ChinaTravelNews - The year 2019 marks not just the 70th anniversary of the People’s Republic of China, but also the 20th birthday of the country’s online travel industry. Buoyed by technological innovations and transformation in consumer demands, the travel sector has soared despite turbulence in the year.
As 2020 approaches, ChinaTravelNews presents you with an overview of 12 significant news events in the past year:
1. Beijing’s USD 63 billion new airport opened
The Daxing International Airport (PKX) was inaugurated on September 25, 2019, having been completed in less than five years.
China Southern Airlines and China Eastern Airlines are the anchor airlines at Daxing, while about 50 international airlines, including British Airways and Finnair, plan to move all or part of their operations in the near future. Chinese flag-carrier Air China claims 10% of the capacity at Daxing.
It is worth keeping an eye on how the airlines will leverage the mega aviation hub to expand their capacity, and how this second commercial airport in China’s capital city sets an example for other cities that also harbor dual-airport plans.
2. 20-year-old OTA Ctrip vows to become global No. 1 in five years
Celebrating its 20th birthday, Chinese online travel company Ctrip rebranded itself as the Trip.com Group, which groups subsidiary brands including Trip.com, Ctrip and Skyscanner under one banner.
With a controlling stake in Indian counterpart MakeMyTrip and a joint venture with US-based TripAdvisor, the Trip.com Group aims to become the world's top player within five years.
3. OYO has ignited consolidation of China’s economy hotels
In just two years, Indian hospitality startup OYO has grown exponentially in China’s budget hotel market and become a formidable challenger to traditional hotel management firms and OTAs. The company expanded its hotel portfolio with its controversial business models and has been under the media spotlight for the past year. It has inspired local hoteliers, OTAs and major investors to embark on similar hotel consolidation across the country.
4. The lesson of Thomas Cook’s demise
Thomas Cook collapsed in September 2019, after 178 years in the market. It is a lesson for global travel companies including traditional operators and agencies in China, which face increasing challenges in their transformation. Saddled with intensive operations and low margins, traditional players are also feeling the pinch from OTA competitions.
5. Social, e-commerce platforms and KOLs capitalize on travel
Chinese video-sharing platform TikTok partnered with a PMS provider in August 2019 to offer its users short-term rental service; e-commerce giant Pinduoduo tapped into travel reservations in September; and a travel KOL generated RMB 172 million (USD 24.5 million) in travel sales during the Chinese Singles’ Day festival. Where there is traffic, there's money.
6. Geopolitical impact on outbound travel
The outbound travel market has had a year of mixed results for multiple reasons. Outbound tourism is inherently full of uncertainties caused by external factors such as the Sino-US trade war and the Hong Kong social unrest. Travel players should diversify their portfolios to hedge against regional headwinds.
7. Reform on A-class attractions and destinations
The Ministry of Culture and Tourism mandated a series of reforms on A-class tourist attractions in 2019 to improve the quality of the culture and tourism markets. Meanwhile, local culture and tourism regulators teamed up with major internet or travel corporations to launch destination-specific one-stop travel service platforms.
8. China embraces inbound tourism
The National Immigration Administration has relaxed visa requirements for foreign visitors. Beijing allowed wholly foreign-owned companies to provide outbound travel services, WeChat Pay followed Alipay in allowing foreign travelers to make payments in China… These measures are encouraging international tourists to visit China, but issues with visa application, local payment, internet control and China’s brand image still need to be addressed.
9. Beijing-Shanghai High-Speed Railway going public
The operator of China’s most lucrative high-speed railway has submitted an application for a public listing on the Shanghai Stock Exchange. The Beijing-Shanghai High-Speed Railway has been operating safely for more than eight years, serving 1.1 billion passengers in total.
10. Chinese hoteliers on HOTELS 325 global ranking
Chinese hotel groups entered a new phase of expansion in the past year. In the annual 325 rankings of the HOTELS magazine in 2019, six Chinese groups made it to the Top 20 list. Between aggregators like China’s Jin Jiang International to India’s unicorn OYO Hotels & Homes, “the complexion of HOTELS annual 325 is evolving at a pace not seen before”, the publication stated.
11. Major Chinese airlines faced headwinds in profitability
In the second half of 2019, China’s civil aviation industry had to grapple with multiple challenges including macro-economic slowdown, systematic security risks, unstable industry growth and decreases in earnings. Four major Chinese carriers - Air China, China Southern, China Eastern and Hainan Airlines - reported losses for the first six months of the year, and Chinese carriers have been losing money on their international routes for the past three years, to the tune of USD 3.1 billion in 2018.
12. Established giants and unicorn startups going after tours and activities
Hong Kong-based destination travel platform KLOOK raised USD 225 million in a funding round in April 2019, and its Berlin-based rival GetYourGuide chalked up USD 484 million in its funding round in the following month. Both rounds were backed by Japanese conglomerate Softbank.
The tours and activities sector is growing robustly, with established players like Booking Holdings, Airbnb, Expedia and Trip.com Group expanding their presence in the market. It is intriguing how this sector will continue to evolve.
