ChinaTravelNews, Ritesh Gupta – Chinese local commerce platform Meituan's in-store, hotel and travel business maintained a steady growth in both domestic room nights and gross transaction volume (GTV) in the second quarter (Q2) of this year.
The company shared that its order volume grew by over 60% year over year. GTV is the value of paid transactions of products and services on a platform by consumers.
Reflecting on its Q2 financial performance, Meituan shared that the team chose to capitalise on platform advantages. One of the focus areas was leveraging its value for money offerings and integrating them as a part of promotional offerings like deals and also in its loyalty initiatives.
Deals and integrated membership initiative
Over the last year or so, Meituan's in-store, hotel and travel businesses have been looking at ways to deepen online penetration in the new consumption environment, and achieved robust growth in merchant base and user base. And now in Q2 Meituan also looked at ways to capture the prevalent demand for deep-discounted deals to boost the overall transacting user base and order volume. This way the plan is to satisfy the diverse needs of consumers and stimulate local consumption by offering value-for-money selections through various product formats.
The company chose to expand its Shen Hui Yuan membership initiative to more categories in the in-store, hotel and travel category in pilot cities, and further rolled it out nationwide in July.
Meituan's decision to work on its new integrated membership program allowed it to deepen collaborations with a broader network of merchants. This way members gained access to a more diverse selection of value-for-money products and services. Meituan shared that as per the initial assessment in the pilot cities, Shen Hui Yuan not only strengthened consumer mindshare in its value-for-money offerings, but also attracted broad merchant participation.
Importantly, the decision to expand its operations in lower-tier markets to boost local consumption also resulted in GTV growth in these areas.
Meituan also shared that it expanded its “Hotel + X” packaged deals not only offered consumers value-for-money products, but it also helped merchants cross-sell other services.
Meituan also provided an insight into its approach about how the team chose to strengthen its work with different categories of hotels.
On the supply side, Meituan tends to actively explore new product formats to capture different consumer demand, particularly in the low-price domain. In the hotel and travel category, the company augmented its supply capabilities in the low-star domain in order to cater to differentiated consumer preferences. And in doing so, it also expanded its value-for-money options. Other than this, Meituan also provided services such as traffic acquisition, room renovations etc. to enable low-star hotel companies to capture growth opportunities.
For high-star hotels, the company focused on the 2024 “Must-Stay List” with expanded coverage. It also further strengthened joint membership programs with high-star hotel groups, adding exclusive discounts and privileges, and launched joint marketing events to enhance product exposure and attract new users.
Meituan continues to strengthen its presence in the travel category. GTV of its in-store, hotel and travel businesses increased by over 100% year over year in 2023.
Growth in revenue generation
During this quarter, Meituan's revenues increased by 21.0% to RMB82.3 billion from RMB68.0 billion for the same period of 2023.
In its Core Local Commerce segment, revenue increased by 18.5% year over year to RMB60.7 billion. Operating profit increased by 36.8% year over year to RMB15.2 billion, and operating margin improved by 3.3 percentage points year over year to 25.1% in Q2.
The revenue growth in this segment was primarily attributable to favourable seasonality, resulting in the increases in GTV due to increased number of transactions. Meituan shared that the total number of on-demand delivery transactions rose to 6,167.1 million in Q2, from 5,400.4 million year-on-year.
