The transaction will close following final regulatory approval of the Chinese government.
Justin Jun Luo, chief executive officer of Tujia.com, said, “The capital raised from this financing will fund business development within China and give Tujia.com the ability to invest more heavily in strategic business development.”
The development gives HomeAway, the worldwide vacation rental site, a minority stake in Tujia.com. “HomeAway seeks to make every vacation property in the world available to every traveler and so we’re excited to make this long term investment in Tujia.com as we believe they are best positioned to bring vacation rentals to China,” said Brian Sharples, chief executive officer of HomeAway.
“We’re also looking forward to a relationship with Ctrip.com, which understands the opportunities of the Chinese vacation rental market and currently highlights Tujia.com’s vacation rental properties on its homepage.”
Ron Cao, managing director at Lightspeed China Partners, said, “Until now, China’s domestic vacation rental market has been a white space with significant supply and demand imbalance.
“Chinese consumers are increasingly looking for more options when they travel, and Tujia provides a unique offering with an online-offline model, and a focus on service and quality. The company’s world-class management team and first-mover advantage will position it well to become the dominant player in China’s emerging vacation rental space.”
Yang said this was a great milestone for Tujia, which was founded in December 2011. “Tujia.com has achieved significant accomplishments in terms of business model innovation and rapid development. This means that we have gained significant recognition from financial and travel related industries in China as well as overseas.”
She added, “The committed capital will be used to fund Tujia’s strategic business development and continued operations expansion.”
Asked if Tujia would expand outside China given the funding, she said, “Tujia won’t be a pure China play in the long run. In the short term we will focus on the domestic market in China.”
Yang told the audience at WITX that since its set-up, Tujia had succeeded in changing the mindset of Chinese consumers who were traditionally not comfortable with renting their beautiful homes to strangers or staying in other people’s houses while travelling domestically.
She said that while she was cognizant of the challenges she would face in a start-up in a new space, after seven years of working with Expedia in the US, she wanted to give it a go because like wild geese, which were migratory in nature, it was time to “come home” to China to carve out a new opportunity for herself and family. (Tujia means “journey home”.)
She said that security was a key consideration at Tujia to ensure guests are safe and home owners are protected.
“We have security at heart, we take photos of the houses for rental, make sure everything is working and clean. There is a specific team to check on the houses, paying special attention to security such as keys and locks,” said Yang.
Setting up Tujia a year ago was “right timing” as more and more Chinese travellers are exploring their own country.
So what niche market should suppliers go after in China? “The luxury market. There are currently about 10 million rich Chinese people and they will be the biggest segment worldwide by 2020. There is good opportunity for new travel ventures.
The Chinese company she admires the most: Sina Weibo, the Twitter of China.
Yang also shared these other trends:
• In China, 85% of family vacations are planned by women. They are very powerful and a market to watch out for and to target.
• Online shopping is more popular in China than in the U.S. – very price focused, deal seekers. “”My staff, for example, are buying their snacks online,” said Yang.
• Deal sites are popular in China but there’s a consolidation. Two years ago there were 3,200 deal sites but they went through high attrition with 10 disappearing every day.
• People are booking and buying on mobile
• The Chinese are better educated now. They, especially the FIT travellers, are looking for more unique travel experiences outside of typical travel brands.
