Today Justin Luo, the Co-founder and CEO of Tujia, announced that the company had concluded a strategic agreement with Ctrip.com and Qunar.com to acquire their homestay businesses. Through this acquisition, the homestay channels of both Ctrip and Qunar’s web sites and Apps, along with their operation teams and the entire business, will be merged into Tujia. It represents another strategic move by Tujia after its purchase of the short-term rental platform Mayi.com this June. This latest consolidation of homestay businesses is viewed as a deep integration of business resources and is expected to serve as a milestone for China’s accommodation sharing industry, symbolizing that the market has exited the start-up stage and moved into the growth stage.
Upon the completion of the deal Tujia will receive a wide range of benefits from Ctrip and Qunar, including inventory, traffic, branding and operations support. The purpose of the deal is to ensure that all users, guests and hosts can gain sustainable benefits. Meanwhile, Tujia will further strengthen its dominant position in China’s accommodation sharing market.
Justin Luo said that the acquisition was executed mainly out of the sustained optimism of all stakeholders towards the market and that the objective is to deliver a better user experience. With combined inventory and customer base plus unified IT systems, the new Tujia platform is about to create a better experience for both the guests and the hosts of shared accommodation. For the guests, the new platform means more choices on all of the platforms, higher standards and better services. For hosts, it means reducing overhead in dealing with multiple platforms, working with different systems and fragmented promotions. It also means a much larger exposure of their properties, which will almost guarantee higher income and lower cost. The goal of Tujia has never changed, which is to use accommodation sharing to create better lodging experiences for customers. The central themes of those experiences are accommodations for multiple people, for extended periods, at unique lodgings and in a greater number of locations.
With full support from investors like Ctrip, more M&A may be coming to complete the industry chain
According to Justin Luo, Tujia and its investors saw eye-to-eye on this M&A and rapidly reached a consensus, deciding to carry out the biggest M&A action in the industry. All parties share the same goal- providing better experiences to more users. Maria Sun, the Executive Vice President of Ctrip.com and CEO of Accommodation Division, said, “in the segmented vertical sector of the homestay and accommodation business, Tujia has built itself into a great brand and established a high reputation. Therefore, we are very pleased to integrate the favorable advantages by handing the homestay business of Ctrip over to Tujia, infusing more energy into the latter so as to create greater value for apartment owners and customers.”
Following this deal, Tujia will release a series of new products and services. The five strategies Tujia announced at its launch event in March have all been implemented, especially the RBA program (run by agents), which pilot-runs well in several key regions in China. Tujia has also expanded its overseas business. With offices operating in Japan, South Korea, Singapore and the Taiwan region, Tujia is committed to building a platform for Chinese customers to travel all over the world.
Justin Luo said that this acquisition enables Tujia to basically complete the integration of the short-term rental platforms in China and that the company would focus on the fusion of the various online brands in the future, unify the management of inventory, improve the whole industrial chain, and, finally, push forward the standardization and regulation of the short-term rental industry. Any possible future merger will be considered in the context of completing the ecosystem and industry chain.
Creating an ecosystem and setting apart online and offline business to launch the second five-year plan
Alongside the announcement of the acquisition, Justin Luo also announced Tujia’s launch of its next five-year plan, signaling that the company will enter a new fast-growing period after the start-up stage is concluded. This will help fuel the development and thriving of China’s accommodation sharing industry. The five-year plan will focus on two dimensions – continuing to build the ecosystem and set apart Tujia’s online and offline businesses.
After five years of development, Tujia has become a leading accommodation sharing platform in China, delivering integrated solutions to guests, real estate developers and individual hosts.
Currently, Tujia has built a complete supply chain layout from pre-real estate development to existing commercial apartment rentals by virtue of its innovative business models, Tu Li Fang, Tuyuan, RBO (run by owner), and RBA (run by agent), along with its various operation platforms such as guest booking, a commercial travel business, and host management. The corporate service chain layout has been expanded to related market sectors through such platforms as Tuli, Xiantu, and Tuzhu. Meanwhile, the company has boosted its short- and long-term lodging and serviced apartment business chain through such partners as 51wofang, 52xiaoluo, and Ascott, and the acquisition of Mayi has completed its industrial layout in the short-term rental sector. All these moves will extend the industry’s ecological chain and help paint a coordinated and integrated picture for the industry.
The acquisition of the homestay businesses of Ctrip and Qunar represents a strategic move for its online platform. In addition, Tujia is set to complete its online and offline business separation soon. Tujia’s offline business includes the self-managed homestay brand Sweetome, which has become a benchmark in China’s vacation rental sector, the self-managed villa and resort brand Tu Villa, which was also launched on October 16th this year, and several other business branches. The online business includes Tujia.com, Mayi.com and the newly acquired business units of Ctrip and Qunar. The division between online and offline operations will help both of Tujia’s business lines to be more focused and have bigger room for growth in the future.
The acquisition of the homestay businesses of Ctrip and Qunar once again demonstrate that the accommodation sharing industry has entered the fast growth stage, and that providing richer products and better services will be the key to win the market. The integration of the four major platforms, Tujia, Ctrip, Qunar, and Mayi, is the starting point for a brighter business future.