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Analysys: In 2015 Q4, capital propelled resource integration and major large travel groups quickly expanded in China’s online tourism market
In 2015 Q4, China’s online travel market realized a transaction size of RM135.4 billion, a rise of 54.4% year on year, showed in the Quarterly Monitoring Report on China’s Online Travel Market 2015 Q4 published by Analysys Industry Database.
  • 22 Apr, 2016
  • Travel
  • 1148
Analysys Insight:
In 2015 Q4, China’s online travel market realized a transaction size of RM135.4 billion, a rise of 54.4% year on year, showed in the Quarterly Monitoring Report on China’s Online Travel Market 2015 Q4 published by Analysys Industry Database.
The market remained at the fast-growing stage, maintained a high year-on-year growth rate above 50%, and presented the characteristic of accelerating resource integration in 2015 Q4:
As to online players, Ctrip.com and Qunar.com merged, as to offline players, Jinjiang International bought Planeto.com, and as to online-offline integration, HNA Tourism Group invested in a number of online platforms, and Ly.com bought several offline travel agencies. These cases reflected that in the context of the overall liquidity tightening in 2015 H2, the market assembled resources to support development needs, utilized resources on a large scale to save the development cost, and come to a new growth stage.
In the opinion of Analysys, China’s online travel market has shaped a large user base on the channel side through continuous improvement of the online reservation experience and extensive marketing spending. In this context, it will emerge as a new major area to improve the design flow and efficiency of offline travel products with the Internet technology and lift the service level. The online-offline integration will promote China’s tourism industry to lift the overall Internet penetration level, and improve the efficiency of the travel industry and user experience level.
1. Online traffic reservation market was the largest segment by transaction size
In 2015 Q4, the online traffic reservation still contributed a majority share, 72% of the total transaction size. In detail, the online air ticket reservation was the major product type and contributed nearly 90% of the transaction size of traffic products. The online train ticket reservation has grown quickly over the past years, because the high-speed railway network has covered major tier-1 and tier-2 cities, and promoted rapid growth of railway passengers with convenient and quick service as well as high service frequency. Also, China Railway Corporation has continuously strengthened the Internet ticket sale and supporting system, which has driven rapid growth of the online train ticket reservation.
2. The online hotel reservation market upgraded user experience by migrating the supply side to the Internet
The online hotel reservation market contributed 18.4% of the transaction size, and in Q4, competition remained very furious among major online hotel reservation agencies on the supply side. The new Ctrip.com family took the absolute leading position by user base, strengthened the negotiating power on the supply size and increased the hotel reservation efficiency through Jointwisdom.com and other information systems. Trip.taobao.com improved the Internet-based hotel reservation through PMS direct connection, further simplified the sign-in procedure for users by further promoting the credit living service, and reinforced the service efficiency and user experience.
3. The fusion aggravated in the online vacation travel market, and online-offline integration was further strengthened
In 2015 Q4, the online vacation travel market contributed 9.6% of the transaction size, and market integration became the major feature. For one thing, Tuniu.com, Ly.com and other players tested the water for film, TV, finance and other areas to reinforce their travel brand, enhanced the value-added services based on the supply chain to realize crossover fusion. For another, major vacation travel agencies further acquired offline travel agencies, accelerated the establishment of service centers or branches in the destinations to reinforce the fusion of online and offline resources.
In the opinion of Analysys, by entering crossover cooperation and integrating online and offline resources, China’s online vacation travel market will enlarge the coverage of the industrial chain, build a multilevel and all-dimensional vacation travel ecosystem, effectively enhance the capacity of online vacation travel agencies to control product quality and service efficiency, and render a vacation travel experience featuring high quality and online-offline integration. In the context of the robust growth of China’s travel industry, high-quality vacation travel experience will continuously drive the development of the online vacation travel market.
1. Top 3 agencies gradually reinforced strengths and built vast competitive advantages over other rivals
As to the market landscape, China’s online travel market became further concentrated, with Ctrip.com, Qunar.com and Trip.taobao.com taking a combined share of 80.2% by transaction size. In particular, Ctrip.com built a one-stop reservation platform with the business system covering the entire industrial chain, far exceeded the other rivals with the transaction size of up to RMB48.26 billion in 2015 Q4, ranking the first. In Q4, Qunar.com recorded a transaction size of RMB40.3 billion, ranking the second. After the merger, Ctrip.com and Qunar.com offer the OTA and platform services, cover users at different levels and extensive supplier resources, thereby forging vast competitive advantages over other rivals.
2. Other players still embodied large development spaces through technical innovation and market segmentation
The penetration rate of the travel Internet in China remained at a low level and came at 11.5% in 2015, which embodies a vast growth space. Other players will still access a large development space by integrating resources and improving product/service quality to upgrade the user experience, strengthen technical innovation and reinforce the strengths in the segments.
As to the online size: In October 2015, Aoyou.com made a strategic investment in 7zhou.com to strengthen the presence in overseas destinations; in December, Mangocity.com declared to enter into strategic partnership with Udache, and declared to introduce two strategic investors for capital injection and restructuring; and Joyu, the parent of Lvmama.com, went public on the new third board, and became the first O2O travel agency in China.
As to the offline side: In September 2015, Jinjiang International bought 81% equity in Planeto.com, and then ranked among the world’s top five hotel groups; Beijing Tourism Group bought out Home Inns, and became the only hotel group covering high, medium and low-end brands; Ly.com strengthened offline presence by setting up a joint venture with Japan’s HIS and acquiring Nantong Splendor CITS and Shanghai Meichen CITS; and HNA Group made successive investments in Zhubaijia.com, Azul, Tuniu.com and other enterprises to refine the entire industrial chain.
In the opinion of Analysys, the major characteristics of China’s online travel market are resource integration and continuous acceleration of online-offline fusion. Now, the spending power of Chinese tourists grows quickly and their travel demands get increasingly personalized. Online travel enterprises can integrate online and offline resources to forge higher-quality travel products and increase service quality and efficiency for the purpose of terminating price competition, continuously upgrading the tourism experience and strengthening the travel service competition.
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