Posted on Thursday, Dec 10th 2015
According to iResearch’s estimates, China’s online travel industry is projected to grow to $75 billion by 2017 from $46 billion in 2014. One of the new entrants to the Billion Dollar Unicorns club is China’s online vacation rental site Tujia. The company has successfully adapted the AirBnb model to suit China’s unique market conditions.
Beijing-based Tujia was set up by Melissa Yang and Luo Jun in 2011. The idea of Tujia came about when Yang visited Sanya and stayed at her friend’s house. She realized that the neighborhood where she was staying had a lot of empty houses while the nearby hotel area was fully booked during the high season. The idea of being able to leverage these empty properties in China and offer them to tourists suddenly became a viable business model for her. According to the Survey and Research Center for China Household Finance, the number of houses that have already been sold, but are lying vacant grew to 22.4% in 2013 compared with 20.6% in 2011.
Tujia has been compared with AirBnB of China. But Tujia is more than that. Unlike AirBnB which operates on a purely online model, Tujia operates on the Online-to-Offline model. It not only lets out properties, but also acts as property manager for mostly high-end properties. The company has a team of dedicated professionals based on various Chinese cities. These professionals are responsible for ensuring that the property being let out is clean and in proper condition. Keeping in mind that China has significantly old properties, Tujia ensures that properties listed on their site are no more than five years old. Also, it doesn’t let individual home owners list out their property for rent on the site. Only property agents and real-estate developers are allowed to sign up so that Tujia can ensure that they have high quality listings on its website. Tujia also offers additional services ranging from regular cleaning of the apartments to dedicated butlers.
Tujia has seen rapid growth since inception. It has positioned itself as a go-to-spot for wealthy tourists through the nature of properties listed. As of August this year, it had over 300,000 properties in 250 cities. It has already expanded into international markets and has over 15,000 properties in 100 other locations. Overseas locations include Thailand, Indonesia, Taiwan, Hong Kong, Korea, and Japan.
Tujia’s detailed financials are not known. Reports suggest that in 2013, rental revenues were more than 100 million Yuan (~$16 million). Its management and housekeeping revenue is estimated to be larger than the rental income.
Tujia is venture funded with $455 million raised from investors including All Stars Investment, CBC Capital, CDH Investments, Ctrip, GGV Capital, HomeAway, Lightspeed China Partners, QiMing Venture Partners, and the Ascott China. Its last round of funding was held in August this year when it raised $300 million at a valuation of over $1 billion from All Stars Investment, Ctrip, and HomeAway.
More investigation and analysis of Unicorn companies can be found in my latest Entrepreneur Journeys book, Billion Dollar Unicorns. Unicorns will also be discussed with some special guests during our 1M/1M Roundtable programs over the next few weeks. To be a part of the conversation, please register here. The term Unicorn was coined in a TechCrunch article by Aileen Lee of Cowboy Ventures.
This segment is a part in the series : Billion Dollar Unicorns
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