(Chinese Version)

On the afternoon of July 27th, Liang Jianzhang, co-founder and former CEO & Chairman of the Executive Board of Ctrip, attended the Mid-Year Performance Communication Conference of Tujia.com.

After his departure, Liang seldom appeared in public. Therefore, this was the first time he attended in public activity for a long while. “Within the next few years, online apartment-sharing will become an indispensable complement to Ctrip and an essential component of Ctrip’s online business,” Liang told TMTPost. He also pointed out that Ctrip and other companies would continue to facilitate the development of apartment-sharing market.

Luo Jun, co-founder and CEO of Tujia.com, revealed at the conference that Tujia.com had already merged their apartment & homestay resources together with Ctrip.com and Qunar.com. In addition, it has initiated the plan to merge apartment & WeChat hotel resources with Elong.com and complete the plan by the end of Q3.

“Ctrip is a comprehensive travelling service provider, though hotel service has become increasingly important,” Liang pointed out.

According to her, the Chinese online apartment & homestay-sharing market is still at the primary stage compared with overseas. A case in point is that the transaction volume of many online apartment-sharing platforms remains much lower than that of Ctrip’s hotel-booking business.

He didn’t think that the Chinese apartment-rental would boom in the next few years, but might enjoy rapid and steady growth.

As Airbnb continued to increase its investment in China, competition in the Chinese short-rental market was growing fiercer and fiercer. In this context, Ctrip might be able to gain an upper hand by merging its resources with Tujia.com

Liang Jianzhang, co-founder and former CEO of Ctrip

The promising but under-developed Chinese apartment & homestay sharing market

At the communication conference, Jiang Xinwei, an apartment-rental market analyst at Analysys, revealed a set of third-party data. “The Chinese apartment-sharing market maintained a growth rate of over 60 per cent in the past three years and the overall market scale was expected to reach RMB 12 billion in 2017,” she revealed.

Liang pointed out that the Chinese apartment & homestay-sharing market didn’t enjoy booming development due to various restraints, and remained caught up in the “warm-up period”.

After six years of development, the Chinese apartment-sharing market has gradually moved from the entry stage to the development stage, though the capital market didn’t go “mad” about it yet as it once did about the ride and bike-sharing market.

The reason why this market didn’t boom is that there was simply not enough supply. Liang explained to TMTPost. He pointed out that although people have been increasingly interested in apartment and homestay-sharing, few people would really want to try it themselves.

“Airbnb succeeded overseas because it made apartment-sharing something novel and fashionable. However, this principle is not applicable here in China,” Liang explained. Chinese apartment-sharing platforms simply didn’t have similar development environment as Airbnb had overseas, he said frankly.

On the one hand, shared apartments and homestays are not competitive at all compared with economy and mid-end hotels; on the other hand, there isn’t a unified service standard in the apartment-sharing market. “Fundamentally, only when shared apartments and homestays can provide better services than traditional hotels with lower price, can the market finally achieve rapid growth,” Liang said.

Liang Jianzhang attended the communication conference, the first time after its long departure

Indeed, the most awkward thing about the Chinese online apartment-sharing market is that there’s simply not enough supply to meet the various types of demands. Therefore, users are less inclined to turn to shared apartments and homestays. However, Liang predicted that both the rising real estate price and the loosening of the “one child policy” were crucial factors to be taken into consideration as to the future market trends.

“Although online apartment-sharing still accounts for 1 to 2 per cent on Ctrip, it could be a good complement if it could take up 10 per cent one day,” Liang pointed out. With the loosening of the “one child policy”, the demand for family travelling is on the rise. In this case, short-term shared apartments and homestays might gain an upper hand compared with traditional hotels as they are more flexible and can accommodate more tenants.

The rising transaction volume, the growing support from Ctrip, and the special emphasis on service quality

At the communication conference, Luo Jun, CEO of Tujia.com, shared the strategic planning and implementation of Tujia for the past year and revealed a set of core data, which suggests that:

Transaction volume

Compared with the same period last year, transaction volume rose significantly in the first half of 2017. Take June for an example, transaction volume increased by 3.5 times year-on-year.

House supply

Available apartments & homestays rose by 150,000 in the first half of 2017, covering 503 cities in total. At present, there are 450,000 apartments & homestays available throughout Tujia.com’s platform.

User experience

Tujia.com has invested a great deal to optimize its services. As a result, high ratings accounted for 98 per cent on average throughout the platform, while rejection rate dropped by 100 per cent.

Overseas expansion

Tujia.com maintained rapid growth in Southeast Asia, South Korea and Japan, as order volume rose by 500 per cent year-on-year. It is especially worth mentioning the Japanese market, as the number of available online shared apartments & homestays of Tujia in Japan is expected to surpass that of its rivals in 2018.

“The key of Tujia.com’s success lies in if it could accurately and appropriately match demand and supply,” Liang said.

Liang Jianzhang at the communication conference

While Ctrip invested in Tujia.com as a key part of its strategic planning in the grand hotel industry, Liang’s appearance at the communication conference was seen as a recognition of Tujia.com performance. “We are glad to see Tujia’s amazing growth within a short period of time. This fully demonstrates the growing interest over and recognition of the market,” Liang said at the conference.

At the conference, TMTPost came to learn that Tujia had already merged its shared-apartment resources with Ctrip.com and Qunar.com and had already initiated a plan to merge the resource with Elong and Elong WeChat hotel by the end of Q3. To make it more convenient to book shared-apartments and homestays, Elong now allows users to get access to Tujia.com’s products through the Hotel button inside WeChat Wallet. Jiang Hao, CEO of Elong.com, maintained that Elong would further its cooperation with Tujia in house supply, direct connection and marketing in the near future.

Liang also revealed that Ctrip, Qunar and Elong would integrate shared apartments & homestays into their product line, recommend appropriate products in target destinations to target users and help them make the right choice.

For a long peiord of time, Tujia.com has maintained a friendly interactive relationship with Ctrip’s member platforms. On December 7th, Tujia entered into strategic cooperation agreement with Ctrip, merely six days after its foundation. On January 17th, 2014, Ctrip added a special channel for Tujia.com. That October, Tujia entered into strategic agreement with Ctrip, Qunar, acquired their apartment & homestay business and entirely integrated their resources and teams.

With the strong support from Ctrip and huge traffic from WeChat Hotel, Tujia.com’s goal is no longer confined to transaction volume and house supply, for sure. Instead, it has shifted its focus to better service quality and lodging experience.

“I never take pride in the transaction volume or house supply on Tujia.com,” Luo said, “reputation matters more in future competition. That’s why I attach high importance to landlord rejection rate and am glad to see that our rejection rate dropped by 100 per cent from Q1 to Q2.”

In addition, Luo revealed to TMTPost that Tujia.com had already launched various services in 18 cities to improve user experience, such as “Wash at Ease” and “Stay at Ease”, and had been testing its “smart hardware kit” to improve standardization in non-standardized shared apartments & homestays.

As the landscape of the Chinese short-term online apartment & homestay market grows clearer, the integration of Tujia.com and Elong’s apartment & homestay resources is sure to bring huge traffic to Tujia.com. With the strong support from Ctrip, Tujia.com is already well-prepared to fight head-on with Airbnb and Xiaozhu.com.

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[The article is published and edited with authorization from the author @Gao Mengyang. Please note the source and hyperlink when reproduce.]       

Translated by Levin Feng (Senior Translator at PAGE TO PAGE), working for TMTpost.