Xiaozhu Taps into Evolving Home-sharing Market
COVID-19 and China
Outdoor lamps turned on. Photo by Brian Babb on Unsplash

China’s one of biggest home-sharing startups Xiaozhu decided to further expand its business model from pure platform to one-stop accommodation platform in its latest move as China's tourism and accommodation market changing rapidly, the company announced on May 17.

Xiaozhu has 800,000 listings globally, covering 700 cities and regions all over the world. The company is the first platform that equips smart locks for landlords, signaling the company’s efforts in supply-side and processes standardization.

“We’ve already been exploring providing all kinds of accommodation services in the past, from photo shooting, cleaning to equipping smart locks for landlords, beyond a single platform. Until now, we came up with the decision that we need to find a pillar to support more than transactions. That’s why we launched a second operation center in Chengdu to start trials of self-operation, franchise business, and off-line service station,” Xiaozhu’s CEO and founder CHEN Chi (陈驰) claimed during an interview with Chinese business review media 21 CBR.

The company aims to build a featured accommodation ecosystem in the coming years. This strategy is becoming an essential problem that all entrepreneurs need to address, as CHEN claimed.  

Xiaozhu took the initiative, a one-stop short-term leasing solution for landlords called Lanzu Community, to lower the barrier for landlords to enter the market in 2018. The company takes care of everything involved in leasing from home design, furnishing, IoT devices, and smart management.

Xiao started strategic cooperation with Hainan Travelling development committee to provide services in Hainan’s rural area, launch poverty pivot programs and set up homestay industry institutions, in 2018.

Aside from expanding into all kinds of properties, Xiaozhu also partners with rural homestay and accommodations booking service platforms like Huazhu and Yunzhanggui.

“You need to solve the environment problem and accommodate with laws in villages, on the other hand, you need to consider the elderlies in communities and city rebuild plan. You cannot have them done as a platform, ” CHEN said.

Over 6,000 Xiaozhu-managers provide landlords cleaning service in 2019. In April, the monthly average orders peaked at 250,000, proving the service itself generates value.

In a bid to build a one-stop accommodation service platform, the company focuses on the supply side. In consumer side, it plans to develop airport transfer and luggage delivery in some pilot cities like Shanghai, Chongqing, Chengdu, Xi’an, according to Xiaozhu's Chief Operating Officer WANG Liantao (Tarry Wang, 王连涛).

The company sets to apply the strategy in reality with more third-parties involved. Xiaozhu will be in charge, and others will join the ecosystem connected by a cooperation network to provide services.

Xiaozhu is not the sole company which tries to invest in a heavy business. OYO Hotel, a rapidly expanding Indian hotel company, completed its business transition as it announced in February. It initially partnered with manager-owners in a soft brand arrangement. Now it wholly leases and franchises all of its budget hotel properties. The company differentiates itself from traditional franchising in traffic entrance, technology and its focus on budget hotel. Most of its customers book rooms from its app and it also has a back-end reservation management system to improve efficiencies of various process that hotel booking involves.

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