ByteDance has kicked the steel plate

Huang Qingchun

Huang Qingchun

Tiger Sniff Official Team

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Produced | Tiger Sniff Yellow Youth Channel

Author | Commercial Consumer Lead Author Huang Qingchun

Title Image | Visual China

Article Summary

Tiktok is facing challenges in the hotel business and market resistance.

•      The performance rate of Tiktok Hotel is low, only 10% of that of Ctrip and Meituan

•      The operating costs of the hotel are high, and the commission has been increased to 8%

•      Tiktok has fierce competition with traditional OTA, and its market share is hard to shake

ByteDance, which has been making great strides all the way, finally kicked the "steel plate" in the local life track.

Hu Xiu learned that after heavy fire has penetrated into restaurant catering and store integration, Tiktok life services continue to go deep into the "hinterland" of Ctrip and Meituan, but the promotion of wine travel business (especially hotel accommodation category) is still in a slow climbing stage:

On the surface, the enthusiasm of the hotel industry to settle in Tiktok is improving. According to the 2024 Tiktok Spring Hotspot Report, the registered corporate accounts of Tiktok in 2024Q1 increased by 20% year on year; Among them, hotel accommodation is the most active industry for registering enterprise accounts, and the number of Tiktok searches for hotels has climbed steadily, with a year-on-year surge of 122% over the first three quarters of last year.

In fact, the prosperity of traffic and the popularity of topics are just superficial excitement:

In terms of market share in the OTA field, Ctrip (including Tongcheng, Qunar, etc.) has a market share of over 50%, especially in the high-end hotel market; Meituan accounts for about 20% of the market, mainly concentrated in small and medium-sized hotels; Tiktok accounted for low single digit;

In terms of actual write off, as of May 2024, the supply of Tiktok life service hotels is only about 10% of that of Ctrip and Meituan, and the hotel performance rate is only about 30%, while the performance rate of Ctrip (including Tongcheng, Qunar, etc.) (mainly in the reservation mode) is as high as 90% (for the above data, Hu Xiu confirmed with Tiktok at the first time, and the other party responded that the above hotel data is not accurate).

This situation mainly stems from the fact that hotel customers mostly complete transactions through natural search on the platform, with low dependence on service providers for operation or advertising placement - in this case, increasing commissions becomes a means for traffic channels to compete with hotels. Hotels are not like the catering industry that can continuously flip tables, nor are they like other industries that need more customers on weekends to solve inventory problems, "said a regional hotel agent.

It is not difficult to understand why Tiktok Life Services changed its strategy in hotel business after July 1, and the rate of accommodation category rose sharply from the original 3.0% -4.5% to 8%, and began to dig deeper into three-star hotels.

However, Crow Rui once wrote that after the implementation of the incentive policy of Tiktok Hotel in 2024Q3, some service providers achieved a higher than expected growth rate, especially for small and medium-sized businesses below one million in the quarter, the quarter on quarter growth rate was as high as 145%, while the quarter on quarter growth rate of middle and waist service providers soared 285% - at the same time, the connection rate of service providers also showed an upward trend, up 6 percentage points.

Of course, the business boost brought by short-term policy stimulus has limited impact on the overall business of Tiktok Hotel, and its penetration ability in the hotel industry is still facing considerable challenges: based on the past online operation inertia and user asset precipitation, local hotels will give priority to Ctrip, Tongcheng and Meituan as the main sales channels. Even though Tiktok can bring abundant traffic and topic, its market share is difficult to climb in the short term, and it is more regarded as an exposure channel.

For this reason, Tiktok Life Service recently announced the 2024Q4 incentive policy for the accommodation industry to ease the off-season operating pressure of service providers/businesses and reduce operating costs: on the one hand, by means of cash rebates, "local push" and other ways, improve the hotel performance rate and business investment willingness; On the other hand, promote refined regional operations and optimize commercial models.

To be frank, after Tiktok entered the local life, there was no lack of voice of decline in the market. Now it is just by taking advantage of the hotel business obstacles to shake Tiktok's "hand" into the hinterland of Ctrip and Meituan, and the two sides have made changes in the business landscape.

Tiktok "can't move" hotel?

Unlike the past resource backflow and blitzkrieg, Tiktok is patient and determined in life service business.

Tiktok's life service business was initially called the innovation business line, which will be launched at the end of 2020; In 2021Q3, it was adjusted to a life service team, which was first managed by Han Shangyou (currently president of Tiktok Group), which shows that the Group attaches great importance to this business.

In 2023, Tiktok will further divide the life service business, and break down the major transportation, travel agency, home stay and other sectors; In 2024, adjustments will be made to merge the wine and tourism business with the catering industry, and adopt a commercial district mechanism for division - all of these adjustments are aimed at expanding the supply chain and exploring lower tier markets - for no other reason. Ctrip and Meituan have completed their strategic positioning by penetrating suppliers in recent years.

In fact, Tiktok's life services continued to occupy the territory. In the second half of 2023, through the platform policy stimulus, there was a short burst of wine travel business. Official data shows that last year, the number of dynamic sellers of Tiktok's wine travel increased nearly seven times, and the payment GMV increased more than 30000% year on year; Among them, live streaming has the largest proportion and the fastest growth rate, with the GMV of wine and tourism live streaming payments increasing by over 20000% year-on-year.

This is mainly due to the fact that Tiktok's promotional advantages (exposed through recommendation pages, brand advertisements, talent cooperation, etc.) and the cooperation of scenic spot merchants (group buying and ticket sales in the live broadcast room) have made many "Tiktok Punch in" scenic spots popular - this is precisely the content+scene touch ability that Ctrip, Feizhu and other platforms lack when selling tickets in scenic spots and booking hotels.

"The user tag of life service is not enough. The platform drives user content consumption through activity operation and smart card punching, and then divides them into different flow pools according to user content preferences, so as to maximize user tags." An industry researcher believes that from shop to home, Tiktok Life Service leverages demand through low-cost supply, and has captured a number of loyal price sensitive users, and has attracted a number of businesses to follow through the emergence of explosive "myths".

In view of this, as the business disk grows larger and larger, the user disk also expands rapidly - According to the 2023 Local Life Service Industry Insight released by the third-party organization QuestMobile, as early as April 2023, Tiktok Life Service was launched in more than 370 cities, with more than 2 million cooperative stores, and more than 300 million overlapping users with Meituan, accounting for 81% of the total users of Meituan.

However, as Tiktok's life services are promoted to hotel accommodation, the difficulty of business climbing begins to appear gradually - as of May 2024, the supply of Tiktok's life services hotels is only about 10% of Ctrip and Meituan, and the hotel performance rate is low, while the performance rate of Ctrip (including Tongcheng, Qunar, etc.) (mainly in the booking mode) is as high as 90%.

Focusing on Tiktok products themselves, the reasons for its slow growth in hotel business can be roughly summarized as follows:

First, after Tiktok launched the calendar room function, one click booking has improved the efficiency of Tiktok's coupon buying and room booking compared with the previous (group buying mode) users, but Tiktok's entertainment attribute is deeply rooted in the hearts of the people, and users' consumption mentality is still in the process of forming. Ctrip and Meituan products have strong consumption attributes and clear scenarios;

Second, some areas of Tiktok's accommodation business cannot directly connect with the merchant's inventory, and the reservation right is determined by the merchant rather than the user, so it is impossible to know the dynamic of the merchant's housing supply in real time;

Third, the hotel's business transformation in Ctrip and Tongcheng is clear, and the user's consumption is determined. The hotel's investment in content operation, short video and live broadcast in Tiktok is the product promotion cost of content diversion. Even though the general voucher of Tiktok's production service room and the calendar room in the early stage drive the transformation efficiency to rise, it is far from the stage of leveraging businesses to put resources online for redistribution;

Fourthly, there is an issue with the content ecosystem, as there are few experts in the vertical field of wine and tourism, and the content production process is constrained, making it difficult to form a virtuous cycle.

Moreover, since July 1, the proportion of Tiktok accommodation category commission has increased from the original 3.0% -4.5% to 8%, and hotel merchants still need to pay service provider commission, operation and other fees, which may cause hotel merchants to rethink their investment strategy for Tiktok channels, obviously posing a higher challenge to the development of Tiktok accommodation industry.

In view of this, Tiktok Life Service 2024Q4 takes a two pronged approach, and the business side continues to increase its incentive policies for service providers and merchants:

One is to continue to give back to the tower base merchants. Provide a 1% rebate incentive to businesses in the accommodation industry whose GTV is less than one million in Q3 2024; Among them, the rebate incentives for high-end and economy hotel businesses have doubled.

Secondly, increase the stimulation for the service provider community. Implement a tiered incentive policy of 1% -3.5% for service providers to encourage them to expand their connection efficiency. Among them, the maximum four-star incentive limit for service providers is up to 1 million yuan. It should be noted that after any platform policy change is transmitted to the brand, the service provider is the first to make changes and adapt. As the "bridge" between the platform and the brand, they have already mastered eighteen skills: from content operation, live streaming operation (testing new products, pulling GPM) to advertising placement. They not only have the ability to provide comprehensive services, but also have the "smell" of rapid iteration.

Third, 2024Q4 will further provide an additional 1% incentive for the approved list of private room providers and private rooms hotels in the accommodation industry, enhance Tiktok's voice in online housing, and exchange profits for more certainty in the supply chain of housing.

On the organizational structure side, Tiktok Life Service further refined the organizational structure of the direct sales team. Taking Luoyang as an example, this city with a permanent population of over 7 million has a monthly GTV of several hundred million yuan. The organizational structure consists of one CM (City Manager) and four BDMs (Business Development Managers), with 4-6 BDMs (Business Development) under each BDM; In addition, the team also includes one expert operator, one data operator, and one industry-specific operator.

However, in terms of specific business development, Tiktok BD team is weak in execution and extensive in performance management of customers; Meituan BD has a more experienced understanding and execution of local life, and its team execution and management are also stronger - Meituan BD will target customers one by one, and Meituan has also done better in risk control, product mechanism, evaluation system, and other aspects.

In addition, according to industry insiders' calculations, Meituan's in store tourism revenue in 2022 is about 31.9 billion yuan. Based on a 29% growth rate of local commercial revenue in 2023, Meituan's in store tourism revenue in 2023 is about 41 billion yuan, close to Ctrip's 44.5 billion yuan; In the first half of this year, Ctrip's market value once exceeded that of Baidu, and its market share still ranked first - behind this, the accumulation of the supply chain of the traditional OTA platform and the binding with the head hotel group are hard to shake in the short term by Tiktok.

Of course, Tiktok and Ctrip also have different customer groups in the field of wine and tourism: Ctrip's advantage lies in high-end business travel customer groups and remote distribution customer groups with tourism destination as the attribute, while Tiktok is mainly a hotel with stronger holiday attribute.

Even though the customer groups of the two are different at this stage, Tiktok still hopes to share the market cake of Ctrip by expanding the supply chain and cooperating with agents. For resort hotels that have already cooperated with Ctrip, they will consider cooperation with other OTA platforms or other channels such as Tiktok for several reasons:

Firstly, whether Ctrip can fully meet the needs of hotels. If it cannot maintain a high occupancy rate, hotels may choose to cooperate with other platforms to fill the gap;

Secondly, the new customer sources brought by new channels are not as many as those lost by Ctrip, which is why hotels are willing to cooperate with other channels - after all, the hotel industry also needs to diversify its online layout and seize customer sources through different channels in the fiercely competitive current.

Behind this, it is actually inseparable from the driving force of user consumption decisions - cost-effectiveness remains an important consideration for consumers when choosing hotels. For example, at the Q3 2023 Meituan performance report meeting, the management mentioned that in the past quarter, consumers were more concerned about cost-effectiveness in the hotel and travel business, and used multiple channels to make purchasing decisions. Meituan attached great importance to consumers' in store discounts, so it strengthened the special discount section to promote low prices.

Tiktok and the conversion of Meituan's attack and defense

Compared with Ctrip, Tiktok once threatened the core businesses of Meituan, namely, home catering and store integration, last year.

Tiktok is good at content. In essence, the short video/live broadcast filled with group buying and store exploring is an active store grass planting touch+conversion and realization. The impact of video is far more attractive than the store text display, while the advantages of Meituan+public comment accumulated in the era of graphics and text will gradually be deconstructed by the wave of high-density short video/live broadcast.

In particular, more and more wine and tourism enterprises have begun to increase their investment in live broadcast and group purchase, directly leverage orders and performance with content marketing, and complete transformation and write off in Tiktok ecology.

For this reason, LatePost once reported that Meituan's internal attitude was very fearful, and "a special project team was set up to defend Tiktok". According to Hu Xiu, the project team was named "beacon fire plan", and its core task was to strategically slow down Tiktok's penetration of Meituan's store business; Subsequently, Meituan continued to increase its investment and promoted a new round of organizational adjustments in April 2023, further delegating power to BD to participate in merchant bargaining, promotional coupon settings, etc.

On the business side, Meituan consolidates its business base by exploring new increments: in the defensive position, Meituan's newly accumulated incremental businesses include Meituan flash purchases (instant retail) that penetrate first and second tier markets, steadily developing Xiaoxiang Supermarkets (instant retail), and Meituan Optimal Selection (community group buying) that focuses on sinking markets; On the offensive front, Meituan has increased investment in emerging marketing media such as video and live streaming, attempting to gather traffic linkage between different scenarios.

In addition, Meituan opened its way with low price group coupons to promote the integration of catering, cultural tourism and other fields with the live broadcast. It established an independent live broadcast team in 2022Q4, expanded to more than 100 people in 2023, and raised the live broadcast entrance to the home page, where you can see the official live broadcast IP such as "popular group", "popular brand", "popular goods", "God is in demand", and the strategies to deal with Tiktok include content, low price for the whole network, and discount for the live broadcast room (merchant side).

Through a combination of tactics, Meituan's core business sector (managed by Wang Puzhong) and overall business will achieve significant improvement in 2024 compared to 2023.

"So that there is less internal talk about Tiktok's offensive." A researcher of Meituan believes that the alleviation of anxiety is mainly due to the two "foundations" of Meituan's store arrival (mainly the cancellation of vouchers, which was the most intense part of Tiktok's offensive in the past) and home arrival (mainly the takeaway).

In addition, according to the institutional analysis, the local life of Tiktok is different from that of Meituan merchants - Tiktok prefers the head merchants, whose traffic is concentrated in the top 20% of the merchants, while the waist and tail merchants of Meituan account for more than 90% of the turnover, which is obviously more stable.

However, Tiktok apparently did not give up its covetousness for home business (mainly delivery), and tried to find a breakthrough through business iteration and organizational changes:

In April 2024, Tiktok take out business will be adjusted from local life business to e-commerce business;

In June, the group purchase and distribution business of Tiktok was transferred to the take away platform from Diaoyin to home, and reached the online take away area in Tiktok hours;

In August, Tiktok's take away business, which was formerly affiliated to Tiktok e-commerce instant retail, returned to Tiktok's local life business line;

In October, Tiktok Life Service adjusted the original delivery business mode, upgrading the original group purchase distribution business to the "Suixin Group" business, that is, the same group purchase commodity can be both written off at the store and delivered home. The original "group purchase distribution" business will gradually move to the "Suixin Group" business from November 1, 2024.

Of course, on the other hand, the layout and advance speed of Meituan's live broadcast business are also difficult to pose a threat to Tiktok - this is mainly because the infrastructure and content supply of Meituan's live broadcast are still "young". Last year, the live broadcast DAU was maintained at around 15 million, the proportion of live broadcast rooms to stores was about 60%, and the proportion of takeout was about 30%. Each user's stay time was less than 10 minutes, which is still in the stage of user mental penetration.

A Meituan researcher pointed out that the tag of "Meituan Live" was once placed in the recommended position on the homepage of the Meituan APP. Consumers clicked through the first level entrance, and the page would display POI based nearby takeaway and in store merchant self broadcasting.

The delivery radius of Meituan's live streaming food delivery is now controlled within 3 kilometers, which means that the geographic location of users seen during live streaming push mainly covers people within 3 kilometers. The above-mentioned person said.

It is worth mentioning that the management of Meituan once mentioned a set of data during the financial conference call. In September last year, the average daily live streaming volume of Meituan Live increased by over 300% compared to June, and GTV increased by 40%.

This has precisely become the confidence support for Meituan's continued bet on live streaming - at the end of December 2023, there were media reports that Meituan accelerated the promotion of live streaming at the group level: in 21 cities including Guangzhou, Shenzhen, and Jinan, Meituan officially recruited trial service providers for in store live streaming IP "explosive groups" (the model is: Meituan provides discounted goods and sales, service providers are responsible for live streaming scene construction, live streaming, and charge commissions based on actual verification amounts).

After all, as an important strategy to counter Tiktok, live broadcasting is also an ecological capability that must be deployed for Meituan:

On the one hand, with the continuous penetration of new scenarios such as Doukuai live streaming and store exploration, the proportion of online sales in catering and retail offline stores is gradually increasing. Stores need to develop marketing strategies and activity plans based on different market environments and consumer needs - the user penetration of live streaming IPs such as Meituan's "Explosive Tuantuan" and "God in Demand" is soaring;

On the other hand, in 2023, the proportion of marketing expenses invested by merchants on two platforms will continue to change based on the actual verification proportion. Meituan is strengthening its defense around the three core scenarios of in store, home, and comprehensive, and live streaming has opened up multi business collaboration, thereby driving more conversions.

It is worth noting that in July 2024, Meituan tested the "money saving version" to further increase its low-priced food delivery business, and recently tested food delivery seeding, attempting to make breakthroughs in content driven sales.

Seeing Meituan and Byte growing in the local front, Xiang Huxiao, a catering service provider, said, "The unit price and conversion rate of Tiktok live broadcast customers are low, and the platform helps merchants to expose multiple scenes and obtain new customers more often; Meituan live broadcast has a high repurchase rate, which is more suitable for old customers, and the irregular and quota subsidies of the platform can promote the interaction between live broadcast and users, and users have a high degree of goodwill."

So far, in the narrative inertia of traffic leading the tide, the local life track has been full of male hormones under the competition of new (Tiktok, Kwai) and old (Meituan, Ctrip) players, and new traffic is also quietly reshaping the pattern of mobile Internet.

#Huang Qingchun, the chief consumer writer of HuXiang Business and the producer of Huang Qingchun Channel, focuses on various fields such as entertainment, social media, gaming, and audio-visual. Industry professionals can communicate and add WeChat: 724051399. News leads can also be emailed to huangqingchun@huxiu.com

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