Tongcheng Travel set to make the most of restructuring
03/24/2022|2:40:35 AM|ChinaTravelNews

ChinaTravelNews, Ritesh Gupta – Tongcheng Travel (formerly Tongcheng-Elong) exhibited resilience and strengthened its competitive position in the Chinese online travel market in 2021, yet another year that proved to be a tough one for the industry owing to spurts of regional virus resurgence and the resulting volatile market situation. 

Tongcheng Travel coped up with the complex and challenging scenario with a perspective that not only took stock of the situation in the short term but also seemingly laid a path for the future, too. 

This is exemplified by the fact that the OTA’s senior management not only delivered on key operating metrics, including revenue growth of over 27% year-to-year to RMB7,537.6 million in 2021, but it also completed a planned organizational restructuring.  

Organizational restructuring

The restructuring by the OTA is a direct response to the demand for short-haul and local trips in China. In 2020, such trips were recognized as emerging opportunities, and today they have come high frequency outings since outbound travel was almost non-existent. 

In the last couple of years, as expected, the growth of local and short-haul travel has been stronger than that of long haul and business travel. The OTAs acknowledge this trend and have taken several initiatives such as serving relevant content to recommend travel destination ideas or improvising the product strategy. 

Tongcheng Travel has set up its Accommodation and Local Consumption business group as part of the plan to cater to such trips. The team believes this will help the group in meeting users’ diversified needs. The move follows the OTA’s decision to blend its tourist attraction ticketing business with the accommodation segment early last year. Plus, Tongcheng Travel has also consolidated all transportation services into a Transportation Ticketing business group to “achieve higher efficiency and synergies”. Also, as seen in case of the likes of Group, Tongcheng Travel, too, is focused on its content offering. It has established its Content and Leisure Travel business group to expand product and service offerings and enhance user stickiness.  

Revenue mix

The company continued to expand its operations to lower-tier cities by enlarging its user acquisition channels to more townships across the country. 

According to Tongcheng Travel, its total registered users residing in non-first-tier cities in China accounted for almost 87% of the total registered users at the end of 2021. Also, about 62% of new paying users on the Weixin platform were from tier-3 or below cities in China. 

The online travel company’s revenue mix almost remained the same in 2021 when compared with 2020, with transportation ticketing services (59.1% of the total revenue, rising from 58.5%) accommodation reservation services (32%, down from 32.8% in 2020) jointly accounting for slightly over 91% of the total revenue. But growth was witnessed in both the segments - transportation ticketing services rose by 28.4% to RMB4,457.7 million, and accommodation reservations went up by 23.8% to RMB2,408.7 million in 2021. The OTA highlighted its performance in the bus ticketing business. Compared with the same period of 2019, the OTA has registered over 400% growth in bus ticketing volume. 

Tongcheng Travel’s financial performance in the last quarter didn’t go as per the plan. GMV recorded went down by 11.6% decrease to RMB31.9 billion as compared to Q4 of 2020. As for how virus resurgence in the last quarter impacted the business, the online travel company highlighted that travel willingness was evident from the search and browsing-related activity witnessed on the OTA’s platform, but overall the travel activity was constrained under travel restrictions. 

The performance in the accommodation sector was negatively impacted in the last quarter due to the resurgence of the pandemic. Revenue generated decreased by 13.1% to RMB562.4 million in Q4. The decrease was mainly due to the declined average daily rates as the resurgence of COVID-19 in the last quarter of 2021. On the other hand, revenue from transportation ticketing services increased by 7.1% from RMB1,003.4 million (owing to the demand of value-added user services). 

User stickiness 

One of the highlights of the year proved to be MAUs and MPUs reaching all-time high on yearly basis. 

Factors that contributed to the same were the group’s association with the Tencent ecosystem and continued focus on a variety of traffic sources. 

At the same time the overall marketing efficiency was boosted by the performance and efficacy of Tongcheng Travel’s app. The company highlighted following aspects that enhanced the app in terms of accessing travel information to order placing:

 • The introduction of the meta-search function within the app. It allows users to find their preferred travel offerings via keywords on their mobile phones.

 • Focus on content and user interface (UI) to improve upon the overall user experience (UX).

 • Voice functionality via the voice assistant function.

 • The OTA embedded itinerary tracking services in smart watches to improve engagement. 

In its results, the company also mentioned that some of the initiatives taken in the past 12 months or so have expanded substantially. For instance, a marketing initiative called the “Blind Box of Air Tickets,” has evolved into a series of related products. It resulted in multiple benefits – sustenance of business and growth, attracting “massive” younger demographic to the platform, etc. Another highlight has been tailor-made products for students.