Kuaishou is still quite laid-back.

On February 24, 2024, the Lantern Festival, Tangshan South Lake Scenic Area.

Over 800,000 tourists gathered here to watch tens of thousands of colorful lanterns light up simultaneously. Some media marveled that the lantern festival was reshaping this steel city into a famous hotspot on social media.

Behind the grand event, 20% of the ticket sales for this lantern festival came from the same platform – Kuaishou.

Since the beginning of this year, Kuaishou has been sharpening its knives, determined to carve out a space in the hotel and travel market. Its first target is its old rival, Douyin.

【Price War】

On July 1, Douyin officially adjusted the commission rate for accommodation merchants from the previous 4.5% to 8%.

The so-called commission is the reward taken by the middleman. In other words, from now on, accommodation merchants on Douyin need to pay 8% of their transaction amount to Douyin for each completed order.

At 4 pm on the same day, Kuaishou closely followed suit by releasing the "Accommodation-Hotel Merchant Key Introduction Plan," offering full commission exemption to accommodation merchants joining Kuaishou from July 1 to August 31 this year.

Of course, Kuaishou is not taking zero commission, but instead implementing a collect-then-refund policy for new merchants. Merchants still need to pay a 4.5% commission, but this amount is divided into two parts: half is refunded to the merchant in cash, and the other half is credited to the merchant's Kuaishou local promotion account, which can be used for advertising.

Behind the different actions of the two platforms is the rapid growth of the hotel and travel market. According to data from the Ministry of Culture and Tourism, in the first quarter of this year, the total number of domestic tourist trips reached 1.419 billion, an increase of 16.7% year-on-year; total tourism spending reached 1.52 trillion yuan, an increase of 17% year-on-year.

During the May Day holiday this year, 295 million people traveled nationwide, 28.2% more than in 2019 before the pandemic.

Taking advantage of this opportunity, the two short video platforms, one "grabbing" money and the other "grabbing" people, are essentially fighting for the large hotel and travel market.

Douyin's commission adjustment is for harvest.

In 2023, Douyin's hotel and travel business was a resounding success. According to official disclosure data, the number of active hotel and travel merchants on Douyin increased nearly sevenfold year-on-year, with platform payment GMV growing more than 300 times and live streaming GMV growing more than 200 times.

The market estimates that Douyin's hotel and travel GMV in 2023 was 60 billion yuan, with its market share rising from 2% to 3%.

With scale comes the need to turn transactions into profits.

ByteDance, Douyin's parent company, has been mired in growth anxiety in recent years. In 2021, its valuation reached $400 billion, but according to the company's share repurchase price in December 2023, its latest valuation was only $268 billion.

The core reason for this situation is that the growth rate is no longer impressive.

The market estimates that from 2016 to 2019, ByteDance's annual revenue growth rate exceeded 200%.

However, in 2020, ByteDance achieved revenue of $34.3 billion, with a growth rate of 111%; in 2021, revenue was about $60 billion, with a growth rate of 70%; and in 2022, revenue exceeded $80 billion, with a growth rate of around 30%.

While a decline in growth rate is inevitable as the base grows, ByteDance is clearly unwilling to accept this as the norm just yet.

Since 2023, Liang Rubo has given two internal speeches, emphasizing "our lead is no longer obvious" and "we must always innovate and escape the gravity of mediocrity," both of which stress the need for ByteDance to continue growing rapidly.

Its efforts have paid off. According to relevant data, ByteDance's annual revenue in 2023 reached $120 billion, a year-on-year growth rate of 40%; annual net profit reached $40 billion, a year-on-year growth rate of 60%.

An important driving force behind this growth is the increase in local services business, including hotel and travel.

The hotel and travel business has good prospects and high profits. Every additional commission point means more revenue for Douyin.

For Kuaishou, adjusting commissions is to compete for merchants and quickly scale up transactions.

In recent years, Kuaishou has also faced slowing growth. Its revenue growth rate in 2023 was only 20.48%, 16.16% in 2022, and 37.95% in 2021. In 2018, Kuaishou still had triple-digit revenue growth rates.

On the profit front, Kuaishou achieved profitability for the first time in 2023, with a net profit of 6.396 billion yuan.

However, another important issue is that Kuaishou's market value has remained low. In 2023, Kuaishou achieved revenue of 113.5 billion yuan, but its latest market value is only 200 billion Hong Kong dollars, equivalent to about 190 billion yuan.

This price-to-sales ratio valuation is significantly lower than that of Douyin. In other words, the market is not optimistic about Kuaishou's potential to earn big money in the future.

This forces Kuaishou to accelerate its efforts in promising businesses, and the hotel and travel industry, with its clear growth trend, is a good direction.

At Kuaishou's Local Life Conference in March this year, Xiaogu, head of Kuaishou's Local Life Business Department, cited the Tangshan Lantern Festival as an example to highlight Kuaishou's potential in hotel and travel: "All group purchases are worth redoing on Kuaishou."

But in hotel and travel, Kuaishou's scale is indeed too small.

The market estimates that Kuaishou's total local life transactions in 2022 were only in the hundreds of millions of yuan. In 2023, Kuaishou disclosed that local life transactions in the fourth quarter increased 25 times year-on-year, but even so, compared to Douyin's local life transactions of about 200 billion yuan in 2023, with hotel and travel transactions alone reaching 60 billion yuan, Kuaishou's presence is still too low.

【Go It Alone, or Join Forces?】

In hotel and travel, Douyin and Kuaishou started from similar points.

In 2020, the pandemic forced the global tourism industry to hit the brakes, and from the beginning to mid-March of that year, Ctrip alone handled over 30 billion yuan in cancellations. In an interview with 36Kr, Ctrip Chairman James Liang lamented:

"This was the year we lost the most money."

Amid the crisis, the hotel and travel industry began to turn its attention to short videos.

Among them, James Liang was the most active, personally serving as a live streamer, first on Douyin and then on Kuaishou, leading the way in selling travel packages.

The consumption frequency of tourism products is inherently low, and even lower during the pandemic. In contrast, short videos are a high-frequency, high-traffic national entertainment form. Using short videos to sell tourism products is a perfect match of high frequency driving low frequency.

Seeing the opportunity, Douyin and Kuaishou almost simultaneously entered the hotel and travel market, but their strategic approaches were completely different.

Kuaishou chose a route focused on cooperation with industry platform companies.

In 2020, Kuaishou and Tongcheng-Elong hit it off: Tongcheng-Elong brought a batch of domestic scenic spots to Kuaishou and released short video products on the platform for users to "travel virtually."

At the same time, Tongcheng-Elong also moved a large number of discounted scenic spot tickets, hotel rooms, and air tickets to Kuaishou's live streaming rooms to sell. Kuaishou, in turn, provided traffic to relevant videos and live streams, guiding users to place orders and make purchases.

In the following years, Kuaishou used the same cooperation method to partner with major domestic hotel and travel platforms, first with Qunar.com, then with Meituan, and finally in January 2024, with Ctrip.

With industry resources firmly in hand, Kuaishou feels good.

At a cooperation conference, a senior vice president of Kuaishou said that Kuaishou is connecting platforms, content, products, services, influencers, and consumers across the industry, creating a modern-day "Riverside Scene at Qingming Festival."

The benefits of the Kuaishou model are obvious: without the need to build complex customer service and ground promotion teams, simply providing sufficient traffic and subsidies can sell platform traffic. However, the drawbacks are also apparent: it can only earn money from outputting traffic, cannot delve into supply chain and service capabilities, and has limited development potential in the later stages, with product resources easily held hostage by third-party platforms.

Douyin, on the other hand, chose a self-operated model, connecting to third-party platforms like Meituan and Ctrip while making greater efforts to build merchant resources.

It invites hotel and travel merchants to register accounts on Douyin and embeds hotel and ticket booking functions into their Douyin homepages. At the same time, it offers courses to these merchants, teaching them how to conduct live streams and make short videos to attract users to their hotel and travel group purchase products.

In 2023, after attracting a large number of merchants, Douyin further launched its own hotel and travel product, "Calendar Rooms."

This is equivalent to Douyin issuing its own "Declaration of Independence" in the hotel and travel industry.

In the past, short video platforms mainly sold hotel and travel group purchase vouchers, pre-selling hotel rooms and scenic spot tickets to consumers. The specific time for consumption had to be booked by the user themselves.

However, the available booking times were often during the off-season. Some users have reported buying a hotel group purchase voucher only to find that rooms were only available to book half a year later.

"Calendar Rooms" are like traditional OTA (Online Travel Agency) platforms like Ctrip, allowing users to select hotels by date. The products are no longer pre-sold rooms but are sold on a current basis.

For Douyin, operating hotel and travel directly will increase operational pressure, but the benefits are more obvious, further influencing upstream merchants and holding the core resources of the industry in its hands.

【Two Mountains to Climb】

At Kuaishou's Local Life Conference this year, Xiaogu, head of Kuaishou's Local Life Business Department, declared:

"We are changing the competitive landscape of the industry."

In Kuaishou's view, its advantages in hotel and travel are unique.

Kuaishou users have high trust and are eager to experience. Xiaogu cited data from the Tangshan Lantern Festival tickets on Kuaishou: the redemption rate was more than 20 percentage points higher than the industry average:

"In the hotel and travel industry, selling is not difficult, what's difficult is whether people will actually use the vouchers after buying them. But we found that Kuaishou users have to go and see after buying vouchers."

However, compared to Douyin, which has already seized the initiative and formed a scale advantage in hotel and travel, Kuaishou still has two key mountains to climb.

The first is to get rid of subsidies and take control of the market.

On the surface, Douyin's commission increase and Kuaishou's commission decrease seem to indicate that Kuaishou is offering more competitive prices to the entire accommodation industry to quickly catch up in developing merchant resources. But the fact behind this is that Douyin has strong customer acquisition capabilities, while Kuaishou does not.

However, this is the core competency in hotel and travel platform competition.

While merchants do care about platform commission rates, they care even more about who can bring in more customers.

At the beginning of 2024, Harbin became a top city overnight due to its ice and snow tourism, with hashtags like "Small Potatoes of the South" and "Ice and Snow World" trending across the internet. Kuaishou and Douyin both joined the battle to drive traffic to Harbin, with the results being:

In 8 days, Kuaishou promoted a 9.6-fold year-on-year increase in GMV for group purchase products in the Harbin region, while Douyin's December travel orders for Harbin routes increased 1880 times year-on-year, driving a 1128-fold year-on-year increase in orders for Heilongjiang travel agencies.

With customer acquisition capabilities not in the same league, relying solely on price wars will be difficult for Kuaishou to overthrow Douyin's dominance in hotel and travel.

The second is that Kuaishou does not have Douyin's self-operated capabilities in hotel and travel.

Kuaishou partners with third-party platforms to provide hotel and travel products to users; Douyin provides hotel and travel products to users through self-operation.

While both appear to be involved in hotel and travel, the significance is completely different.

With self-operated Calendar Rooms, Douyin can compete with OTAs like Ctrip and Meituan, requiring hotels to provide reserved rooms for it and directly confirming bookings after consumers make reservations, without the need for hotels to reconfirm.

This solves the problem Xiaogu mentioned: "Consumers place orders but don't go."

Market statistics have shown that Douyin's hotel and travel redemption rate is lower than that of traditional OTA platforms like Meituan.

The core reason is that selling only group purchase vouchers ultimately means helping hotels and travel agencies clear out their inventory. The quality of service consumers receive depends entirely on the mood of the merchants.

Now that Douyin has taken a step forward and obtained genuine products, its industry position has immediately improved:

Merchants who can provide more reserved rooms for Douyin will receive more traffic benefits on the platform. Competition among merchants will further enhance Douyin's reputation in hotel and travel.

However, at present, Kuaishou's hotel and travel consumption scale is not enough to support it in reversely controlling upstream suppliers.

Why has Kuaishou fallen so far behind Douyin in hotel and travel, despite starting almost simultaneously?

The core reason is that while Kuaishou started early, it was too laid-back.

In the short video platform, hotel and travel fall under the scope of local services business. As early as 2020, Kuaishou launched a local services entry to provide users with services such as nearby tours, but it was not until 2022 that Kuaishou established an independent Local Life Business Department and truly stepped up its efforts in this area.