The GMV of online travel reached 56.57 billion Yuan in Q1 2014, up 17.2% YoY and down 0.6% QoQ.
There are two drivers for the growth. On the one hand, big sales of hotel rooms and air tickets during China Spring Festival period fueled the increase of online travel GMV. On the other hand, from January 1st , 2014, Ctrip, LY and Lvmama began to compete in entrance ticket market. Ctrip provided 50% to 100% cash rebates for more than 5,000 entrance tickets on PC and App. Lvmama had a “0 Yuan” entrance ticket during China Spring Festival. LY also had cash discounts and free exclusive products. All the activities jointly made a boom of the entrance ticket market.
OTA Revenue Arrived at 2.99 Billion Yuan with Slowing Growth
According to iResearch, the revenue of OTA stood at 2.99 billion Yuan in Q1 2014, up 17.7% YoY.
We believe the decrease of commission rate dragged down the growth rate. However, the growth in the sales of entrance tickets, hotel rooms and air tickets somewhat offset the decline of commission revenue.
Vacation Drove Revenue Growth and Major Players Became Allies
OTA market remained stable in Q1. Ctrip took a commanding lead at 51.9%, followed by eLong and LY at 9.3% and 6.2% respectively.
We believe Ctrip’s rich product lines and excellent services helped the company controlled half of the market. In Q1, Ctrip announced several investment deals including Tujia (middle-high end apartment rent), Tufeng (North American market) and Yidaoyongche and Yihei (local car rental for travelers). The investment will continue to enrich Ctrip’s product lines. eLong enjoyed natural growth due to CNY’s air ticket and hotel sales. LY’s major revenue growth came from vacation products other than air ticket and hotel business.