It was announced yesterday that agoda have signed a strategic global partnership with China’s Xiaozhu.com, to develop inventory, tech and services. With agoda being such a muscular presence in Asia, you would have thought that the company would only be focussing on acquiring a dominating force in the Chinese market.
But, the question remains, who exactly is Xiaozhu?
Founded in 2012, it is an Airbnb-style house-sharing platform. Until now it has concentrated on the domestic market, for daily rental and short-term rooms, building a strong foundation which has enabled Xiaozhu.com to compete with local favourite Tujia.com.
This all changed in late 2017, when they raised US$120 million, following a round of funding spearheaded by Alibaba’s Jack Ma, giving the company the means to develop a more global outlook, with the potential to not just compete with Tujia.com and Airbnb but to maybe even outmatch them. Xiaozhu now covers listings in over 100 overseas cities, notably in growing homestay markets such as Japan and Thailand.
Since entering China in 2015, agoda – my former employer – has grown into one of the national’s most popular booking sites for Chinese tourists heading overseas. I am certain the Booking Holdings-owned company (along with Booking.com et al) has long been aware of the threat of the sharing economy to more traditional hospitality models. In the initial phases of agoda’s cooperation with Xiaozhu.com, both sites will share 100,000 listings on each platform.
Thinking of the alternatives
Spencer Low, agoda’s managing director for Greater China, said: “This partnership will offer alternatives to traditional hotels in China and will benefit travellers who are looking for more distinctive options for their accommodation needs. Together Xiaozhu and agoda will provide easy access to listings that offer different benefits.
“One is the flexibility of staying together at a larger property when traveling as a group of friends or family, while another is more options for business travellers who crave the comforts of home. Additionally, these listings include a range of price points to cater for a variety of budgets. We are confident that the combination of Xiaozhu’s rich knowledge of the China market and agoda’s global OTA expertise will enhance consumers’ experience of homestays.”
“This partnership… will benefit travellers who are looking for more distinctive options for their accommodation needs”
– Spencer Low, agoda
Chen Chi, co-founder and CEO of Xiaozhu, also called this joining of forces a win-win: “agoda’s worldwide success, especially its experience in Asian countries, will enhance Xiaozhu’s globalization momentum.
“As Chinese outbound and inbound tourism is growing rapidly, homestay platforms must be able to provide high-quality services to global consumers. To this end, Xiaozhu is accelerating cooperation with our industry partners.”
Without doubt, agoda has the intent and the engine to take advantage of Xiaozhu’s considerable local foothold and I bet the two companies will clean up in China if not all of Asia. According to our calculations, this will bring agoda’s global listings up to around 1,000,000 which is an impressive figure, but on a global scale it is a mere drop in the ocean compared to Airbnb’s total of 4 million.