This Low-Tech Japan Travel Startup is Going Global – Bed & Art

Today we are going low-tech. Sledgehammers and paint brushes low tech.

Keigo Fukugaki has started his own hotel brand, BnA, which stands for Bed & Art. It’s not a platform. It’s not an online marketplace. There isn’t (yet) even a meaningful e-commerce component. BnA is a new kind of hotel that places travelers not only in hotel rooms with interesting decor, but plugs them into the local artistic community.

It’s an incredibly ambitious project, but Keigo and his team have three small prototype hotels up and running, and they are in the process of building a full scale facility in Japan and already in talks about international expansion.

With SaaS companies and digital marketplaces dominating the news, sometimes it's nice to know that some startups are running businesses based on concrete and lumber.

It’s a fascinating interview, and I think you’ll enjoy it.

Show Notes for Startups

Why old office buildings make ideal art spaces The dangers of standardization in Japan and global the hotel industry Why Bed&Art is the anti-Airbnb Why crowdfunding should never be about the money any more Why Keigo left San Francisco to start his startup in Japan The very real danger of stretching yourself too thin Why the differences between Japanese and American programmers are real and important

Links from the Founder

Learn more about Bed and Art Follow Keigo on twitter @makeshiftjp Friend him on Facebook Checkout Keigo's design firm Makeshift Honey Wedding The BnA prototype as Airbnb in Ikebukuro Their successful crowdfunding campaign

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Transcript from Japan Disrupting Japan, episode 71.

Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs. I'm Tim Romero and thanks for joining me.

You know, more than anything else, Disrupting Japan is about introducing you to the people who are changing business in Japan. I mean, really introducing you to them. Not the banal book tour interviews you hear everywhere else, but to let you get to know the real people starting things up in Japan. People you would love to sit down and have a beer with and with whom I’m lucky enough to do just that. It’s letting you know the people behind the startups. And although Disrupting Japan is a business podcast, business is personal.

Hiding behind every great startup with impressive numbers, there is an interesting story about how it got started. And hiding behind that interesting story is the story of what really happened and the real goals, and the real successes, and real disappointments. And what I love about podcasting is that it makes it so easy for you to hear when someone is telling a PR approved origin story and when someone is really speaking from the heart, when they are telling you about something that really matters to them.

Well, I’ve got a great story for you today and listeners have commented that I’ve been a bit tech heavy recently, so today, we’re going to meet someone who is decidedly low tech, as in paint brushes and hammers low tech. Keigo Fukugaki has started his own hotel brand, Bed & Art, in which he tries to merge travel with supporting the local artistic community. It’s an ambitious project to be sure and as the interview progressed, I went from thinking, “This won’t work,” to, “Nah, this is way too much of a long shot to really work,” to “You know, this is just crazy and quirky enough that is just might work.”

In this age of SAS, Airbnb, and middleware, sometimes it’s refreshing to find a startup that deals in concrete. But, you know, Keigo tell that story much better than I can. So let’s hear from our sponsors and get right to the interview. [pro_ad_display_adzone id="1404" info_text="Sponsored by" font_color="grey" ]

[Interview]

Tim: So cheers. We’re sitting here with Keigo Fukugaki of Bed & Art, which is sort of a distributed hotel art space, but you’re going to be able to explain it much better than me, so what is Bed & Art?

Keigo: Basically, we’re a hotel startup and we’re trying to find a new way to start a hotel brand, not a real estate mogul. We’re just four guys with a little bit of cash. We also work with a lot of artists and we’re mixing the hotel business with art to create a new kind of travel experience.

Tim: Okay. Concretely, what are you doing?

Keigo: We’re creating one of a kind rooms with artists and every time someone stays in those rooms, part of the revenue goes back to the artist. It’s bringing together a lot of unique travellers and the local artists together.

Tim: Are these apartments that you own? Are they apartments that other people are letting you renovate? How does it work?

Keigo: We’re actually a hotel, registered as a hotel. So we’re taking over old buildings and we’re renovating those, creating lobby, bar, hotel rooms. And in Tokyo, there’s a lot of these office buildings that we’re able to convert into a hotel. And I think that’s new. Usually when you think about a hotel, it’s about where it is and how beautiful the exterior is.

Tim: Sure. The hotel industry has really become standardized. And that’s good and bad. You know what to expect. But every room is completely different and some of them are really crazy. We’ll put links to the site so everyone can see it. Always hard to describe art in an audio podcast. You’ve got a couple of hotels now, right? One in Koenji, one in Kyoto.

Keigo: And then we have a pilot room that started off as an Airbnb room in Ikebukuro.

Tim: So how many rooms are in each of these hotels?

Keigo: Very small. The one in Koenji has 2 rooms, and Ikebukuro has one room, and Kyoto has 3 rooms.

Tim: All right. Is your marketing primarily via Airbnb, or do you use Expedia, or word of mouth? How do you get your bookings?

Keigo: Most of our bookings come through Expedia and Booking.com.

Tim: Really? I would have figured it would have been Airbnb.

Keigo: We’re actually at a separate price range than what an Airbnb customer might be looking for. So we’re priced at the same level as a hotel, so you’re looking at $160-200 something per night. Usually, in Tokyo at least, Airbnb costs are much lower than that. So even though we have some of our rooms listed on Airbnb, most of our customers don’t come through there. Our target market is actually slightly separate from an Airbnb customer base. We believe we’re target towards young professionals who are looking for great service, but also a unique experience as well.

Tim: Interesting. I guess in some ways, you’re kind of the anti-Airbnb. Because when you rent an Airbnb pretty much anywhere in the world these days, you’re going to go into the same type of room with the same IKEA furniture, and that’s all fine, but it’s getting sort of standardized like the hotel experience.

Keigo: Exactly. It’s interesting that you say this because this is exactly why we started BnA. And I mentioned that we started the Ikebukuro project as a pilot because two of our partners, or co-founders, they used to run a lot of Airbnbs in Tokyo and they were actually Airbnb moguls. They had something like 40 Airbnbs in Tokyo, and they were one of the first ones to really start making that into a pseudo business. And they were killing it but I came in and I actually made fun of them, said, “Basically, you guys are actually making this cookie cutter room with IKEA furniture, and all you’re doing is making money.”

Tim: There’s nothing wrong with that.

Keigo: There’s definitely nothing wrong with that but these guys, at the time, they were like 27—brilliant guys. And that’s why I’m working with them. But I realized, at 27, I think if you have a higher goal, you can achieve much, much more interesting things. And that’s where I came in and kind of poked around, and they agreed. They wanted to do something more interesting.

Tim: Now, Airbnb rates in the last year or so have really been coming down in Japan. Are they still in that Airbnb business or did they sort of pare that back?

Keigo: They’re in it, but they have definitely pulled back. They realized the competition is really high, in terms of how many listing there are. So even if you are doing a great job, the price will come down.

Tim: It’s kind of a race to the bottom now, now that everyone expects the IKEA furniture. All right. So tell me about your customers. Who stays here and who goes to the bar?

Keigo: We call them like-minded people. To us, our focus is really to try and find who would be our best friends in the rest of the world. And these people are young, hip, they know what they want. When they travel, they’re well-travelled, so they expect a certain amount of an unknown. And they feel that they can handle certain amounts of differences.

Tim: Are your guests mostly foreign or Japanese?

Keigo: They’re mostly foreign and they’re actually all from Europe, or the US, or Australia. So western countries are our main customer base.

Tim: Are they people from, let’s call it an artist community, that are usually using it, or is it more of just regular travellers looking for something a little different?

Keigo: They’re definitely the creative types. They’re TV producers, they might be writers, they might be musicians, web designers. So they tend to be more in that creative field. But they’re all young professionals. They make a certain amount of income that they can actually stay in the hotel and kind of have a decent amount of spending. I’m not saying they’re luxurious in any way, but they have done the Airbnb and they’re over it because they know they can afford a little bit more service. But that middle ground is missing right now.

Tim: That middle ground between the standardized Airbnb experience and the standardized hotel experience. But from a business point of view, if you’re operating property that only has two rooms,