Insight
Online tourism market sees consolidation trend
Last Updated: 2017-01-10 08:21 | CE.cn
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By Zheng Bin

Recently, Ctrip announced that Qunar was merged by Ctrip Travel, which was another big step for Ctrip to integrate the "ecosystem" of online holiday market in over a month, following its strategic investment in Traveling Bestone and strategic cooperation with three American travel agencies. Previously, Tongcheng Tourism announced with Wanda Group that the Wanda Tourism of Wanda Group was merged and reorganized by Tongcheng International Tourism of Tongcheng Tourism to realize online to offline (OTO) integrative development in a full scale.

"It is widely acknowledged in the industry that there are online and offline advantages respectively." An insider expressed that integration has become a general trend, the prospect will be poorer and poorer if online or offline operation is depended upon singly, and no enterprise can get success without a full OTO combination.

Creating an ecosystem by integrating three parties

With the advent of the era of mass tourism, holiday travel, following traditional sightseeing tour, is showing a vigorous development momentum, so is the online tourism market. Chinese online holiday market reached a scale of RMB 70.07 billion yuan in 2015, realizing a year-on-year growth of 56.1 percent and accounting for 16.2 percent of the whole online tourism market, according to the statistical data by National Tourism Administration.

Based on this, a quarter management meeting was held among the holiday teams of Ctrip, Qunar and Traveling Bestone in Shanghai to promote docking in products, technology, sales, marketing and other aspects. The online operation after system docking means that full integration in the holiday area was started among Chinese three major OTO tourist enterprises after Ctrip made a strategic investment in Qunar and Traveling Bestone.

Ctrip ,Qunar and Traveling Bestone have complementary advantages and could promote the development of tourism sector effectively upon cooperation, according to an expert. Ctrip has a large share in the holiday market, leads the industry in respect of products, services, technologies and so on, and has a strong brand appeal in the first-tier cities; Traveling Bestone is among the biggest travel group-forming organizations in China and has a wide range of offline sales channels in the second-, third- and fourth-tier cities; Qunar has numerous users and large online traffic and is influential for market in the second- and third-tier cities as well as young casual users.

According to Yang Tao, senior vice president of Ctrip and CEO of Ctrip Travel, the three parties' integration in the holiday area is not a "burn" mode, but it is aimed to "establish a tourism ecosystem centering efficiency and innovation". The reporter noticed that Ctrip is the only sustainably profitable online tourist enterprise currently. Ctrip's net income in the third quarter of 2016 was RMB 5.6 billion yuan, with a year-on-year growth of 75 percent; in detail, the operating revenue of tourism business was RMB 813 million yuan, with a year-on-year growth of 37 percent. Qunar also made a profit in that quarter.

Integration value highlighted in merger

As indicated in the "ecosystem" of Ctrip, merger is a win-win choice for both parties. Since 2015, many online and offline travel agencies have announced to make merger or deep collaboration. On one hand, offline travel agencies have been permeating the Internet through capitalization operation; on the other hand, online enterprises have been establishing their own offline service centers to improve the service quality and quality control of their offline products, both of which can make mutual benefit and achieve win-win results through bilateral integration development.

Not long ago, Tongcheng Tourism announced with Wanda Group that the Wanda Tourism of Wanda Group was merged and reorganized by Tongcheng International Tourism of Tongcheng Tourism to realize online to offline (OTO) integrative development in a full scale. It is generally believed in the industry that Tongcheng Tourism, starting from OTA lacks offline resources, especially destination resources, while Wanda is exactly among the enterprises with the richest tourism resources in China. Both parties can transform the disadvantage in terms of resources into an advantage by capital operation and business collaboration to establish a complete value chain and grasp the first chance in the future industrial competition.

Yang Yanfeng, an associate researcher of China Tourism Academy, believes that in the future, the boundary between online tourism and offline tourism will be more and more fuzzy, and the market of travel agencies will tend to be complex.

Speeding up globalization layout

"In order to stand on the international stage, online tourist enterprises shall stop internecine struggle earliest and get rid of the price war which results in cut-throat competition. And the O2O competition based on online information efficiency and offline resources layout will become a new normal," said Liu Zhaohui, founder & CEO of Tripvivid.

Compared with the performance of world top 10 online travel companies in the United States, the online tourist enterprises in China still have a long way to go. There are common shortages for domestic online enterprises in terms of internationalization layout. TripAdvisor has 19 subsidiary tourism media brands and the 12 brands subordinated to Expedia have 150 travel booking points in 70 countries across the world. By contrast, the global development of Chinese online travel companies is really slow. Ctrip can only provide services in 9 languages now, and Tuniu launched its English client of N-Booking for Overseas suppliers just now.

However, domestic online tourist enterprises have begun to make efforts. Fliggy makes a strategic cooperation named "Fliggy·Tour in Singapore" with Singapore Tourism Board, establishing its first station for global layout. Local enterprises in Singapore with airline, hotel, scenic spot, theme park and other tourism resources open their chain stores on the website of Fliggy successively, showing Chinese tourists their high-quality tourism products directly. At the same time, Future Hotel and Future Scenic Spot can also be found in Singapore successively in the future.

Besides, Tongcheng also focus on "outbound tourism", and from last October, it has successively purchased Nantong Brilliant International Travel Agency, Shanghai Meichen international travel agency and Guangzhou Chuangyou International Travel Agency Co., Ltd. which have qualification of outbound tourism. Also, Tongcheng has made strategic cooperation with Japan HIS Co., Ltd. and South Korean Lotte Tourism Co., Ltd. respectively to set up joint venture subsidiaries in Japan and South Korea separately, and it will extend Chinese outbound tourism market with TripAdvisor.

Besides, Ctrip is also accelerating its internationalization development, which not only invests in Travelfusion - a British cheap airline distribution system - and MakeMyTrip - Indian largest online tourist enterprise - successively, but also perfects its Outbound tourism market and globalization layout for travel by investing in U-tour and China Eastern Airlines. At the same time, Ctrip also launched its global leadership program. Sun Jie, CEO of Ctrip, said that Ctrip "will realize globalization" and will also make globalized partners.

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