At the end of 2011, the first batch of homestay players were established. Today, the homestay industry is facing a ten-year test. From being unaccepted to the development of self-hematopoietic ability today, the homestay industry is gradually becoming mature, but it has been hit by a series of epidemics. Can the homestay ten-year test hand in a satisfactory answer?
In the following, I will lead you to re-take the road of homestay development, gain insight into the future through history, explore the development process of the homestay industry, and find the future development path of homestay.
From hundreds of players to a handful of homestay industry big waves wash sand
In 2011, homestays were fledgling in China. With the popularity of the sharing economy, homestays have become a favorite of capital, once standing on the wave of capital. Statistics show that in five years, 17 companies in the short-term rental industry have received a total of 9.3 billion yuan in financing. From the amount of financing, it is enough to see the popularity of the homestay industry at that time.
Of course, there are bound to be victims and martyrs in the development of any industry, and the same is true for the hotel industry.
According to public statistics, in the past 9 years, the homestay platform has grown from hundreds of companies at the beginning to today, and there are only a handful of platform companies left, namely Tujia, Wooden Bird Homestay, Xiaozhu Short-term Rental (only the statistics here are It has been established since the end of 2011), together with the short-term rental originator Airbnb (Airbnb) stationed in China, the short-term rental industry has formed a rectangular pattern of the New Fourth Army, ranking first in the industry.
From the initial hundreds of players in the homestay industry, how did the three remaining players stand out from the fierce competition and become more vibrant and energetic after nine years of turmoil?
According to public data, both Tujia and Xiaozhu have received E-round financing and have relatively abundant capital reserves; while Muniao has been following a low-key route, and the current financing round has reached the B round.
However, judging from the downloads of the latest Qimai data and the ranking of the travel list, Muniao seems to have become a dark horse after the epidemic, ranking first in both downloads and rankings. According to Wooden Bird official data, the Spring Festival in 2021 will increase by 22 times compared to 2020, and the orders for Qingming and May Day will be about 2.8 times and 2.5 times that of the same period in 2019, and the growth rate is higher than that of other players.
As a typical representative of post-epidemic growth, dig deep into the reasons behind its growth, and provide certain references and references for other companies.
First, the strategy of Wooden Bird B&B is different from other hotels. In the interview, its founder also clearly stated that the company insists on the strategy of not burning money. Under the premise of limited funds, Wooden Bird’s approach can retain sufficient cash to the greatest extent. to help them get through the crisis smoothly.
Second, the 2020 epidemic has brought all companies back to the same starting line. During the special period when each family is reducing expenses, Wooden Bird B&B has launched a series of online and offline advertisements to occupy the minds of users and lay the groundwork for its user growth after the epidemic. Of course, Muniao also enjoyed part of the results of the money-burning player education market, and the fisherman reaped the benefits.
Third, after the epidemic, the backlog of travel enthusiasm of users has been released in a concentrated manner. After years of market education, the homestay has a certain user base, and the industry is ushering in a development bonus period. This wave of dividends in the market has brought rapid growth for itself.
Looking back at the catching-up process of Wooden Bird B & B, opportunities are reserved for those who are prepared. They insist on doing a good job in the underlying construction, ready to go, and tackle key problems in one fell swoop. What needs to be explained here is that due to its special attributes, the homestay industry has a long cycle of user education and market cultivation, and other industries can use it as a reference.
Profit from blood transfusion to hematopoiesis is the kingly way of building an everlasting business
For any enterprise, making money is the foundation and a kind of ability.
If an enterprise wants to continuously expand its scale, finally realize its mission, fulfill its corporate responsibility, and make money, it is one of the most important things for the bottom-level construction of an enterprise.
For the slow-growing homestay industry, although it has been developed for 9 years, it is not easy to make profits.
According to public data, Wooden Bird Homestay announced in mid-2017 that it had officially passed the break-even point. Tujia announced in August 2018 that it had achieved a single-month profit, and Xiaozhu’s profit was slightly weak. From Airbnb’s financial report for the second quarter of fiscal year 2021, it can be seen that its net loss was US$68.2 million, and the loss shrank sharply year-on-year.
Achieving profitability is very important, but for homestay companies, there is still a long way to go before continuous profitability.
Huang Yue, CEO of Wooden Bird B&B, said in an interview that Wooden Bird will achieve profitability in April, May, June, and July of 2021. In August, orders fell due to the impact of the epidemic. From the data point of view, Wooden Bird seems to have a certain Continuous profitability, and this may be one of the reasons why it has become a dark horse after the epidemic. However, the sustainability of the profitability of Wooden Bird Homestay remains to be further observed. Under the epidemic situation, how long can the company's cash flow last, these are the core elements that affect the development of the company and even the industry.
Purely from an investment point of view, whether a company can achieve profitability should also become one of the focuses of investors. After all, in today's Internet bubble, a profitable company is only a plus for investors. If you enter the game at this time, the return on investment will be higher, and the chances of winning will naturally be greater.
The industry has built a moat, and it is difficult for new players to enter the game
After nearly 10 years of development and accumulation, the homestay industry has built an industry moat—housing sources and users.
According to public data, Airbnb, Tujia, Muniao and Xiaozhu have a total of 5.6 million, 2.3 million, 1.1 million and 800,000 houses respectively. For new entrants, this over one million housing stock is the first insurmountable threshold. Of course, there are also many homestay platforms that focus on local areas (such as Sichuan and Chongqing), but judging from the current market share, it is still difficult for such platforms to be elegant. Take Meituan Homestay as an example. Even with the backing of Meituan, a big-name financial backer, it took two and a half years for the number of houses to reach 700,000. If you start from scratch, the difficulty can be imagined.
Of course, this is only the first difficulty to face when entering the industry, and there is another difficulty is user acquisition. With the continuous increase in traffic and customer acquisition costs, and the homestay industry itself is an industry with no obvious differentiation and low consumption frequency, it is difficult to cut into the subdivision track. For new entrants, there are not enough advantages. , the probability of users liking the new and disliking the old is very small. Even if a large-scale subsidy is used to burn money, its effect and sustainability are still open to question.
When it is difficult for new players to enter the game, it is a foregone conclusion. For old players, whoever survives for a long time, who has self-sufficient profitability, and who can achieve the ultimate in product and user experience, who may be the final choice of users.
The next ten years of homestay: gold will always shine
The homestay industry has entered its first ten years in China. After a long period of user education and market cultivation, as well as the test of many natural disasters such as epidemics and earthquakes, which direction will the homestay industry continue to move forward in the next ten years? Woolen cloth?
First, product services are continuously optimized and upgraded, resulting in a qualitative leap. From the quality and service of the house source to the products around the homestay, and even the differentiated competition of the homestay platform, it is inseparable from the upgrading of products and services. Products and services directly affect the user experience, and the user experience will determine the future of the platform. User stickiness, repurchase rate, and whether the foundation can be laid will directly determine how many floors the platform can build in the future.
Second, the brand spillover effect is obvious, and each company needs to make efforts in brand building. A brand is an intangible asset of a company, and it is also the key for a company to occupy the shelves of consumers' minds. When the enterprise develops to a certain scale and the brand value becomes increasingly prominent, it is the brand that really attracts double-end users of homestay. Establish a good brand image, give full play to the brand spillover effect, and form a positive cycle between the platform and dual-end users. While the brand enjoys benefits, it gradually establishes certain barriers in peer competition, and continuously empowers the long-term development of the company.
Third, for homestay companies, the normalization of the epidemic has become a reality, and how to reserve more funds has become one of the key and difficult points for the company. Attracting external investment is one of the methods. Sufficient cash flow reserves are a profound lesson for many companies after the epidemic. In addition, how to make full use of its own advantages, improve profitability, achieve sustainable profitability, and bring continuous cash flow to the enterprise is also a compulsory course for the development of enterprises in the next ten years. If an industry is still unable to achieve profitability in its second decade, then the development prospects of the industry must be worrying.
The lead has faded to its original color, and the gold is seen only when the waves wash the sand. It is gold that always shines, and this beam of industry light needs to be lit by industry players!
References:
1. "Five years of attracting 9.3 billion in gold and now 3 top companies are seeking to go public: the short-term rental trend of shared homestays is about to go ashore" Flush Finance
2. "Airbnb's 2021 Second Quarter Financial Report: Both Supply and Demand Growth Revenue Has Exceeded the Same Period in 2019" People's Information
3. "From Selling Houses to Survive to Get Out of the Valley, the Wooden Bird B&B, which has been "flying" for 9 years, has gained a firm foothold" Titanium Media