China’s Tongcheng Travel Has High Hopes For Generation Z
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Change Take
As Tongcheng Travel waits for China to relax restrictions and open travel, the online travel company has used the downtime to diversify its user base. Now if only the borders would fully reopen!
Peden Doma Bhutia
Catch them young clearly seems to be the mantra for Tongcheng Travel as the Chinese online travel agency has been steadily ramping up efforts to enhance its brand influence among younger generations through varied marketing campaigns.
In late April 2020, Tongcheng Travel, formerly known as Tongcheng-Elong, launched a new brand name — ly.com and a new logo aimed at its ambition to better serve users with a younger mindset.
“In the last quarter, we launched campaigns to help connect with Generation Z. The company wants to build itself as unique travel platform that understands and connects with younger users,” Heping Ma, executive director and CEO of Tongcheng, said during the earnings call earlier this week for the quarter ended June 30.
Tongcheng, which is publicly listed in Hong Kong, has also been working closely with WeChat’s parent company — Tencent — for young user acquisition and has joined with Jiangsu Province Tourist Bureau to co-launch marketing activities targeting college students.
The group also expanded its geographical footprint across the country by focusing on lower-tier cities and further optimizing operations in these cities, with approximately 87 percent registered users from non-first-tier cities, the company said.
“We moved to capture recovery opportunities driven by the demand for short-haul and local travel, especially in lower-tier cities, which recovered faster,” Ma said.
Over the last quarter, Tongcheng’s accommodation business staged better-than-expected performance even as China’s tourism industry faced drastic travel restrictions as a result of the government’s stringent zero-Covid policy.
The group maintained profitability in the second quarter having registered total revenue amounting to $192 million, a 38 percent year-on-year decrease from the same period in 2021. The company also reported an adjusted net profit of $16 million, down 73 percent year-on-year.
“Tongcheng’s offline user acquisition initiatives also continue to play a key role in acquiring new users while facilitating its strategy to further penetrate to low-tier cities,” the CEO said.
The travel company continued to push ahead with its offline user acquisition initiatives with enhanced emphasize on efficiency, user value and merchandise recognition.
Integrating online and offline channels to diversify traffic sources, Tongcheng believes it optimized its app interface and enriched tourism-related content, to provide users with one-stop products and services. The company also worked with location-based apps to expand user-acquisition channels.
“Tongcheng Travel continued to develop and apply innovative technology to transform from an online travel agency to intelligent travel assistant,” said Joyce Li, Tongcheng’s vice president and head of capital markets.
The believes the bus ticketing business remains an effective instrument for the company to grow its user base bigger. “We had more urban and rural bus operators on board to work together and further penetrate under-tapped countries and towns,” Ma said.
While it is expected that the market growth will be driven by local and short-haul leisure travel, as well as the increase in the number of business trips, the travel compoany will continue to tap into under-penetrated regions to further enhance its market share, the executives said during the earnings call.
“Building on our solid market foothold, we are confident about the industry prospects and development outlook of the company,” Ma said.
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