ChinaTravelNews, Ritesh Gupta - The domestic travel segment in China has bounced back after rather a slow start in 2021. And as room nights or travel-related transactions receive a major boost, it is worth exploring whether some of the non-travel e-commerce players or apps are taking a plunge or expanding in this sector.
Counting on its growing scale, China’s largest agriculture platform, Pinduoduo, with over 824 million customers, is now selling hotel vouchers. In this context, it is also worth assessing how even other non-travel apps, such as Douyin, Xiaohongshu etc. or even Didi are going about selling travel products.
The emergence of these apps as an option for branding, distribution or direct selling doesn’t come as a surprise to foreign brands.
In his interview with ChinaTravelNews.com late last year, Philippe Garnier, VP Third Party Distribution of InterContinental Group (IHG) indicated that as things pick up in China one shouldn’t approach the market as done previously. “We have to start asking ourselves what's coming next…do we anticipate that the world will completely go back to normal and let's say 2021 or 2022 will be the exact same as things were in 2019. But I don't think so because the pace of change is accelerating and the pace of innovation is accelerating,” Garnier had said.
And he was spot on!
Pinduoduo and travel
In June, Pinduoduo mentioned that its focus on agriculture isn’t abated even as it evolved to become a full-fledged ecommerce marketplace. The company had raised US$6.1B in funding to invest heavily in agriculture. But it doesn’t mean the team isn’t focusing on relatively new product categories.
“Pinduoduo is selling travel products, but mainly on pre-sell packages in the form as “normal” e-commerce products. They are still not yet a significantly important player in the travel industry,” said a distribution specialist in China. The source added that Pinduoduo has both Chinese and foreign (though limited) brands working with them.
Another source shared, “They (Pinduoduo) are selling hotel vouchers like Groupon. They have a product team signing deals with hotels. Since they are not applying the OTA model, they treat these vouchers as normal e-commerce products. They act as a platform and invite hotels to open shops on the platform.” Users can find a wide range of hotels from five-star categories in Macao or Sanya to three-star hotels in the tier-3 or tier-4 cities on this platform. “They (Pinduoduo) do have a travel section where they offer hotel promotions. Generally speaking, they just started to engage in the travel business, so there is still a plenty of room to improve in terms of supply chain and user experience. For example, currently you cannot search the hotel offering by destination, which I think is not that convenient for customers.” Certain agents or hotels themselves provide these packages, mentioned the source.
More apps, varied models
Some other notable developments:
• Another entity worth noticing is Gaode. “It is a navigation app like Google Map with DAU (daily active users) of 100 million, they are applying the meta (search) model and generating huge volume,” shared a source. The app’s operator AutoNavi Software is a part of Alibaba Group. “The offering of Gaode for the travel sector is mainly location related. When you search a location, it will tell you what the nearby hotel offerings are. In the meanwhile, if you search a specific hotel name, then it will redirect you to an interface where you can see all the platforms selling this specific hotel with price listed. It is not only hotels, you can find attractions, restaurants, and more,” added the source. As per the feedback, Gaode also works with multiple suppliers other than Alibaba-owned Fliggy. They are relatively independent from other Alibaba businesses. Gaode was in news last year for a couple features, including one that allows family members to track each other’s location in real-time and an augmented reality tool providing details on lights, traffic etc.
• SoftBank-backed Didi Chuxing, China's biggest ride-hailing company, has completed internal testing of a newly-developed business travel booking function in its corporate-facing app. As of now, as per the industry sources, Didi is not yet engaged in selling any travel products.
• Hotel groups like IHG are leveraging Douyin and Xiaohongshu to communicate brand campaign and promote iconic properties. They are setting up their official accounts on multiple social media platforms including Douyin and Xiaohongshu. “Douyin with monthly active users or MAU of 550 million and Xiaohongshu with MAU of 138 m are becoming more important especially when it comes to travel inspiration. Younger generations tend to come to search information regarding destinations and tourism spots, and get inspired by video and photo on these new media. However, at this moment they have not yet got a clear plan to formulate a closed loop to provide a seamless booking journey for travellers. Therefore, they are still more like a marketing hub where people come to search information but go back to OTAs for reservation,” mentioned the source. Meanwhile, hotel companies are exploring the possibilities with these platforms for social-commerce business, such as driving social content to direct digital channel revenue with the smoothest online experience.
What makes the situation interesting is the fact that many of these apps are associated with Internet giants, be it for Tencent or Alibaba. It is fascinating to assess the sheer number of entities that can be associated with one booking in China. A case in point - Alibaba formed a JV with Utour to distribute travel products. Post this Alibaba invested in DidaTravel, which is now working with Fliggy and also the JV company (featuring Utour). And Alibaba is also invested in Gaode.
Travel technology specialists, too, are keeping a close eye on the latest developments. “These applications (non-travel apps) with huge traffic have the ability to directly convert traffic directly into bookings. “We are currently looking into ways to connect the ARI (availability, rate and inventory) DerbySoft offering to these non-traditional travel apps, so users can make hotel reservations in more diverse ways,” shared an executive from DerbySoft. “Booking accuracy (is vital) for all the parties involved. Non-travel apps must have the most accurate and up-to-date ARI so customers can create confidence in the booking process, which creates loyalty on any new booking platform.” DerbySoft has initiated projects for many hotels, connecting them to WeChat and Meituan when all of this was new. For example, Hotel ARI search and booking is currently available within social booking platforms such as WeChat Mini-Programs. “In these kind of apps, the hotel can open an official account or an official native app commonly called a Mini-Program. The Mini-Program can promote the hotel brand among the younger generation as well as work with influencers to promote the company’s brand and increase bookings for the hotel.”
While the emerging platforms are looking at their growing scale, settled travel e-commerce players are confident about their proposition considering that they not only offer marketing tools at competitive price to attract traffic, but continue to work on digital solutions to help even individual hotels and small hotel chains to enhance their operating efficiency. Another aspect that must be noted is the fact that the likes of TongCheng eLong have established cooperation with multiple short-video platforms including Kuaishou, Douyin and Xiaohongshu. It might take some time for these emerging video platforms to sell travel, as OTAs acknowledge that these apps are currently more suitable for branding as the buying decision-making process for travel products is more complicated.