Tuniu expands with aggressive acquisition plans post IPO
Tuniu has announced on March 9 2015 the acquisition of Hangzhou-based Zhongshan Travel and Tianjin-based China Classical Holiday.
ChinaTravelNews - Tuniu has announced on March 9 2015 the acquisition of Hangzhou-based Zhongshan Travel and Tianjin-based China Classical Holiday. As Tuniu’s first acquisitions after its IPO, just what significance do these two travel companies have for Tuniu’s expansion strategy?
What’s special about Taiwan-licensed tour operators?
In an interview with ChinaTravelNews, Tuniu CFO Conor Yang said that Tuniu needed a Taiwan tour operating license to offer tour products to the island. “The acquisition delivered us two Taiwan-licensed tour operators. We can thus offer Taiwan tour products to independent travelers from all over China as well as organize tour groups from Zhejiang and Tianjin,” he said.
He said currently most of Tuniu’s products are sold directly to customers and very few products are sold by the platform’s third-party vendors. Tuniu favors this business model in order to control product quality and maintain high consumer trust.
ChinaTravelNews has learned from an industry expert that operators conducting tours to international destinations other than Taiwan enjoy relatively relaxed regulations. Any company licensed for outbound travel can open agencies anywhere in China.
This makes it very convenient for Tuniu to open branches nationally without having to apply for outbound tourism licensing in each city. Meanwhile, Tuniu can still continue to sell directly to customers by adding a clause in the sales contract authorizing Tuniu to subcontract.
The observer also thinks that Tunui would be looking beyond just two provinces for aqcuiring more Taiwan-licensed regional tour operators in order to build up its scale and boost its bargaining power and resources for its Taiwan tour products.
Acquisition criteria: good resources and strong wholesale operations
Mr. Yang said it’s still too early for Tuniu to think about acquiring ground operators overseas, and this is not the major investment focus for Tuniu for now.
Instead it will continue to eye travel companies that have advantage in resources and strong wholesale operations in China’s outbound departure cities.
“We will consider any acquisition, whether wholesalers or large-scale tour operators, that will accelerate Tuniu’s bid for market share ,” he said.(Translation by David)
(Report by Jianjun Yao)