyle viable."
It wouldn't work without a system where "when you are not living there, or when you are using another home, it can become a hotel." Otherwise, you would end up having to buy two houses. Because there is a system where "it becomes a hotel when you are not there" that leads to income, this lifestyle can be realized.
Economics and lifestyle are not contradictory. Rather, I believe thatbecause there is economic viability, an ideal life can be realized.
It is no good to just paint a dream, and you cannot create something good if you only think about money. I believe that only when an ideal future and economic logic coexist can you ultimately create a new world, and I continue to build NOT A HOTEL today while believing that.
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At NOT A HOTEL, we are actively looking for colleagues to join us in realizing our vision of "Your home, all over the world"! Please see the link below for details.
https://youtrust.jp/companies/notahotel