Business / Corporate

Trunk (Hotel) banks on lodging experience that goes beyond the room

by Cory Baird

Staff Writer

In the morning, two millennial-age men sit at a table together sipping coffee while typing away on their computers. As lunch time approaches, office workers file in for a bite to eat. At dusk, fashionable crowds sip on swanky cocktails and listen to local DJs spin their latest tunes.

This is the scene over the course of a normal day at Trunk (Hotel), a business whose fittingly ambiguous name brings to light a basic question about the company — is it a hotel, or a business with a hotel?

Speaking with Trunk officials and spending a day at the facilities, it’s clear that the company is aiming to be the latter.

“Our business is more than our rooms,” said Haruka Osaka, a spokesman for Trunk, the first venture into the hotel industry by parent company Take and Give Needs Co., which provides wedding planning and event services. (It’s formal name is Take and Give. Needs Co.)

Sitting in the bustling main entrance of the facility in Tokyo’s Shibuya Ward, Osaka lists the many amenities available: a lounge with a bar, a convenience store, two restaurants, four banquet rooms and a chapel for weddings.

These various shops, in addition to tours conducted by the hotel, are part of what she says is the company’s plan to “create a community hub, unlike an exclusive hotel.”

While the community hub model — also referred to as the boutique or experience model — is not a new concept, it has only recently started to take off in Japan.

“Many wealthy people used to want to stay in high-class hotels in good locations, which can be thought of as the ‘classical model,'” said Kimio Morishige, a professor at Osaka Gakuin University who specializes in the hotel industry.

“But recently, a new model of hotel, called the ‘experience model,’ is becoming more popular. These types of hotels try to provide authentic experiences in the community, are concerned with sustainability and often conduct tours,” said Morishige.

“Their popularity has slowly been growing in Japan,” he added.

While diversifying revenue seems like an no-brainer from a business perspective, many of Tokyo’s hotels have instead chosen to carve out market share by simply catering to a specific segment, such as business travelers.

According to a December 2017 estimate by the Japan Tourism Agency, business hotels, which usually offer cheap stays and a no-frills service, account for about 40 percent of all lodging in Tokyo.

But the new business model appears to be paying off so far. Since Trunk (Hotel) opened its doors in May 2017, occupancy rates have averaged around 91 percent, according to data from the company. By comparison, the average occupancy rate in Tokyo was 80 percent throughout 2017, according to the tourism ministry.

Trunk (Hotel) President Yoshitaka Nojiri, who is also president of Take and Give, appears ready to double down on his belief that the experience model is here to stay.

At an investor meeting in July, Nojiri announced plans to develop nine similar hotels in other major cities across Japan by 2027. But the company made it clear that the new properties will not simply mimic the offerings at the Shibuya branch.

“Regarding our future developments, we will continue to create a different concept for each hotel,” Nojiri said in an email to The Japan Times, explaining that each new development will have a different design and carry a different name.

How these plans play out depends on whether the company can continue to tap into the growing tourism boom.

With Trunk estimating that around 85 percent of its guests are from abroad, there is a risk a slump could threaten the revenue stream. Replacing its overseas customers would also be a hefty challenge as room rates average about ¥55,000 ($500) a night, which may be too steep for domestic customers.

Another potential threat to upstarts like Trunk may come from large hotel chains, which are starting to take note that tourists are seeking more than a hotel room, Osaka Gakuin’s Morishige said.

“Some large hotels already offer tourists a chance to connect with local specialists,” said Morishige. “This includes courses on how to make Japanese cuisine and other experiences that can only be tried in Japan.”

Given the variety of its business offerings, the company might be insulated to some degree if competition heats up. While the company does not release details of its sales, spokesman Osaka estimated that around 90 percent of the patrons frequenting the lounge, two restaurants, and convenience store are not guests at the hotel.

It also hosts a variety of concerts, workshops, and other product launches that help cushion its bottom line. In July alone Trunk (Hotel) sponsored 11 separate events.

In addition to the nine facilities being planned, Osaka said it is also holding discussions on adding another Trunk branded facility somewhere in Tokyo.

While the theme of each may differ, the diverse business model is likely to remain.

“On weekends we have weddings, during the week we have corporate events and different exhibitions,” said Osaka. “It all helps support our business.”

Coronavirus banner