Hotels are far more than just a nice-to-have at China’s Meituan Dianping.

While food delivery dominates Meituan Dianping’s transactions and revenue, as part of its “Food + Platform” strategy the Chinese e-commerce and lifestyle giant now claims to process more domestic hotel-room nights than any of its competitors, including Ctrip.

In reporting its fourth quarter and full-year 2018 results, its second such quarterly exercise since executing an initial public offering, Meituan CFO Shaohui Chen said “we continue to maintain our leading position in terms of domestic room nights.” He said the domestic hotel business is profitable.

In 2018, Meituan saw its domestic room nights jump 38.5 percent to 283.9 million. As part of the IPO process, Meituan claimed last year that it was just ahead of leading online travel agency Ctrip in domestic room nights booked with 33.6 percent market share for Meituan versus 33 percent for Ctrip.

It’s tough to tell whether Meituan widened that gap, as claimed, because Ctrip doesn’t disclose its domestic room night numbers. Ctrip executives pointed to high growth in the fourth quarter in its low-end; mid- to high-end, and international hotel segments. It didn’t mention domestic hotels specifically.

Hotels are just one of the add-on services, including wedding, spa, and gym services, that Meituan offers to its huge food delivery user base, and offers hotels as a cross-sell.

Meituan’s food delivery clout — it claims 60 percent market share of delivery orders in China — is a competitive advantage. Chen said that more than 90 percent of its first-time hotel bookers have used either Meituan’s food delivery or in-store dining services.

Chen said most of the company’s hotel bookers do so for leisure travel, but there could be more lucrative future trends as Meituan aggressively expands into higher-end hotels.

“So as this younger user grew in age, they also grow in income and grow in spending power,” Chen told analysts during an earnings call Monday evening local time. “And their total booking demands naturally move up to higher-end hotels.”

In 2018, Meitiuan saw revenue from its in-store dining, hotel and travel segment jump 46 percent to $2.35 billion. Revenue from the company’s core food delivery service grew even faster, 81.3 percent to $5.67 billion.

“So it’s very important to remember that we operate our hotel booking business just as one category of our whole in-store business, and our overall strategy for us is more on increasing the profitability of the business segment,” Chen said.

He maintained that Meituan doesn’t have to pay undue attention to what competitors are doing “because we have the largest user platform” and “a very good infrastructure for connecting with the hotels.”

Bloomberg, however, pointed out that Meituan is facing inroads from competitors such as Alibaba in Meituan’s smaller businesses, including bike-sharing and travel, where “profitability shrank.”

Food Delivery Growth Maturing?

Chen said he expected to Meituan’s food delivery growth to be “modest” in 2019 compared with the prior “explosive” expansion. He said there is still “a lot of room for growth” as the company transitions to “long-term relatively slower, but a more sustainable growth stage.”

For full-year 2018, Meituan saw its adjusted earnings before taxes, depreciation and amortization loss widen 76 percent to $700 million on revenue of $9.7 billion, a 92 percent leap.

When it comes to hotels, though, Ctrip, which went on an acquisition spree of rivals several years ago, clearly faces a new, formidable competitor.

This article was originally published on Skift, a Jing Travel content partner.

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