China’s Xiaozhu takes on Airbnb with new one-stop management service for flat owners

A big part of the appeal for travellers in booking accommodation through Airbnb and other home-sharing service providers is the sheer variety of places to stay.

Every property offers different decor and amenities, and travellers get to stay in appealing neighbourhoods or those with the same conveniences as home. 

With demand for such accommodation increasing at a rapid clip in China, domestic provider Xiaozhu wants to make it easier for more homeowners across the mainland to open up their properties and join the country’s sharing economy.

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Beijing-based Xiaozhu, often called China’s answer to Airbnb, has launched Lanzu Gongshe – loosely translated as rental business community – that delivers a one-stop solution for homeowners on the mainland to run an Airbnb-like business. 

This new “infrastructure platform” offers a range of services that cover everything from decor design and security, such as the installation of so-called smart locks, to cleaning and day-to-day property management.

“The reason that Xiaozhu has experienced rapid development in China over the past several years is because of the value-added services we provide to homeowners and guests,” Xiaozhu chief executive Kelvin Chen Chi said in an interview, referring to the company’s call centre and other support services.

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“We want to bring our game to the next level with this new business, which will allow more people to easily share their homes online and provide travellers with a better experience than in hotels.” 

The introduction of the new Xiaozhu service followed Airbnb’s recent expansion initiative in China’s home-sharing market, which research firm eMarketer has forecast to reach 16.9 billion yuan (US$2.7 billion) in revenue this year – up from an estimated 12.5 billion yuan last year and about 2 billion yuan in 2014.

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San Francisco-based Airbnb, which has a listing of 150,000 homes in China, announced last month that Shanghai will be among 13 cities in the world to launch its curated “Airbnb Plus” service, which will offer a select group of homes and accommodation that have been individually inspected and verified by the firm. Airbnb Plus hosts have access to design consultants and receive photography support.

The US firm had also pledged last year to double its investments and triple its workforce in China to spur further growth in the world’s second-largest economy. 

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Xiaozhu, which has a listing of 300,000 homes across the mainland, is betting that Lanzu Gongshe could help boost its stickiness with more mainland homeowners.

The company’s one-stop management programme represents a strategy that is similar to how Chinese e-commerce majors like Alibaba Group Holding, the parent of South China Morning Post, and JD.com have kept and attracted merchants on their online shopping platforms by providing various technical support and promotion for their digital stores.

Chen said Xiaozhu’s new service can raise the efficiency of running a home-sharing business, while encouraging more people to list their flats online. 

“In the old days, it was impossible for those who live in Beijing to rent out their second apartments in other cities,” Chen said. “With our new service, they can use smart locks to allow guests to check-in securely, as well as find someone in their area to clean the apartments and help them pay utility bills.”

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“Even if they don’t want to interact with guests online, they can find someone else to help them do that. All they need is to an apartment that they want to share online,” he said.

Xiaozhu’s chief executive also predicted that in about five years about half of the flats listed on its platform will not be run by homeowners in person, but by third-party service providers.

Chen also announced that Xiaozhu will establish its second headquarters in Chengdu, the capital of southwest China’s Sichuan province, as the company ramps up efforts to expand in the country’s second-tier cities, where travellers can also find high-quality accommodation.

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While Xiaozhu, a start-up backed by Alibaba founder Jack Ma Yun’s Yunfeng Capital, expects its new service to help improve the experience for guests and widen the pool of properties for home-sharing, some analysts say things could get more complicated.

“The risk is that the new service will standardise the home-sharing business, making it less about human interaction and more about the money,” said Chen Liteng, an analyst with Hangzhou-based internet consultancy China E-Commerce Research Centre.

Some mainland homeowners welcome Xiaozhu’s initiative, but said their decision to join the company’s platform ultimately depends on the benefits of using its service.

“You can find a cleaner on many of the online platforms in China. They can also help you buy necessities as long as they get paid,” said Peter Li, a Beijing-based entrepreneur, who has listed his second flat on both Airbnb and Xiaozhu. “That is why I have been running a home-sharing business for two years without cleaning the apartment nor meeting any of my guests.”

“The new service from Xiaozhu does sound tempting, especially its feature about helping interact with guests who often have a lot of questions, like how to get to your apartment or how to use the washing machine,” Li said. 

“Still, my main concern is the cost of the service and how I can make money from using it.”