ChinaTravelNews, Ritesh Gupta - Tongcheng Travel Holdings continues to expand its user base in China, as the online travel company shared that the total number of travellers served in the 12-month period rose by 9.3% to 1,928.1 million in 2024.
Sharing its fourth quarter (Q4) results, the online travel company attributed the growth in accumulated number of users served to “continuous improvement in user purchase frequency”.
Tongcheng reported that alongside leveraging Tencent’s platforms, they also focused on enhancing their own digital offerings and loyalty programs, ultimately improving user value and driving app adoption.
Tongcheng has strategically diversified its traffic sources, with its standalone app becoming increasingly pivotal. Throughout the past year, the company increased investments in its standalone app and launched targeted marketing campaigns to acquire new users. Consequently, the app’s daily active users (DAU) experienced significant growth, more than doubling year-over-year.
Additionally, annual monthly paying users (MPUs) increased by 4.4%, reaching 43.1 million for the year.
Growth led by partnership with Tencent
Tongcheng highlighted that the team continuously capitalised on the market opportunities and outpaced the market with “excellent results”.
For Q4 of 2024, Tongcheng’s total revenue increased by 34.8% year-to-year to RMB 4,237.6 million.
The adjusted net profit increased by 36.8% from RMB 482.5 million to RMB 660.2 million, representing an adjusted net margin of 15.6%.
Tongcheng’s strong performance is largely attributable to its association with Tencent Group, with the Weixin ecosystem playing a particularly significant role especially the contribution of the Weixin ecosystem.
Recognising the growth potential, Tongcheng is actively expanding the scope and scenarios of its cooperation with Tencent Group, enhancing traffic support, advertising, marketing promotion, and related services.
Tongcheng’s growth strategy is fundamentally anchored in its partnership with Tencent. This collaboration, recently solidified by a three-year agreement extending to July 2027, focuses on significantly expanding Tongcheng’s market share within China’s mass market.
Tongcheng emphasises the crucial need to not only focus on user acquisition and traffic support through Tencent’s extensive Weixin and Mobile QQ user base, but also to expand its revenue streams via offerings like QQ Music and Tencent Video membership cards.
Prior to finalising the new agreement last year, a dedicated internal review team analysed industry transactions, leveraging data on Weixin and Mobile QQ user bases, traffic stability, and historical service fees to establish optimal service fees and commission rates.
Additionally, the team determined annual caps for service fees, ensuring financial stability. Looking ahead, Tongcheng’s core strategy includes expanding its reach into China’s rapidly developing lower-tier cities, for which it continues to view Tencent as a valuable strategic ally. Also, Tongcheng meticulously assessed key factors including advertising and marketing budget allocation, projected demand and revenue from transportation ticketing and accommodation products, and strategic opportunities such as capitalising on mass market rebounds and expanding into lower-tier cities.
Revenue mix
Tongcheng reported substantial growth in its core online travel agency business, with revenue reaching RMB 14.2 billion in 2024, a 22.1% increase year-over-year. Tourism revenue for the same period was RMB 3.1 billion.
Core OTA revenue was RMB 3.5 billion, up by 20.2% and tourism revenue was RMB 780 million in Q4.
In Q4, revenue from transportation ticketing services rose by 17.0% year-over-year to RMB 1,723.0 million. For 2024, transportation ticketing revenue increased by 19.9% year-over-year to RMB 7,229.0 million. This growth was primarily fuelled by an increase in ticketing volume and enhancements to value-added products and services.
Also, the international air ticketing segment experienced rapid expansion, driven by competitive pricing and aggressive marketing strategies, according to the group. As a result, international air ticket volume surged by over 130% year-over-year.
In its accommodation business, revenue grew by 19.7% year-to-year to RMB4,668.2 million last year. The team shared that it achieved record highs in both room nights sold and revenue.
Chengxin AI system
The group also shared that it has worked on Chengxin, a proprietary generative AI system. It helps users work on their custom travel plans and compare accommodations tailored to individual preferences. Chengxin has been integrated into multiple external generative AI platforms and mobile devices to expand the group’s user reach.
Tongcheng has also developed digital assistants for several tourist destinations. In addition to providing tailored suggestions, they facilitate simplified interactions.
