Release Date: Sept 8, 2017

In China, online travel is an old topic, you would have assumed the market is already saturated, but the truth is the penetration of online travel is only 15.8%, with a volume of 739 billion RMB(~ 108 billion USD) until 2016.

If you further break down the market size, you will find the market is mostly occupied by online transportation segment, which holds 72.8% of the total market. Online accommodation and online vacation hold 16.9% and 10.3% respectively.

There are three clear trends in China’s online travel market:

Trend #1: Magnates in Domestic Market

Except for Alibaba, both Baidu and Tencent seem to lose much of their interest in this market as they are neither actively participated in the investments, nor their own initiatives. Ctrip is the only pure online giant right now through multiple major M&A(merger and acquisitions) as well as investments. Meanwhile, big offline companies which originally from air aviation or accommodations are trying to integrate offline assets with online services to take the market. The following picture shows the top 4 emerging travel groups in domestic market:

• Ctrip Portfolio: Ctrip owns relatively comprehensive investment portfolios among the others. Its strategy is from online to offline, which means they occupy the online traffics as much as they can, and then fully leverage their offline resources to make it bigger than bigger.
• Alibaba Portfolio: Alibaba inherits its thinking to build a marketplace, e.g. Fliggy, in order to aggregate all the agencies and customers.
• Jinjiang Portfolio: Starting from domestic hotel accommodation business, Jinjiang heavily invests in related business assets in recent years.
• HNA Portfolio: Famous of its Hainan Airlines, HNA tries to attach the advantage of mobile Internet trend in China. It has more and unique online portfolios than the other traditional travel companies.

Trend #2: UGC Platform Expands Quickly

Driven by the trend of more and more travellers want to travel by themselves instead of tour groups, UGC platform has been growing very fast in the past 5 years. For example, Mafengwo, the most leading travel UGC platform owns more than 6 million active users every quarter, and each active user will open its App 22+ times for 2.5+ hours averagely per quarter. Combining with 1 million hotels and accommodations resources, 380,000 tickets SKUs as well as 5,000+ travel partners, Mafengwo is able to use its big data to enable a smarter recommendation system.

Trend #3: Huge Outbound Travel Market

According to a report from China Tourism Academy, there are more than 62 million Chinese people travel overseas in the first half of 2017, which means there are 100+ million outbound Chinese tourists around the world every year! That is a huge market, but a different market as well. So we can see there are some new, smaller and innovative startups focusing on this area.