Airbnb's biggest rival in China raises $300m to fund rapid expansion

Chinese startup Tujia gains a valuation of more than $1.5bn as it looks to win over young Chinese holiday makers

Home-sharing startups look to win over free spending Chinese travellers (REUTERS)

Airbnb’s biggest rival in China, Tujia, has raised $300m (£227m) to fund a rapid expansion and ride a surge in Chinese families taking holidays around the world.

Online travel giant Ctrip and All-Stars led a round that valued the company at more than $1.5bn, it said in a statement confirming an earlier Bloomberg report. That’s up sharply from a valuation of over $1bn when it last tapped financing in 2015.

China’s largest vacation rental platform now handles more than 650,000 listings globally, focused on serving the world’s largest population of domestic and international travellers.

Tujia’s latest fund-raising comes as Airbnb quadruples its Chinese tech team to grow its domestic market share. It now has around 100,000 listings there and is fighting to convince the same group of middle-class consumers to use its services instead of domestic rivals.

China Renaissance was an adviser to Tujia and its New Economy Fund, which is now known as the Huaxing Growth Capital fund, was an investor in the round.

Glade BrookCapital -- a backer of Airbnb -- also took part along with G Street Capital, which was advised by Macquarie Capital.

Tujia is intent on taking its rivalry with Airbnb global, including in Japan -- one of the most popular destinations for Chinese tourists.

The Beijing-based startup aims to increase the number of properties available for holiday rental there to about 100,000 by 2019 from 10,000 now, Tomoko Suzuki, chief executive of the Japanese unit, told Bloomberg.

The startup said it now covers more than 1,000 foreign destinations.

But the battle may be fiercest in China; source of the world’s most freely spending travellers and a booming market in its own right.

China’s shared-accommodation operators are fighting house-by-house to boost their catalogues and win more users.

They’re relying on local know-how and relationships to stave off foreign giants like Airbnb, which has become a key global player in the space and now plans a more aggressive approach after taking it slow in past years.

The US home-sharing giant is adopting the name “Aibiying” in China, one that translates as “welcome each other with love,” as it doubles investment in the country.

Building a brand in China is vital for global travel operators as increasingly affluent Chinese holiday makers reshape the global tourism market.

They will take 67 per cent more trips in 2020 compared with 2015, according to Bloomberg Intelligence. Much of this is driven by millennials more willing to opt for independent travel and skip the packaged tours favoured by their parents’ generation.

“China’s travel accommodation sharing industry, of which Tujia is the leading player, will gradually be fully accepted as a travel option,” said Cai Jiayi, an associate with G Street Capital.

Bloomberg