Since the beginning of this year, advertising costs for travel-related keywords on Xiaohongshu has risen sharply, catching many travel businesses off guard.
According to K, a travel agency owner, the cost-per-click for popular destinations like Xinjiang has surged to several hundred yuan (about USD 100). Each click now carries a tangible cost, and if the content fails to resonate, the spending may yield no meaningful return.
Industry insiders widely attribute the rising traffic costs to the entry of major OTA players like Trip.com Group, whose aggressive bidding has intensified keyword competition and shifted ad exposure heavily toward top-tier advertisers.
S, the owner of a boutique lodging brand, noted that major OTAs like Trip.com Group have significantly ramped up advertising on Xiaohongshu since May, driving up the costs for keywords like "Japan," "Tokyo," and "homestay" by 20% to 50%, with some even doubling.
This bidding model is similar to SEM (Search Engine Marketing), where higher bids lead to better content visibility.
S admitted that despite two years of operating on Xiaohongshu, today’s traffic battle has become a contest of capital and team strength.
With competition intensifying, small and medium-sized travel agencies are under growing pressure.
Yuanshan Xiao, a veteran travel industry analyst, pointed out that many small businesses lack content teams and advertising know-how, making it difficult to afford monthly ad budgets that can reach hundreds of thousands of yuan (around tens of thousands of US dollars).
“If the gross margin is under 20% and the traffic ROI is below 1:5, you’re basically working for the platform,” he noted.
He also said that many local travel agencies have already abandoned Xiaohongshu, turning instead to platforms like Douyin and WeChat in search of better returns.
By mid-2024, Xiaohongshu had reached 320 million monthly active users. Seventy percent of them use the search function, with an average of six searches per day, making it an emerging gateway for travel decision-making.
Amid the growing concentration of traffic, Xiao suggests that small and medium agencies should accelerate brand-building—either by creating corporate brands or developing personal IPs to stand out on traffic-driven platforms.
Looking forward, the ability to improve ad conversion efficiency and building proprietary traffic pools will be key to whether travel businesses can break through in the digital era.
