Travel has always been a rather traditional thing. You can book tickets, hotels, and check travel guides online, but in the end, you still have to experience it in person to truly say you’ve had a real trip. Over the years, with the development of the internet and mobile internet, OTAs (online travel agencies) have grown to a scale of billions of dollars. Judging from recent capital movements, the internet’s “big three” — BAT (Baidu, Alibaba, Tencent) — are paying increasing attention to this industry. But how should traditional giants like HNA Tourism Group compete with these lightweight internet companies in their own backyard that’s already on fire? Let’s first take a look at the current state of the industry.
Online Travel: The BAT Trio Holds Near Monopoly
Just like the booming smart terminal and online education markets, online travel is one of the few trillion-dollar-scale markets with vast “money-making” potential. The industry includes long-established leaders like Ctrip, which has been deeply involved in OTA for many years, as well as recently listed vertical search engine Qunar. Startups often choose less competitive services such as travel notes and guided tours. While it may seem like a flourishing field, in reality, by analyzing recent capital investments and the shareholders behind entrepreneurs, the online travel industry has already been monopolized by giants.
From the perspective of the industrial ecosystem, there are mainly three types of companies. The first are typical online travel distributors, represented by Ctrip (with a market value close to $8 billion), eLong, and Tongcheng. Their characteristic is operating platforms and recommending customers to offline service providers through their own platforms, earning commissions or rebates. This is currently the most mature model, where the larger the scale, the stronger the bargaining power.
The second type are vertical travel search engines. Qunar is the leader in this field, with a current market value close to $4 billion. Another search engine, Kuxun, is also a choice for many. Economic hotel players like Home Inns and Hanting have also recently joined the fray, attempting to keep resources in their own hands, but compared to internet companies, they still appear weaker.
The third type of company is a favorite among today’s entrepreneurs — those focusing on travel notes and guides. Companies like Mafengwo and Qyer have built strong reputations on both PC and mobile platforms. This model is more down-to-earth (I personally know friends who have already gotten involved in it). It can be seen as a functional + media-type application. After users complete online consumption on OTAs, they rely more on travel notes and guides to plan their trips.
Essentially, all online travel distribution is a classic form of O2O. Whether it’s high-end travel, outbound services, or related tool apps, they all integrate online resources with offline merchants. Given the current pace of development, the potential is still enormous, which has led to the inevitable outcome of OTAs being acquired by giants.
Among the BAT trio, Baidu holds Qunar, Baidu Maps, and Baidu Travel. News of its controlling stake in Ctrip and integration with Qunar continues to emerge. If the investment is completed, Baidu would take a lead over the other two, controlling half of the online travel market — keep in mind, just Ctrip’s investment portfolio includes startups like Lvping, Tujia, FlightAware, Qunar Hotel Manager, Chaneyouji, and Yidao Yongche, covering areas such as short-term rentals, hotels, travel, communities, travel notes, vacations, and car rentals.
On Alibaba’s side, there’s Amap, Qyer, Taobao Travel, App “Zai Shang Lu,” and the heavily funded Kuaidi Dache, gradually expanding its layout around pan-life e-commerce. Tencent controls eLong, Tongcheng, Dianping, QQ Travel, and Tencent Maps. Although it rarely leads in any industry except Dianping, relying on the potential of WeChat, it still has the possibility of coming from behind.
In a nutshell — the first phase of the online travel industry battle has ended. The OTA giants, who fought their way to prominence over the years, have now fully submitted to the giants. The future OTA battles are in the “post-harvest” phase of the giants and are basically no longer relevant to small and medium-sized internet companies.
Post-Harvest Phase: What Should Traditional Giants Do?
Online travel is similar to e-commerce, both being industries where traditional rules have been rewritten by internet companies. The rise of Alibaba and JD.com woke up Suning and Gome. In today’s increasingly internet-driven tourism industry, do traditional enterprises still have a chance to turn things around?
A typical case of a traditional giant striking back is HNA Tourism. Let me first introduce the background of this “tycoon” — it is part of the HNA Group and one of its core business lines. Its siblings include the most well-known HNA Aviation. The HNA Group has total assets exceeding 360 billion yuan, with over 100,000 employees. A company of this 60-billion-dollar scale, if placed in the internet circle, can also rival BAT in terms of capital.
However, HNA Tourism did not choose to confront internet companies head-on. Instead, it started with distinctive nearby travel, bypassing the internet platform layout and opting for an app to enter the online travel industry.It looks a lot like the approach of a startup, but upon deeper analysis, it’s actually a strategic move that allows for both offense and defense.
First, HNA Tourism’s advantage lies in group resource integration. But in the fields of aviation and hotels, HNA Tourism clearly cannot abandon profits to achieve the kind of across-the-board bargaining power that Ctrip has with its presence across the entire network. If it were to directly launch a similar OTA platform, users would be unlikely to accept it in the short term, and it could easily be suppressed by companies that have already claimed the territory. Such a head-on collision would give HNA very low odds of winning. The loss of reputation would be minor compared to the impact of a failed start on subsequent deeper moves.
Second, the shift from desktop platforms to mobile terminals is unstoppable. In the real-world environment of online travel, the frequency and functionality of mobile phones are crucial. Features like voice translation and photo-based travel notes have also been quickly accepted by users. Starting from the app side provides effective room for a giant like HNA to pivot when needed.
Third, HNA Tourism has accumulated brand advantages over the years, making it more acceptable compared to small app startups. Of course, in the end, it’s the product that speaks, but when faced with two similar apps, I believe users’ first choice will definitely be the relatively well-known and reliable one.
On the other hand, don’t forget HNA Tourism’s data accumulation. Just as Dianping is valuable, HNA, through massive user data analysis, can also provide substantial support for popular travel guide services. If internal resources like flights and hotels are further utilized in operations, initially attracting a certain scale of users shouldn’t be a problem.
One noteworthy point is that HNA Tourism Group initially invested 500 million yuan to operate and develop this app called “Yizhouyou.” Keep in mind, this scale is already at the level of a Series B funding round for most tool & information apps. In a word — it’s full-on tycoon style.
Behind the Tycoon-Style Investment: Where Are the Shortcomings?
For someone like me — not a seasoned traveler but someone who loves to stroll around — I’ve used quite a few similar OTA products. From the user experience perspective, “Yizhouyou” has very distinct characteristics: it focuses on nearby urban travel and attempts to become an all-in-one mobile self-service platform.
From a macro perspective, the concept of “smart tourism” has been mentioned multiple times by officials this year. Offline scenic spots, attractions, and hotels are also adopting a more open attitude toward integration with online businesses. Coupled with the reduced travel costs in recent years, the arrival of industry dividends is a strong boost for all OTA companies.
Looking at the specific product, “Yizhouyou” provides information on nearby scenic spots, hotels, food, shopping, travel destinations, navigation, voice-guided tours, panoramic guide services, as well as online ticket and hotel booking services. Beyond that, it offers a rather geeky yet absolutely essential feature that the industry still hasn’t solved well — finding restrooms in scenic areas. If you think that’s no big deal, just recall your own travel experiences... How does the group’s resource integration capability show itself? All of these are included in the “Activity Square.” Previously, on several major news apps, online “activities” were common, mostly centered around prize draws or exchanging for small gifts, offering limited value to users. But seeing HNA’s “Activity Square” has refreshed my understanding of this feature, once again showcasing its tycoon nature — directly giving away free tickets and flights to Brazil for the World Cup to netizens. And let’s be clear, this isn’t something money alone can pull off.
However, as HNA’s stepping stone into the mobile internet, “Yizhouyou,” while a smart move, still has plenty of room for improvement. For example, its user experience and interaction still lag behind mature apps. With a capital scale of 500 million yuan, the product team still needs to further strengthen its internet DNA.
In terms of internet operation strategies, it’s also an area HNA Tourism has rarely touched. This includes how to build a fan economy, establish membership systems, engage in social marketing, and even adopt hardware-like tactics like flash sales and group buying. It might also consider learning from these strategies. In terms of bargaining power with scenic spots, it’s hoped that HNA Tourism Group can leverage sufficient resources to bring more benefits to users.
Actively integrating existing resources + entering a relatively balanced and niche segment of the industry + large-scale investment are the highlights of HNA Tourism’s transformation this time. Whether it can change the OTA industry landscape with its distinctive app remains to be seen, but it does provide a clear case of transformation for many traditional enterprises eroded by internet companies.