Executive Summary:
China’s self-drive tourism market is a lucrative opportunity, but also a tough nut to crack. Data shows,2016in that year, the number of self-drive trips in China exceeded26billion, with the market size surpassing one trillion yuan; but due to factors such as severe product fragmentation, a broad and long industrial chain, highly fragmented market competition, and difficulties in integrating industry resources, the self-drive tourism market still faces numerous challenges. Road Trip claims it can create a closed-loop ecosystem for self-drive tourism by crowdsourcing route products and car-hotel services to seasoned local playersKOLand alliance car-hotel operators, and connecting them through short videos to form a closed-loop ecosystem.
◎Author of this article: Zhihui reporter_Hong Liping(WeChat:hongliping719), Editor: Qiu Wei
China’s self-drive tourism industry is on the eve of explosive growth. Jiang Ya, Chief Analyst of the Social Services Sector at CITIC Securities, once estimated that China’s self-drive tourism market size was approximately2017billion and2020trillion in7400and1.55, respectively, with the industry expected to grow at a compound annual rate of about28%.
Shenzhen Road Trip Co., Ltd. (hereinafter referred to as “Road Trip”)CEOLuo Xianqiang also told Zhihui that2016China’s private car ownership has exceeded1.46million vehicles, with the number of self-drive trips reaching26billion. Assuming an average consumption of500yuan per trip, the market would amount to1.3trillion yuan. Luo Xianqiang has been passionate about self-driving for twenty years, having visited the world’s three poles—including six trips to Tibet—and has also traveled to lifetime dream destinations for road trippers such as Russia, the western coast of Australia, and America’s66Highway.
Where does the courage to build a self-drive tourism closed-loop ecosystem come from?
“There is almost no true car hotel in China,” said veteran driver Luo Xianqiang, who deeply understands user pain points. He told Zhihui, “The uncertainties of self-drive travel are immense, including road traffic conditions, accessibility of information, route selection, driving safety, upstream destination resources, offline service providers, roadside rescue and support, and even the lack of reliable, searchable online information.”
Taking just the accommodation aspect of user pain points, for self-drive travelers, so-called car hotels often lack nearby car repair shops or equipment supply stations, do not offer in-room self-service kitchens, washers, or dryers, and cannot provide smart, fast check-out—all of which make them no different from regular budget hotels.
The biggest pain point for users is the difficulty of finding suitable travel companions before setting off. Although there are currently tens of thousands of self-driving tour clubs, car brands, and4Sdealerships nationwide that have established self-driving associations and organize self-driving tours, "the industry's biggest characteristic is the lack of standardization, and the market has not yet built clear expectations for self-driving tourists," Luo Xianqiang observes. His assessment of the current self-driving tourism market is: "a chaotic landscape with no dominant players and no banner yet to rally under."
Ultimately, this stems from the high degree of fragmentation in the self-driving tourism industry, where a complete industrial chain has yet to form. In the view of Jiang Ya from CITIC, the structure of the self-driving tourism industry chain has the following characteristics:1High product fragmentation with a heavy upstream supply chain;2High randomness in tourist spending during self-driving tours and a long offline service chain;3Self-driving tours emphasize travel depth, experience, and strong social attributes. Coupled with the fact that the industry is still in its early stages, an efficient industry chain has not yet emerged. Given the industry’s depth and broad coverage—with numerous participants across various segments—the overall market competition remains relatively fragmented. Jiang Ya states that in the early stages of development, ecosystem layout capabilities and resource control will determine whether a company can secure sufficient competitive advantages and pricing power within the industry chain.
Figure1: Luo Xianqiang on a self-driving trip in Russia
Building a closed-loop self-driving tourism ecosystem, and focusing on car hotels and route products, are precisely the key strategies Luo Xianqiang is using to "raise the banner" in the self-driving tourism market. The self-driving platform Lushang (Road Trip Auto), founded by Luo, is dedicated to establishing a closed-loop self-driving ecosystem, aiming to make self-driving tours a true lifestyle.From online to offline, from virtual communities to physical ones, driven by video content, the platform focuses on upgrading self-driving products and innovating services. LuShang operates three subsidiaries: LuShang Hotel Management Company, LuShang Network Technology Company, and LuShang Travel Culture. Over the past two years, the team has continuously delved into user needs and the market, growing from0to1. Currently, the Shenzhen headquarters employs40staff members, with senior executives coming from the internet, travel, and hospitality industries. The content production team includes experienced illustrators, photographers, and post-production editors.
In the roadmap of the LuShang team, the user value self-driving tourists can gain within the LuShang ecosystem includes: finding travel companions/carpooling before or during the trip, searching for travel guides/selecting and finalizing routes, sharing short videos, offline interactions, rescue support, professional equipment supply, and a series of top-tier services.
How is this achieved? How does the LuShang ecosystem avoid becoming overly resource-heavy?
"LuShang actually only creates two ultimate products: route products and car hotels. These two products are crowdsourced to local veteran playersKOLand alliance car hotels respectively, connected in the middle through short videos to form a closed loop, thus building a self-driving traveler community driven by short video content," Luo told Zhihui.
How to compete for resources with Ctrip, and how to coexist prosperously with alliance hotels?
"It is China’s first true car hotel in the real sense." The Zhangjiajie model car hotel, now in deep strategic cooperation with LuShang, has been completed with an investment of1.5hundred million yuan, and is set to open at the end of6. The hotel is invested in by the developer, while LuShang is responsible for understanding and presenting user needs, implementing core elements, and fostering cultural immersion. "The investor obtains affordable land by cooperating with LuShang, handles construction and retains the asset; we ensure sufficient operational revenue to guarantee their capital costs," Luo told Zhihui.
Currently, LuShang has partnered with20hotels and plans to form an alliance with100hotels by the end of this year.Why are so many hotels willing to ally with LuShang? Luo Xianqiang has identified three critical pain points faced by current resort-type hotels:1,90%The traffic comes fromOTAa platform, and sales are constrained;2,OTAThe commission taken is as high as15%–25%, resulting in poor profitability;3,It is difficult to build one’s own brand due to either over-positioning or high costs for software and hardware upgrades, an inability to attract high-end users, or intense homogeneous competition when positioning low.
Figure3: A sample self-drive car hotel on the road to Zhangjiajie
Self-drive travel can solve all the above pain points. Huang Jin, the owner of Lushang Auto Hotel and Cheyouhui Homestay Chain under the Road Alliance, told Zhihui, “We learned about Self-Drive Travel through the magazine Faraway Home and found that our business philosophies align—both aim to provide professional car hotel services for self-drive travelers. After communication, Self-Drive Travel was willing to installPMS(hotel management system) for us for free, and only select2-3alliance hotels per popular destination.” Huang Jin did the math for Zhihui: even if they partnered exclusively with the largestOTACtrip and ranked among the top100gold exclusive merchants, the traffic was still very limited. “We believe Self-Drive Travel has the capability to buildKOLandPGC+AGCshort video content into an ecosystem closed loop. Once Self-Drive Travel has100million users, the number of guests referred to us daily will far exceed our current numbers—this figure is very promising.”He also stated that both parties have reached an agreement: no fees will be charged by Self-Drive Travel in the first year, the commission in the second year will be much lower than Ctrip’s, and additionally, alliance hotels can receive a series of subsidies from Self-Drive Travel, especially for soft furnishings—various car-themed ornaments, authorization plaques, sponsorships, etc., instantly enhancing the brand feel.
10Years ago, Huang Jin and his wife, who loved long-distance self-driving trips of over3000kilometers, fell in love with Lijiang. They then bought two4-story villas in the ancient town to create a car + Min-Taiwan culture-themed hotel, offering supporting services such as parking spaces, self-service kitchens, roadbooks for fellow travelers, and interactive bars. Currently, Huang Jin is developing the Cheyouhui3.0version of the——Quanzhou Container Art Hotel and has already partnered with Self-Drive Travel.
How does Self-Drive Travel support and manage its alliance hotels?First, starting with self-drive hot routes in Yunnan, Guizhou, Sichuan, and Tibet, only one partner is confirmed per destination to ensure ample customer flow for alliance hotels; second, once a hotel is willing to cooperate, it must align with the self-drive travel player ecosystem channel—apart from having a well-arranged layout, the owner must be a local expert who can help users with self-driving routes and other assistance; third, zero commission in the first year, with commission around8% in the second year, and Self-Drive Travel provides all the traffic; fourth, the alliance brand maintains its independence across all online and offline channels; fifth, group purchasing is carried out to help hotels enhance guest accommodation quality at low cost.“Originally, for a single hotel, linens for one room cost1000yuan, but through group purchasing, it can be upgraded to four-star or higher standards. If you only want to meet two-star standards, you only need500yuan.”
Strictly implements a deposit system for self-driving tours.KOLWhat are the pain points?
"We offer relatively down-to-earth self-driving routes because we crowdsource them from localKOLproviders. They are all seasoned travelers themselves—not just in it for profit, but also bring genuine enthusiasm. As a result, self-drivers are assured of safety in terms of food, accommodation, and transportation." In Luo Xianqiang’s view, road-based self-driving is not like Taobao’sC2Cmodel, but more like JD.com’s—where the platformKOLclassifies providers into different tiers. Once signed up as a road-based self-drivingKOLpartner, as long as a transaction is successful, the platform will share revenue with theKOLprovider.
4: Road Self-Driving Club’s Alxa Heroes Rally
Of course,KOLalso faces pain points. Cui Guowei from Ziyou World International Hunting Club, which focuses on self-driving + hunting, told Zhihui, "We focus on developing and executing high-quality routes; Road Self-Driving brings in the traffic, creating a win-win situation." Cui Guowei has always faced conflicts between price and quality in product development: large groups lead to poor experiences, while small groups are expensive. He hopes Road Self-Driving can help solve this issue. Cui has great confidence in Luo Xianqiang’s teamCEOCui Guowei told Zhihui, “We focus on developing routes and executing them with peace of mind; the self-drive tours bring in traffic, creating a win-win situation for both sides.” Cui Guowei has always faced a conflict between price and quality in product development: more people lead to a poorer experience, fewer people make the price higher. He hopes to solve this issue through self-drive tours. Cui Guowei has considerable confidence in Luo Xianqiang’s team.———Sun Yu, Director of the Self-Driving Travel Division, and Wang Rui, Manager of the Self-Driving Product Department, are both seasoned travelers. Road Self-DrivingBPreveals that Sun Yu, who also serves as Director of the Self-Driving Travel Division, transitioned from being a product manager at aCMOFortune 500 company to senior roles in multiple startups, gaining extensive experience in user needs analysis, market trends, and product development. Sun Yu is passionate about self-driving travel, a veteran and VIP member of the off-road500community, and one of the earliest moderators of its major forums. Over the years, his self-driving journeys have taken him nearly across the entire country, especially favoring wild and remote areas such as Tibet, Xinjiang, and off-road zones.ECui Guowei agrees with Road Self-Driving’s deposit system: "If a customer’s negative review is verified, the
quality deposit will be deducted." According to Zhihui, the cooperation agreement between the two parties stipulates that Road Self-Driving will prepay10-20%% of the cost for different route products, with the remainingKOL 80-90% of the balance paid to the10-20provider upon successful completion of the tour, provided there are no complaints.KOLCui Guowei vividly remembers last winter’s driving scene in the primeval forests of Russia’s Far East—driving a large-wheeled vehicle modified from a Russian truck up a
degree slope, with adrenaline surging instantly, surpassing everything else.45"It’s about releasing your primal wildness and finding your true self."——Currently, Road Self-Driving has signed contracts with
over200partners, primarily concentrated in the Yunnan, Guizhou, and Sichuan regions, and aims to complete contracts withKOLpartners by the end of2017year. Luo Xianqiang outlined the expansion plan: "It might be a bit like Mobike, which started in1000seats. Luo Xianqiang outlined the vision, “This might be a bit like Mobike, inAPPA map layout will be formed. For self-driving travelers arriving at a destination,APPit will displayKOLwhether they are online or not, and will mark eachKOLarea of expertise, such as hunting, fishing, gourmet food, rock climbing, etc., allowing self-driving travelers to directly contact and transact with them.” Luka Self-DrivingAPPAfter eight months of development, was launched in4mid-this year. Users can also view route product details on the “On the Road” WeChat official account. Currently,APPit is still in trial operation and will7fully launch and operate by the end of the month.
Image5: Shenzhen On the Road Self-Driving Co., Ltd.CEOLuo Xianqiang
Plans to achieve over2100 million in revenue within three years. How to acquire and retain users?
By crowdsourcing accommodation services and route products, where do the users of On the Road Self-Driving come from? “We are not the traditional internet model of burning money by acquiring users first and then considering monetization. On the Road Self-Driving is a business-driven model,” Luo Xianqiang revealed. In terms of user acquisition, On the Road Self-Driving does not spend money on buying traffic. First, after two years of operation, the WeChat official account “On the Road” has accumulated20million users; second, through deep cooperation with insurance companies, in the second half of the year, various customer activities are planned to be carried out under the leadership of On the Road Self-Driving, aiming to reactivate45million auto insurance users into8million active users; third, the interactive features in offline alliance hotel scenarios allow self-driving travelers to actively download Luka Self-DrivingAPPat the hotel and meet more like-minded people. Luo Xianqiang cited the Zhangjiajie direct-operated store as an example, “200rooms, at an65%occupancy rate, with each guest staying for1.5days, the hotel hosts about8million guests, and these8million people will becomeAPPusers. By the end of the year,100alliance hotels will go live, with each hotel having5000to6000guests, potentially bringing in50to60million users”; fourth, short video content distribution will drive traffic; fifth, route execution will win more users through word of mouth.
According to Luo Xianqiang, the target user base for On the Road Self-Driving by the end of the year is341 million,2018the goal for this year is to reach100–1201 million, with daily active users2000or more. After acquiring the first batch of users, how can Road Trip maintain user stickiness and retention given the low-frequency consumption nature of self-driving travel?
Short video content is a powerful tool for Road Trip.“Every user is the protagonist of their own short video, authentically expressing themselves on the road through in-car cameras, aerial photography, and other means.” Market research shows that short videos are very popular among self-driving enthusiasts. “Users are no longer just taking a fewLowphotos after enduring all kinds of sweat, exhaustion, and struggles. Many destinations can’t be visited often, which is truly regrettable.”Road Trip’s short videos capture real-life scenes and recreate heartwarming moments at destinations, produced rapidly in a serialized format, attracting continuous attention from would-be travelers who can’t go. Short videos are currently in the testing phase but will soon be distributed across online and offline platforms nationwide.PGCThe content will sparkUGCmore content. In executing the short video strategy, besidesKOL, Road Trip also collaborates with local offline photography teams, especially university photography associations.5As of [month], it has partnered with the School of Journalism and Communication at Nanchang University.
Image6: Luo Xianqiang with musician Gao Xiaosong in Antarctica
To enrich ecological content, Road Trip has not only signed on self-driving influencers with over a million followers in fields such as culture, investment, sports, traditional Chinese studies, and art, but also attracted corporate executives, entrepreneurs, and internet celebrities. Li Chi, known as the Warren Buffett of China, has joined the Road Trip ecosystem. He has authored *Investing Is a Very Long Journey*. “Previously, big names felt distant, but now they keep appearing in short videos, which brings them closer. This builds user loyalty, subtly promotes self-driving as a lifestyle, and may even‘inspire’users to travel.” Luo Xianqiang reveals another layer of the business rationale behind short videos.
Road Trip’s business goals are very clear. The financial revenue targets for the next three years are:2017Year2000[figure] million, hotels1200[figure] million, and self-driving tour route products800[figure] million. Luo Xianqiang stated that Road Trip’s main revenue streams come from route products and hotel accommodations, sold through both online and offline channels. It is expected that sales of route products will reach800[figure] million in the second half of the year; hotel accommodation revenue will be1200[figure] million, including room income, alliance commissions, and small membership fees. There will also be additional income from the industrial chain, including brand sponsorships, content e-commerce, TV content sales, customs passports, and insurance sales. According to data from the Shenzhen Insurance Association, Shenzhen has millions of auto insurance users, and major insurance companies are now very focused on new channels with deep user stickiness. Recently, Shenzhen Pacific Property Insurance, which already has45[figure] million car-owning users, has entered into a strategic partnership with Road Trip. In the future, Road Trip will leverage the big data accumulated from itsAPPuser base to collaborate more deeply with insurance companies in areas such as user behavior analysis, premium customer rewards, and improving insurance renewal rates, creating greater mutual benefits.
Luo Xianqiang is confident that with the rise of the middle class, the penetration of mobile internet into destinations, and the support of offline travel services such as car rentals, the self-driving tourism market will experience tremendous growth in five years. By then, self-driving customers will have standardized and accurate expectations for the travel experience before setting off.
Finally, Luo Xianqiang said that his tireless drive to explore the unknown may stem from his long-standing influence by Jin Yong. The bold and freedom-loving side of his personality all comes from Jin Yong. Recently, he launched the“Luca Recruitment” campaign to find travel enthusiasts who are passionate about overcoming mountains and rivers and are deeply in love with self-driving adventures.