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Tuniu CEO says China’s OTA sector will mature in 2-3 years

11/02/2014| 1:46:50 PM|

Tuniu CEO, Donald Yu says in the next 2-3 years will be full of opportunities for China’s OTAs. By the end of this period the OTA sector will likely mature.

Tuniu CEO, Donald Yu says due to the current trend of transition from offline to online, the next 2-3 years will be full of opportunities for China’s OTAs. By the end of this period the OTA sector will likely mature.

Donald Yu thinks that the current explosive growth of China’s travel industry went through two stages. The first stage was from 1999-2006, when air ticket and hotel booking went online. The second stage is from 2007 to the present, when vacation travel went online.

Tuniu was listed on Nasdaq in May this year. Their prospectus shows that Tuniu was ranked No. 1 in the online package tourmarket in2013. The data from iResearch indicates that in 2012 Tuniu had a 15% share of China’s online package tour market for outbound travel. This made them second only to Ctrip. Tuniu had losses of 113.6 million RMB in the Q2 of this year. However, their operational revenue still increased 84.9% compared to the same period last year.

Donald Yu is not very concerned with Alibaba’s new OTA “Alitrip”. He says that Alitrip focuses on air tickets and hotel booking, so they are similar to Qunar.As for the increasing competition presented by rivals, Donald Yu believes that Tuniu has a competitive advantage by differentiation between their brand and Qunar, eLong, and Ctrip.

 “First of all, they are mostly offering independent and standardized low-end products. We offer high-end package tour products. Secondly, they are focusing on domestic destinations and we are focusing on overseas tours.Third, they don’t have a cash flow but Tuniu does. We always keep around 50 days of cash at hand”.

Tuniu spent 96.9 million RMB on marketing this year, a 403.4% increase from last year. Donald Yu says that branding is very important for high-end products, so there is plenty of long-term return on marketing activities.(Translated by David)

TAGS: Tuniu | Donald Yu | OTA
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