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Analysys: In 2015 Q4, crossover competition occurred among China’s online vacation travel market, and Tuniu.com first exceeded Ctrip.com by market share
In 2015 Q4, China’s online vacation travel market realized a transaction size of RMB12,997 million, a fall of 29.9% quarter on quarter or a rise of 54.3% year on year, showed in the Quarterly Monitoring Report on China’s Online Vacation Travel Market 2015 Q4 published by Analysys Industry Database.
  • 22 Apr, 2016
  • Travel
  • 745
Analysys Insight:
In 2015 Q4, China’s online vacation travel market realized a transaction size of RMB12,997 million, a fall of 29.9% quarter on quarter or a rise of 54.3% year on year, showed in the Quarterly Monitoring Report on China’s Online Vacation Travel Market 2015 Q4 published by Analysys Industry Database.
 
In the opinion of Analysys, the market size fell back compared to Q3 in Q4 due to the seasonal factor, but still maintained a high growth rate. In 2015 H2, the market mainly presented the following three trends:
1. Online vacation travel agencies accelerated offshore expansion and expanded destination coverage
Chinese residents now became more mature in travel consumption, changed the concept from “sightseeing” to “recreation”, and mainly selected self-service travel. Thus, destination service became a crucial factor affecting consumers’ decisions. Major online vacation travel agencies raced to strengthen the offline service system. By 2014 Q4, Tuniu.com had set up 160 service centers nationwide covering over 200 departure cities, and opened service centers in Maldives, Bali and other destinations in the Southeast Asia. Lvmama.com had established over 30 branches and opened more than 100 offline outlets. Ly.com had covered over 20 provinces and 100 cities nationwide with its offline service system.
2. Streamlined the supply chain of travel products and increased the proportion of direct procurement
The migration of travel resources to the Internet also geared up amid constant increase in the Internet penetration rate of the vacation travel market. Online vacation travel agencies strengthened direct procurement, streamlined past hierarchical procurement procedure for travel products, and increased the efficiency of the supply chain. Besides, they reduced the cost, enlarged the profit space, and further improved the efficiency of reacting to changes in user demands on the resource side. At present, Tuniu.com has increased the share of direct procurement to above 30%, and Lvmama.com has also made the plan to boost the ratio to 70% over the following two years.
3. Crossover cooperation happened frequently, and market competition evolved towards brand building
As Chinese travel consumers got increasingly mature, the experience factor took a rising proportion in consumer decision. In this context, the competition in the online vacation travel market gradually terminated price competition but evolved towards multiple levels stressing brands. Tuniu.com, Lvmama.com, Ly.com and other vendors spent a lot of money on entitling or cooperating with entertainment programs. They even established film studios and produced travel TV programs to convey their cultural strengths and strengthen brand building. At the same time, Tuniu.com, Ly.com and other vendors made foray into the financial service industry, further strengthened their platform service capacity and enhanced their brand image by strengthening the supply chain finance and consumer finance, and increasing the online transaction efficiency of the supply side and consumers.
 
 
In 2015 Q4, Tuniu.com and Ctrip.com still took the lead by market share. Tuniu.com first overtook Ctrip.com with a market share of 26.2%, which was higher than that of Ctrip.com by 2.6 percentage points. In 2015 Q4, Tuniu.com and Ctrip.com took a combined market share of 49.8% and ranked in the first echelon with obvious advantages over rivals.
In 2015 Q4, Tuniu.com realized a transaction size of RMB3.4 billion, a jump of 132.5%, maintained a higher robust growth momentum than other rivals, and increased its market share from 17.4% in 2014 Q4 to 26.2% in 2015 Q4. In November 2015, HNA Tourism Group declared to invest USD500 million in Tuniu.com, and would supplement offline resources of Tuniu.com with its aviation, hotel, travel wholesale and other travel resources, which will further enhance the service capacity of Tuniu.com.
In 2015 Q4, Ctrip.com realized a transaction size of RMB3.07 billion, a rise of 40.2% year on year. After acquiring Elong.com and Qunar.com, two arch rivals, Ctrip.com took the absolute leading position in air ticket, hotel and other standard products. The new Ctrip.com family has rich supplier resources, which lays a solid foundation for developing the vacation travel business. In November 2015, Ctrip.com declared to merge its group travel, free travel and yacht units into the vacation unit. In future, Ctrip.com will establish a collaborative business mix and mainly strengthen the spending on the vacation travel business.
In 2015 Q4, Lvmama.com and Ly.com realized a transaction size of RMB1.52 billion and RMB1.47 billion respectively, and still ranked in the second echelon.
Backed with the major asset in the scenic culture, Lvmama.com went public on the new third board in December 2015 and became the first O2O travel agency that had gone public in China’s domestic capital market. In 2015 Q4, Lvmama.com further strengthened the implementation of the O2O strategy. By 2015 Q4, it had set up over 30 subsidiaries covering more than 60 cities nationwide. In future, it will continuously integrate online and offline resources and strengthen the O2O system.
In 2015 Q4, Ly.com attacked the financial and film service market by establishing LY Financial Services, and launched its first demand wealth management product – LY Pal to improve the user experience by strengthening the added services of the supply chain.
In the opinion of Analysys, competition will further escalate in China’s online vacation travel market in 2016, and mainly happen in the offshore resource and outbound travel areas. At the same time, the market will see more vertical M&A cases between players and along the industrial chain than in 2015 as well as a further increase in market concentration.
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