Online Vacation Is a High Light in China's Online Travel Market

Source:iResearch May 11,201812:57 PM

In 2017, the growth of internet users continued decelerating. As a result, the online travel companies which rely on the demographic dividends of internet users to increase GMV are facing the problem of traffic shrinking. To address this problem, different approaches are adopted by different companies. These approaches show that the key to address the traffic problem is to extend the industry chain, offer diversified product categories, adopt the scenario-based marketing and raise the spending of each customer.

 

Since 2009, the share of online vacation in online travel by GMV has been growing at a rate faster than growth of GMV of the online travel market, which can be attributed to the following two reasons. First, with the consumption upgrading in China, besides sightseeing, the travel users have developed high-level demands in terms of travel experience and vacations, therefore, the growth rate of the GMV of online vacation has been higher than that of the online travel sector as a whole. Second, with the expansion of the online travel market and the intensifying competition in the industry, the gross profits of traditional flight ticket and hotel booking products is decreasing, thus OTAs and other online travel enterprises need to find new profit growth points. As a result, the online travel enterprises are attracted by the high gross profits and the diversity of the online vacation products. However, the share of flight tickets and hotels booking is still larger than that of online vacation. and the companies still need to find the right way to develop the online vacation market in the future.

 

The rise of destination services indicates that the OTAs and other online travel enterprises are pursuing products and services with high gross profits. and it also indicates that with the changing of the online travel users’ ideas, the users have higher requirements on the quality of travel products and services. The rise of destination services is mainly driven by three factors: first, higher penetration of mobile internet in online travel sector; with more users using their mobile devices and mobile internet in booking, inquiry and consumption when they are traveling, the OTAs and other online travel enterprises need to provide destination services and raise customer retention rate by providing high-quality services; second, personalized forms of travel, in the context of consumption upgrading, it is hard for traditional destination services to meet the personalized demands of the consumers; and finally, development of P2P services, peer-to-peer resources sharing and exchanges make up for the deficiency of destination services provided by big enterprises and promote the upgrading and healthy development of destination services. 

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