Flying high on China’s travel boom
Online bookings firm Tuniu’s co-founder Yan Haifeng says the innovation and energy of its young team is driving the business
Yan Haifeng, the co-founder of online travel company Tuniu, likes change — which is just as well, given his industry is constantly evolving amid what has become an outbound travel boom in China.
“In the internet world, change is normal. We are an internet start-up, so we have to embrace it,” said the company’s president and chief operating officer.
The youthful-looking 34-year-old co-founded the leisure travel website in Nanjing in 2006 with Yu Dunde, who’s now the company’s chief executive and chairman.
Unlike major players in the sector such as Ctrip and Qunar which focus on flight and hotel booking business, Nasdaq-listed Tuniu mainly targets tour group sales and package tours.
Yan says the country’s online travel sector remains fiercely competitive, with the high rise in traveller numbers attracting more startups all the time.
And Tuniu, he added, needs to keep an open mind on innovation to keep ahead of the game.
“Ten years ago, when most started offering air ticketing and hotel bookings, we didn’t want to do the same. Tuniu took a different approach by providing non-standardised package tours and wanted to be an exception in the market,” Yan said.
“When other people go to the left, we want to turn to the right to do something different.”
Creating price wars still remains a common strategy among rival firms competing for market share in hotel bookings, but Tuniu is planning new products in that segment instead of trying to attract consumers with just low prices, he added, without elaborating.
A recent study by Beijing-based internet consulting firm iResearch showed China’s online travel industry surged 37.5 per cent in size last year, with the value of transactions though e-commerce platforms worth 425.3 billion yuan. It estimates that number to grow another 25.3 per cent this year, to 532.9 billion yuan.
Those are big rises, but Yan insisted his firm expects to grow even faster.
“We cannot afford to slow down, so once we feel we are not moving fast enough, we have to think about how to make more changes,” he said.
Now a decade-old, Tuniu is not a young company anymore, but with its team averaging 24 years old, it certainly has a young outlook on business.
“Young people like change, and they can adapt quickly. They always surprise me with their new ideas about products and sales channels,” Yan said.
“I also don’t like doing something repeatedly. I also have a young mind to be able to work with my team on innovations.”
Tuniu is also different from its peers in that it targets predominantly leisure travellers only.
The company is well-known for its ability to customise tours and explore new attractions to cater for what has become the increasingly diversified demands of Chinese tourists.
Last year, it also set up its own media company to produce TV programmes to promote the tourism industry.
Since the beginning of the year, Tuniu has now stepped up efforts to expand its flights and hotel bookings business, a sector still dominated by its Ctrip and Qunar, which Yan hopes will become a new growth driver.
He says their merger in October last year should also mean less of a battle in the market on prices.
In the first quarter of this year, Tuniu’s revenue soared 62.8 per cent to 2 billion yuan from a year ago, driven by a strong growth in tour bookings.
However, its net loss for the period more than doubled to 539.5 million yuan as intense competition took its toll on margins.
“For our new business lines, I let a younger team take responsibility because they are creative. They are already coming up new ideas for our mobile app,” he said.
While that new business line is yet to turn a profit, Tuniu still needs to maintain solid income from its existing business, leisure travel.
“We have some more experienced and older executives taking care of the leisure business. The growth of this segment may be slow, but it’s profitable and stable.
“And this is how we maintain a balance between the new and the old,” he said.
Even after a decade, Yan still says managing the company is like “a child learning to walk after a number of falls”.
“It doesn’t matter we make mistakes, the most important thing is we find the right direction, and also find the right people,” he said.
Tuniu launched its first mobile app in 2011, which Yan admits was a failure because it was still too early then for consumers to happily go online to buy travel.
“It was then a bit late when we relaunched the app in 2013 — but we are sure the direction is correct this time,” he said.
“That was a lesson well learned.”