Interview: Qunar CEO Makes No Apologies, It’s All About Price

Editor’s Note: Skift is publishing a series of interviews with online travel CEOs talking about the Future of Travel Booking, and the evolving habits and device preferences of travel consumers. Check out all the interviews as they come out here.

Does the future of travel booking lie with metasearch sites such as Kayak, Trivago, TripAdvisor and Skyscanner or with online booking sites such as Expedia and Booking.com?

From the hyper-compettive travel marketplace of China comes Chenchao “CC” Zhuang, co-founder and CEO of the country’s most-visited travel site, Qunar, which takes direct booking for hotels within China, and offers metasearch for outbound travelers internationally.

CC Zhuang thinks prolonged debates about business models are unproductive and “outdated,” obfuscating what he believes is a more central theme — how to deliver the best customer experience.

The Qunar CEO isn’t shy about these and other subjects, as well. CC Zhuang believes loyalty basically begins and ends with consumers’ wallets, and that the travel company that delivers the most choice, the lowest prices, and the greatest efficiencies will dominate the Chinese market.

Skift spoke with CC Zhuang about these issues and the future of travel booking. An edited version of the interview follows:

Skift: In relation to Priceline’s investment in your competitor, Ctrip, you’ve talked a lot about how your international service is metasearch and you partner with brands like Booking.com and Expedia, while domestically you do direct bookings. Do you see this balancing act between metasearch and direct bookings continuing for the foreseeable future, and does that sort of model have any significance for other players outside of China?

Chenchao “CC” Zhuang: We have a very funny situation. Everyone talks about models and balance etc.  We actually don’t look at it in this way. We just look at consumers. What does the consumer want? Basically two things: selections and price points. We built an ecosystem to provide the most selections for consumers at the best price points. So whatever models we pick, whatever balance we do, it all gets back to the consumers. If it’s beneficial for consumers, we do it, and if it doesn’t benefit consumers, we forbid it.

I think you know that people should forget about models regarding online travel agencies and metasearch. That is outdated. Let’s get back to consumer retention. And we should forget about the concept of consumers being loyal. Let’s get back to very basic things. Number one, the consumer is only loyal to selections and price. And, number two, whoever is able to provide the selections and price is going to dominate the market. It is very simple.

Skift: So right now you think it is best for Chinese consumers if they are looking for hotels internationally to do metasearch?

CC Zhuang: Exactly, because we have partnerships with many of these players globally and locally and regionally so I concur it is the best model. It is evolving fast. So we just make the choice to purely focus on the consumer experience.

Skift: I see that your mobile revenue grew 511% in the second quarter and you mentioned in the first quarter that you had 83 million downloads. Downloads are one thing, but engaging users on mobile is a whole different story, right? How do you approach that dichotomy?

CC Zhuang: First of all, our cumulative activated downloads are actually 270 million this quarter [Q2}. If we look at the numbers of activated unique handsets, this quarter it is 130 million, versus last quarter it was 83 million. Second of all, in terms of our hotels’ transaction model, 50% is already on mobile. I would say engagement and real transactions are pretty significant. But, in terms of our huge user base, we still see a lot of potential in the future. I think we have deployed multiple ways to activate our mobile users to promote transactions on handsets.

Skift: What about your users’ behavior on mobile? Do they start on desktop and then go to mobile and continue on desktop? How do you deal with what might be called multi-device behavior?

CC Zhuang: I think the players in our industry actually provide a deep incentive on mobile and hence they have a lot of their users shifting from the traditional call center and PC to their mobile. But, for us, we never do that. Today, most of our users on mobile are new users and so they are only using our mobile apps.

Skift: You spoke during your second quarter earnings call about revenue per room decreasing 12.5% during the quarter because of couponing and discounting. How is that going to play itself out if it is becoming the lowest common denominator and people are just looking for the lowest price, price, price? Where do experience and value come into play?

CC Zhuang: I think in retail and consumer experience that price is the most important part of user experience. That’s the reality. People are looking for the best deal. So I think price is a very important part of the service, first of all. Second, if you look at our net take rate of the hotel, we should see an increase, maybe a significant increase, in the next few quarters. So I think we are very comfortable with our present level. Third, it is an efficiency game. The travel players that provide the most highly efficient operating system will be able to provide the lowest price points for consumers. And we should be able to stay competitive from our highly efficient operation.

Skift: If travelers’ number one concern is price, then where does loyalty to the Qunar brand come in?

CC Zhuang: The consumer has loyalty to their wallet. To think that consumers are loyal to a brand, I think, is very simplistic and naive. The only way to keep the consumer is to show loyalty to the consumers’ wallet.

Skift: Hilton Worldwide recently announced for a lot of its global hotels that it will be allowing guests to book specific rooms, and I remember when I visited you several months ago you said you were starting to experiment with that sort of thing on a very small scale. Has there been any progess on that front and where do you think that’s headed?

CC Zhuang: It is doing pretty good, but the number is relatively small. The program will eventually be more mature. But, generally, I would say it is useful, and that’s a trend, and eventually we will get there.