June 2018, London
Food and travel: go together like China and a dragon?
Chinese start-up Meituan-Dianping's recent moves reflect its stated ambition to become an industry leader in travel
China’s rising star in travel, Meituan-Dianping, has kicked off 2018 with two moves – food and transport - that reflect its ambitions to target both domestic and international travellers with a wider range of services.
“As we already attract 320 million active buyers annually, we believe we are poised to quickly become an industry leader,” says Liang Chen, who is senior vice president of Meituan-Dianping, and also president of Meituan Travel, the hotel & travel business group which launched in May last year.
Meituan-Dianping’s rise has not been missed by the international set. In a $4-billion Series C financing round led by TenCent in October 2017, Priceline, one of the notable other investors, stumped up $450 million. The investment helped Meituan-Dianping’s valuation to over $30 billion, making it bigger than Airbnb.
As we already attract 320 million active buyers annually, we believe we are poised to quickly become an industry leader
Liang Chen, President, Meituan Travel.
A leader in offline-to-online, the company’s platform allows consumers to purchase everything from food to hotel accommodation and travel online, processes over 20 million orders each day and has already drawn on its 1.2 billion reviews from its customer base. It also helps merchants sell more. Needless to say, there is a lot of data there that is enabling the company to understand its customers’ preferences!
In its most recent move, this month the company launched its Black Pearl Restaurant Guide to 330 restaurants in 22 Chinese cities and five overseas - Bangkok, New York, Paris, Singapore and Tokyo.
CEO Xing Wang, the former founder of micro-blogging site fanfou.com and also renren.com, one of China’s biggest social media firms, says the launch of the guide reflects Meituan-Dianping’s push to meet China’s evolving taste for traditional and modern cuisine, both locally and abroad.
Aside from this concerted foray into the food business, this month the fast-growing Asian start-up also began recruiting users for its new ride-sharing platform, which it plans to launch in seven Chinese cities. In a sign of its growing confidence, it seems Meituan-Dianping is hoping to take on Didi Chuxing, which, provides transportation services for over 450 million users in 400 cities in China. Not only did Didi Chuxing manage to see off competition from Uber, it has also recently completed a $4bn funding.
Should that work, could something along the line of Uber Eats be next?
The firm is certainly committed to food. A data-driven white paper from the company last year found that the Chinese dining industry was a major driver of domestic economic growth. The dining market grew 11.3% in 2016, significantly higher than the country’s 6.7% GDP growth, and double-digit annual growth is expected to continue.
Where the biggest growth is expected is in on-demand food deliveries, which tripled in 2016. According to the white paper, the market is expected to reach RMB300 billion in 2018, up from RMB130 billion in 2016.
In what could be viewed as a sign that it is thinking ahead of this game, it has developed what it describes as a ‘mini-programme’ for WeChat, which enables gatekeepers at residential buildings to identify and verify riders when they deliver food orders.
It’s also not ignoring the rise of voice search and has developed a voice control application to help riders take orders and direct them to pick up and delivery locations. They no longer need to press any phone buttons and can complete the whole process simply using their voice.
Needless to say, it is millennials who are driving the growth and development in the industry, a customer base that is certainly benefiting from Meituan-Dianping’s commitment to improving digital services with artificial intelligence and analytics.
By its own admission, the company is looking to create a new generation of one-stop services platform that cover ‘a broad range of daily life scenarios corresponding to four big location-based service (LBS) categories namely in store, at home, on trip and on road’.
As part of this, Meituan Travel, the ‘on-trip’ piece, is aiming to be a one-stop travel platform that offers in-depth industry knowledge, high-quality accommodation services, flight and train ticketing, tours, and tourist attractions.
The company’s hotel & travel business group believes its record-breaking sales and impressive overall performance metrics already speak for themselves. In accommodation, Meituan Travel claims to be the leading online accommodation booking service provider in China, outranking the rest of the industry in terms of room nights sold. According to Chen, the company already has 340,000 hotel partners at home, and 200,000 abroad.
The launch of a bed and breakfast app, Hazelnut B&B, in April 2017 was viewed as another important step in tapping the domestic market. And, then, to highlight the opportunity between hotel booking and tours and attractions, it has secured the largest online domestic attraction and excursions ticketing platform, which covers nearly 400 cities and has more than 20,000 attractions across China.
Clearly where the firm’s strength currently lies is in the fast-growing domestic market. Guess they are banking on the fact that if Chinese travellers are comfortable using the platform at home, then they will also use it abroad. And they are. Yes, outbound travellers are also turning to the Meituan-Dianping app for their international travel needs. Along with WeChat and Google Maps this is one of the three apps most used by Chinese tourists abroad.
Millions of users access the app for guidance on overseas attractions, dining, and shopping every month
Says Chen: “Millions of users access the app for guidance on overseas attractions, dining, and shopping every month.”
Needless to say Priceline understands that in order to tap the Chinese market, it needs to secure a foothold locally. Since 2012, the global OTA giant has had a commercial relationship with Ctrip, and its latest investment indicates that it hasn’t yet given up on the world’s biggest and fastest growing travel market. For the moment it may be that with firms like Agoda and booking.com under its umbrella, Priceline may still be the global leader. But with the number of Chinese travellers growing rapidly and firms like Ctrip acquiring Skyscanner to help realise their own international agenda, it's certainly getting interesting.