Hotel brand Qingzhu completes three funding rounds in half a year, raising tens of millions of dollars with Source Code Capital leading angel round

源码资本·July 22, 2019·0·0

Qingzhu currently operates 2,000 hotels and expects to reach 4,000 by the end of 2019.

Qingzhu, a hotel brand founded in January 2019, completed three funding rounds in the first half of this year, with Source Code Capital, XVC, and HSG participating and increasing their stakes, bringing total funding to tens of millions of dollars. Qianyue Capital served as the exclusive financial advisor.

Qingzhu primarily provides comprehensive online and offline upgrades and operational management services for China's existing inventory of independent, single-location hotels. Qingzhu founder & CEO Nan Zhao said the company currently has 2,000 hotels under its brand and expects to reach 4,000 by the end of 2019. Hotels that have partnered with Qingzhu for more than three months have seen significant improvements in occupancy rates, RevPAR, and OTA composite scores, with a notable decline in negative user reviews.

Nan Zhao, Founder & CEO of Qingzhu

As the sole investor in the angel round, Yungang Huang of Source Code Capital said: "The Qingzhu team brings combined expertise — they understand both online operations and offline hotel management. We have high expectations that this team will better empower the vast number of independent hotels and contribute meaningfully to the massive transformation underway in the hotel industry ecosystem."

Qingzhu's strong business progress stems from several key factors:

First, macro tailwinds: shifting industry dynamics and evolving consumer demand.

According to 2017 industry data, China's hotel market had 16.77 million existing guest rooms, of which approximately 3.2 million were in chain hotels — a chain penetration rate of just 19.08%. Looking at the U.S. lodging market model, the supply mix across high-, mid-, and budget tiers is roughly 49%, 40%, and 11% respectively, forming an olive-shaped distribution. China's market, by contrast, resembles a pyramid: mid- to budget-tier hotels account for 86.3% of supply, while mid-tier hotels represent only 8.1% — even though corresponding demand exceeds 40%.

Driven by rising consumer demand for upgraded accommodation experiences, the supply structure began shifting noticeably last year. More than 80% of existing independent hotels that had yet to be consolidated attracted entry from overseas giants, domestic hotel groups, and even OTAs themselves. Entrepreneurs describe this market as an industry ecosystem migration involving hundreds of billions of yuan, as well as an instance where internet business model innovation and capital markets are prying open the traditional hotel sector.

Second, an experienced, complementary team.

Qingzhu's core team has spent years in the trenches of OTAs, e-commerce sales, and chain hotel operations, accumulating extensive frontline and management experience. Founder & CEO Nan Zhao previously led Meituan Hotels' revenue and review management operations and served as commercial analysis director for Meituan Hotels. He holds a bachelor's and master's degree in electrical engineering from Tsinghua University. Co-founder Xiaodong Zhao previously served as development and operations director for East China at Plateno Group, with ten years of experience in chain hotel development and operations. Co-founder Fujun Liu was a regional sales manager at Meituan Hotels' ground sales team, with seven years of sales management experience at Meituan and prior experience on Alibaba's "China Suppliers" team.

Third, a distinctive business model and operational approach.

Qingzhu employs relatively comprehensive and selective criteria when screening partner properties. Partner hotels must meet minimum room count requirements and maintain OTA composite scores above a certain threshold. In Chengdu, for example, according to incomplete statistics from 36Kr, Qingzhu has approximately 100 franchised locations listed on the Meituan app, with over 80% scoring 4.5 or above. Detailed screening criteria focus on the consumer experience — hardware facilities, user reviews, room size, and similar factors. To enable more granular management, Qingzhu has created regional hotel operations manager roles. By providing SOP manuals and management tools, the company aims to improve personnel efficiency by at least 2x in the future — meaning each manager would effectively oversee dozens of hotels, supporting the regional management demands of rapid expansion. The company also invests in renovating select properties and rooms.

On the vertical opportunity of internet-enabled traditional hotels, Founder & CEO Nan Zhao outlined several key focus areas for Qingzhu:

At the management level, providing simple, effective data systems and staff management SOPs. Qingzhu has developed an IT management tool for regional operations managers and a PMS-based revenue management tool for hotel owners, helping small proprietors achieve data-driven, refined management.

At the marketing level, driving occupancy and overall revenue by attracting traffic, improving conversion, and optimizing pricing for partner hotels.

At the operations level, chain and non-chain properties differ substantially as physical formats — in accommodation environment, service quality, and cleanliness. Unified management to improve environment and service quality directly lifts user satisfaction.

At the brand level, small-scale independent hotels with low brand recognition struggle to cultivate customer loyalty and lack formal human resource management systems, making staff recruitment and training difficult. The branding process can gradually address these issues.

At the organizational level, Qingzhu has established an inspection team that conducts follow-up visits with partner merchants to ensure policy implementation and keep abreast of frontline business conditions. This department operates with relative independence, reporting directly to CEO Nan Zhao. When ground-level issues are identified, headquarters can push solutions downward.

Beyond addressing franchisees' current challenges in marketing, operations, branding, IT systems, staff training, and member management, Founder & CEO Nan Zhao said Qingzhu is exploring new needs and commercial opportunities, aiming to provide additional services and expand touchpoints between the Qingzhu brand and its franchisees to achieve more comprehensive empowerment of independent hotels.