Avid Chinese booking of holidays online fuels industry boom

Trend reflected in Japan and Southeast Asia

PUBLISHED : Thursday, 24 December, 2015, 12:02pm
UPDATED : Thursday, 24 December, 2015, 12:02pm

China’s enthusiasm for booking holidays online is being reflected in Japan and Southeast Asia.

Fast-expanding digital travel sales in the mainland are fuelling a boom in the industry across Asia-Pacific, which would enable the region to surpass North America as the world’s biggest online travel market by 2018.

That growth on the mainland, however, could spell further consolidation among the leading online travel service providers there, analysts said.

New York research firm eMarketer on Tuesday forecast China’s digital travel sales to reach US$131 billion by 2019, up from an estimated US$66 billion this year.

“As with retail e-commerce, China’s digital travel market leads the region thanks to a massive population, a rising middle class that enjoys travelling and high mobile adoption,” said eMarketer analyst Christopher Bendtsen.

The mainland already makes up the bulk of total Asia-Pacific digital travel sales, which eMarketer predicted to reach US$243 billion in 2019 from an estimated US$139 billion this year. For more detail, see the table below.

Bendtsen pointed out that Asia-Pacific digital travel sales “will surpass Western Europe next year and North America in 2018” on the back of continued heavy activity in China.

He added that India and Southeast Asia would also see rising digital sales over the next few years. Japan remains the next big digital travel market after mainland China in Asia. eMarketer said digital travel sales in Japan is projected to hit US$34 billion in 2019 from the forecast US$27 billion this year.

Alicia Yap, the head of China internet research at Barclays, said in a report that the mainland digital travel market’s sales growth has been helped by industry consolidation led by International, the country’s largest online travel agency.

According to Ctrip, its large portfolio of minority holdings in different business categories – including budget hotels, car rental firms and online travel agencies – was worth US$848 million.

Data from Analysys International and Barclays showed that Ctrip had a 36 per cent share of China’s overall digital travel market last year.

Its closest rivals were Qunar, with a 22.5 per cent share, and e-commerce giant Alibaba Group’s Alitrip, with 12.4 per cent.

Following its blockbuster merger with Qunar in October, Ctrip now has a commanding lead in the mainland digital travel market and has put a stop to aggressive price discounting.

Yap, however, said the landscape for the leisure and packaged tour booking segment was relatively fragmented, with smaller online travel agents providing services tailored towards different groups of travellers.

Internet giant Tencent Holdings is looking to raise its profile in the digital travel market by proposing to buy the remaining shares it does not own in eLong, an online travel firm in which Ctrip has a 38 per cent stake.