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Sequoia-backed hospitality operator QingZhu Hotel scores tens of millions of dollars in Series B

Qingzhu was first incubated inside Meituan Dianping but went solo in January 2019 as a separate company.

Photo by Stephen Leonardi on Unsplash

Beijing-based hotel chain operator Qingzhu Hotel has closed its Series B round led by GGV Capital and Sofina Group, bagging tens of millions of dollars, 36Kr reported on Thursday.

Earlier investors also participated in this round, including Sequoia Capital China and Beijing-based venture capital firm XVC, the latter of which once backed and exited successfully from US-listed online education firm 51Talk. Financial details of the round were not disclosed.

Qingzhu was first incubated inside Meituan Dianping but went solo in January 2019 as a separate company, according to Qingzhu’s WeChat public account. Meituan confirmed with KrASIA on Thursday that Qingzhu and Meituan “are now independent from each other”.

The firm has signed over 3,000 standalone hotels under its umbrella, giving them access to Qingzhu’s online booking platforms and back-end management software. The company also offers design for hotels seeking to become franchised and management assistance for those under its aegis. All partner hotels are labeled as Qingzhu Jiudian, Qingzhu Yuexiang, or Qingzhu Lianmeng, depending on the services they purchase from the company.

New funds will be used to sign more hotels and for research and development, said the company.

The investment comes at a time when the hotel industry has been negatively affected by the COVID-19 pandemic, as people travel less, cratering demand for hotels.

However, Qingzhu’s CEO Zhao Nan told 36Kr that the effects of the public health crisis are temporary, and predicted that the industry will return to normal within six months.

“The pandemic will accelerate the elimination of hotels with relatively weak competitiveness. When the industry resumes, there will be a better opportunity in franchising existing hotels,” he added.

Jixun Foo, managing partner at GGV Capital, said chained hotels only account for 20% of all hotels in China and franchising is an inevitable trend for the sector. He added that Qingzhu Hotel could grow into a new-generation franchised hotel brand.

However, the sector is not without competition. Alibaba’s online travel agency platform, Fliggy, disclosed last December that it had attracted more than 15,000 stand-alone hotels to join its Feizhu hotel alliance in just three months.

Indian startup Oyo has signed up more than 10,000 hotels as franchisees since it entered China in late 2017. However, the company is also an example of the difficulties firms face in this market. The SoftBank-backed firm is currently undergoing a massive downsizing in China, slashing more than 7,000 employees since November, KrASIA reported.

In response, Oyo recently announced it has been optimizing and refining the regional management structure, which may include adjustments in headcount.

36Kr is KrASIA’s parent company.