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Pinduoduo ventures into hotel business, taking on Trip.com and Meituan

This is the first time that a hotel chain operator in China has opened an online booking channel on Pinduoduo, which mainly sells groceries.

Photo: Provided by company with the press release

Hotel chain operator Huazhu Hotels Group (NASDAQ: HTHT) has launched a flagship store on Pinduoduo (NASDAQ: PDD), making its 2,000 hotels accessible to the social e-commerce platform’s 568.8 million monthly active users, Pinduoudo confirmed with KrASIA on Monday.

This is the first time that a hotel chain operator in China has opened such an online booking channel on Pinduoduo, which mainly sells groceries.

Under Pinduoduo’s RMB 10 billion (USD 1.4 billion) subsidy plan, three-night stays at Huazhu’s Ji Hotel and Orange Hotel are priced starting from RMB 480 (USD 70) to RMB 765 (USD 110) across China, which is at least RMB 144 (USD 21) cheaper than same package sold elsewhere. A total of 1,215 Pinduoduo users have booked such hotel stays by Monday afternoon.

“Pinduoduo’s entry into the hotel sector is bad news for Trip.com (NASDAQ: TCOM) and Meituan (HKG: 3690), but the effect is likely not large”, Cecilia Xu, an analyst with 36Kr Research, told KrASIA on Monday.

China digest

She explained that Trip, which is China’s largest online travel agency, is mainly in the high-end hotel sector, an area hard for Pinduoduo to tap, while Meituan, which focuses on middle-to-low-end hotels, is more efficient than Pinduoduo in attracting hotel suppliers as its strong promotional team recruits both restaurants and hotel operators at the same time.

Pinduoduo’s entry comes at a time when China’s hospitality industry, which was devastated by the COVID-19 pandemic, now shows signs of recovery.

Huazhu, which operated 5,953 hotels in the first quarter of this year, generated RMB 2.1 billion (USD 301 million) in net losses the first quarter of this year, compared with net income of RMB 106 million in the first quarter of 2019 and net income of RMB 619 million in the fourth quarter of 2019, according to its latest quarterly earnings release.

Trip collected RMB 1.2 billion (USD 163 million) in accommodation reservation revenue for the first quarter of 2020, representing a 62% decrease from the same period in 2019 due to the COVID-19 pandemic. The company has yet to disclose its second quarter earnings.

Meituan reported that the number of domestic room nights consumed on its platform in the first quarter of 2020 decreased by 45.5% year-over-year (YoY) to 42.8 million but that number increased to 78 million in the second quarter, although this performance still represented a 13.4% YoY decrease.