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Vacation rental services set to boom
Last Updated: 2019-06-24 09:48 | China Daily
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Homestays, the pursuit of quality holiday experiences, investments and supportive policies spur high growth in the emerging sector

China's vacation rental and homestay market, which clocked sales of 19.1 billion yuan ($2.8 billion) in 2018, is expected to surge this year, thanks to the wanderlust of fast-growing middle-and high-income groups, supportive policies, and increasing popularity of homestays.

According to a report from the State Information Center, the sector's revenue is expected to reach 50 billion yuan by 2020.

The SIC forecast that by 2020, the number of short-term tenants is likely to exceed 100 million and the number of short-term lodging facilities will exceed 6 million.

Competition in the vacation rental sector is also set to intensify as both domestic and foreign companies step up efforts to gain traction among Chinese millennial tourists. On offer are high-quality, personalized services, said industry insiders.

The rise of vacation rentals can be attributed to Chinese consumers' pursuit of high-quality travel experiences.

About 195 million people traveled during the four-day Labor Day holiday in the first week of May, up almost 14 percent year-on-year, according to the Ministry of Culture and Tourism.

Their travels generated 117.67 billion yuan in revenue over the four days, representing significant growth of more than 16 percent year-on-year.

Roughly 38 percent of tourists spent between 501 yuan and 1,000 yuan each during the holiday. Their cultural and tourism consumption came mostly from family trips, which spurred the explosive growth of the country's vacation rental and homestay services, the ministry said.

In October, the State Council released an action plan for 2018-20 to further stimulate domestic consumption. The plan emphasized that market access should be relaxed in several service-related fields like tourism, and efforts made to boost the development of short-term rental services like rental apartments and guesthouses.

"The vacation rental services are still nascent. China is one of the most important markets for Airbnb and we have seen the Chinese government holds a positive attitude toward the sharing economy," said An Li, vice-president of Airbnb China.

Peng Tao, Airbnb China's president, said the company is ramping up efforts to launch educational initiatives designed to enlighten landlords in second-and third-tier cities, to improve the quality of Airbnb listings, as well as strengthen online reviews of listings and brand-building.

Peng is bullish on the prospects of China's vacation rental market, which can help boost the local employment rate and help drive economic growth.

Last year, Airbnb debuted Airbnb Plus in China - a new selection of only highest-quality homes with hosts known for great reviews and attention to detail. The company has launched Airbnb Plus in 164 cities worldwide, including 13 in China. Beijing, Shanghai, Guangzhou and Chengdu figure among the 13 Chinese cities.

China is projected to be the largest source of tourists for Airbnb by 2020. In addition, the company has signed agreements with Chinese cities like Shenzhen, Guangzhou and Shanghai to strengthen cooperation with their municipal governments.

"There is still huge development potential for the vacation rental services in urban areas, especially in the utilization of housing resources and optimized allocation of resources," said Huang Yue, founder and CEO of short-term rental booking platform Muniao.

Huang said more landlords and tenants are expected to join the short-term rental homestays in the future, to enjoy the benefits brought by the sharing economy, which will greatly improve the utilization rate of social resources.

Established in May 2012, Muniao is a vacation rental service. It lists more than 300,000 properties for short-term rentals in 396 cities across China, and offers users accommodation of verified sources and family-oriented homestays.

Huang said Muniao will enhance the quality of its accommodations to cater to the Chinese market. It will verify homeowners' identities, support intelligent door locks and offer family-oriented homestays. It has also been cooperating with Ping An Insurance to offer rental insurance for both tenants and hosts.

Huang said there is great growth potential in vacation rentals in China as they could make up for the tight supply of traditional hotels during peak seasons.

Tujia, a Chinese online platform for short-term lodging services, is looking to lure the country's young millennials by beefing up its presence in overseas markets like Japan and Southeast Asia. It is striving to boost this year's revenue by 100 percent year-on-year.

"We will continue to increase investments in overseas markets. We will establish branches or subsidiaries in popular tourist destinations and cooperate with local vacation rental service providers," said Yang Changle, CEO of Tujia.

The firm is targeting the rapidly growing outbound travel market. Last year, it acquired Fishtrip, a Taiwan province-based bed-and-breakfast booking platform. The move added about 300,000 quality overseas properties to its listings.

The company set up a small team in Japan in 2016. It also teamed up with Rakuten Lifull Stay, an e-commerce company in Japan, in 2017, with an aim to boost its presence in Japan to take advantage of the 2020 Tokyo Summer Olympics.

Xiaozhu Inc, another Chinese homestay service provider, claimed over 500,000 active listings across 710 cities in January. In October 2018, the startup raised $300 million from Yunfeng Capital of Jack Ma, co-founder of Alibaba.

As Chinese outbound and inbound tourism sectors are growing rapidly, homestay platforms must be able to provide high-quality services to global consumers, said Chen Chi, co-founder and CEO of Xiaozhu.

According to a report from iiMedia Research, various homestay apps in China had 147 million users last year, up 83 percent year-on-year. It forecast the number would reach 300 million in 2020.

Jiang Xiwei, an analyst with market consultancy Analysys, said there is huge room for growth of the vacation rental market as travelers are willing to try something different, like homestays, during a trip, and online services offer diverse experiences these days.

"The short-term home rentals and homestay services are wide-ranging now, to satisfy the needs of various kinds of tourists. Typically, customers hire such services for get-togethers, reunions, team-building activities and to improve parent-child bonding and communication," said Lai Zhen, an analyst at market research firm iResearch.

Lai said the authorities should increase efforts to formulate standards for the emerging market and implement detailed safety rules, in cooperation with shared accommodation providers. That kind of approach will help the healthy and orderly development of online short-term rental services.

(Editor:富博)

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Vacation rental services set to boom
Source:China Daily | 2019-06-24 09:48
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