Japanese company H2O raises $7m in Series B funding

Japan: Japanese vacation rental management company H2O, short for Hospitality 2.0, has closed $7 million in additional funding.

This brings the total funding it has brought in to $18 million.

H2O began its operations in 2015 with Wahome, a South Korean cleaning venture, before acquiring various Japanese companies to form H2O. Currently, the platform features around 5,000 rooms, but plans to expand.

The company also offers property management solutions, helping owners manage operations, housekeeping, and bookings on one platform. This helps property managers keep costs down

Hoping to fill the need for accommodation in the lead up to the 2020 Olympics, CEO John Lee believes that Japan is ripe for investment because of both that existing shortage, as well as massive domestic and international tourism.

The firm’s overall revenue has doubled since the third quarter of 2018 and with this latest round of funding, it has brought in investors such as Samsung, Stonebridge Ventures, and Shinhan Capital.

Eric Kim, senior investment manager at Samsung said to TechCrunch: “We’re pleased to be part of the fastest-growing hospitality company in Japan. H2O has already proven product market fit within Japan, and we expect them to continue to thrive as they expand outside of major cities.”

H2O properties mostly fall under Japan’s 2019 minpaku law, designed to control the unregulated short-term rental market. Lee has said the new regulation has helped new players to enter into the market, especially those already owning property.

Japan’s hospitality market is seen as a potential for growth across the industry. The boutique hotel industry is growing there as well, with new brands like [trunk] attempting to buck the image of the corporate hotel.

Airbnb is also looking for its entry into the region. Though the platform struggled with the minpaku law, its ability to provide quick housing for visitors to the Rugby World Cup added to its existing market value.

With the Olympics soon and accommodations on the rise, Japanese short-term rental providers may see a significant rise in business.

For more information, visit the H2O website here.