Good day, and thank you for standing by. Welcome to the Meituan Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.
I would now like to hand the conference to our first speaker today, Ms. Carla Xu, Vice President and Head of Capital Markets. Please go ahead.
Thank you, operator. Good evening and good morning, everyone. Welcome to our Q2 2021 earnings conference call. Joining us today are Mr. Xin 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 Q2 2021 results and then conduct a Q and 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 that may differ from active results in the future. This presentation is based on our management accounts, which has not been audited or reviewed by our auditor. This presentation also contains unaudited 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 disclosure documents in the IR section of our website. Now, I will turn the call over to Xun Wang. Please go ahead, Xun.
Thank you, Scarlett, and hello, everyone. Welcome to Meituan's Q2 2021 earnings call. In the Q2 of 2021, our various business segments remain healthy growth. As the Chinese economy continue to recover steadily and as we continue to digitize the offline and service economies, in Q2, Annual active merchants and annual transacting users saw faster year over year growth versus Q1, reaching 7,700,000 and 728,000,000 respectively. The average number of transactions The projected user increased to 32.8 times for the trailing 12 months of Q2 2021 compared to 25.7 times for the trailing 12 months of Q2 2020.
We Serve More Merchants and Help Accelerate Their Business Digitization. We also strive to better serve consumers, providing them with a more diversified, more convenient and more value for money services and products. As a technology platform, we will continue to use our technology empowered system to improve offline business and Supply Chain Efficiency, creating more commercial and social value in return. At the same time, where we continue to develop our business around the mass market consumer while fulfilling our mission to help people eat better, live better. Now let's start with food delivery.
We continue to bring a wider range and greater quantity of merchants online to better meet consumers' increasing diverse needs. In Q2, our total food delivery orders Group by close to 60% year over year with a 2 year CAGR of more than 30% as measured from the Q2 of 20 2019. On the consumer side, we continue to broaden the variety of consumption scenarios available on our platform, provide longer distance deliveries and implement a more targeted operational strategy for merchants to better meet consumer growth needs of food delivery. By the end of June, food delivery annual transacting users Has increased by 16% year over year with most of the new additions coming from lower tier markets. Meanwhile, our monthly membership subscriber base also continued to hit new records, reaching over 59,000,000 as of the end of Q2 and accounting for an ever larger proportion of our total food delivery orders.
They are scaling up. Consumers are also attracting more frequently on our platform with quarterly purchase frequency up 25% year over year. In addition, order contribution from the breakfast, afternoon tea and late night snacks categories also grew meaningfully with orders from long distance merchants contributing to a greater percentage of total orders in Q2. On the merchant side, we focused on helping merchants to run their online business more efficiently By conducting constructive and transparent dialogues with the merchants, we were able to better understand their business pain points and congrats with their firsthand feedback. Food delivery annual active merchants and annual advertising merchants first reached new highs in Q2.
Since May, we have been rolling out a new tiered pricing mechanism for merchants. It not only made the pricing and cost structures more transparent for merchants, but also provide the merchants with more flexibility in delivery options. We believe this mechanism should help optimize the food delivery industry's operation over the long run. We also launched the food delivery manager at YMai Guangzhou, the program to Better Support Small and Medium Restaurants. This program is focused on helping restaurants set up and use online operations, covering such areas as operational diagnosis, operational optimization, store renovation, menu design, event planning, marketing and more.
Results were notable as more than 6,000 merchants participated in the program and saw the average GTV grow by more than 50% versus before. For the smaller merchants, We have continued to witness a trend of acceleration in their adoption of digital and online solutions. The less dining in more delivery service business model has worked well for smaller restaurants in our merchant ecosystem. We will continue to support the larger number of small and medium merchants on our platform by helping them to acquire more consumers, lower their operating expenses and increase their operational efficiency. In terms of our delivery network, in Q2, we came up with a more differentiated delivery solutions for different merchant groups and consumption scenarios, while continuing to strive toward delivering quality consumer services, increasing our delivery efficiency.
Our delivery services also expanded for more merchant type from food to medicine, supermarkets, convenience stores and so on. In the first half of this year, We hosted more than 85 panel feedback sessions with delivery riders, through which we collected the feedbacks and incorporated into our operations to further enhance our delivery riders' welfare. Over the past few quarters, on the back of our efforts to support the David Rider family, The program was designed specifically to improve the well-being of delivery riders' children. Our other welfare programs also help the riders' families in times of need and sickness. To help riders with the long term career planning, we initiated a delivery station manager, Shenzhen Pei An Ji Hua.
And through this program, high potential delivery riders have the opportunity to become managers and resume more responsibilities. We are a technology company, So the research and development of cutting edge technology is key to our business. In the future, To provide our delivery riders with more assistance, further improve delivery efficiency, we aim to assimilate our self developed autonomous delivery vehicles and delivery drones into our delivery network. During the recurrence of COVID-nineteen, for example, we flew our delivery drones in Shenzhen's Nan Shan District to provide the quarantined community with the much needed daily necessities. And our autonomous delivery vehicles operated in cities such as Chengdu, Nanjing, Guangzhou, delivering grocery during the pandemic as well as in addition to Beijing Shunyi District, where we have been running the pilot program since the onset of the pandemic.
Now let's move on to our second segment. Our in store hotel and travel segment recorded a steady growth in Q2. During the period, we focused on building out our long term capabilities in order to better serve merchants and consumers, ultimately helping to recover and grow domestic consumptions. We also leveraged the different holidays and vegetables to launch category specific promotional campaigns, which resulted in record transaction volume at GTV, a merchant's number for our in store business in Q2. We maintain a distinctive and strong consumption management as the go to destination for exploring local lifestyle as well as discovering quality merchants and value for money services.
For in store dining, our GTV achieved a 2 year CAGR of more than 37% in Q2, accelerating from that of Q1. We also brought more high quality and light meal auctions online that launched more transaction based and advertising products By providing merchants with more differentiated operational strategies, we help them to better run their online and offline businesses. Our merchant supplies increased diversity also attracted consumers to Dine out and transact more in restaurants during the consumption recovery. As annual active merchants continue to hit record highs, Consumer transaction frequency and user stickiness also improved. For other in store services, GTV achieved a 2 year CAGR of close to 47% in Q2.
As categories such as medical, anesthetics, Healthcare and Healthcare Maintain Their High Growth Rate. We also leveraged the various vegetables and campaigns to bring more high quality merchants online, satisfying the growing consumer needs. During the June 18th Festival for Medical Aesthetics category. GTV and number of transactions grew by more than 70% year over year during the promotional period. We also ramped up our self owned business development team to cover more categories in broader lower tier markets, increasing the number of annual active merchants in turn.
We believe for these lower tier markets, The need of both consumers and merchants have yet to be optimally met and there is still ample room for further Industry Dissertation. So going forward, we will focus on this approach in appropriate markets, while also improving our products and operations to reach more consumers. And for hotel booking, The intention and demand for traveling was stronger in Q2 versus Q1. This resulted in higher quality domestic alumnis of more than 140,000,000 for our platform. With the daily peak for the Labor Day holiday reaching more than 4,000,000.
We also continue to strengthen our ability to provide our high star hotel segment with better services and supply. For low star hotels, we've solidified our leading position continue to penetrate further into lower tier markets through the accelerated digitization process and offline traffic conversion. And next for our new initiatives segment. We continue to invest in key initiatives, Inspire Utility and Retail. In Q2, Meituan Select expanded our geographic coverage in China, while also deepening its penetration into the lower tier markets.
At the same time, we increased our coverage of both those counties that are less well off, providing hundreds of thousands of villagers opportunity to work as group leaders increase this residence income. For those who left their villages and now work in Larger Cities. Meituan Select rolled out a specific program that enables them to conveniently order grocery for their parents back in their hometown with just clicks of a button. Orders from this channel exceeded millions in just 1 month. We also achieved solid user growth by implementing new user acquisition methods, which included programs to build a During the summer, we built our nationwide code chain logistics to improve our product quality and user experience as well as further enable the quality delivery of fresh product produce.
Going forward, As we continue to channel our resources into developing our long term capability for products, supply chains and Logistic Networks. We will also further improve our operating efficiency. Importantly, We will abide by regulatory guidelines for business development and help to facilitate a healthy orderly and competitive environment. For Meituan Insta Shopping, We continue to increase the number of merchants and categories offered on our platform by deepening our relationship with FMCG Brands directly. We are helping them to achieve more efficient marketing and wider distribution.
Magazine vertical. We launched the Yellow Light project in Q2. By working with over 10,000 drugstores pharmacies. We can deliver medicine on 24 hours per day 7 days a week basis and solve people's most urgent medical needs at home. As we increase our brand awareness, Meituan Instant Shopping's user growth accelerated.
With its quarterly number of transactions and GTV growing north of 140% year over year. Average daily transactions reached 3,000,000 in Q2. And during the most recent Chinese Valentine's Day, Meituan Insta Shopping reached a peak daily transactions of more than 6,000,000. For Meituan Grocery, we completed our coverage expansion of existing Tier 1 cities, that's Beijing, Shanghai, Guangzhou and Shenzhen in Q2, growing GTV by over 280% and quarterly transacting user base by over 250 year over year. We also optimized our product structure and improved our warehousing and delivery logistics.
Importantly, we were able to increase the segment's order density in the warehouse, while also ensuring an optimal user experience. Going forward, to improve our long term unit economics, we will continue to enhance our supply chain and Logistic Capabilities as well as our operating efficiency. As China's leading e commerce platform for services, We have actively worked on ensuring more social responsibility and creating greater value while promoting common prosperity for the largest strategy, including our delivery riders, merchants, Consumers and Other Business Partners. In Q2, we strengthened our long term capabilities to help consumers Discover Better Services. We also work toward serving a greater number of merchants by ensuring consistent delivery experiences.
Our on demand delivery network. It's not only about the delivery of food. Meituan is the shortening covers a wide variety of categories, including medicines, flowers, groceries, gifts and so on. Through new initiatives, we brought more convenience, more value for money products to consumers in lower tier markets. We have to improve the logistical and delivery network of rural areas and streamline the distribution of products from this market.
Most importantly, We have not only continued to improve incentives of our delivery riders, but also actively taken their feedback into consideration to better organize our degree services. We also took steps to care for their personal and family well-being as well as their long term career path. During the recent unprecedented flash in Henan, our delivery riders Startup against this natural disaster and help consumers in their most urgent hours. In addition, our retail division opened up warehouse inventories in Zhengzhou, donating food and daily necessities to people in need. And our hotel booking division acted quickly arranged relevant hotels to provide emergency shelter for the public as well.
Our Meituan Charity Foundation donated RMB100 1,000,000 to provide a shelter and post disaster healthcare services for the cause. We would like to continue to do the best we can and contribute back to our society. Lastly, a series of regulatory policies and guidelines recently announced provided us clear directions on how to improve our business operations. We will abide by these guidelines strictly and carry out our social responsibilities proactively. The new regulatory environment change will allow us to better remind ourselves of our societal role and stimulate ourselves to innovate and better contribute to our society at the launch, using our Technology to empower and digitize offline businesses.
We hope to further contribute to the quality development of National Economies. While improving lives of our broader population, we will live up to the higher expectations Our government, society, merchants, gateway riders, consumers and more. We will continue to roll out Our plans for sustainable development, bring more employment opportunities to more markets, Boost consumption growth in less developed areas and carry out our carbon neutrality objectives in our daily operations. We will always have our social responsibilities at heart and do the best we can to contribute to the growth and common prosperity of broader society, always fulfilling our mission to help people eat better and eat better. With that, I will turn the call over to Xiaohui for an update on our latest financial results.
Please go ahead.
Thank you, Xin. Hello, everyone. I will now go through our Q2 financial results. In the Q2, our total revenue reached RMB43.8 billion, increasing by 77% year over year. On a year over year basis, our business segments achieved healthy growth as we recover from the COVID-nineteen pandemic.
As a percentage of total revenue, cost of revenue was 71.4% this quarter, increasing from 55.3 percent in the prior year and a decreasing from 80.5% in the prior quarter. Year over year increase was mainly attributable to the increase in food delivery related costs, in line with the increase in order volume continued development and exploration in our retail business. While the sequential decline was as a result of seasonality and improved fulfillment efficiency of our new initiatives. Meanwhile, We also allocate more resources to user incentives, employee benefits, as well as promotion and advertising. Selling and marketing expenses as a percentage of total revenue were 24.8% this quarter, increasing from 16.9% in the private year and the 19.5% in the private quarter.
R and D expenses as a percentage of total revenue decreased to 8.9% from 9.6 percent in the prior year and the 9.4% in the prior quarter, mainly due to our improved operating leverage. G and A expenses as a percentage of total revenue was stable, both on a quarter over quarter and a year over year basis at 4.7% in this quarter. Both our food delivery and in store hotel and travel segments maintained their steady growth in this quarter. As a result, the aggregate operating profit for both segments were RMB6.1 billion this quarter, increasing from RMB3.1 billion in the prior year and RMB3.9 billion in the prior quarter. Nevertheless, we recorded a total operating loss of RMB3.3 billion in this quarter, primarily due to the rapid expansion of our new businesses, Especially our retail businesses.
On a consolidated basis, our adjusted EBITDA and adjusted net profit client to negative RMB1.2 billion and negative RMB2.3 billion respectively in this quarter. Now moving on to our second reporting, starting with food delivery. Our strength in consumer base, merchant base and delivery network remained strong in this 2nd quarter, continuing to reinforce each other and enabling us to achieve solid growth. Both quarterly transaction users and quarterly purchase frequency Achieve Health's year over year growth in this quarter, stimulated by our enhanced marketing efficiency, effective membership program and optimized operations of different consumption scenarios. Meanwhile, we continue to onboard more high quality merchants as well as more immediate Sized Merchant.
This helped us to further diversify our platform selections and thus better satisfy consumers' ever growing demand. Line with these growth drivers. Our food delivery business order volume maintains strong growth momentum with the daily average number of food delivery transactions growing by 59% year over year to achieve a 2 year CAGR above 30%. By the end of June, The majority are merchants in all of the cities in China where we have direct operations and upped our new fee structure. It had a limited impact on the blended monetization rate of the delivery.
Monetization rate was stable on a year over year basis. However, decreased by 1.1 percentage point on a sequential basis, mainly due to a higher user incentives resulting seasonality and marketing strategy. Total delivery revenue was RMB23.1 billion in this quarter, representing a year over year increase of 59% and 2 year CAGR of 34%. Operating margin for food delivery is normally the highest during the Q2 of the year as a sufficient delivery capacity and less delivery incentive due to the favorable weather conditions. As such, during the quarter, both operating profit and operating margin improved meaningfully on a sequential basis to RMB2.4 billion and 10.6 percent respectively, partially offset by the higher user input ratio.
In addition, our business scale continues to grow and the daily average order volume surpassed 38,900,000 orders in this quarter, further improving our order density. Better economics of scale and improved capacity mobilization also contributes to a higher operating margin for our 4th delivery segment on a year over year basis. Now turning to our 2nd segment. In Q2, our in store hotel and travel business continued to achieve outstanding goals. Segment's quarterly revenue growing at 89.3% year over year.
Notably, Our in stock business transaction volume, GTV and revenue all reached historic highs, achieving 2 year CAGR of 38%, 40% and 33%, respectively. Our average focus on expanding our service variety, diversifying our merchant supply and launching various theme based promotion campaigns has enabled us to capture consumers' explosive demand for local services. Meanwhile, to meet the marketing needs of merchants in different industries. We have continued to diversify our transaction based products. This helped merchants promote higher transaction frequency and better user acquisition on our platform in this quarter.
As a result, our MSOP segment's 2 year CAGR for commission revenue reached 37% in this quarter. While local services merchants also display higher marketing demand as their business further recovers to encourage more small and medium restaurant merchants to try and use our advertising products. We continue to lower the price for subscription based products, driving the adoption rate of our subscription based services even higher in this quarter. In the meantime, More merchants also adopted our CTC advertising products this quarter, increasing the 2 year payer of our CTC advertising revenue to more than 40 5%. With respect to our hotel business, although the broader industry has not yet fully recovered due to the currencies of the pandemic.
Our domestic room nights increased by 81% year over year in this quarter. This was largely due to our structural advantages and the strategic focus in the domestic market and the intercity travel scenario as well as our strong performance during the Labor Day holiday season. Meanwhile, the contribution from high stock hotels also further increased a year over year basis as we continue to strengthen our collaborations with hotels in this segment, enhance our customer service quality, improve our client strategy and step up our platform incentives. Operating profit and operating margin for our in store hotel and travel business increased to RMB3.7 billion and 42.6 percent respectively. This sequential improvement was mainly attributable to the increase in business scale, Driven by seasonality and certain holiday promotional campaigns, partially offset by increase in user incentives for our hotel business.
With the strong recovery from COVID-nineteen and improved operating leverage, this segment's operating profit and operating margin growth improved on a year over year basis. Let's now turn to our 3rd segment, new initiatives and others. During the period, revenue in this segment increased by 113.6 percent to RMB12 1,000,000,000, Driven by both the recovery from COVID-nineteen pandemic and the continuous development of our new initiatives to satisfy consumers' growing needs. The increase in revenue mainly came from retail business, B2B food distribution services and bike sharing and more pet business services. Operating loss for this segment expanded to negative RMB9.2 billion in this quarter from negative RMB8 1,000,000,000 in the last quarter.
Our operating margin improved by 4.8 percentage points quarter over quarter to negative 36.8%. Our repair business, especially our community commerce business, continue to be our largest area of investment this quarter. As a result, operating loss for our community e commerce business further widened on a sequential basis As we continue to expand this business scale, additionally, while we're continuing to cultivate consumer habits and expand our good leader base To incentives, we also continue to make substantial investment in further enhancing our supply chain and fulfillment in areas such CoChain facilities, supply chain digitization and more. The combination of our increasing business scale and this investment led a noticeable increase in our community count business losses during this quarter. However, we are pleased to see that we achieved gradual improvement in overall unit numbers of our community count business during the quarter.
We were also delighted to see the operating margin of both Meituan Instant Shopping and Meituan Grocery improved on a sequential basis, driven by operating efficiency improvement. Now turning to our cash position. As of June 30, 2021, our cash, cash equivalents and short term investments were to RMB RMB122.5 billion. Additionally, during the quarter, our operating cash flow reduced to RMB2.9 billion RMB5.6 billion for the same period of 2020, which was primarily attributable to our increased losses before income tax. To conclude my prepared remarks, I would like to highlight several things.
First, despite the recent regulatory changes, We believe that the industry outlook of our core business remain intact for the long term. 2nd, We have already witnessed positive progress across our new initiative today, especially for our retail business. As we explore various new initiatives, we will maintain a committed, a flexible investment pace, closely monitor the key metrics of each business line and continuously assess our progress. Lastly, while continuing to contribute in the real economy growth with Technology Innovation. We will continue to attend to the common interest and long term growth of merchants and other parties on platform.
It's our primary goal. We will continue to optimize our operating efficiency, while focusing on long term return and creating great value to the society.
We have the first question, this is coming from the line of Ronald Keung from Goldman Sachs. Please go ahead.
Thank you. Thank you, Shingo, Shaohui, Scarlett and team. I would like to ask on regulations that how do management think of the current business dynamics in this regulatory environment? Are there any adjustments to your current business operations or even profit outlook for each of the segments in food delivery, in store, community e commerce and how will you strike the balance between social responsibility and business efficiency? Thank you.
Okay. Thanks, Ronald. So I would like to cover some macro thinking Because recently there has been a lot of changes, so people are concerned. But everything happens for a reason. So I would like to say all for common prosperity.
I would even like to say common prosperity is built in the gene of Meituan. Actually, it's even in the name of Meituan, because the name Meituan consists of 2 Chinese characters. When I need to explain the name Meituan to people who don't speak Mandarin, sometimes I say Mei, the first character means good or better and the second character, tuan, means together. So, Meituan means Better Together. So the comment has always been baked into our dream.
With that, let's turn to our businesses. So recently, we have seen regulators introduce a series of regulations on the Internet sector, focusing on assets ranging from antitrust, data security, community e commerce and so The government's supervision and the public concerns and the voices of our partners, including merchants and data providers, Both warning and motivating for us. They present higher expectations for us from the interruptions. We believe that this regulatory change are good for the sustainable development and orderly growth of the Internet Platform Economy. It promotes fair competition Development.
This is not just in China. We see similar regulation trends globally as well. We will continue to actively implement compliance requirements and improve internal control mechanism across all our businesses, conduct in-depth sales review and actively rectify any issues to ensure full business compliance and to avert the risk. We have always maintained strict standards for data security and privacy protection. We will continue to strictly protect the user data in future.
In terms of our delivery services, we have prohibited any use of an inclusive partnership and we will be firmly against. We will fully respect the merchants' choices and closely attend to the worker situation Welfare of Delivery Writers. For the retail business, we have actively adjusted our pricing strategy And we'll grow our business with the long term development. Although fine tuning our business will inevitably bring some sequential subsequent potential impacts in the short term. We believe that these adjustments are our best options and will benefit us in the longer run.
Meituan is never meant to be a traditional Internet company. We are a platform that empowers offline services. Compared to some peers, we are not a company that focuses on margins. The fulfillment cost and expenses to support our delivery network and retail services are actually quite substantial. And we have made a considerable investment in the ecosystem.
The short term profits has never been Meituan's philosophy. We focus more on generating long term value, creating social output and driving Huawei's fulfillment to help people eat better and live better. Therefore, compliance, social responsibility and business development Our goal to run our business with a healthy long term development remains unchanged. Although we have some impact actions during our Growth. We will work hard to rectify any issues we may have and always strive to improve ourselves.
Our purpose remains unchanged and we are confident that we can create greater social value while achieving greater team. Through technology innovation, we will continue to generate and the great quality employment opportunities and bring convenience to consumers' life. We will help accelerate the industry distribution and help small or medium sized merchants operate more efficiently And collectively create a more active, open and diversified market. We will also continue to bring more efficient logistics network and digital supplies to rural areas, Allowing farmers to increase their income and contribution to rural revitalization. Furthermore, we will continue to promote carbon neutrality through back e mopeds and sharing businesses Future Sustainable Development.
We will leverage our advantages at the technology platform I have people from all walks of life enjoy the benefit of digital economy as the mission our mission remained unchanged to help people eat better and live better. Thank you. Thank you, Singe.
We have the next question. This is coming from Jiang Yap from Citix. Please go ahead.
Okay. Thank you, management. My question is also about the regulations. And how do you view the recent regulatory guidelines on protecting workers and the new forms of employment and as well as the guidelines on protecting delivery riders, since it's for 4 delivery companies. In Chinese also and how will you adjust to deliver the right management and the welfare.
Thank you.
Thank you, Jianya. Once the policy guidelines were published, our management team conducted an in-depth study of the next line documents. We believe that the guideline have taken into consideration the holistic view of new home of labor relations such as, database writers. It clarifies the rights, obligations of all parties introduces a series of practical new measures. So these are important to promoting a sustainable and healthy development of the on demand delivery industry.
We have set up a special working group to go through the guidelines, self examining and self improve based on our current practice. At present, We have resolved some of the problems and improved some of our practices. The others are also in work Work in Progress. We will strictly follow the guidelines on the authorities and actively fulfill our responsibilities and make a greater effort to protect the rights of delivery riders, Labor Relations. At present, we have taken the lead in responding to the government's call to prevent and solve occupational injury risk, adjust riders' worries by actively participating in the pilot program for implementing delivery riders' occupational injury insurance.
Going forward, we will operate with the authorities to provide a more comprehensive welfare scheme to the delivery rider group and promote the high quality and healthy industry development. In terms of improving delivery of the experiences, we will continue to upgrade our intelligent Expansion System with the policy guidelines. We will improve the flexibility of delivery time by adopting different operational strategies and taking into consideration unfavorable or untangible factors. To provide a rider Reasonable Rest During Long Working Hours. We will adjust our order system and introduce compulsory brakes for delivery riders.
We will continue to provide better equipments and services such as smart helmet and battery change service to deliver riders' personal safety and improve their work convenience. We are paying very close attention to delivery riders' feedbacks And continue to improve the provider's work environments. We will also continue to broaden the channel for the DDAB Audio Mall panel sessions, product experience workshop and field research and more. In order to help delivery riders with their long term career development, we initiated Delivery Station Manager, that's in Chinese. By opening up a promotional channel for high potential business.
This program equips them to be station managers or delivery partner managers and so on. Meanwhile, we are cooperating with a vocational and national open institution and to help digital providers upgrade their occupational skills and academic degrees, improve their careers with switch mechanisms and Achieve More Diversified Career Development Goals. The policies and guidelines issued by authorities. This time, have provided Meituan with a more specific direction and a clearer policy path, Which is an accomplishment and also motivation for the implant degree industry, a new form of employment. We will definitely work hard to improve ourselves, set an example in the on demand delivery industry with our own actions and promoting the healthy and sustainable development company, the on demand delivery industry and the food delivery industry.
Thank
you. Thank you.
We have the next question. This is coming from Eddie Jiang from Bank of America Merrill Lynch. Please go ahead.
Good evening. About regulation, just wondering if you could share some color with us on the long term duty economics of the food delivery business given various regulation changes. And then separately, I think Singe, you mentioned technology early on to improve efficiency. So could you give us some color on the progress and any potential benefits that we can see in the coming years. And perhaps just finally, Any color on the potential impact from data related regulation on our marketing solution and marketing revenue.
Thank you.
Thank you, Eddie. Yes, I will take the first question on the UE packet and technology progress. Despite the increase of rider cost in the future with better welfare for the driver, we believe that improved the welfare will help us improve liver rider retention rate on our platform and not promote the healthy development of the industry in the long run. Therefore, we remain confident on the Yiwi target of the delivery. And we believe We will further improve our delivery efficiency across the different way.
For example, we will more widely adopted mid delivery model such as the intelligent lockers, which proved to have short term delivery time operating areas while ensuring the good experience of both the dealer riders and consumers. In the meanwhile, Autonomous delivery has been our key R and D focus to improve delivery efficiency. We have actively invented and designed both autonomous delivered vehicles and delivered drones over the past few years, as we believe that once widely applied, it could make significant positive impact businesses. We aim to construct a comprehensive on demand delivery network with autonomous delivery, like supplements where our delivery riders and effectively improve the overall efficiency in future. As of now, our autonomous delivery has been deployed Beijing for over a year, accumulating nearly 50,000 delivery orders to date.
In April this year, we launched the latest edition of our self developed autonomous delivery vehicles and is set to deploy more widely over the next 3 years. In July, we officially launched autonomous delivery drones. We have tested and developed our drone services for over 3 years now and has finally joined for actual orders since the start of this year. As of duty, we have accumulated over 2,500 legal orders and 220,000 tech slides within June. During the period of pandemic is current in Guangdong, we used drones to establish an air channel for transporting urban materials in Shenzhen, Nanshan District, delivering most important residential supplies to residents in this area.
We also use our autonomous delivery vehicles to deliver essential supplies to parent time people during the Coverings in Nanjing and Chengdu. We have also made investments to support the joint delivery startups, and we are actively contributing to the development of the field through in house R and D and our investment. Overall, we believe that we have a market approach to further improve delivery efficiency while increase order density in future. We are confident that we can undertake more social responsibility by achieving our long term target for the brewer business.
And Xiaohui, any impact on marketing solution given data related regulation?
Yes, sure. Yes, I think first, we have carefully monitored the new policy related to that. We think it's in line with the company's philosophy and policy that We should always have patience and predict our user privacy and all the data accumulated to our platform. So I think we complete understand the rationale behind their new policy and we are Although what their latest required. Overall, we think this is the right move for the overall industry and potentially we'll have positive impact on the industry in the long term.
Also I think sector for fair competition in the industry for more health competition. We will continue to assess impact on us and we are all the regulators required. Thank you.
Thank you.
We have the next question. This is coming from Alex Yao from JPMorgan. Please go ahead.
Thank you management for taking my question. Congratulations on a strong quarter. I have a couple of questions on ride sharing or shared mobility business. We noticed that Meituan has recently increased its investment in self operated ridesharing business. How do you see the opportunities in this industry going forward?
Is there any business strategy updates you can share with us? And how much should we expect you to further invest into this business in the near future? On the longer term view, what is your expectation on profitability for the ride sharing services? And lastly, Any comments on recent regulators' guideline on commission rate cap? Thank you very much.
Okay. Thank you, Alex. So, ridesharing is, as we know, high frequency mass market category. It has been one of our continuous experiments Monthly Categories. We believe it has the potential.
We started our leisurely business Wow, 4 years more than 4 years ago, through the self operated model. And then we further expanded geographic coverage through aggregate EBITDA model because aggregate model is lighter. And our aggregate model has significantly expanded ride supply during the past few quarters. While our self operated model brings a better user experience by providing a stable and better control to ride the supply, especially during the peak hours. Last year, we only run self operated module in 2 cities, that's Shanghai, Jing.
And however, we now believe that both our credibility market environment and have reached the point that we can expand our operating model in some more cities where we already have operations to aggregate that model. So since July, we have further rolled out our self operated model in more than 30 cities. On the operational side, we were through those cities that are strategically important to run self Operator Model. While we continue to encourage drivers to cooperate with us to expand our capacity and enhanced supply quality. We are also refining our marketing options to boost the business growth.
In the short term, marketing expenses will increase, but we expand on a bit of scale, and we will maintain Financial Discipline to achieve a sustainable growth. The Ministry of Transportation recently commented that ride sharing companies need to restrict their commission rate on drivers. Once there is a further guideline on the cap, we Jupyteri. Currently, our commission rate complies with industry standards and vary from region to region and time to time. We are still at an exploring state for leisurely business, and we will control our costs to reasonable levels.
We do not expect to have a significant impact on our operation. After analyzing other rational business both in China and also in other countries, We still believe our advisory business has potential to scale and have a reasonable long term prospect through the continuous improvement of its operating efficiency. We'll collaborate our user base to develop a ride sharing business and can also cross sell other Beituan services to our ride sharing users. Also, We believe that in the long run, the combination of ride sharing and autonomous driving can create a more social and economic value for society. We are not focused on short term performance, but rather the long term value that the ride sharing creates for the broader community.
That's all. Thank you.
We have the next question, which is coming from Thomas Chong from Jefferies. Please go ahead.
Hi, good evening. Thanks management for taking my questions. After completing the rational coverage, we saw May Plan Select order growth slow time in recent months. I think it's partially due to more rational product pricing and also because the company increased its investments Co Chain capabilities during the summer. Has we seen anything change from our previous expectation after we started Community E Commerce Business for a year now.
And is there any adjustment to our thinking on the addressable market? And do we expect to significantly lower our growth target and investments in Meituan Ciele? And what's the key business strategy for community e commerce business going forward. Thank you.
Thank you, Thomas. The recent regulatory guidelines give industry players a clear direction And the industry puts more focus on improving long term capabilities such as product sourcing, SKU Management, Supply Chain and Logistic Network and Promote Healthy Industry Growth. For us, for me, we have actively addressed the regulatory guidance in reassessing our pricing strategy. We will strengthen our competence by focusing on efficient improvement and better consumer service. By delivering a more superior music experience, we can reinforce our consumer management and brand awareness as we optimize SKU selection and control product quality and ensure timely delivery.
We are still very confident about the upside in penetration rate and prospect of community e commerce in the long run. We believe that the industry will drive the industry towards a healthier and more sustainable growth. It is a great opportunity for us to tap into the physical e commerce and the broader consumer retail market. Through operating this business over the past year, we are more convinced of how this business can help residents in lower tier markets We fully recognize the capacity of this business operation. In order to ensure high quality consumer experience of community commerce, we need to build up a multi dimensional capability and stay patient as we invest decisively and run rapidly and continue to iterate.
During the past quarter, we expanded Meituan's debt geographically and deepened the penetration into lower tier markets. Meanwhile, we have built up our coaching capability nationwide using different fulfillment strategy for fresh produce and frozen products. Our culture and logistics In the traditional off season of retail market in the second quarter. We were able to further improve our supply chain capabilities and logistics Board. We will continuously improve operational efficiency and iterate the business model, Assess our progress on a continuous basis based on ROI with long term oriented strategy despite a short term mortality.
Overall, there are some fluctuations for me to reflect due to the Regulation Guidelines and Seasonality. I will remain positive on the healthy growth of the company's business. Although it may take longer to achieve our long term before the business has not changed, We'll follow regulation instructions to optimize our pricing strategy and build up our long term capabilities. We'll gradually improve Meituan's competitiveness and operation efficiency in the run. So in short, I would believe that And it's huge, but the penetration will take time.
Thank you.
Thank you.
Thank you. We have the next question, which is coming from the line of Kenneth Fong from Credit Suisse. Please go ahead.
Hi, good evening management. Thank you for taking my question. The in store hotel and travel segment continue to achieve a high growth this quarter. So what is the expectation for this segment in a longer term sustainable growth rate as well as stability. And for Q3, how should we think about the impact from the recurrence of the COVID-nineteen cases in China?
Thank you.
Thank you, Tianyin. Thank you for raising the question about install segment. We were pleased to see that the GTV, our 2nd segment, achieved a 3 digit year over year growth rate in Q2, represent a 2 year CAGR in the high 30s. GTV growth acceleration led to increases in transaction based revenue, Biopetection revenue also achieved a commendable growth, thanks to merchant business recovery. Recently, cases of the Delta Rands occurred in quite a few Chinese cities, never renewed the features of a certain area.
We noticed that the restaurant daily revenue dropped meaningfully month by month in August and the hotel occupancy rate also decreased to levels below the same period in 2019. As a result, we estimate reasonable negative impact to our second segment in August. The measures for pandemic prevention and control by local government have been effective And also become more routine. Therefore, we believe that the impact on our business may not last for too long and our in store and hotel segment We'll continue to have resilient growth in 2021. We remain highly confident in this segment's long term potential.
There are 14,000,000 local merchants in China. We only penetrate 2,400,000 non hotel paying merchants, which implies ample room for future growth. In future, our business development team will continue to expand our online merchant base. We will also leverage our user insights alongside the carbon consumption trend to bring more service categories online. To attract more young consumers, we will explore more interactive media types, provide them with high quality supply as well as trusted and X-ray recommendation.
As a result, we will be able to provide more services and apps that meet consumers' preference and diversify needs, while also improving user engagement and frequency. For our merchants, we will build a wider array of transaction based products and self-service tools to help them accelerate TV growth and optimize their online operations. We believe that more merchants will choose our diversified advertising product in the future driving up growth. We will also plan on using more self owned business development team versus third party agency, which will help improve our penetration rate in lower tier markets. For our hotel and travel segment, We have long established advantage in low star hotels and target to better set higher e star hotel users to improve our segment market share and ADR.
With all the above measures and the expectation of steadily growing domestic consumption, we believe that this segment has the potential to maintain a revenue growth of over 35% over the next 5 years with healthy margins. Thank you. Thank you very much.
Thank you. We have the next question coming from the line of Gary Yu from Morgan Stanley. Please go ahead.
Hi. Thank you management team for the opportunity to ask question. Most of my question has been already addressed, but I have one last one on retail business. Looks like we have increased our investment in Meituan Insta Shopping and also Meituan Grocery in the past couple of quarters. Is there any recent update on the strategies and also priorities?
And how do you assess the kind of long term profitability of these two businesses as well as value to Meituan. Thank you. Yes, sure.
So retailing music focus, including Meituan Select, Meituan Instant Shopping and Meituan Go Authority. For Meituan Select, is a scenario small for preorder group purchase model. While Meituan is the shopping and Meituan Broaderie provide a 30 minute delivery services to consumers. Our platform continue to convert high quality for delivery users Shopping, which drove the high growth in Q2. As further increasing SKUs and optimizing product structure.
We maintain rapid year over year growth in auto volume. Through holidays such as May 20 and our 24thimeseven Magazine Delivery, which further cultivate consumer My Shares as the go to platform for on demand delivery service that brings everything to their doorstep. Flowers and the medicine achieved very high growth with GTV for flower growing by 2 50% year over year and medicine growing by 3 45% year over year in Q2. Over the next few quarters, we will continue to invest in Meituan and disruption by expanding our product categories and SKUs. We will further strengthen our cooperation with top brands, local supermarkets, convenience stores, flower shop, pharmacies and mall local merchants and continue cultivate consumer mind share.
Meituan Instant Shopping is a way for us to extend our on demand delivery consumption scenarios from restaurant food to more diverse categories. We not only increased the transaction frequency and up of existing medium to high frequency for delivery users on our platform. I also include the efficiency of our delivery network. We believe that Every order volume of Meituan Instant Shopping has potential to achieve over 10,000,000 in the long run, While economies scale will help us to long term profitability. Our delivery capacity between main financing and shopping and food delivery complement each other And it's a clear advantage for us to further increase order density and drive our on demand delivery network efficiency.
We will continue to convert more frequent food delivery users to using Meituan Instant Shopping. For Meituan Grocery, is our self operating front distribution warehouse model. We essentially complete our coverage expansion in the 4 Tier 1 cities in the Q2. Order volume grew close to 3 50% year over year. In terms of the business model, we believe that the online grocery market is large diverse NAB for different models coexist and meet varying needs for different users in different markets.
Compared to community common, the front distribution warehouse model focused on meeting the needs of users in higher tier cities. Meituan grocery can provide users with on demand delivery by utilizing our advantage and delivery network while offering wider range of attractive high quality products. Over the past quarter, we continue to accelerate our operational capability of Meituan's growth rate, including first, adjusted warehouse capacity for a portion of our warehouse based on user needs and optimize the strategy and product selection, marketing, warehousing and delivery operations. 2nd, further itinerary supply chain capabilities to expand our SKU offering. 3rd, strengthen our promotional capabilities to continue to capture users' mind share 4th, continue to improve operation and delivery capabilities while free overall efficiency.
Similar to other players in the market, our operating loss of fund distribution warehouse model is still relatively high, But we believe that with further enhanced order frequency, optimized SKU offerings and improved delivery method, order density and AOV for Meituan's grocery will will continue to increase and overall profitability of the business will continue to improve this economic scale.
Thank you.
Thank you.
Thank you. We have no further questions at the moment. I would like to hand the conference back to Scarlett Xu. Please take over.
Okay. Thank you everyone for joining our call. We're looking forward to speaking with you next quarter. Thank you.
Thank you, everyone.
Thank you. That concludes our conference call for today. Thank you all for your participation. You may disconnect now.