In 2017, Kiraku encountered two large Kyomachiyas (traditional Kyoto townhouses) of a scale rarely seen in Kyoto and, hoping to renovate them into a boutique ryokan (now Nazuna Kyoto Gosho), had been searching for an operating partner.

At the time, Yumegurashi Co., Ltd. had been operating private villas and a Michelin-featured ryokan renovated from machiyas under the brand ‘Nazuna.’ While most machiya-style accommodations in Kyoto at the time consisted of private villa rentals with no service, Nazuna had been receiving high acclaim for its unique hospitality, service and stay experience.

After looking into the service and track record of Nazuna, Kiraku reached out to Yumegurashi Co., Ltd. about the possibility of being an operating partner for the project. As discussions continued, it became clear that there could be great synergies between the two teams, and a potential to expand beyond just one project.

In Japan, small-scale lodging facilities including ryokans are often a family business, in which “ownership” and “operation” are merged. While this business model has its merits, it becomes difficult to expand beyond one facility: there may be a limit to the number of properties a company can own, or the company may be engaged in businesses other than the lodging business.

On the other hand, separating “ownership” and “operation,” in which an owner invests in the property while a separate management company operates it, gives management companies greater flexibility to expand their business and brand. Functions such as accounting, human resources, and marketing that apply across all properties can also be centralized – leading to greater efficiency, lower operational burden, and less costs, which is advantageous for both owner and operator.

With this in mind, Kiraku partnered with Yumegurashi Co., Ltd. to set up a new hospitality management company, Nazuna Co., Ltd., to operate a collection of accommodations. Existing properties as well as new projects were branded to ‘Nazuna’ (for ryokans) and ‘Kiraku’ (for private villas). Currently, Kiraku continues to provide support to Nazuna for its expansion of properties, implementation of internal and external systems, improvement of operational efficiency, and business planning and development.

In April 2018, Kiraku, together with Yumegurashi Co., Ltd., established and partially invested in Nazuna Co., Ltd., a new hospitality management company that operates a collection of ryokans and private villas.

Nazuna Co., Ltd. has the mission of providing the very best hospitality in each of their unique accommodations, all of which are renovated from traditional Japanese buildings. Kiraku continues to provide business management and development support. In addition, all Nazuna facilities have implemented Hamlet, a property management system developed by Kiraku, to manage day-to-day operations, collect KPI data, and improve overall operational efficiency.

The private villa Kiraku Kyoto Honmachi opened in January 2019. Nazuna Kyoto Gosho, a 7-room boutique ryokan renovated from two large Kyomachiyas, opened in February 2019. Nazuna Kyoto Tsubaki St., a 23-room boutique ryokan renovated from an alleyway of Kyomachiyas, opened in June 2020. Nazuna Obi Onsen Resort, a 5-room onsen (hot spring) ryokan renovated from a large-scale samurai mansion, also opened in 2020 – establishing Nazuna’s first venture outside of Kyoto, in Obi town of Miyazaki Prefecture.

Nazuna Co., Ltd. currently operates 4 ryokans under the Nazuna brand and 10 private villas under the Kiraku brand.