China’s largest economy hotel chain Home Inns has announced the removal of its listings from Qunar’s websites, bringing yet another setback to the OTA’s hotel strategy. Both sides claim to have their own reasons for the split and chances of Home Inns resuming business with Qunar are slim.
Qunar calls it quits with Home Inns
Meanwhile, Qunar also claimed to have initiated the parting. A Qunar spokesman said Qunar ended the partnership with Home Inns on November 12. The partnership was in two forms - a direct partnership with Home Inns Group and direct contracts with Home Inns' hotels (both directly-managed hotels and franchises).
Qunar's spokesman said: “Home Inns Group hotels are suffering a slump in business as the degree of support in orders and customers offered by the group to the member hotels has gone from bad to worse. Many hotels say they can no longer make ends meet and are preparing to change franchises. These hotels have been flocking to sign direct partnerships with Qunar to lessen the financial pressure and leverage greater marketing resources, so their prices on our platform dropped lower than on Home Inn’s official website”.
"After careful consideration, we decided to delist all Home Inns Group hotels as they present high operational risks and deliver poor user experiences. We recommend that our customers stay at other budget hotels for the time being,” said Qunar's spokesman.
Home Inns accuses Qunar of violating terms of agreement
In response, a Home Inns spokesman said Qunar was irresponsible in making such groundless accusations and Home Inns reserves the right to pursue legal action against them.
“Qunar has violated the partnership agreement with Home Inns Group stating that the stipulated prices for hotel products could not fall below the agreed prices.”
“This violation has disrupted our pricing system and affected our partnerships with other OTAs. Qunar has not corrected the pricing despite our negotiation, prompting us to withdraw our hotels from its listing,” he added.
As to Qunar's allegation about Home Inns' lack of support to member hotels, Home Inns CEO David Sun said in April this year that distributorship accounted for just 8% of the group's sales, and direct sales would continue to be the dominant channel vis-a-vis distributorship.
One industry observer noted that the majority of partnership agreements between OTA’s and economy hotels are signed solely between the hotel groups and the distributors and rarely directly with individual hotels. It is also very rare to see two parties taking their dispute public.
“Home Inns is a strong brand in the economy hotels sector while Qunar is a price-comparison platform whose users are price-sensitive consumers. They took a gamble to accelerate the opening up of new markets by driving the prices further down to ramp up sales volume. But this move came at a time when economy hotels are obsessing over their pricing systems and it is not surprising that Home Inns made a counter move.”
Home Inns is now planning to take the war over to Qunar's turf by launching its own “Home Club” platform, targeting small- to medium-sized hotels and adding fuel to the two companies’ flare up. Meanwhile, Qunar’s biggest rival Ctrip is also the biggest single shareholder of Home Inns.(Translation by David)
