Good day and thank you for standing by. Welcome to Meituan first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. Now I'd like to hand the conference over to Ms. Scarlett Xu, Vice President and Head of Capital Markets. Thank you. Please go ahead, ma'am.
Thank you, operator. Good evening and good morning, everyone. Welcome to our first quarter earnings conference call. Joining us today are Mr. Xing Wang, Chairman and CEO, and Mr. Shaohui Chen, Senior Vice President and CFO of Meituan. For today's call, management will first provide a review of our first quarter results and then conduct a Q&A session. Before we start, we would like to remind you that our presentation contains forward-looking statements, which include a number of risks and uncertainties and may differ from actual results in future. This presentation also contains an audited non-IFRS financial measures that should be considered in addition to, and not as a substitute for, measures of the company's financial performance prepared in accordance with IFRS. For a detailed discussion of risk factors and non-IFRS measures, please refer to the disclosure documents in the IR section of our website.
Now, I will turn the call over to Mr. Xing Wang. Please go ahead, Xing.
Thank you, Scarlett. Hello, everyone, and welcome to Meituan's first quarter in 2022 earnings call. We achieved a healthy growth across different businesses in Q1, despite the spread of Omicron to more regions in China since March. For the first quarter of 2022, our total revenue increased by 25% year-over-year to CNY 46.3 billion. Annual transacting users on our platform increased to 693 million, while the number of annual active merchants increased to about 9 million. The average number of transactions per transacting user increased to 37.2 for the trailing twelve months of Q1 2022, compared to 30.5 for the trailing twelve months of Q1 2021.
Adhering to our upgraded company strategy, retail plus technology, we never cease to provide consumers with diverse, high-quality services and daily necessity supplies during the recent COVID resurgence. We proactively responded to government's guidance around the COVID resurgence since March, fulfilling our social responsibilities and creating more value for the society at large. Specifically, our on-demand delivery network played a meaningful role in providing consumers in affected areas with daily necessities and daily services, including meals, groceries, medicines, and running errands. I am proud of how our teams worked seamlessly together across the company to find safe and creative solutions for consumers and merchants during challenging times. In Shanghai, to better meet the demand of people with special needs, we launched quite a few new services, including the community group meals, community group grocery purchases, and emergency helpers.
We also sent our autonomous delivery vehicles from Beijing to Shanghai, delivering goods in multiple residential communities, hospitals, and universities. Meanwhile, to ensure sufficient delivery capacity and safe working environment for our couriers, we offered them free nucleic acid tests alongside local governments and free accommodation or rest stations for those living in lockdown communities. We will continue to build on the mutual trust forged strongly amongst consumers, merchants, couriers, and all other industry participants during this challenging period and along the way. Let's start with our first segment, food delivery. Its revenue and order volume grew by 17.47% and 15.8% year-over-year in Q1. Both quarterly transacting users and transaction frequency also increased steadily year-over-year in Q1, with medium or high-frequency users purchasing more frequently versus average.
In January and February, food delivery performance was very resilient. During Chinese New Year, as more people stayed put and celebrated holidays in their working cities, consumer mind share and preferences for food delivery also strengthened. We have accumulated a broad consumer base with high consumption power over the years, who usually opt for the convenience and variety that comes with ordering food delivery for family gatherings. Compared to Spring Festival period last year, the number of merchants serving New Year meals on our platform also doubled. High AOV orders contributed to a higher percentage of total orders, with the new categories such as beverages and desserts increasing meaningfully year-over-year during the holidays. Since March, Omicron spread to many regions, including Shanghai, Shenzhen, and Jilin.
Control measures were stricken with many merchants suspending operations and couriers getting quarantined, meaningfully limiting our merchant supplies and delivery capacities in these cities, and hence impacting business growth. However, we leveraged our strong organizational and execution capabilities accumulated over the years to help people meet their daily needs during lockdowns in Shanghai and others. For example, we quickly pioneered and launched the community group meal services. Residents in the same community can order meals in bulk together, which are prepared in central kitchens and delivered by us through vehicles to ensure steady routine meal supply. The services covered over 9,000 communities and 10 million residents just at its initial launch, which also helped us bring a lot of new users to our platform. Besides, we also launched emergency helper services in Chinese it's called [foreign language] to establish.
To especially address the needs of the elderly, pregnant women, and people with disabilities, and including delivering meals, supermarket grocery, and emergency medicines. We have received over 210,000 of these urgent requests since launch. Over 90% of which are from elderly people and mothers with babies. In addition, our delivery services are critical for merchants to generate revenues during special periods like this. We launched multiple measures to help merchants in difficulties, such as commission rebates to hundreds of thousands of small to medium merchants in over 30 cities to continue to provide good delivery management, and free smart operational equipment to tens of thousands of merchants. We also started to host feedback panels with merchants across multiple cities to better understand their operating pain points.
Both our service model and merchant support measures continue to iterate, which demonstrated the agility of our organization, and yet again proved our strong executions. Despite the short-term impact on the food delivery industry, we are confident that our long-term competitive advantage remain unchanged, and consumer mindshare will continue to strengthen through this challenging period. Couriers are essential to our food delivery business. During the Spring Festival, we distribute total subsidy of over CNY 50 million to couriers, working through the holidays while also providing them free Chinese New Year Eve meals, holiday gift boxes, and more. In both Shenzhen and Shanghai, we opened more than 800 courtesy hotels, provided accommodation for around 3,000 couriers, and offered free food and hygienic equipment. Besides, safety is always of utmost importance. The smart safety helmets for couriers are more widely used in most cities.
The new second generation smart helmet launched in February is lightweight with expanded and friendly user experience. Our occupational injury insurance, we will cooperate with and follow government guidance in executing the policy to ensure a pilot program launch timely, covering all couriers' expenses in the process. Overall, couriers' welfare and security are in every part of our business operation and decision-making as we ensure safer working environment for couriers with better care and benefits. Now let's move on to our second segment, the in-store, hotel, and travel. Segment revenue increased by 15.8% year-over-year in Q1, mostly driven by strong performance in January and February. In-store services GTV increased by over 30% year-over-year.
Around the New Year and Spring Festival holiday seasons, we launched the various promotional campaign to further stimulate demand for local services. Quarterly active merchants increased by over 30% year-over-year as we expand the categories on our platform. More gathering categories such as hot springs, winter sports, hotel dining, and entertainment packages all recorded a stellar growth, boosted by the Winter Olympics celebrations this year. We continue to iterate and diversify our online marketing and transaction-based products and services, allowing merchants to acquire consumer efficiently to increase table turnover rates and consumer stickiness. Annual transacting user increased by close to 20% year-over-year in Q1. Meituan has a go-to destination for local services and consumer mindshare further strengthened. For in-store dining, we continue to focus on the light meal fast food categories.
We're celebrating their digitization while enriching our supply to better fulfill the surging demand from younger generations and young families. For other in-store services, consumption trends are quickly evolving, and we are even faster to identify them and innovate our products accordingly. The new consumption demand from younger generation drives us to bring more diverse and trendy services to our nearly 20 or 200 service categories. However, since March, more higher tier cities were affected by the Omicron, with the stricter control measures and drastically reduced offline traffic, resulting in significant and negative impact on our in-store hotel and travel businesses. Although we are facing short-term fluctuations, we will cooperate with the local governments to stimulate local consumption alongside recovery in different regions. For example, in April, Xinjiang government issued CNY 500 million of consumption vouchers, which we participated and assisted to boost consumptions.
These vouchers stimulated consumer demand for local shopping, food, and travel during the main holiday. Our hotel and travel business was significantly impacted by the COVID resurgence in March, with the domestic hotel room nights decreasing by single digits year-over-year in Q1. As a result of stricter controls on intercity travels, demand for outings within or around the city streamed, with domestic room nights for these scenarios increasing by a high single-digit percentage year-over-year in Q1. We enhanced our service offerings and service quality to better serve the increasing demand of, for local travels. Also, room night contribution from high-star hotels reached 17%, a record high for us.
This is a result of our continuous effort in improving offerings, services, and fulfillment quality, in addition to better marketing capabilities for short trips and Hotel Plus X products. For our low and medium star hotel segment, we provided improved products and services to help accelerate the merchants' digital transformation process, allowing hotels to benefit from lower cost and higher conversion rate. Now moving on to the third segment, new initiatives. Segment revenue increased by 47 year-over-year, 47% year-over-year this quarter, as we continue to focus on grocery retail business in conjunction with our upgraded company strategy. Our various grocery retail business model help to address different consumption needs and provide consumers with groceries and other necessary daily necessities, reliably during the COVID resurgence across different markets despite the stricter COVID controls.
Our Meituan Instas hopping, that's Meituan Shangou, continued its high growth trajectory in Q1, with order volume growing by nearly 70% year-over-year. User base and transaction frequency both increased in Q1, with its annual transacting users as the main growth driver for overall order volume growth. That's increasing rapidly year-over-year. We also have drove consumption through various marketing and promotional campaigns during holidays, by further enhancing consumer mindshare that Meituan delivers everything to their doorsteps. During Chinese New Year, we collaborated with around 600 supermarkets, chain stores, and convenience stores, and nearly 100 established consumer goods and electronics brands for promotions for over a month, allowing consumers who stayed put in their working cities for Spring Festival to enjoy a more diverse range of goods.
Significantly, more consumers order on Meituan Instas hopping to send holiday gifts to their distant families during Spring Festival this year. During Valentine's Day, flower orders nearly 3x versus last year, with ordering other standardized gifts also becoming more popular. Sales of electronics and cosmetics increased 6x and 2x respectively versus last year. GTV and other volumes both grew significantly year-over-year during these aforementioned shopping festivals. Besides, both our quality active merchants and newly onboarded merchants increased significantly year-over-year in Q1. We brought more diverse merchants onto our platform in order to better fulfill evolving consumer demand. Since the beginning of this year, growth from categories such as convenience stores, flower shops, and other new merchant categories meaningfully accelerated.
In March, we were the first to launch a rapid antigen testing kits delivery with a number of pharmacies while ensuring sufficient and diverse medicine supplies. During COVID resurgence in various cities, together with offline supermarkets and stores, Meituan Instashopping played an important role to ensure steady daily necessity and grocery supplies for consumers. For example, during lockdowns in Shanghai, we helped deliver essential goods to consumers, especially for those with special needs. In Beijing, Meituan Instashopping worked closely with over 20,000 supermarkets, convenience stores and grocery stores to maximize supplies to consumers. Taking into account the high demand at night from people who work during the day, operational and delivery time for supermarkets and grocery stores was extended to ensure that the necessities such as fresh produce and other necessities could be purchased and delivered during the nighttime as well.
We also increased the help to supplement peak capacity at the supermarkets to meet the surging online orders at supermarket. The consumer mindshare that we deliver everything home also strengthened as a result. In the future, we will further improve operations for large specialty store and supermarket accounts and build more regional teams to further increase our consumer mindshare. Meituan Select, Meituan Youxuan is our community e-commerce business. In the first quarter, we focused on high quality growth, improving operating efficiency by growing scale and maintaining our market leadership. We further built out our core capabilities around the digital operation and procurement. On the supply side, we deepened our collaboration with merchants to provide more quality SKUs and diverse product selections to consumers. The percentage of products coming from agricultural produce, direct sourcing or centralized nationwide procurement increased.
We further optimized infrastructure and operating system for cold chain logistics, expanding network coverage while ensuring strict quality control across the entire supply chain. We proactively explored and applied smart warehousing systems and continuous iterative procurement methods to improve efficiency. Corporate social responsibility continued to be our top priority. We actively support the farmers not only by promoting their products, but also providing job opportunities through our new vocational training program in lower tier cities. In Q1, agricultural produce sales accounted for almost 50% of Meituan Select sales. With offline stores working with us in rural areas now around 1 million.
We actively participated in COVID prevention and control measures with the government guidance to ensure properly priced supplies to consumers through setting up a swift response mechanism for the entire supply chain and logistic system, which further proved our strong execution and efficient procurement capabilities. Next, let's talk about our self-operated Meituan Grocery, Meituan Maicai. It provides consumer grocery with on-demand delivery services within 30 minutes. We further expanded product matrix to meet the rising demand during the Chinese New Year holidays. By continuously improving product selection and marketing strategy, we not only stimulated holiday consumption demand, but also helped consumer stock up food and supplies at short notice. Both number of items to order and the average order value increased as a result. During the lockdown in Shanghai, we proactively iterated our operations to ensure the stable supply of daily necessities.
We went all out to make sure our supply chain was stable and functional properly. We swiftly rolled out a plan on services for residents in lockdowns during launching a community group purchase feature. We increased the inventory significantly at our front distribution centers, extended our services time, and increased the accounts for source sorting and delivery. In situations where warehouse staff and couriers could not access to their lockdown-hit communities, we provided them with accommodation nearby their work places. Autonomous delivery vehicles sent to Shanghai also served areas with contactless delivery requirements, improving delivery efficiency substantially. During recent COVID resurgence in Beijing, we focused on ensuring necessary supplies for consumers. Our autonomous delivery vehicles continued to operate in around 10 communities in Shunyi District. We also immediately increased supplies and inventories of important products to ensure steady supply and broad pricing for consumers.
Besides, we increased our critical staffing capacity to ensure smooth operations. For example, picker capacity was up by 70% and couriers capacity by 50% to ensure goods were delivered to consumers timely. In future, Meituan Grocery will continue to improve operating efficiency across supply and procurement chain by using technology to empower industry digital transformation. Looking ahead to the second quarter and the full year, we will continue to face the impact and challenges from Omicron. As our nation continues to counter the COVID resurgence and to achieve the dynamic zero COVID goal, we will align our strategy with the policies and improve our operations and services using advanced technologies in order to meet people's basic needs, as well as to boost consumption recovery.
Meanwhile, we will continue to assist small and medium-sized merchants, and we'll try our best to understand their pain points and to help them through the difficult time. Because our corporate social responsibility is at the heart of everything we do. Last but not least, we will further assist the digital transformation of retail industry. By fulfilling our mission, we help people eat better, live better. We are confident to carry on delivering greater values through continuous technology innovation to our consumers, merchants, and society as a whole. With that, I will turn the call over to Shaohui for an update on our latest financial results.
Thank you, Xing. Hello, everyone. I will now go through our first quarter financial results. During the first quarter, our total revenue reached CNY 46.3 billion, increasing by 25% year-over-year in the midst of the surge of COVID cases in a challenging macro environment. The increase was mainly driven by the steady revenue growth of our food delivery and in-store hotel and travel business, and the strong revenue growth of our new initiatives, especially in the goods retail businesses. As a percentage of total revenue, cost of revenue was 76.8% this quarter, down from 80.5% in the prior year period, but slightly increased from 75.8% in the prior quarter.
Year-over-year decline was mainly due to the improved gross margin of our food delivery business, as well as the improved gross margin of goods retail business as we continue to optimize operating efficiency. Selling and marketing expenses as a percentage of total revenue was 19.7% this quarter, relatively stable year-over-year, but down from 22.7% in the previous quarter. The sequential decline was mainly attributable to the reduction in user incentives and promotion of online marketing expenses. R&D expenses as a percentage of total revenue increased to 10.5%, up from 9.4% in the prior year period and 9.3% in the previous quarter, while G&A expenses as a percentage of total revenue remained stable on both a year-over-year and a quarter-over-quarter basis.
We are glad to see that our efforts in delivering high-quality growth and improving operating efficiency have achieved good progress this quarter. Total segment operating loss narrowed on both a year-over-year and a quarter-over-quarter basis to CNY 4 billion this quarter as we improved operating margins across all business segments. Year-over-year and quarter-over-quarter increases in our total operating loss were mainly due to increases in fair value loss of financial investment. On a consolidated basis, both adjusted EBITDA and adjusted net loss improved on both a year-over-year and a quarter-over-quarter basis to - CNY 1.8 billion and CNY 3.6 billion, respectively, this quarter. Turning to our segment results, starting with food delivery.
Before moving to details, I would like to highlight that from this quarter, we are no longer disclosing GTV for this segment, as from a business management perspective, we will focus more on order volume. The segment's revenue increased by 17.4% year-over-year, decreased by 7.5% quarter-over-quarter to CNY 24.2 billion. Revenue per order increased on both a year-over-year and a quarter-over-quarter basis to CNY 7.2 for the following reason. First, AOV rose during the quarter as more holiday users and their higher willingness to pay for premium and large ticket size orders such as family orders, long-distance orders, and more selection selectively during the holiday. Second, a reduction in user incentives resulted in the decreased counter revenue amount as we continue our focus on high-quality growth.
However, the increase in revenue per order was partially offset by the negative impact on commission revenue as we roll out a variety of merchant support and remedies in response to Omicron spread in March. During the quarter, both operating profit and operating margin improved on a year-over-year basis, a decline on a quarter-over-quarter basis to CNY 1.6 billion and 6.5% respectively. Thanks to more abundant courier capacity during the holiday period this year and our improved delivery efficiency, delivery cost per order reduced year-over-year. The lower delivery cost per order, together with the reduction in user incentives ratio, contribute to a higher operating margin. The sequential decrease in operating margin was mainly due to the increase in delivery costs per order, which was mainly due to higher seasonal courier incentives, partially offset by the lower user incentives.
Now turning to our second segment, in-store hotel and travel . The segment's revenue grew by 15.8% year-over-year, but decreased by 12.6% quarter-over-quarter to CNY 7.6 billion this quarter. From January to February, our in-store business performed strongly, with both order volume and GTV increasing at much higher growth rates than that in the fourth quarter last year. We constantly improve the variety and quality of our suppliers, optimize our transaction-based products, and launch diverse marketing events to stimulate growth. Meanwhile, strong demand for local accommodation and short-distance travel during holiday periods also led to 15% year-over-year growth in domestic room nights for the first two months.
However, since mid-March, the Omicron variant has spread across many regions, especially several tier one cities, which significantly affected travel activities and offline local consumption, resulting in a growth rate of order volume for in-store business and domestic room nights turning negative in March. Merchants' willingness for online marketing also reduced significantly. In particular, this created headwinds for CPC and display online marketing product sales. Online marketing revenue was much less affected than commission revenue, which was mainly contributed by the year-over-year increase of active online marketing merchants. Meanwhile, subscription-based online marketing revenue maintained stable year-over-year growth in this quarter. Operating profit for our in-store hotel and travel business segment increased to CNY 3.5 billion during this quarter, representing a year-over-year growth of 26.4%, a quarter-over-quarter decline of 10.9%.
Operating margin improved on both a year-over-year and a quarter-over-quarter basis to 45.6%, mainly attributable to the improved operating efficiency, smaller revenue contribution from hotel business, which has a relatively low OP margin, and our tighter control over user incentive spending and promotion expenses. Let's now turn to our new initiatives and others. During this period, revenue in this segment increased by 47% year-over-year to CNY 14.5 billion, mainly due to the expansion of goods retail business. Operating loss for this segment narrowed sequentially to - CNY 9 billion during this quarter, while operating margin improved by 7.2 percentage points quarter-over-quarter to - 62.3%, primarily attributable to the improved gross profit and operating efficiency in our goods retail business. Our goods retail business remain our key area of investment.
With a focus on high-quality growth, our community e-commerce business delivered a healthy increase in both GTV and sales volume on a sequential basis, while operating loss as a percentage of GTV continued to narrow compared to the fourth quarter. Operating loss for our community commerce business also narrowed sequentially. Our improvement in product mix, for example, providing high-quality and cost-effective product offerings to meet consumption demand during Chinese New Year, has driven sequential increase in both our price per item and the price markup. Furthermore, operating efficiency throughout the whole value chain also improved. However, the failures in delivery and higher rate of damaged fresh produce caused by the pandemic's resurgence brought a certain increase in compensation costs. Operating loss for Meituan Instas hopping also narrowed compared to the first quarter of last year, with operating margin optimizing and loss per order decreasing.
On one hand, AOV rose significantly as a result of consumers' surging demand to stock up food and necessities pre-lockdown and their explosive demand for high ticket size gifts as well as bulk purchase during holiday periods. On the other hand, we implemented tighter control over user incentive spending, promotion and online marketing expenses due to seasonality. Operating loss and operating margin for Meituan Grocery both improved significantly on a sequential basis. This improvement was driven by two factors. First, increased AOV and order density brought by the surging demand for food and the suppliers stockpiling during the pandemic. Second, improved operating efficiency generated by the optimization of subsidy strategy and the upgrade of our warehousing and fulfillment capabilities. Now turning to our cash position.
As of March 31, 2022, our cash and cash equivalent, as well as short-term treasury investment total CNY 103.4 billion. Additionally, our operating cash outflow increased to CNY 11.3 billion from CNY 4.4 billion during the same period of 2021. The year-over-year increase in outflow was primarily due to, first, the outflow from net settlement of payables to merchants and the less cash inflows of advanced payments for online marketing services from merchants due to the outbreak of Omicron variant. Second, the increase in the payment of year-end bonus. To conclude, I would like to stress that our business, especially food delivery and store and hotel booking, will continue to face short-term headwinds on the back of the surge in COVID cases and the weaker macro environment.
Nevertheless, we believe that short-term impacts are temporary, and all of our business will resume normalized growth post strict pandemic control periods. We will continue to prioritize high quality growth and operating efficiency improvement in the current environment. Our company still has strong confidence in our long-term growth potential. We hope everyone can see through the short-term negative impacts and value our company from a longer term perspective. Additionally, we are glad to see that our dedication to our delivery network and retail technology services contribute to the wider society during the challenging time. We showcase our strong capability to execute efficiently and quickly iterate our business operations. We have further strengthened consumer mind share of Meituan being the retail plus technology company, while also deepening our trust relationship with users, merchants, and couriers. We believe that such trust and recognition will eventually help drive our long-term growth.
We will firmly implement our company strategy of retail plus technology and continue to contribute to social responsibility in terms of supply side digitization, consumption expansion, innovation for industry upgrading, and employment opportunity expansion. With that, we are now open for Q&A.
Thank you. As a reminder, if you wish to ask a question now, please press star one on your telephone and wait for your name to be announced. If you wish to withdraw your request, please press the pound or hash key. The first question comes from the line of Ronald Keung from Goldman Sachs. Please ask your question.
Thank you. Thank you, Xing Wang, Shaohui, and Scarlett . For the food delivery segment, can you elaborate and share more details on the COVID impact for the second quarter? Will we focus more on promoting customer loyalty? You also touched on subsidies. Are we adjusting any subsidy strategy under the current macro environment? Lastly, how should we think about the food delivery performance for the whole year of 2022? Thank you.
Thank you, Ronald. Yeah, our food delivery business was resilient despite COVID resurgence in some places in January and February. Order volume growth accelerate meaningfully around Chinese New Year. However, since March, Omicron quickly spread in more cities, including several top-tier cities such as Shanghai, Shenzhen, Qingdao, et cetera. Strict COVID control policies were implemented citywide. Many residential communities had control measures in place to various extents, and delivery couriers could not go up to consumer doorsteps, reducing the convenience and willingness to order food delivery. Non-residential venues like offices, leisure hotels were also affected as consumer traffic has slowed. Order volume in these top-tier cities dropped significantly, resulting in material impact on our order volume growth in March. Provinces like Jilin went to full lockdown around mid-March. Its order volume dropped by almost 90% compared to the pre-pandemic levels.
Some lower tier cities also adopted stricter anti-COVID control measures, and many cities operated by agencies suspended food delivery services. Since April, control measures were even stricter. Higher tier cities that contribute to higher percentage of our overall food delivery volume were all affected. Order volume in cities with high- and mid-risk areas dropped significantly in April. For example, Shanghai started broader lockdown at the end of March. Order volume dropped by 90% versus pre-pandemic in April in Shanghai, with restaurants open for business only single-digit percentage and the delivery capacity only mid-teens percentage versus pre-lockdown. There was split over into low-risk and some no-risk areas. A t least also adopted more cautious control measures. Order volume growth in low-risk and no-risk areas also materially slowed down.
Given the great COVID impact in Q2, I expect order volume growth in Q2 will materially accelerate versus Q1. However, as the pandemic was effectively brought under control in many places with more relaxed control measures, order volume began to pick up steadily in the last two weeks of May.
Since the end of May, residents in Shanghai and Beijing have been steadily resuming work, so we expect the order volume in June to show a better recovery trend than May. Q3 and Q4 will depend on how COVID measures act. If more higher tier cities are affected, we will continue to see material impact on order volume growth. During this time, we will put more focus on high-quality growth, especially on increasing the transition frequency and thickness of medium high-frequency users. We will also optimize operations and control subsidy. Also, operating profit and operating margin for the first segment are expected to achieve year-over-year improvement in 2022. Looking ahead, I'm still very confident for food delivery's long-term growth and our ability to achieve it. During the challenging time, we roll out package measures to meet consumers' needs very quickly.
We also designed measures to help merchants sustain normal operation in Shanghai. We quickly iterated to roll out the community group meal model to supplement the traditional food delivery model, delivering more than 400,000 meals to about 9,000 communities in total. In Beijing, as dining out was banned during the May holidays, we increased our delivery queries by 30% and provide long-distance delivery services. We launched citywide delivery selections and demand for high AOV long-distance orders surged. From first to third of May, order volume increased by 30% year-over-year in Beijing, with cross-city long-distance orders increased by 40%. We are confident to stimulate consumption post the pandemic control measure, and food delivery order volume growth will be expected to normalize. Thank you.
Thank you. That's very useful. Thank you.
Your next question comes from Ya Jiang from CITIC Securities. Please go ahead.
Thanks, and thanks for taking my question. During recent COVID resurgence, I saw that Meituan sent autonomous delivery vehicles to Shanghai to help with on-demand delivery efforts. Could you share more on the progress of autonomous delivery operations? What about future developments in the trajectory, and at what point will this reach the scale that will help improve the UE? Thank you.
Thank you, Jiang Ya . Well, I'm very proud to say that Meituan autonomous delivery has delivered nearly 2.2 million orders in total since the start of 2020. They were used many times in COVID-affected areas, assisting local governments. This time, we immediately deployed our delivery vehicles in Shenzhen, Shanghai, and Beijing. From early April to May 24, they deliver more than 700,000 orders in total. In Shanghai, we help to deliver meals, groceries, and other necessary daily necessities to the hotel, hospital, Fudan University, many mobile cabin hospitals, 15 locked-down communities. We also help to deliver nucleic acid test samples, medical supplies within hospitals. In Beijing, our ADV, that means alternative delivery vehicle.
Our ADV helps to continuously deliver grocery to more than 50 communities in Shunyi District by working with local community to deliver daily necessities to many lockdown areas. In addition, they were also deployed in a number of lockdown colleges nationwide to deliver hundreds of thousands of essential supplies to teachers and students. COVID is a special scenario for ADV, given high contagion risk. It amplifies the advantage of using such technology to empower deliveries. These vehicles can carry close to 150 kg per trip. Relieving the delivery capacity by delivery couriers and volunteers. Also, it can reduce contagion risk. In the long run, I think, autonomous delivery is sustainable and technology empowers the delivery method, and it will supplement our courier-based on-demand delivery network.
It includes autonomous delivery vehicles and unmanned aerial vehicles, or you can call them delivery drones and other robotic methods, and they will integrate the air and ground last mile delivery systems. These innovations will better meet on-demand delivery needs in places like residential communities, office parks, universities, open roads and so on. In future, we hope that delivery drones and ADV can better supplement the existing delivery network so as to structurally improve our delivery efficiency and unit economics, while improving user experience. This will help us to ultimately fulfill our mission to help people eat better, live better. In the short term, we will apply this technology for pilot trial in more consumption scenarios, including universities, residential communities and surrounding areas. We will also try to improve our operating efficiency in different environments.
We will also work hard to make our technology more mature by using either the internal R&D or external investment. We want to make more contribution to this field in the long term. In short, although the future is very bright, it's not going to be massive, you know, anytime soon. I believe this is going to be a very long-time effort. The R&D of our ADV started in late 2016. It has been more than five and a half years. Right now we have hundreds of very bright people working on our internal R&D. I think that's part of our new initiative on our third segment. It's going to be great, but it will take a long time, so no hurry. Thank you.
Okay, thanks, Xing Wang.
Thank you. Our next question comes from Eddie Leung from Bank of America Merrill Lynch. Please ask your question.
Good evening, guys. Thank you for taking my question, and thank you for all the efforts you have done in the past few months. A question on the in-store and hotel segment. Just like Ronald, could you also provide some color on the COVID lockdown impact on this segment? What's the recent performance and any thought on the full year profitability and growth profile of this business? Thank you.
Thank you, Eddie. In Q1, our second segment was resilient in January and February, especially driven by holiday consumption around the spring festivals. GTV of in-store service was up to 30%. Hotel room nights was up to nearly 15% year-over-year. From mid-March, Omicron spread to more regions, including Shanghai and surrounding provinces. More higher tier cities were impacted meaningfully, which is still with spillover effect to other regions as well, reducing offline traffic and travel significantly. The higher tier cities consist of a significant part of our in-store revenue, so severely affecting the total segment revenue. Merchants' willingness for online marketing also reduced, so online marketing revenue declined year-over-year in March as well. The impact on hotel booking was even more severe than in-store services.
Since April, Omicron spread to even more regions, including Beijing, Guangzhou and Shenzhen with strict control measures. For example, Shanghai went full lockdown since the end of March. From May holiday onwards, in-store dining was not allowed in Beijing. Non-essential locations such as entertainment venues, gyms and other indoor and outdoor venues all suspended operation across different streets. Other public venues require test result done within 48 hours, not only in places like Shanghai and Beijing, even at the lower risk regions are affected, even people cautious tend to go out. Intercity consumptions never stopped, and local offline consumption was subject to control measures. Shops covering dining, entertainment, training, beauty, medical, cosmetics and more, had to suspend operation on limited traffic. Residents in lockdown communities also cannot visit these offline stores.
Business impact is even more severe for the quarter till date. The COVID impact on the second segment is materially more severe than on food delivery. The good sign is that the GTV began to pick up steadily in the last two weeks of May for our in-store business. Residents in Shanghai and Beijing have been steadily resuming work since the end of May. However, given the material negative impact in April, May, I think the second segment will see quite meaningful revenue drop year-over-year in Q2. Given the uncertainty and different recovery pace in different cities, it's hard to predict for the full year performance. Business recovery is highly dependent on COVID situation. Alongside our current zero-COVID policy, I think our second segment, we are continuing to see negative impact in the second half of this year.
However, once things start to normalize, we will assist the government to stimulate demand for local service consumption, and we believe our in-store business will get back to healthy growth track. For example, during the May holiday in Shenzhen, we assist the Shenzhen government in distributing consumption coupon vouchers on our platform, highly driving GTV for in-store dining and other in-store services up by 50% and 30% respectively during the holiday year-over-year. Overall, in-store GTV in Shenzhen was back to healthy growth trend year-over-year in May as well. However, some gathering categories have not recovered fully or have traffic limits, so recovery for other in-store services is slower than in-store dining in Shenzhen at this moment. Despite short-term fluctuations, we are confident that the second segment can and grows in the long term. Our strategy remain unchanged.
For in-store, we will help to accelerate the digital transformation of local service industry with GTV, a key KPI. We will also improve our product content, supplies and traffic. For hotel booking, we will increase penetration in the low-star segment and focus on local travel. We will also continue to increase the high power of tail contribution to meet the various travel demands post pandemic. For small and medium local service merchants affected by COVID, we will proactively roll out different measures to help merchants recover and get past the difficult time. We will also assist local governments in stimulating consumption recovery going forward, like the work we did in Shenzhen. Thank you.
Thank you.
Your next question comes from the line of Alicia Yap from Citigroup. Please ask your question.
Hello. Thank you. Good evening, management. Thanks for taking my questions. You know, congrats on the solid result despite a challenging environment. We noticed the demand to stock up the food and also the necessities surged during the COVID period. It looks like the impact on Meituan Instas hopping might be different from, you know, the experience on food delivery. Could you elaborate and share more details on the COVID impact and Meituan Instas hopping performance in the first quarter and also the second quarter? Looking forward, how should we think about the performance for the full year 2022, and any potential future upside from this segment? Thank you.
Thank you, Alicia, for your question on Meituan Instas hopping. Yes, you are right. Although during lockdown, the operation negatively impact for Meituan Instas hopping. Overall, the impact was much less than that on food delivery. The reasons are as follows. First, pre-lockdown, consumers rushed to stock up grocery and daily necessities. For example, in Shanghai, we saw daily order volume and GTV surging by about 80% and 290% respectively during the week of March 21st versus the last week of February. Second, traditional logistics networks were running behind schedule or had limited access in some cities. Given time sensitivity and the new control measures, consumer prefer instant delivery and chose to order locally using on-demand delivery network.
Third, in areas where in-store dining and food delivery is restricted, supermarkets and convenience stores played a more critical role in meeting the daily needs. Meituan Instas hopping merchants were, in general, less affected than restaurants. We are glad to see that Meituan Instas hopping achieved strong growth across different metrics, with the number of transaction and GTV growing by nearly 70% and over 80% respectively year-over-year in Q1. Average daily order volume also exceeded 3.9 million in Q1. Overall, Meituan Instas hopping is the trusted partner to deliver everything home, and this brand awareness further strengthened during this period. More consumers embrace and enjoy ordering food and goods timely on demand. Meanwhile, we further increased user traffic conversion on our platform. Our competitive advantage on merchant side also further strengthened with more diverse merchants onto our platform.
Flowers, convenience stores, and other new merchant category meaningfully accelerated. COVID has catalyzed many consumers to rely on on-demand delivery. I expect Meituan Instas hopping to benefit from the tailwind of everything now as we increase consumer mindshare and widen SKU selection. I'm very confident that Meituan Instas hopping's growth potential in the long term. In 2022, we remain committed to Meituan Instas hopping and expected to increase the investment versus 2021. We will allocate more resources to capture consumer mindshare and drive the growth of our key categories. However, I remain very confident of its profitability potential in the long run, given it's a natural extension from prepared food to more categories for their on-demand delivery. I would expect its long-term unit economics will be similar to food delivery. It also has the potential to achieve higher AOV and online marketing revenue upside. Thank you.
Thank you.
Your next question comes from the line of Thomas Chong from Jefferies. Please ask your question.
Good evening. Thanks management, for taking my questions. When we look at the numbers, the loss reductions, for retail-related business weren't very meaningful, in Q1. Can you share with us more details on Meituan Select's recent, performance? Also, given your core business profitability will likely see meaningful impact, by COVID, do you expect a greater cost reductions? What have you already done exactly to that means, and what are the strategies? Thank you.
Thank you for a tough one, Thomas. In 2022, Meituan Select will focus more on high quality growth. Over the last quarter, we worked on improving our supply chain capability and effective marketing. We were able to capture the consumption surge before Spring Festival by providing high quality and value for money festival goods. Hence, GTV before Spring Festival grew steadily. During Chinese New Year, group leaders suspended operations to celebrate holidays with families. In February, our GTV declined. As group leaders returned to work after the holiday, and our business growth quickly caught up to levels before the Spring Festival. While we keep improving our operating efficiency, our GTV also grew as we stay as the industry leading player.
Since March, Omicron also impacted Meituan Select because in affected areas, some central and satellite warehouses suspended operations, and some group leaders could not operate. Fulfillment was also affected in some areas. Although volumes was negatively impacted in the second quarter so far, so was its operating efficiency. We see gradual and improving trends in some regions. I expect, as fulfillment and logistic chain resume and stabilizes, sales in these regions will also, quickly recover. Overall, we maintained good, growth momentum under the challenging time. In the current environment, we have improved our ability to deal with emergency and urgent situations. Organization, you know, capability across the entire chain of operations is also improving.
We will focus on ourselves and build up our foundations to ensure high product quality and competitive pricing, more skill variety and timely delivery and good experiences for consumers. Above all, we are increasing operating efficiency and reducing cost while pursuing high-quality growth. We are also iterating operations SKUs and use management that are tailored to different regions. For marketing expenses, we will reduce user acquisition cost with low conversion rates. On the back-end expenses, we also see room to go down. I think the above measures will materialize in the next few quarters. To grow our scale and cultivate user habits, we will also keep a fine balance between pace of cost reduction and business growth. I think we have the cash flow and the strong balance sheet to develop new initiatives such as Meituan Select.
We are also confident of its long-term potential and future landscape. In future, we will have ongoing assessment on COVID impact, core business profitability, and community e-commerce developments. We will adjust dynamically the development pace and resources allocation for Meituan Select and others. Thank you.
Thank you.
Your final question comes from Gary Yu from Morgan Stanley. Please ask your question.
Hi, thank you for the opportunity to ask the final question. I read that Meituan Grocery played an important role during COVID in Shanghai. Could you please share some of the details on its operation and new models, particularly on grocery group purchase? What was the unit economics like during COVID, and how do you expect your business model evolve and your unit economics will be like post-COVID? Also beyond COVID, in 2022, what are your key strategies for this business? Thank you.
Thank you, Gary. In Shanghai, we proactively followed the government guidance and worked hard to fulfill our social responsibility by mainly doing three things right to make sure that there is sufficient supplies. First, we designed and rolled out an emergency plan. The priority for us was to make sure that we had enough inventory, so we immediately contacted all our suppliers and expanded supply pool, procuring and delivering goods directly from the producers to the front distribution centers. We also preempted for upcoming needs and increased inventory at each front distribution center accordingly by iterating fulfillment model, increasing delivery vehicles and delivery frequency. Second, we quickly roll out the grocery group purchase model and the government's government guidance. This effectively addressed the explosive demand and difficulty in buying grocery.
We prioritized areas with high lockdown community density and built delivery capacity for this model. Residents order grocery first in-house, which will be delivered together to the districts by drivers via vehicles rather than riders via mopeds. This is a one-stop solution for consumers' various daily necessity needs, and also an effective fulfillment method when delivery capacity was restrained. We delivered nearly 400,000 group orders as of end of May. Third, we quickly added the accounts in Shanghai and reallocated staff such as the warehouse staff, pickers and so on, from Beijing, Guangzhou, and et cetera, to Shanghai. We maximized our staffing capacity and also supplemented with autonomous delivery vehicles sent from Beijing to Shanghai. Our ADV addressed the situations where there were contactless requirements while increasing delivery efficiency so that the crews were less exposed.
After what we have all been through Guangzhou, Shenzhen, Shanghai, Beijing, et cetera, and we have already iterated our business to deal with the COVID control situation in response to government guidance. We will keep doing what we can to continue to provide stable and quality supplies. Given consumers' strong need to stock up in COVID-affected regions, our AOV increased significantly as a result. Also, COVID catalyzed more consumers to using Meituan Grocery for 30-minute grocery delivery. Overall, order density as well as the fulfillment efficiency also increased. We have iterated new models such as the grocery group purchases. In 2022, we will continue to operate the platform at the front distribution centers with a focus on optimizing SKU management, user management and fulfillment.
Hopefully, it will lead to better user retentions and higher AOV and higher order density. We will gradually improve our supply chain and product capabilities, increase the SKUs, and dynamically optimize procurement costs. Lastly, we will step up our effort to increase efficiency, lower procurement costs and other expenses, so our unit economics will gradually improve over the long term. Thank you.
Thank you.
Great. Thank you very much for all your questions. I'll now turn the call back to Ms. Scarlett Xu for her closing remarks.
Okay. Thank you for joining our call. We look forward to speaking with everyone next quarter. Thank you for your support.
Thank you. This concludes our conference for today. Thank you for participating. You may all disconnect.