Tongcheng Travel Holdings’ revenue generation from categories other than accommodation reservation and transportation ticketing services rose considerably in the third quarter (Q3) of this year. Revenue from what is described as “others” i.e. advertising, hotel management services, tourism offerings and corporate travel rose to RM B491.9 million, as compared to RMB 242.6 million for the July-September period of 2022.
In terms of percentage contribution, these services cumulatively increased their share from 11.1% last year to 14.9% this year out of a total RMB 3,299.3 million revenue generated in Q3. The growth of revenue from all these categories means that the company’s plan to opt for diversified revenue streams with a balanced mix is in the right direction.
In 2023, the company has made significant progress when it comes to revenue from segments other than accommodation and transportation. Revenue from others was RMB 316.3 million in the April-June period of this year.
Building app stickiness
The company has been focusing on going beyond transactional revenue by working out ways for its users to access its app frequently.
Once intent and context of the user come into the picture via the usage of app for reasons beyond bookings, then Tongcheng is in a better position to target advertising revenue.
The marketing team has taken initiatives to build what it calls “a fun and entertaining brand identity” among the younger demographic.
As a part of its branding initiatives, the company joined hands with Luoyang Museum and initiated events that showcased traditional Chinese costume culture. Also, the company has continued to collaborate with Tencent Games, chose to integrate e-sports games into its user engagement program and conducted interactive events, cooperated with Tencent Music, sponsored two grand music festivals in Macau, and co-hosted a music festival in Jiangxi Province. Tongcheng chose to strengthen its membership program by introducing exclusive benefits and privileges to members, for instance, free access to major tourist attractions. Increased advertising and promotion expenses led to the overall rise in the company’s selling and marketing expenses increasing by 35.7% to RMB 1,271.5 million in Q3 as compared to the same period of last year.
As part of its integrated efforts to monetize its association with events, the team at Tongcheng explored various hotel stay scenarios, catering to users’ emerging interest in music festivals, concerts, and e-sports events.
These efforts also eventually show in monthly active users (MAU) and monthly paying users (MPU).
Average MPUs increased by 20.1% year-to-year to 44.2 million at the end of the July-September period. Average MPUs have been growing steadily, as the base was 24.3 million at the end of Q4 in 2022, 41.4 million in Q1 of this year, followed by 42.2 million in the previous quarter. APUs for the twelve months ended September 30, 2023, reached a record high of 224.7 million, stated the company.
The company shared that registered users residing in non-first-tier cities in China accounted for around 87% of the total registered users. In Q3, over 71% of new paying users on the Weixin platform were from non-first-tier cities in China.
International business
In the previous quarter, Tongcheng also chose to rebuild its international business.
The team shared that its air ticket volume increased by more than 30% compared to the same period in 2019, with international air ticket volume recovering significantly and surpassing the level of 2019.
The company also stated that its accommodation business attained “another record high in volume and revenue”. In Q3, revenue from the accommodation business increased by 37.7% year-to-year from RMB 818.7 million to RMB 1,127.4 million. Room nights sold grew by 100% compared to the same period of 2019.
At the same time, looking at some of the trends from the past few years, Tongcheng also managed to capture the rising demand for short-haul travel and boosted the monetization capability of its bus ticketing and car-hailing businesses.
