Behind the "contract-breaking wave" of homestays, Meituan cannot become "Airbnb"

Before the May Day holiday, news about the "contract cancellation wave" on homestay platforms was trending, and many consumers also shared various reasons for being "broken" on social platforms. So what kind of development status of the folk custom industry can we see behind this phenomenon? Let's take a look at the author's interpretation.

If this year's "315" had not passed, the "silly operation" of the May Day homestay owner would definitely have made the front-page headlines of consumer rights protection.

Before May Day, many consumers complained on social platforms that when they were about to travel, the owners of homestays told them that the rooms were unavailable, and then they tripled or even quintupled the prices on the platform. The reasons for their refusal were so bizarre that it was like a real-life version of "Knives Out". Even a script couldn't be so exciting.

Some were seized for drug use, some had homicides, and some bosses refused to accept customers on the grounds that they were mentally ill. "Renovation", "bankruptcy", "change of boss" and "changing to long-term rentals" are the most common excuses.

▲ A real case of breach of contract on the Xiaohongshu platform

The reason behind the breach of contract is obvious . It is nothing more than that users have learned to be smart and booked May Day homestays at normal prices long after the Spring Festival. When May Day approaches, all prices have skyrocketed. The owners found that they "lost money" and rejected customers who bought at a fair price with strange reasons, and continued to sell on the platform at a higher price.

"During the May Day holiday this year, the price of homestays in Guangzhou basically doubled. On weekdays, they can be sold for around 800 yuan, and the transaction price is about 1,600 yuan. The May Day holiday coincided with the Canton Fair, and the occupancy rate in the past month has reached 95%." A Guangzhou homestay owner told "Self Quadrant".

What is more unacceptable to users than "breaking the contract" is the indifference of the homestay platform. Many consumers complained to the homestay platform, and the platform said it would negotiate and deal with it, but did not remove the price-increased products, nor did it see clear punishment measures. Many platforms are involved, including Mu Niao Homestay, Tujia Homestay, Xiaozhu Homestay, Zhixing Travel, Ctrip, Meituan, etc.

▲ Image source: Screenshot of Black Cat Complaint

In fact, the peak traffic during the May Day holiday is a big test for all walks of life. According to Ctrip travel data, as of April 20, the number of homestay bookings during the May Day holiday increased by 1070% compared with the April weekdays (bookings from March 30 to April 3 as of March 21), and the average order price increased by more than 30% month-on-month. Compared with the same period in 2022 (bookings from April 30 to May 4, 2022 as of April 21, 2022), the number of orders increased by 1080%.

Obviously, under tremendous pressure, the historical problems left over in the homestay industry are being torn apart.

1. There is no Airbnb in China

"Before Airbnb withdrew, it was our main battlefield, with basically no negative reviews. The quality of new customers and the stickiness of old customers were very high, and we even became friends with some old guests." Another B&B owner in Chongqing told "Self-Quadrant".

After Airbnb withdrew from China last year, the position of the most reliable homestay subscription channel for consumers remains vacant to this day.

Even domestic companies such as Xiaozhu Homestay, Tujia, Meituan, and Mubird have begun to make efforts one after another, preparing to share the cake previously taken by Airbnb.

"The capabilities of Meituan, Tujia, and Ctrip are channel capabilities. Once a product is put on the shelves, it can be distributed to different platforms through their channels. Xiaozhu and Muniao are in the traffic business, attracting users from platforms such as Xiaohongshu and Weibo for conversion. Airbnb adopts a niche boutique model. Its traffic itself is not as high as that of Meituan and Tujia, but its customers are very accurate and sticky." said the above-mentioned homestay owner.

In essence, the online homestay booking industry and Didi are doing the same business, namely real-time supply and demand matching. But the difference is that in the homestay industry, the commodities are in a completely discrete state, and they all rely on "each one doing their own thing", which makes it impossible to form centralized management and scale effects. This arduous task falls on the homestay platform.

Just like Didi attaches importance to the safety of online ride-hailing, the same is true for homestay platforms. Protecting the rights and interests of consumers is the platform’s first priority.

According to "Zi Quadrant", Meituan, Ctrip, and Tujia, which are homestay booking channels endorsed by their platforms, have certain protection policies. Ctrip's solution is "refund one and compensate one", that is, after checking out, the platform will return an additional double compensation to consumers. Meituan's solution is "refund one and compensate three", and users can get three times the compensation after a malicious check-out.

▲ Screenshot of some of the integrity rules for homestay hosts on the Meituan platform

Platforms like Xiaozhu Homestay, which have no brand endorsement, have almost no guarantee. After a user's reservation on the Xiaozhu platform was canceled twice, the platform only gave a vague statement that "your order may not be able to be checked in smoothly" and reminded the user to cancel the order, without giving any compensation measures.

▲ Image source: Consumer screenshot

In addition, depending on the strength of the consumer's attitude, the platform will step by step test the bottom line of what the consumer can accept. This insincere "tug of war" permeates the entire consumption process, which leads to users' lack of trust in both the platform and the homestay owners.

"As far as Guangzhou is concerned, Meituan has always had the highest traffic, and Tujia has recently shown signs of overtaking it. Xiaozhu and Mubird have very poor operational capabilities and cannot enter the Guangzhou market at all," said a Guangzhou B&B owner.

The poor operational capabilities mentioned here refer not only to the platform's security capabilities, but also to the understanding of local conditions, platform positioning, user group screening, etc.

For example, the above-mentioned homestay owner said that although Airbnb's users were small in number, they were of high quality and concentrated in groups such as college students, white-collar workers, and the elite. As long as the service guarantee and the listings and pictures were not too different, both parties would have a pleasant stay. In addition, the owner can usually become friends with the customer, introduce local food and tourist attractions, and provide some value-added services, including storage after check-out, mailing of lost items, invoice issuance, etc., all of which require the platform to play a key role in the middle.

At present, after investigating users in different regions and platforms, it is found that Tujia generally prefers business travelers, with short stays and high frequency as the main characteristics; Meituan casts a wider net, with people of all ages and professions, especially those traveling with families or children. Xiaozhu and Muniao are more inclined to "Internet celebrity recommendations", tourists who check in and take photos with Internet celebrities, but there are often discrepancies between the pictures and the actual products, and customer complaints often fall on deaf ears.

The root cause is that the Chongqing homestay owner said: "Xiaozhu does not impose any restrictions on merchants. Basic house source authentication is sufficient. Real scene authentication and business license are not required. In comparison, Tujia has many rules and regulations. Every time a new house is listed, it must be confirmed again and again."

Returning to the essence of business, the current homestay platform lacks the ability to operate in a refined and systematic manner and is still an extensive matchmaking business, making it difficult to guarantee consumers' homestay experience.

Another B&B owner also said: "The head of Meituan B&B will come to Guangzhou and invite several leading B&B owners to talk about the local situation and what interesting activities and measures are available."

Overall, domestic homestay platforms are currently aware of the need to carry out localized reforms and strengthen their operational capabilities. In fact, Airbnb's core competitiveness in the homestay industry is that it has established a set of homestay service standards and has implemented this set of service standards and mechanisms in various environments through the power of the platform.

But the first person to do this will inevitably have to do a lot of "hard work" and will easily be overtaken by latecomers. Given the current situation, it is still difficult for China to have an "Airbnb".

2. B&Bs usher in a "handover period"

In addition to the lack of a strong operating platform, the chaos in the B&B industry also stems from the fact that it is currently in the "handover period from the new to the old."

In the past three years, due to the overall decline of the tourism industry, B&B owners do not have as strong support as hotel groups. In the cold winter, countless small owners have collapsed.

B&Bs are a capital-intensive industry. Apart from the cost of rent, some popular B&Bs also have to pay for renovation, brand promotion, daily maintenance, and wear and tear. The payback period is also very long. For those who rent or buy a house and then renovate it into a B&B, they are more eager to recoup their huge initial investment.

According to the "Self-Quadrant" investigation, the decoration cost of a general quality B&B is about 200,000 to 300,000 yuan, not including operating costs. Some boutique and high-end B&Bs in Beijing have an initial investment of nearly 3 million yuan. The payback period for this price is five to six years, and the gross profit is low. The market is uncertain. Even if there is no impact from the epidemic, it is very difficult to do.

A B&B owner who had been running a business in Beijing for two years told us: "At that time, we already had about 20 rooms in Beijing. During the epidemic, things were really bleak, especially since Beijing's policies were very strict. Converting residential areas into B&Bs was a gray area in itself. In addition, neighbors upstairs and downstairs complained, so we had no choice but to close it."

From the data, according to the "2021 China Accommodation Industry Development and Consumption Trend Report" jointly released by eLong Hotel Technology and Tongcheng Research Institute, the number of accommodation facilities in the country declined significantly in 2020 and 2021, with a total decrease of 26.5%. Among them, the number and percentage of non-standard accommodation facilities decreased more than hotels, a decrease of 37.8%.

In other words, the homestay industry as a whole has undergone a reshuffle in the past two years, with new people replacing old ones. However, "no one is forever young, but there are always young people." The catering industry has collapsed one after another, and there are still people opening new restaurants in the old places.

The same is true for homestays, which received a huge amount of traffic during the May Day holiday, some of whom were "new recruits" who had not received any training and went directly to the battlefield, so casualties were inevitable.

“During my stay, I asked the boss how to get there and if there was a map. The boss only gave me a verbal description. He didn’t know where to pick up the takeaway and was not familiar with the area around the community. It was obvious that he was a boss who had just started out. The overall service experience was quite poor.” A consumer gave feedback to “Self-Quadrant”.

Another user complained to a homestay platform and said he would continue to complain to the industrial and commercial department, hoping that the platform would provide the store's relevant licenses. However, the platform said that the store was a new store and the business license was still under registration review and had not been submitted to the platform.

The takeover by newcomers has undoubtedly made the quality of the originally scattered B&Bs even more uneven, which has also directly led to the return of the territory that B&Bs and hotels had spent several years fighting for.

According to Zhongling's "2022 Homestay Industry Research Report", the number of online homestay landlords in my country in 2020 was 458,000.

The report mentioned that the market size of the domestic homestay industry was about 10 billion yuan in 2011. It dropped to 12.58 billion yuan in 2020 due to the impact of the epidemic, and rebounded again to 20.1 billion yuan in the first half of 2021. In 2022, the homestay market size was affected by the epidemic and dropped to 14.7 billion yuan, a decrease of 14.5% from 2021.

A landmark event in the gradual shrinking of the homestay market was Airbnb's withdrawal from the Chinese market in May 2022.

"After Airbnb withdrew from China, I have not booked a homestay again. I would rather book a hotel when I go out. Homestays are like opening a blind box. There is always uncertainty and it makes me feel uneasy. No matter how bad a hotel is, I can always guarantee a low standard."

Compared with B&Bs, the standardization and scale of hotels have become core competitive advantages in the turbulence.

B&Bs, due to their "sharing" attributes, have advantages in price, folk customs, local customs, etc., and have carved out a piece of the pie from the vast accommodation market. But in essence, B&Bs are still an accommodation product that requires more standardized operating rules to protect the rights and interests of consumers. This is the underlying value of the product. Once this part is missing, all the advantages brought by the features, discounts, and customs built on top of it will no longer exist.

For a long time, B&Bs and hotels have been taking completely opposite paths. After this "defeat", consumers are like frightened birds. Both B&B platforms and B&B owners need to rethink how to form a more positive and benign ecology, and this may take longer than the last decade.

Author: Cheng Xin, Editor: Luo Ji

Source public account: Zixiangxian (ID: zixiangxian), between the squares, there is a quadrant. Care about science and technology, economy, humanities, and life.