by Ibo Fung
To many travelers, accommodation is often the first issue to consider, whatever their destination is. Accommodation fees always account for a big part of the total travel cost.
It can be more than just a little bit difficult to book a hotel room that meets travelers’ different requirements, which also happens to be located near tourist attractions in China – especially during holidays like China’s National Day, occurring in the first week of October. Fortunately, short-term rental booking platform Muniao has come out with an economical alternative.
Business ideas born in an American residential home
A travel enthusiast, the 38 year old Huang Yue, founder and CEO of Muniao, has been to numerous tourist attractions domestically and overseas. Generally, he would live in local hotels wherever he went, which seems to be the natural choice for most travelers.
A first person experience inspired what he does today. It was July 2011, when he and his family failed to find a hotel room during a trip to America, they had to live in a rented vacation house.
“We were reluctant to live in somebody else’s house at the beginning, but soon we found that it was much better than living in a hotel room,” Huang told us.
According to Huang, the size of a common hotel room is only between 15 m2 to 25 m2, but the house his family lived in was as big as 190 m2, with a nice and spacious kitchen, living room and bedrooms.
Huang said that they felt as comfortable as if they were in their own house. What was more important, the rental fees were even lower than a hotel room. High hotel rates have prevented many Chinese families from travelling, according to Huang.
(Watch the video interview with Huang here. )
“Accommodation costs usually account for over half of a family’s total travel expenses. There will be more people willing to travel if accommodation costs are cut in half,” said Huang.
Huang had thought about his experience over and over again. Finally, he decided to set up his own short-term house rental platform when he returned to China in 2011. This was the same time that Airbnb received its USD 115 million Series B financing.
Less lodging costs, more indigenous experience
Huang founded Muniao in Beijing in May 2012. “Muniao” means “wooden bird” in English. Huang said that “Muniao” reflected the exploring spirit of the ancient Chinese in flying, and he wanted to cultivate this spirit of innovation in his company name.
Muniao now has over 300,000 houses and serviced apartments in 396 Chinese cities, as well as 75,000 houses in 45 foreign countries, including in North America, Europe, and Southeast Asia.
Users can find much bigger rooms at lower prices than common hotel rooms on Muniao’s official website, or on the Muniao App. Over one million travelers have booked rooms on Muniao, according to Huang.
Out of the rental fees, dwellers pay the landlords, and Muniao take a commission of 10%. All house providers are free to register their houses on Muniao.
There are many vacant houses in China; at the same time, there are a great number of travelers who can’t find accommodation every year. Muniao can make a connection between these two ends,” said Huang.
Muniao also provides travelers with featured houses including sea-view houses, quadrangle courtyards, cave dwellings and villas. In this way, Muniao aimed to make the accommodation part of the indigenous travel experience.
Safety is another important issue. Muniao puts the identity information of both dwellers and house providers on record on China’s public security system. On Muniao, dwellers can add comments and ratings on their experience in the houses; house providers can also review and rate the dwellers.
Muniao’s “flying ambition” was supported by investors. The company landed RMB 60 million (USD 8.9 million) from Plum Ventures in Series A financing in July 2015, and tens of millions of RMB from Fortune Capital and Plum Ventures in Series B financing in February 2016.
Short-term rental and house sharing
According to a market analysis report by Sootoo.com in July, the size of the short-term rental market was RMB 140 million in 2012, and quickly grew to RMB 10 billion in 2015. The market size is expected to reach RMB 30 billion by the end of 2016.
The China National Tourism Administration has estimated that Chinese people will make 4.3 billion domestic trips in 2016, so the potential market is huge. Nonetheless, it seems that most people still choose hotels during their trips.
“Currently, 95% travelers in China would still choose traditional hotels rather than home rental. The short-term house rental market will not see an explosion until the first half of 2017 in China. But this is also an opportunity for Muniao,” said Huang.
On the one hand, the administration costs for hotels have driven the hotel rates to higher and higher levels; on the other hand, there are more and more vacant houses in China. So there will be a big market if these vacant houses can be used for short-term rental purposes, according to Huang.
“First, house sharing can obviously promote the development of tourism; second, it seems to offer the best answer to the vacant house problem; third, it can improve employment,” said Huang.
Huang said that China can learn from America in house sharing, since the house sharing history in America is much longer than in China, and Americans brought the house sharing business online earlier than the Chinese.
Muniao aimed to increase the number of houses on its platform to 600,000 by the end of 2016, and one million by the end of 2017, with more featured house choices and better platform services.
“I recommend homes on Muniao to you if you are planning for a trip, especially a family trip, during the coming National Day. We can give you a better accommodation experience than a hotel,” said Huang.
(All photos provided by Muniao)