Online travel firm Tuniu seeks a cut in outbound travel above rivals

[Photo by Zhen Huai/Asianewsphoto]

China's online travel firm Tuniu is seeking to increase its outbound travel offerings to carve out a place of its own following the merger of bigger rivals Ctrip and Qunar last year.

While a partnership between industry leaders Ctrip and Qunar has put a bitter pricing war to end and raises prospects for improved margins going forward, smaller players like Tuniu have been ramping up investment, especially in outbound travel offerings, to distinguish itself from its bigger rivals.

Despite seeing its shares, listed on the NASDAQ, halved from its all-time-high of 24 US dollars since late 2014, the company, which is based in the Eastern Chinese city Nanjing, has made aggressive investments in expanding overseas travel offerings and improving on-the-ground services at destinations popular with Chinese.

Such investment has pushed Tuniu's gross margin down further to 4.8 percent in 2015 from 6.4 a year earlier, compared with 72 percent for Ctrip and 65 percent for Qunar during the same period.

The company's chief operating officer and co-founder Alex Yan said such investment is necessary to prepare the firm to capitalize on China's 120 million outbound travelers, the world's largest, and also the biggest spenders overseas.

"As per capita GDP continues to grow in China, the outbound travel boom will be a rewarding business worthy of our investment." Yan said this week on the sidelines of a travel expo in Beijing.
He added that such expenditures are expected to be capped below last year's level and become more efficient.