Meituan-Dianping is quickly becoming a dominant force in online luxury hotel reservations in China. A year after the luxury hotel category was launched on Meituan, a popular Chinese e-commerce platform, 10% of the hotels listed on the site are now luxury hotels. The site lists 15,000 luxury hotels in China, which is 92% of all luxury hotels. In addition, 60% of new Meituan users are drawn to the site to book rooms in luxury hotels, according to vice president and general manager of Meituan-Dianping hotel division Qing Guo.
Last year, 6% of total bookings on the company’s platforms were luxury bookings, and luxury hotel bookings on Meituan increased 300%.
Younger and higher income users tend to book luxury hotels on the site and luxury hotels have been identified by Guo as a key area of growth across the entire Chinese hospitality industry, activities for online hotel reservations and for Meituan-Dianping in particular. Guo estimates that only 20% of the total hospitality industry in China is available to book online, which means there is still substantial growth potential for the online hotel reservation industry.
The company launched its own travel platform this year and hopes to make it a unique travel platform for its customers. Meituan started out as a service that sold vouchers for services and entertainment online. It merged with Dianping, a Chinese group shopping website, in 2015.
Average luxury hotel prices differ across different business platforms. Luxury hotels on the Meituan app cost an average of RMB 360 (US $ 52) per night, but on the Dianping app, they cost an average of RMB 500 (US $ 73) per night. This means that the category of “luxury” hotels on Meituan covers a wide range of accommodation options.
According to Guo, Meituan received a refusal from Ctrip, the national leader in travel and hotel reservations, while discussing a partnership with InterContinental Hotels Group. Ctrip feared that Meituan-Dianping would challenge Ctrip’s dominance in the luxury hotel reservation market. However, Guo noted that most of Meituan’s customers had never stayed at a luxury hotel before, and argued that the move actually increased the size of the market for Ctrip’s services.
The agreement between Meituan-Dianping and InterContinental Hotels Group was finalized in December 2016. The agreement allows Meituan and Dianping users to book InterContinental Group hotels online and gives the group access to the application user bases, about 600 million in total.
Meituan-Dianping also has agreements with Beijing Capital Tourism, Wanda Hotels, Empark Hotels and Resorts and Shangri-La Hotels and Resorts. Meituan-Dianping takes a reservation commission rate, paid by hotels, on each purchase that averages 10 percent, but some individual hotels pay as much as 18 to 20 percent.