It's 2019 C.E. or 4717 according to the Chinese lunar calendar. Indeed, China is the new gold mine for the world's hotel industry, and is attracting investments by all the major hotel groups grands such as IHG, which will celebrate - this April 3 - its 400th hotel opened in China. At the other end of the spyglass, Chinese companies have likewise taken interest in Western markets.
Whether emanating from a well-established company like Fliggy, Alibaba's travel subsidiary, does or a young start-up already valued at over $1 billion like Meituan, the five companies presented below are often leaders in their respective markets in China. They hope to maintain their positions in an ultra-competitive environment where sectors are more permeable to each other because of the specificities of Chinese practices like the super-app model, those all-purpose applications among which WeChat with its 1.2 billion users is the most telling example. With their strong foothold in this huge domestic market, they are beginning to invest in Western markets but they are nevertheless face the same cultural difficulties as Western players investing in China.
CTrip, the travel agency with 300 million users
Founded in 1999, CTrip is the leading online travel agency in China with its 300 million de clients in 2017. It is an Internet go-to in China and gateway to the Chinese market for Western actors.
Since 2010, the company has intensified development outside China's borders by extending its catalogue to other countries to facilitate consumption by Chinese travelers. In 2016, the company began a new phase with investments in foreign companies such as MakemyTrip.com, an Indian travel agency, and the British comparator Skyscanner. In 2018, the American platform Trip.com was acquired by Ctrip to strengthen its online presence with an international domain name and to take advantage of this platform as a springboard.
In 2019, we see that the two platforms have merged and offer services in 24 different communities and 16 languages, including French. It no longer consists solely of offering a global catalogue for Chinese consumers, but also of addressing its offer to Western consumers. To increase its offering and be competitive with Booking's parent company Priceline and Expedia, Ctrip entered into partnerships with ACCOR in 2018 and more recently with Bookingkit, a reservation system offered to providers of leisure activities that are aggregated in a database sold to distribution platforms.
Also see: Ctrip and AccorHotels: a win-win partnership
Jin Jiang Hotels, the number 2 hotel group worldwide in 2019
The Chinese hotel group, already a leader in China’s domestic market and 5th worldwide, stepped onto the podium in 2019. It was a rapid, but not surprising, ascension following its acquisition in the majority stake of the group Radisson AB (94.12% of shares). On the European market, Jin Jiang is thus number 2, just behind Accor.
Fliggy, Alibaba's travel platform
Created in 1999 by 18 people led by Jack Ma, today Alibaba is an e-commerce giant comparable in every way to Amazon. The company continued its growth by expanding into the travel sector in 2014 via a dedicated platform, Fliggy, an ex-Alitrip competitor of CTrip. It currently claims 200 million users mainly in China, as the platform is not translated into other languages.
Several partnerships have been signed to accelerate the growth of the catalogue, particularly for international destinations. In France, for example, "4 roues sous un parapluie" has presented its offer on Fliggy since spring 2018.
In the hotel sector, it is mainly with Marriott, the world's leading group once again in 2019, that Fliggy has forged its most strategic alliance. In addition to gradually selling its catalogue of 6,500 hotels, the two companies are cooperating in the field of new technologies. Experiments aim to improve the customer experience by automating certain procedures such as check-in or opening the room via facial recognition. The experiments are presented and tested in the FlyZoo "concept-hotel" in Hangzhou on the Alibaba campus and some are already being deployed in Marriott Group hotels. Thanks to this collaboration, Alibaba, which benefits from technological resources in the fields of artificial intelligence and robotics, could become a service provider for hotel operators.
Tongcheng-eLong, an "outsider" backed by WeChat
The result of the merger between two Chinese companies in early 2018 (Tongcheng Networks, a leisure travel company, and E-Dragon Holdings, a hotel reservation company), Tongcheng-eLong benefits from the financial and strategic support of Tencent, the owner of the application "WeChat". It is included among WeChat's "mini-programs" catalogue and has, thus quickly penetrated the Chinese market. It currently ranks 3rd in terms of transaction volume after CTrip and Fliggy.
In November 2018, Tongcheng-eLong went public with an aim to attract foreign investors with whom it wishes to establish partnerships. According to Jiazhu Wu, Chief Strategy Officer, "Our primary objective with this listing is to increase brand awareness, as is done with consumers. When you are a Chinese company, being listed brings you additional credibility with consumers and partners. [...] We want our governance to be better regulated and to attract more attention from international investors." An agreement has already been signed in early December 2018 with Kiwi.com, an airline consolidator, to expand Tongcheng-eLong's offer.
Meituan, a "super-app" leader in online services in China
Created in 2010 by Wang Xing, a former Alibaba employee, Meituan appears to be one of the most promising "unicorns" (start-ups with a value exceeding $1 billion) since its initial public offering on 20 September 2018, when it raised $4.2 billion and then reached $52.8 billion in valuation.
Initially, the start-up was intended for group purchases like Groupon. Thanks to investors including Tencent, owner of WeChat, Meituan merged in 2015 with one of its competitors, Dianping, which also offers a group buying service and a platform for restaurant reviews. On this new premise, the company developed on a super-app model (a model whose most famous example is WeChat with its mini-programs that allow you to consult a city map as well as book a restaurant or buy a pair of shoes) with the intention of being a leader in the sale of online services: online meal delivery, bike rental, driver services or hotel reservations...
While meal delivery now seems to be the cornerstone of its business model (20 million orders per day), hotel distribution is one of the growth drivers for the coming years. In its last annual report for 2018, hotel nights sold on the application increased by 38.5% to 280 million nights. This performance was achieved solely in the domestic market and can be compared with the performance of the travel agency Booking, which claims 565 million overnight stays sold per year.
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