◎ Understand the Emperor of Wealth (ID: znfinance) | Zhu Qionghua
After many years, online travel (OTAs) will look back on 2022 with a year of ups and downs, but OTAs showing resilience.
At the same time, China's OTAs are changing, with the pandemic reaching a substantial inflection point and tourism recovering rapidly.
The wave of civilian tourism and the wave of digital intelligence are stirring up and surging new life.
Looking at the travel industry in 2022, we may be able to see the future direction of OTAs.
Those OTA companies that are constantly changing, they are actively adjusting during the epidemic, and may grow more steadily and sustainably after the economy recovers.
Through the "darkest hour", toughness grows upward
In the decade before the pandemic, China's tourism industry grew at an average double-digit rate.
In 2019, the total revenue of tourism reached 6.63 trillion yuan, and the added value of tourism and related industries was 4.5 trillion yuan, accounting for about 4.56% of GDP.
2022 is the year when the tourism industry is most deeply affected by the epidemic and the industry is the weakest, and the overall domestic tourism market is weak, with a year-on-year decline and negative growth as the main keynote.
In this year, domestic tourism revenue was 2.04 trillion yuan, recovering to about 31% of 2019, and the comprehensive contribution of tourism to GDP fell below 2%, recovering to about 44% in 2019.
At the same time, a number of travel listed companies issued pre-loss announcements for 2022 results, and losses became a common situation in the past year.
In such a "cold winter", the same trip is a very interesting observation sample.
Let's look at its profitability:
In 2022, Tongcheng Travel maintained profitability every quarter, with an adjusted net profit of RMB650 million for the full year.
Even in the fourth quarter, where the impact of the epidemic on the travel market continued, Tongcheng Travel still achieved an adjusted net profit of 37.46 million yuan.
Let's look at its revenue:
In 2022, Tongcheng Travel achieved revenue of RMB6.58 billion.
Among them, accommodation revenue was RMB2.41 billion, a slight increase of 0.2% year-on-year in 2021 and 2.4% compared with 2019. Among them, Q4 accommodation revenue was 510 million yuan.
During the epidemic, although long-distance consumption in some first-tier cities was significantly suppressed, Tongcheng Travel grasped the strong demand for local consumption and short- and medium-distance travel, and achieved growth in the face of adversity.
Tongcheng Travel's accommodation business has shown resilience, maintaining positive year-on-year growth and exceeding pre-pandemic levels.
In 2022, Tongcheng Travel's other revenue was RMB790 million, an increase of 17.9% year-on-year and 53% compared to 2019.
In Q4, other revenue was 240 million yuan, an increase of 12.4% year-on-year and an increase of 54% compared to 2019.
Tongcheng Travel has found new growth points, and the proportion of its diversified businesses and innovative projects contributing to its revenue continues to rise, such as advertising, Black Whale membership, PMS, business travel, scenic spot tickets, etc.
In addition, Tongcheng Travel Transportation revenue in 2022 will be 3.38 billion yuan, of which 760 million yuan will be generated in the fourth quarter.
Why is Tongcheng Travel able to grow in 2022?
This is because Tongcheng Travel's users continue to grow.
In 2022, Tongcheng Travel will have 190 million annual paying users, an increase of 23% over 2019. Average monthly active users reached 230 million, an increase of 13.9% over 2019; The average monthly paying users reached 29.7 million, an increase of 10.4% compared to 2019.
It is worth noting that the wave of civilian tourism in the sinking market is expected to become the fastest growing market.
According to statistics, from 2017 to 2019, the proportion of third-tier cities and below in the total online travel users increased from 35.9% to 46.1%. By the end of 2020, the installation rate of online travel apps for mobile phone users in third-tier cities and below was only 18%, far lower than the level of first- and second-tier cities, and future growth can be expected.
As of the end of 2022, Tongcheng Travel accounted for about 86.5% of the total registered users residing in non-first-tier cities in China. On the WeChat platform, about 60.3% of new paying users are from third-tier cities or below in China.
During the pandemic, Tongcheng Travel continued to explore new ways to grow users: broaden user acquisition channels, maintain cooperation with various platforms, and cover diversified service scenarios.
Offline, Tongcheng Travel uses channels such as hotel QR code scanning, scenic spot scanning code tours, and smart bus tickets to achieve online connection.
Online, Tongcheng's WeChat ecosystem, especially Mini Program users, continues to grow, and short video channels such as Douyin and Kuaishou continue to attract new users.
As of August 2022, the cumulative number of deduplication users of Tongcheng Travel WeChat Mini Program has exceeded 1 billion.
In addition, Tongcheng Travel continues to combine with cultural tourism to catch the rapid growth train of users in the Z generation.
The Tongcheng Cup e-sports event held by Tongcheng Travel won the best event of the year co-creation partner of Tencent Games, becoming the favorite partner of hundreds of millions of young users.
Tongcheng Travel's Hengdian Water Music Festival, "WeChat Status X Footprint Map", Fei'er Dream Festival and other cultural and entertainment projects have formed a boom among young people.
Digital Intelligence Wave "renewed" online travel
Chinese OTAs have experienced a "rebirth" of the epidemic and are now standing at a new crossroads.
Looking at the development of OTAs over the past four decades, they have experienced dividends through several eras.
The first generation of OTAs grasped the demographic frontier dividend and adopted the "mouse + cement" model. In the early 90s, they adopted the ground push mode in offline scenarios such as train stations to obtain user dividends.
The second generation of OTAs has captured the search dividend of the PC era. Around 2000, they adopted vertical integration, borrowed the search engine model, and obtained traffic dividends.
The third generation of OTAs has seized the dividends of the mobile Internet. Around 2012, they used apps and WeChat mini programs to grasp the dividends of the Internet transformation.
Today, the wave of digitalization and intelligence is accelerating, and the integration of online tourism and industry in the future will refresh the entire tourism industry chain.
For OTAs, only by addressing the long-tail needs of consumers and suppliers can they have the opportunity to become digital and intelligent promoters in the travel industry.
The epidemic is like a sword, which has cut off the upstream and downstream industrial chain of the tourism industry.
Tongcheng Travel uses technology to collide and integrate with the tourism industry to reconstruct the industrial chain. Tongcheng Travel's MSCI ESG rating has been upgraded to AA – the highest rating in the wine travel industry.
In the field of air tickets, in 2022, Tongcheng Travel established strategic cooperation with Guizhou Airport, Urumqi Airport, Shaanxi Regional Airport and other airports, and deployed bus ticketing systems and intelligent ticketing equipment.
Hotels are the most fragmented segment of the travel industry and the most important for consumers.
Tongcheng Travel empowers accommodation customers with one-stop digital intelligence solutions to help hotels improve efficiency and generate revenue.
Tongcheng Travel owns brands such as "Sumitomo Zhe", "Golden Swan" and "Cloud Dispenser", covering mid-to-high-end chain hotels, small and medium-sized independent hotels and homestays.
THESE SAAS TOOLS PROVIDE NEW MEDIA MARKETING, AGENCY OPERATION, REVENUE MANAGEMENT, SMART HOTEL UPGRADES AND OTHER TOOLS FOR ALL KINDS OF HOTELS AND GUESTHOUSES.
"These tools not only realize the online booking business, but also greatly improve the efficiency of hotel internal management." A small and medium-sized hotel owner said that Tongcheng Travel's digital intelligence technology has helped them achieve performance growth.
In the field of small and medium-sized hotels, Tongcheng Travel launched the "Empowerment Program" and launched the "Travel Intelligence Technology Lecture Hall" in collaboration with industry experts, hotel partners and operation experts, with tens of thousands of live courses.
In the field of digital scenic spots, Tongcheng Travel has carried out digital transformation of China Lantern World based on the platform's scientific and technological research and development capabilities and full-link marketing experience, providing tourists with a new play experience.
Tongcheng Travel has also cooperated with the governments of nearly 20 provinces, municipalities and regions including Yunnan, Guizhou and Zhejiang to issue tourism consumption coupons, and by the end of 2022, it has issued hundreds of millions of yuan and achieved hundreds of millions of exposures.
In addition, Tongcheng Travel has built the "Global Connect" smart platform to provide one-stop services such as professional digital city planning, technology research and development, promotion and operation for global destination governments.
At present, the project has built more than 40 platforms such as provincial, prefecture-level cities, several districts and counties, neighborhoods, scenic spots and villages, becoming a cutting-edge brand in the field of digital cultural tourism in China.
In particular, the service of Tongcheng Travel has penetrated into various travel scenarios of users, whether it is a megacity or a small city of the fifth and sixth tiers, you can find users of Tongcheng Travel.
In the sinking market, car transit is the most important mode of transportation. There are more than 8,000 bus ticket operators in China, but the online booking rate is less than 10%.
In thousands of cities on the third, fourth and fifth routes across the country, Tongcheng Travel negotiated with bus station operators one by one, installed ticket dispensers at stations, and transformed the bus ticket supply chain bit by bit, so that tourists can truly enjoy the convenient service of online ticket purchase and collection.
Today, Tongcheng Travel continues to promote the digitalization of transportation and build smart stations.
A simple case. In May last year, Tongcheng Travel cooperated with Huaiyun Group to launch the digital transformation of smart stations, which directly improved the service level of stations, improved passenger turnover efficiency, and reduced their input costs.
Tongcheng Travel uses artificial intelligence technology to transform the station management system of "car, passenger, and finance" at 14 stations under Huaiyun Group, and also launches paperless rides and electronic settlement, covering all aspects of travelers' ticket purchase, ticket check-in, reimbursement and so on.
"Enterprises really want to go digital, and they want it to work, but they don't know how to start and land." According to Zang Zhigao, senior director of R&D of Tongcheng Travel, the key point of digitalization for enterprise competitiveness is not only to improve corporate efficiency, but also to reduce operating costs.
There is no doubt that Tongcheng Travel is constantly shaping the competitiveness of enterprises through digital intelligence in the fields of data middle platform construction, AI technology customer service scenarios, travel scenarios, new business launches, digital systems, and organizational management efficiency improvement.
Long-termism, "flywheel" starts
"Different business segments in a company are coupled with each other, different business segments are like different gears, it is very difficult to run and push at the beginning, but each rotation provides potential energy for the next rotation, and eventually the flywheel will turn faster and faster, and the value of the enterprise will increase."
Management expert Jim Collins summed up the success of many large technology companies in "From Good to Great" - the "flywheel effect".
Even in the most difficult three years, the flywheel of Tongcheng Travel was lubricated and rotated and successfully withstood the "cold winter" of the tourism industry.
The flywheel of any company starts with paying attention to consumers.
On the demand side, the pandemic in the past few years has made the new tourism market continue to expand.
With sporadic outbreaks of the epidemic, user consumption behavior has undergone structural changes, user needs have become more diversified, and local leisure and peripheral tourism have become the mainstream.
Tongcheng Travel continues to expand its product offering, with air tickets, train tickets, hotels, etc. in 2019 and expanded to scenic spot tickets, peripheral tours, cars, bus tickets, vacations, hotel packages, visas, etc. in 2022.
At present, Tongcheng Travel can meet the multi-travel needs of various groups of people such as mid-to-high-end, business travel, weekend leisure, and student migrant workers.
At the same time, Tongcheng Travel expands in the face of adversity.
On December 29, 2022, Tongcheng Travel announced the acquisition of Tongcheng International Travel Service and has completed the deep integration of its vacation business.
Tongcheng Travel has a special activity, the company's senior management, middle management, etc. must go to the front line, collect customer feedback problems, and regularly optimize and transform the pain points and difficulties.
By the end of 2022, 34 such events had been held, with 654 participants and 523 cases of problems identified, most of which had been improved.
On the supply side, as mentioned in the second part, Tongcheng Travel continues to deepen the industrial chain and promote digital and intelligent transformation.
Take Tongcheng Travel's business travel segment as an example. Huang Liang, CEO of Tongcheng Business Travel, said that digital informatization has brought multi-dimensional extensions to enterprise business scenarios, and the use of expense control systems has become very popular in the approval and reimbursement process, and is gradually integrating into budget control and various business systems, and will expand to the front-end consumption field in terms of breadth, creating a full-process integrated platform integrating supply chain.
As a new benchmark in the industry, Tongcheng Business Travel integrates corporate travel, expense control, OA system, and payment and reimbursement to help enterprises achieve compliance and transparency, reduce costs and increase efficiency. Previous data show that effective expense control can reduce the operating costs of enterprises by more than 30%.
The demand side - paying attention to consumer demand and experience, and the supply side - using digital intelligence technology to promote the progress of the industrial chain, which is the two flywheels of Tongcheng Travel and the long-term principle it adheres to.
The larger the number of consumers, the more travel companies Tongcheng needs to connect with. The more industrial companies provide travel services, consumers will enjoy better experiences and services.
Tourism "Davis Double Click"
Ji Tailai is like a hand, striding into the sky since then.
With the recovery of fundamentals, the entire travel industry will most likely usher in the Davis double click in the capital market this year.
In fact, during this year's Spring Festival, the tourism industry has shown a recovery momentum. According to the data center of the Ministry of Culture and Tourism, 308 million domestic tourism trips were made during the Spring Festival holiday this year, a year-on-year increase of 23.1%, recovering to 88.6% of the same period in 2019; Domestic tourism revenue reached 375.843 billion yuan, a year-on-year increase of 30%, recovering to 73.1% of the same period in 2019.
According to a report released by the China Tourism Academy on February 20, the tourism market will "start steadily and continue to recover" in 2023, and the summer vacation is expected to usher in a full recovery.
According to the China Tourism Research Institute, it is expected that the number of domestic tourists in the first quarter of this year will be 1.46 billion, and the domestic tourism revenue will reach 1.3 trillion yuan, recovering to 82% and 76% of 2019 respectively. It is expected that the number of domestic tourists and revenue in the first half of this year are expected to recover to 85%-88% and 78%-80% of 2019.
Dai Bin, president of China Tourism Research Institute, said that after SARS in 2003, the tourism industry experienced a strong industry-wide recovery and entered a "golden age". After 20 years, the infrastructure in all aspects is more perfect, the economic and consumption strength of the Chinese people is stronger, the level of tourist attractions has also been greatly improved, and the comprehensive revival of the industry is just around the corner.
The spring of tourism has arrived, but after three years of the epidemic, the main body and form of tourism consumption have undergone many changes. The old way of thinking may not be able to adapt to the post-pandemic market, and the old growth model is unlikely to return the travel industry to the golden age.
Survival of the fittest, survival of the fittest.
There is no doubt that the next decade will be the era of digital intelligent OTAs.
Note: The data is based on public disclosure and does not constitute any investment advice, investment is risky, and caution is required when entering the market.
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