Chinese travellers, just like Western travellers on Airbnb, like cheaper prices and home-style comfort. But they find it hard to trust a property owner that they have not previously met, and prefer local home-rental platforms that caters to this need. Amongst a slew of local startups, the largest of these platforms in China is Tujia.
A mid-voyage home
The Chinese name “Tujia” roughly translates to “mid-voyage home”, or “home while travelling.” It represents the company’s promise of a home-style accommodation experience for travellers.
China’s online travel booking market revenue was USD 17.67 billion in 2015, according to the leading statistics portal Statista.
Tujia hopes to disrupt the travel accommodation market, which was once dominated by hotels. Its main strategy is to offer a cost-efficient way for travellers to experience a homestyle accommodation while they are on the road.
Additionally, personalized homes, with their relatively spacious nature – at least in comparison to hotel rooms – make these homes appealing to long-term travellers, who may soon get bored of staying in identical and monotonous hotel rooms.
“A home on Tujia in downtown Beijing costs RMB 400 (USD 60) per night, while a nearby five-star hotel costs RMB 1400,” said Zhuang Hai, Senior Vice President (SVP) at Tujia.
From the perspective of a business model, the Beijing-based company is asset-light. Tujia does not own these homes, they are essentially a middleman between owners and travellers. The homes can be sold if the owner decides to delist from the Tujia platform.
China’s Airbnb? Not really.
Although often referred to as “China’s Airbnb”, Tujia differs from Airbnb in that it does more than connecting property owners with travelers.
In fact, properties on its platform can be divided into two categories:
The first category is properties managed by the company. Users are provided a basic level of service in these homes, like provided towels or ablutions. There are around 14,000 homes that fall into this category, accounting for 3% of homes on its platform.
The other category is properties managed by agents, who are in charge of multiple houses and homes on the site, and properties managed by the owners themselves.
Aside from that, the company cooperates with Chinese real estate developers to rent out unsold inventory.
China has 20 million to 30 million existing unoccupied homes, Bloomberg reported in February, citing Zheshang Securities Co. analyst Dai Fang.
“We are more than building a website to bridge homeowners and renters. More offline work needs to be done, including transforming unsold homes into homes for rental on Tujia,” Zhuang told AllChinaTech.
Growing fast
Founded in 2011, Tujia confronted many competitors on the market. But it later turned out to be the fastest growing one, ascending to be the largest home rental platform in China.
Behind the fast-growing startup is its team. The company’s CEO and co-founder, Justin Jun Luo, was Co-President at listed company China Real Estate Information Corp. Zhuang Hai, the SVP, is a veteran software engineer with ten years working experience at Microsoft.
Currently, Tujia has over 400,000 properties available online and more than 800,000 properties in stock. It has a coverage of 329 domestic cities and 1,085 overseas destinations.
In August 2015, the startup secured USD 300 million in Series D financing backed by All-Stars Investment, Ascott, and Ctrip.
In June this year, Tujia acquired the accommodation platform Mayi Duanzu, whose network of properties covers 300 cities across China, comprising around 300,000 properties.
Quality control
Amidst the constantly changing world of online-to-offline businesses, and entering the fiercely competitive market of hospitality, it is a do-or-die mission for home-sharing startups to quickly impress customers with both a competitive price and a quality experience. Otherwise, people will not accept this brand new style of accommodation booking, and look elsewhere. From Airbnb to a much smaller startup, all of them face this challenge. Tujia is no exception.
Zhuang shared the team’s experience of staying in a home in the southern Chinese seaside city of Sanya. He commented that “the house was nice, but services were just so so.”
“We decided that quality and word-of-mouth are crucial for players in the industry,” said Zhuang.
According to Zhuang, there was not much in the way of obvious best-practice that could be adopted in the Chinese short-term rental market; they just had to try different options.
“We made great efforts to ensure only good-quality homes are listed on the platform, ” said Zhuang.
The strategy turned out to be the right one. The Tujia App has been downloaded 150 million times.
Overseas layout
Tujia launched overseas properties on its platform in December 2012. Offering services tailored for Chinese people is Tujia’s potent weapon, which the company hopes to use to outflank global sharing economy giant Airbnb. For example, In many kitchens, it offers electric rice cookers and emergency services, such as seeing a doctor or claiming lost property.
“Tujia has a large user base of high-income and well-educated users. They trust Tujia with its domestic properties and are willing to try out our overseas ones,” said Zhuang.
Aside from this, Tujia has a system of property verification and supply workflow to ensure the quality.
Ctrip, China’s largest online travel agent and one of Tujia’s investors, also helped Tujia with resources for its overseas expansion.
(Top photo from Pixabay.com)