(Chinese Version)

As a Chinese company that focuses on providing home-sharing service for Chinese outbound tourists, Zhubaijia has been much of a center of attention in the industry since its establishment. The company has 250,000 directly signed accommodation offers across 70 countries and 729 cities, with offers including tree houses, mansions, castles and even accommodations by the dock.

A group of Internet celebrities and entertainment celebrities are also promoting the platform on the Internet. Huang Xiaoming and Angela Baby’s wedding picture shoot was booked via Zhubaijia as well. Angela Baby is in fact one of the investors of Zhubaijia’s B-round financing. Recently, Michigan Ross School of Business is also planning to include Zhubaijia as a case study, which will make Zhubaijia the first Chinese sharing economy company to be listed as a case study by a top business school in the U.S.

After receiving its C-round strategic financing from HNAtour last year in September, Zhubaijia appeared on the National Equities Exchange and Quotations this year in April. Many might be curious about why Zhubaijia could win over the heart of the capital when facing the fierce competition from Tujia and Mayi as well as international heavyweight Airbnb, and why it could attract celebrities such as Lin Xinru and Huang Bo and gain traction in the short-rental market so quickly.

Airbnb+Caissa Touristic model builds an exquisite marketplace for outbound tourists

When Airbnb just started to get popular in 2008, Zhang Hengde, who was studying abroad at that time, gradually fell in love with this new form of sharing economy. Airbnb was popular among students for its cost-effectiveness and fresh experience compared with traditional hotel stay. However, Zhang Hengde then found that Airbnb had some shortages when it came to Chinese students, as it lacked efficient communication with the Chinese students, some hosts were not friendly to Chinese people, and the reservation period could be long etc.

After returning to China, Zhang Hengde started his entrepreneurial journey. He became a host on Airbnb. He first rented several tens of apartments in Hong Kong and redecorated them all over again. And he put all his apartments on Airbnb and Wimdu(the Airbnb in Europe, headquarted in HK) for short-term rental, in hopes of finding a replicable business model. After Wimdu’s exit from the Asian market, Zhang Hengde and Ruan Zhimin(former senior executive of Wimdu Asia) put everything they have——Ruan Zhimin’s several hundred of overseas apartment sources accumulated over the years on Wimdu——to start their own venture.

Zhubaijia’s founder and CEO Zhang Hengde

As the largest tourism consumption group in the world, the middle class community in China has made great contribution to China’s outbound tourism. According to World Tourism Organization’s research on Chinese tourists’ visiting pattern, the middle class community has become the main group of China’s outbound tourism with immense consumption power. Credit Suisse last year stated that in accordance with the U.S standard, China’s middle class community has reached the scale of 109 million, which is the world’s largest, and will continue to grow by 24% every year. Credit Suisse aso said that the scale of China’s middle class community is expected to reach 300 million in five years and remain the top one globally.

Zhang Hengde and Ruan Zhimin saw the opportunities and then founded Zhubaijia, a short-term rental platform targeting Chinese outbound tourists.

Zhubaijia’s office in Beijing

After researching on the short-term rental sector, Zhang Hengde found that there are two risks in overseas non-standard stay industry. Firstly, the accommodation is the crucial part of outbound visit. Users tend to hold high expectation of their trip, especially the middle class. If anything goes wrong with the accommodation, then the whole trip might just be ruined.

Secondly, users have high trust demand when choosing non-standard stay. If the host has some problems or the accommodation has problems, it would be very exhausting for the users as they are in an entirely different place and probably don’t speak the language there. The language barrier and cultural difference are also very big obstacles in outbound visit.

That’s why the first thing Zhubaijia did to win over market share was control the quality of the accommodation sources. Since Zhubaijia targets the middle class community, its home sources must be better than Airbnb. To pull that off, Zhubaijia set itself as the Airbnb+Caissa Touristic model in the very beginning instead of the Chinese Airbnb.

Zhubaijia developed its own accommodation filtering system, the PES(Property Evaluation System). PES includes over 70 evaluation standards, from the location, the surrounding environment, the ethnicity of the host, the transportation condition around the property, to details like whether the house has cracks on the wall and if the host provides slippers etc. Every home source has to go through the PES before appearing on Zhubaijia’s platform. Furthermore, Zhubaijia’s staff will go inspect the home source in person before putting it on the platform.

Besides the evaluation on the property, Zhubaijia will also investigate the host’s background. For instance, Zhubaijia will assess the host’s credibility through social media such as Twitter, Facebook and Tripadvisor etc. Zhubaijia will also interview the host’s neighbors to further assess the credibility. “Airbnb is like a big supermarket. It provides a lot of options but can’t really insure the quality. Zhubaijia is like a high-end market. We dedicate to providing our users with high-quality and safe products,” Zhang Hengde said.

To satisfy users’ different needs, Zhubaijia is also pushing to provide unique home sources like tree houses, mansions, castles, trailers, homestay etc. Zhubaijia’s most unique home source is probably a seaside mansion on the Bahama island, where France’s former president had stayed before and where one of The Wolf of Wall Street’s scene was shot before. Zhubaijia is the only Chinese company that was able to acquire the agency. It’s priced at ￥170,000 per night and favored by Spanish royals, movie stars, and successful businessmen. This is the first time that it’s open to Chinese people. “When there is a demand, we will make it happen.”

When digging into overseas property sources, Zhubaijia gradually developed three paths of exploration. For instance, Zhubaijia outsources the task of finding accommodation sources to local people what know about the local culture and lifestyle. This includes Chinese people who have lived in a certain region for many years, or local Chinese students or travelers that really know about the place. Also, the host can apply to be on the platform or recommend others. Thirdly, Zhubaijia also gets accommodation sources from suppliers like Homeaway. But since Chinese users have special customization needs, Zhubaijia mainly focuses on direct accommodation sources.

Given the fact that HK’s accommodation sources are limited, Zhubaijia mainly offers sources in hot traveling destinations in western countries and some Asian countries. Mansions by the sea and European castles can cater better to the users. The quantity and quality of the accommodation sources can contribute a lot to the market expansion.

Airbnb and Tujia etc. charge their users a 12-15% service fee, Zhubaijia sticks to the profiting model based on the price spread. “We will price the accommodation sources according to the seasons, and the quality of the house. Meanwhile, we provide one-stop service for our users and other services other than accommodation. That’s another income source for us. For example we have transportation service, private tour guide service, home dinner deliver, and bodyguard service etc. The 44% of the income during the first half of the year was from that,” Zhang Hengde said.

Three features lead the innovation in the industry

For non-standard accommodation sector, at the end of the day the competition is all about the service. Zhubaijia knows that all along so it aims to provide the best services it can deliver.

For example, Zhubaijia is the first platform to provide 3D accommodation observation service that lets users “see” the accommodations they are interested in. That’s Zhubaijia’s first endeavor in the industry. Hosts on ordinary short-term rental platform would generally over photoshop the photos, and when users eventually arrive at the house they would be really disappointed.

That’s why Zhubaijia rolled out the 3D accommodation observation service. This insures the experience and lowers the complaint rate. Outbound tourist groups such as families and company tours can also observe the accommodation sources first and plan the whole arrangement. For instance, some people might want bedrooms with a private bathroom.

Another special feature Zhubaijia has brought about is the 24-hour Chinese customer service and butler service, including transportation service, private tour guide service, home dinner deliver, and bodyguard service etc. That said, whenever and wherever you are, you can have access to services in Chinese, which breaks the language barrier for outbound tourists. If the users lose their passport, wallet, or get sick, the bulter service can help them fix the problems.

Another special feature Zhubaijia has brought about is the 24-hour Chinese customer service and butler service, including transportation service, private tour guide service, home dinner deliver, and bodyguard service etc. That said, whenever and wherever you are, you can have access to services in Chinese, which breaks the language barrier for outbound tourists. If the users lose their passport, wallet, or get sick, the bulter service can help them fix the problems.

Zhubaijia’s CTO Guo Xiao told TMTpost that Zhubaijia is working on a smart terminal, which will allow users to have access to the Internet without having to get a local sim card. The users will be able to call up the customer service and reach the butler service via the smart terminal. And of course, the terminal also bears the mission of accumulating data on users’ behavioral pattern and consumption pattern, so as to better understand the users and provide better services that will cater to them.

“The terminal might be provided for Zhubaijia’s VIP members for free. We hope to build the world’s largest data platform on outbound Chinese tourists,” Guo Xiao said.

At present, Zhubaijia is gaining momentum fast, with 250,000 accommodation offers across 70 countries and 729 cities. The largest overseas hotel group Starwood Hotels now boasts 390,000 accommodation sources. “Zhubaijia can pretty much reach that scale next year,” Zhang Hengde said.

Zhubaijia is also working on a data analysis model and recommendation algorithm for accurate operation in an attempt to accumulate data on user behavior and analyze use case and predict users’ consumption activity. When users open the app, they will first get one or two accommodation recommendation determined by big data analysis. It helps users pick accommodation that fits them.

Zhubaijia is going to penetrate other chains of outbound tourism centering around the accommodation in the future, Zhang Hengde said. The platform sets to bring out a complete customizable traveling solution. Zhubaijia’s future services might include value-added services like flight booking, hotel reservation, local taxi service and tour guide service etc.

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[The article is published and edited with authorization from the author @Hu Jianglu, please note source and hyperlink when reproduce.]

Translated by Garrett Lee (Senior Translator at PAGE TO PAGE), working for TMTpost.