Meituan's Hong Kong IPO May Intensify Its Rivalry With Ctrip
Skift Take
China's travel market is fast-growing enough that it could support a competitor to current leader Ctrip. That day may arrive soon, too, given that Meituan-Dianping is showing surprising traction in hotel booking.
Meituan-Dianping, a Chinese startup that considers itself to be an Amazon for lifestyle services, will debut as a public company Thursday on Hong Kong's stock exchange. It's expected to launch with a valuation as high as $55 billion.
In 2017, the company drew about two-thirds of its income from carry-out food delivery and other restaurant-related services for its 320 million transacting users.
But Meituan's hotel-booking business is its second-largest business.
In full-year 2017, consumers booked 200 million domestic hotel room nights through Meituan, the company said. In the four months ended April 30, 2018, it sold an additional 30 million domestic hotel room nights, according to an updated prospectus issued this month for its initial public offering.
"Meituan is trying to become China’s super app — an application where consumers can conduct many of life’s transactions," said Paul Gillis, a professor at the business school at Peking University in Beijing. "But none of its businesses are profitable, and the big challenge for Meituan will be to justify its roughly $50 billion valuation."
Some rivals claim that Meituan has an unsustainable business model of wooing customers with cash rebates and similar incentives.
"The question will be, when you stop subsidizing these items, how many people can afford it?" said Ctrip CEO Jane Sun in an interview with Reuters this week. "That's the challenge for any company who is us
