Riding the tourism boom abroad

Updated: 2016-11-21 07:37

By Sophie He(HK Edition)

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Chinese online travel company Tuniu has already kicked off plans to expand overseas, Co-Founder and President Yan Haifeng tells Sophie He.

The surge in the number of Chinese outbound travelers will see a spike in Chinese tourism companies going global in the next five years, according to Yan Haifeng, co-founder and president of Chinese online leisure travel company Tuniu Corporation.

Yan told China Daily on the sidelines of a China Daily Asia Leadership Roundtable in Macao last month that he believes the country's outbound tourism industry is still in its infancy. He explains that Chinese tourists have only been traveling abroad for about 14 years, as there were too many limitations for going overseas before 2002.

But Yan says since then, the Chinese tourism industry has flourished, with the demand and consumption habits of Chinese travelers changing rapidly.

Initially, travelers preferred destinations including Singapore, Malaysia and Thailand before turning to South Korea and Japan. Now, Chinese tourists are flying further abroad, with Europe gaining in popularity, Yan says.

He adds that in the past decade, residents of Beijing, Shanghai, Guangzhou and Shenzhen were the main group traveling abroad, but people who live in third- or fourth-tier cities are now planning their overseas vacations.

This means in the next decade, more Chinese tourism companies will complete their global positioning, amid the rising demand of outbound tourists.

"Now there are about 100 million Chinese mainland travelers traveling overseas every year. I believe the number will only grow further in the future, and the scale could easily grow up to 200 to 300 million per year," Yan says.

"I believe that in the next three to five years, what we are going to see is an increasing number of Chinese tourism corporations will go overseas."

Going global

He says Chinese tourism companies must expand overseas and cooperate with local companies to tap into certain tourism resources, including local hotels and transportation - one of the focuses at Tuniu.

Tuniu has been listed on the Nasdaq since May 2014, and offers packaged tours (organized and self-guided tours), as well as travel-related services for tourists through its website Tuniu.com and mobile platform.

He recalls that Tuniu was initially focused only in group traveling of residents in first-tier cities, with just 15 branches nationally. A decade since the company was founded, it now has more than 200 branches, targeting self-guided, outbound young tourists.

Yan points out that the country's infrastructure has improved immensely in order to support the rapid growth of the tourism industry. More airports have been built, leading to more flights that link lower-tier cities directly to overseas travel destinations.

Since last year, Tuniu has been setting up subsidiaries in overseas markets, including in Hong Kong, Thailand, Japan, South Korea and in Europe.

Aside from trying to obtain more local tourism resources from overseas markets, Tuniu is also focusing on cooperating with local companies and even bringing in local partners to the company, according to Yan.

Millennial muscle

Another trend shift is that people born after 1980, or millennials, now make up a major part of Chinese outbound travelers, Yan says, as these young and wealthier people are more interested in self-guided holidays rather than organized tours.

Yan believes that these new trends and demands will bring more opportunities rather than challenges to tourism corporations. This means companies that understand the demand of young Chinese tourists will hold a competitive edge in the future.

"In order to stay ahead in the competition in the future, Tuniu has to meet the demand of millennials - luckily the two founders of the companies were both born after 1980, so it is not very difficult to understand what young travelers want."

Yan points out that the millennials seek a high quality of services when they are traveling, and tend to attach great importance on their traveling experience rather than just shopping or sightseeing.

"I noticed that mainland young travelers in Tokyo are keen to dine at Michelin-starred restaurants, indicating how much people value their experiences, and Tuniu has to adapt and meet this kind of demand," he says.

Yan says Tuniu wants to continue expanding its business in tourism and hotels, with also a focus on transportation including plane tickets, bus tickets and car rental services. He hopes Tuniu can be an international company in the near future, but warns that it should be more "focused", concentrating its resources in one particular field at one time instead of trying to do everything at once.

For the second quarter of 2016, Tuniu recorded a net loss of 764.8 million yuan ($115.1 million). Net revenues during the period were 2.4 billion yuan ($355.5 million), a year-on-year increase of 55.6 percent from 2015.

Yan stresses he wants the company to grow, but external and internal risks means they should also be prudent. External risks include the uncertainty of the global economy and the slower growth of Chinese economy, adding that internal risks may be related to the company's judgment of the long-term situation, and the goals they wish to achieve.

Contact the writer at sophiehe@chinadailyhk.com

(HK Edition 11/21/2016 page9)