China Online Travel GMV Surpasses 58 Bn Yuan in Q3 2013

According to the statistical data released by iResearch, GMV of China online travel attained 58.56 billion Yuan in Q3 2013, up 17.1% compared with Q3 2012 and increasing 15.1% over Q2 2013. Revenues of OTA market, an online travel segment, arrived at 3.01 billion Yuan, increasing 12.9% from a year earlier.

iResearch analyzed that, on the one hand, recovery of domestic economy, upcoming of summer holiday and climbing travel demand of mainly middle class group led to robust growth of online travel market. On the other hand, seen from financial results of several online travel agency (OTA), frequent price war launched by distributors resulted in decrease of profit margin. Therefore, online travel industry increased slowly in Q3. Direct sales will turn into major force for online travel growth in the future.
 


According to iResearch, revenues of OTA attained 3.01 billion Yuan in Q3 2013, rising 12.9% over the same period of last year and 12.7% compared with Q2 2013.

iResearch held that, on the one hand, from the development trend of several OTA, too many promotions in frequent price war and mobile travel expansion of OTA led to decelerated growth of their profit and revenue. On the other hand, influenced by the expansion of emerging low-commission self-guided tours, OTA was lower than the overall online travel in YoY growth of GMV. 

In Q3 2013, top 3 players maintained the same. Ctrip ranked first with the share of 48.9%. Ctrip, eLong and 17u jointly occupied the majority of the market share.

iResearch believed that, Ctrip’s vacation tour product on Qunar.com and mature operation of wireless client has contributed to the growth of Ctrip’s revenue and increased gap between Ctrip and other players to a certain extent; Main business of eLong is hotel reservation, thus its revenue was significantly influenced by price wars, but hotel reservation demand in peak tourist season in Q3 drove up substantial growth of the revenues of eLong; 17u’s nine anniversary promotion in Q3 and launching of its long distance self-guided tours boosted its market share.

James Liang, CEO of Ctrip, revealed that Ctrip would transit from OTA to MTA (Mobile Travel Agency). The second quarter financial results of Ctrip showed that hotel reservation occupied 20%, flight ticket reservation made up 15% by revenue. Meanwhile, reservations from Ctrip mobile app topped out during summer holidays. At the same time, Ctrip started to adjust the offline businesses model. According to the second quarter earnings report of eLong, hotel reservation on mobile device captured over 20%. eLong announced the transformation of “online hotel” to “mobile hotel” among the first. In addition, Suzhou Branch of Citic Bank recently provided 17u with 2 billion Yuan of credit to expand the wireless business of 17u. The attractiveness and strategy of online travel on mobile phone are obvious to all.

iResearch held that from the perspective of OTA on PC, Ctrip, eLong and 17u are top 3 with a stable market structure, but there are considerable potentials in developing mobile internet market. The next driving power of OTA is expanding businesses via mobile app and enhancing their original leading advantage on mobile internet. iResearch suggests that OTA should learn from online travel on PC and increase the market shares of mobile market by actively developing new products and improving service quality on mobile device rather than through the malicious competition mode of price wars.

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