China’s largest ride-hailing app Didi Chuxing is entering the hotel-booking business as it strives to recover from two highly publicized murders of female passengers by drivers on its platform.
That’s according to Chinese business magazine Caijing and tech news site 36kr (links in Chinese). R-Lab, the unit in charge of Didi’s new venture, is aptly named to signify the company’s effort to “rebuild” its boundaries beyond on-demand car services. The lab has also been responsible for hatching Didi’s food delivery business, according to Caijing.
A Didi representative told TechCrunch that the company has “no plans to launch new businesses in the near future” and that it’s currently focusing its resources on “safety and operational upgrades.”
Nonetheless, the $56 billion startup has already shown interest in the hospitality industry – mainly through fostering partnerships. In July, Didi nabbed $500 million in strategic investment from Booking Holdings. The deal allows Didi users to reserve hotels on Booking services and, in turn, offer its on-demand car services to Booking users.
In September, Times of India reported that the transportation startup may be backing India’s hotel booking platform Oyo Rooms. The rumor has yet to receive any official confirmation.
Diversification appears to be a logical move given the Chinese ride-hailing giant has yet to turn a profit and its core car services are under regulatory pressure and public scrutiny following the passenger safety crisis. The company has already spun off its asset-heavy premium car unit ahead of a likely IPO.
But the hotel space isn’t an easy target either, with Baidu-backed online travel agency Ctrip being one of the dominant forces.
When contacted by TechCrunch to comment on Didi’s new endeavor, Ctrip’s vice president of corporate affairs Victor Tseng pointed to the industry’s challenges. “The hotel business is fragmented and unstandaridized.”
That means Didi would have to work on consolidating its services into the traveller’s planning journey, which spans booking hotels, transportation, experiences, and so on, as well as invest heavily in service keeping capacities.
Ctrip isn’t Didi’s only potential rival. Meituan Dianping, the Tencent-backed neighborhood services behemoth that went public in Hong Kong last month, has thrived on budget-hotel booking and outraced Ctrip (link in Chinese) in terms of the number of hotel nights booked, according to data analytics firm Trustdata.