Tourists admire sand sculptures on Labor Day in Weihai, Shandong, May 1.
Last year, online travel transactions hit 200 billion yuan (US$31.96 billion), up 27.7% year-on-year in China, according to iResearch, a research and consulting group. But that only accounts for about 7.7% of the total travel market.
“The online travel market is growing faster and will be bigger than other countries. We have good local government support and the potential is enormous,” said Henrik Kjellberg, chairperson of eLong, a Nasdaq-listed company providing online hotel reservations in China.
The expanding community of independent travelers who demand better service has driven the online gains. The tropical coastal city of Sanya in Hainan province received over 700,000 tourists during the week-long Spring Festival holiday last year, with independent travellers accounting for about two thirds of the total, according to the local tourism bureau.
The State Council, China’s cabinet, decided to develop the tourism sector into a strategic pillar industry supporting economic growth in 2009, and 2014 is the National Tourism Administration’s “Year of Smart Tourism.” A national smart tourism service center in Zhenjiang and 33 pilot smart tourism cities nationwide are doing everything in their power to improve the independent travel experience.
Smart tourism is a key part in upgrading the tourism sector from a traditional service industry to a modern one, said Shao Qiwei, director of the administration.
Internet companies have been investing heavily in the online tourism sector. Some online travel firms simply act as agents and sell tickets and hotel bookings online, some offer price comparison services, while others combine offline and online resources to roll out fully customized package trips, and communication platforms for travelers to share experiences.
The three big internet players Baidu, Alibaba and Tencent, have all made forays into the online travel market, with Baidu’s investment in Qunar, Tencent’s investment into eLong and 17U, in addition to its own QQ Travel service and Taobao’s Taobao Travel.
There are also new players, such as LY and Tuniu, which itself is applying to be listed on the Nasdaq. Both companies announced this week that the Nasdaq-listed online travel agency Ctrip has become one of their shareholders.
Like all e-commerce, online travel is nothing if offline services are poor.
The purpose of online travel services is to make travel easier and cheaper, but whether the trip is pleasant mainly relies on service quality and infrastructure, said Dai Bin, director of the China Tourism Academy, a think tank with the administration.
According to the academy, despite its scenic tropical location, Sanya fell well behind other destinations in a Q1 satisfaction survey due to its inadequate public and commercial infrastructure.
“If you don’t even have access to WiFi, then smart travel apps are almost useless,” Dai added.
Dai wants local governments to focus more on infrastructure and public services while leaving most of the platform development and promotion to market players who understand consumers.
Online travel agencies capitalize on China's smart tourism boom
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