Top Chinese home-rental site Tujia’s valuation surpasses US$1.5bn after latest funding round
China’s leading home-rental site reports almost 400 per cent jump in bookings during Golden Week holiday
Tujia.com, China’s largest home-rental site and a competitor of Airbnb, said on Tuesday that it has raised US$300 million in its latest round of funding, pushing its valuation to more than US$1.5 billion.
The fundraising comes as the company rides on the wave of a growing number of Chinese travellers, fuelled by rising personal income. During the Golden Week holiday from October 1 to October 8, Tujia reported close to 400 per cent increase in bookings for flat rentals compared with the same period last year.
The latest funding in Tujia was led by Ctrip, China’s largest travel website, and Hong Kong-based All-Stars Investment.
Other investors include Huaxing Growth Capital set up by China Renaissance Group, G Street Capital China, and US-based Glade Brook Capital. China Renaissance acted as exclusive financial advisor on the deal.
Glade Brook, known for its early investments in Alibaba, Uber, and Snap, also invested in Airbnb last year in a fundraising round worth US$555 million.
The investments, the website’s first independent financing since the split of Tujia’s online and offline services, will be used to “optimise user experiences, improve non-standard accommodation services, and expand the products and services in overseas markets”, Luo Jun, CEO of Tujia, said in a statement.
Tujia acquired the home rental services separately from Ctrip and Qunar last October, shortly before it announced a split of its online and offline business.
Recently Chinese Premier Li Keqiang said the government would relax regulations in the online holiday home rental and car rental industries in a bid to boost tourist spending and stimulate domestic consumption.
With a bigger war chest, Tujia is expected to intensify the competition in China’s home rental market where local players had gained an edge over Airbnb because of their scale and understanding of Chinese customers.
“We think China’s online short-term rental market has big growth potential, and will reach similar penetration rates in the US and European markets,” Paul Hudson, founder and chief investment officer for Glade Brook Capital, said in a statement.
Foreign players are also actively eyeing the Chinese market.
Airbnb, the US home-rental start-up valued at more than US$30 billion, recently stepped up its game in China two years after its entry. It expanded its workforce and gave itself a Chinese name “Aibiying” earlier this year, literally meaning “welcome each other with love”.
In June, Airbnb partnered with the travel social network Mafengwo and the online payment platform Alipay, and launched marketing campaigns targeting young Chinese travellers.
Ge Hong, Airbnb’s China chief, told the South China Morning Post in a recent interview that China was a “fundamentally important market” that Airbnb is determined to crack with “as much investment as it needed”.
Still, it lags behind local rivals, with about 120,000 listings in China.
In comparison, Tujia said it covers 345 domestic and 1,037 foreign destinations, with more than 650,000 online listings. The company has built up a larger number of listings partly due to its strategy of working with local property developers in China.
Tujia said it has signed strategic cooperation agreements with a number of Chinese developers, reserving more than 1 million houses as “potential listings”.
Under the partnership, developers will purchase the so-called “butler service” from Tujia and let it look for temporary tenants on behalf of the owners of the houses, so the owners can earn rent when they are not staying in their house for extended periods of time.
This has become one of the main sources of listings on Tujia’s site, the company said.
Other local players have also developed features tailored to meet the demands of Chinese tourists and hosts. For example, Xiaozhu, a home-sharing site in China, offers its hosts room-cleaning services and smart locks that can be unlocked by passwords to ease their burden in running such businesses part-time. It currently has more than 200,000 online listings.
Apart from serving young customers with limited budgets, Tujia also expanded its product portfolio last month and launched a high-end product called Tujia Mansion, aiming to tap the affluent Chinese.
Still, Tujia has a relatively small presence in overseas markets compared with Airbnb, with around 400,000 overseas listings, while Airbnb has 4 million worldwide listings, according to latest available data.