China Online Travel Overview Fifth Edition: The Giant Has Awoken

China Online Travel Overview Fifth Edition: The Giant Has Awoken Published June 2012 Analysts: Roy Graff, Chetan Kapoor, Deepak Jain, Douglas Quinby


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Many travel markets have been slow to recover from the global recession, but China's travel industry tells a very different story. China's total travel market will nearly double between 2008 and 2013. The online market has been particularly explosive: consistent double-digit growth will drive online bookings past the US$15 billion mark by 2013. And with several of the country's large Internet players actively investing in the travel category, market growth is poised to remain strong for the long term.

PhoCusWright's China Online Travel Overview Fifth Edition: The Giant Has Awoken presents market sizing and projections for China's total and online leisure and unmanaged business travel markets from 2009-2013. In addition, the report discusses the key developments that are shaping China's rapidly expanding travel and tourism industry.

Report highlights include:

  • Total market and online leisure/unmanaged business travel bookings for 2009-2013
  • Bookings by major travel product segment – air, hotel, rail and car rental – along with analysis of key segment drivers and dynamics
  • Analysis of the explosive online travel market, including share by segment, online penetration and unique characteristics
  • Comparison of supplier-branded websites and online travel agencies (OTAs), including key players, bookings and projected growth rates through 2013
  • Role of traditional travel agencies and the continued importance of offline fulfillment
  • Examination of the OTA landscape – local versus global players, recent activity and comparison of business models and offerings
  • Impact of government policy and market regulation, social media, mobile, flash sales and traveler review websites

PhoCusWright's China Online Travel Overview Fifth Edition: The Giant Has Awoken provides a comprehensive look at China's unique and increasingly influential travel marketplace.

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PhoCusWright's Asia Pacific Online Travel Overview Fifth Edition presents market sizing and projections for the total and online leisure and unmanaged business travel markets from 2009-2013. Figures for 2009-2011 are based on actual company results and selected projections for 2011. Market sizing for 2012-2013 is projected. Estimates and projections are for gross bookings – the retail value of travel sold after cancellations.

Travel market sizing for China is based on relevant supplier revenues from airlines, hotels, car rentals and rail. Airline sizing excludes other revenues (e.g., freight, ancillary sales, cancellation charges). Hotel figures are based on room revenue. Figures for car rental are based on rental revenue, while rail figures are based on passenger ticket revenue. Totals may not always equal 100% due to rounding.

Supplier revenues are attributed to the market where the company is based or headquartered. For example, 100% of Air China's passenger revenue is attributed to China.

Both leisure and unmanaged business travel services are included in the online travel market sizing and forecast figures. Unless otherwise indicated, all online gross bookings and share figures refer to leisure/unmanaged business travel. Unmanaged business travel refers to all air, car and hotel expenses associated with business travel in firms that do not have a travel policy dictating the channel, type of travel, supplier or fare/rate used. Corporate online booking systems are excluded from this analysis. This report does include corporate travel bookings in the total travel market figures and in the total revenues for each segment. However, it does not directly address the size and dynamics of the corporate travel market, except to the extent that they shape key trends affecting the size and development of the total and online travel markets. Some corporate bookings made through leisure channels, such as online travel agencies (OTAs) and supplier websites, may be included in online totals because of the difficulty in distinguishing these bookings from leisure sales.

PhoCusWright defines online travel as travel services that are paid for online. Travel that is researched online but booked offline using company telephone numbers provided on websites is, wherever possible, excluded from online gross bookings figures. PhoCusWright has made estimates for the percentage of offline (call center) bookings made via OTAs in China. These bookings are excluded from the total online number.

PhoCusWright builds its estimates and forecasts from interviews with more than 50 travel executives across Asia Pacific (APAC) regarding their companies' Internet sales, marketing and technology investments, challenges, strategies and expectations. Their responses have been vetted and aggregated to determine market size for supplier websites and OTAs. PhoCusWright also considers historical growth and economic trends when developing its forecasts, and reviews data from public filings of listed companies, government statistics and select third-party data sources.

Market sizing is presented in both the local currency – Chinese renminbi (or yuan, ¥) – and U.S. dollars (US$). Local currencies are converted at the average rate for the period they represent. References to the "travel market" are understood to cover the total travel market, and "traditional travel agency" refers to principally offline travel agencies. "Online penetration" denotes the percentage of people shopping and buying travel online, while "Internet penetration" denotes the percentage of people with Internet access.