Market Research on China - Euromonitor International

Rising market demand for leisure and business travel underpins healthy growth

With a steadily growing domestic economy, business travel is rising strongly. At the same time, local consumers are in search of both domestic and outbound tourism products for leisure purposes, supported by growing disposable incomes and driven by mounting pressures in both life and work. As a result, the travel market in China experienced healthy value growth in 2014 even after years of buoyant double-digit annual growth over the review period.

Explosive growth for mobile channel amid robust online travel sales

From a tiny base, mobile travel sales registered explosive value growth in 2014, driven by the greater convenience of on-the-go consumption, in line with the rapid penetration of smartphones and tablets in China during the review period. At the same time, many travel agencies and direct suppliers have placed more emphasis on the mobile travel sales channel, with aggressive marketing and promotional activities, resulting in more competitive pricing, thus attracting a fast-growing number of mobile travel buyers in 2014.

Strategic partnerships among varied stakeholders in tourism on the rise

Amid the increasingly fiercer market competition, relevant stakeholders in tourism have formed partnerships to remain competitive and to provide more affordable travel products and services, at the same time offering consistent quality. Ctrip.com formed strategic partnerships with eHi Car Services in 2013 and various tourist attractions in China, such as Zhangjiajie, in 2014, which further consolidated ctrip.com’s leading position in intermediaries online sales.

Online travel portals increasingly popular among local consumers

In addition to online travel agencies, represented by ctrip.com, other online travel-related portals are also popular among domestic consumers. Such metasearch engines as qunar.com have developed dynamically over the review period, fuelled by the soaring demand for online information search related to tourism. To cater to the rocketing demand and to seek new growth engines, qunar.com invested in 517 Best, the largest chained travel agency in West China in 2014, and became the second largest shareholder in this chained business. By this investment, qunar.com gained a foothold in the developing O2O (online to offline) market.

Stable forecast performance expected

Given the forecast stable economic development in China, market demand for both leisure and business travel is anticipated to be stable, with the major driving force to come from car rental and online travel sales, both expected to enjoy double-digit CAGRs in constant value terms from 2014 to 2019. The rising demand for self-drive trips for both leisure and business and the wide gap between licensed drivers and the number of private cars in China, due to purchasing restrictions implemented by some local governments to reduce air pollution and traffic jams, are major factors behind the strong forecast growth for car rental. Consumers’ growing acceptance of online purchasing, due to its greater convenience and more competitive pricing, will also fuel online travel sales over the forecast period.

Source: Euromonitor