Summer vacation is here, big companies are scrambling for cultural tourism

Why are many large companies rushing to invest in cultural tourism this summer? This article will explain the reasons, and is also recommended for companies and individual business owners.

Summer vacation is here and traveling has become even more popular.

In the past two years, from Zibo to Harbin to Tianshui and then to Kaifeng, cultural and tourism industries in various places have been trying hard to keep up with this huge traffic boom, and major platforms also want to get a piece of the pie.

OTA platforms such as Ctrip, Fliggy, and Tongcheng have all started to promote products through pictures, texts, and short videos, while content platforms such as Douyin and Xiaohongshu have changed from simply selling traffic and earning advertising fees to engaging in transactions.

The platforms were filled with smoke, and a battle of offense and defense had already begun.

Douyin is responsible for the attack. With nearly 800 million daily active users, Douyin has a user portrait and consumption habits that are different from those of OTA platforms. This is an important opportunity for hotel and travel businesses to acquire customers, divert private traffic, and at the same time check and balance the voice of OTA platforms.

Ctrip and other companies naturally have to defend themselves. In addition to holding on to their high-star hotel resources, they are also accelerating the opening of stores in the sinking market.

This battle requires preparation for long-term competition.

1. Douyin and Xiaohongshu, don’t miss out on the cultural tourism cake

In recent years, the redistribution of traffic on different platforms has rewritten many industries, and cultural tourism is one of them.

With Douyin having nearly 800 million daily active users and Xiaohongshu having over 100 million daily active users, content platforms are becoming platforms that consumers cannot avoid when making travel decisions. This has also helped many travel destinations become popular on Xiaohongshu and Douyin, and have frequently appeared in hot searches.

The two have different ways of boosting: Douyin has popularized local food, drink and entertainment, becoming an important channel for promoting cultural tourism , such as Zibo BBQ, Guizhou Village Supermarket, Harbin Ice and Snow World, Tianshui Malatang, etc., while Xiaohongshu has popularized young people's travel methods, becoming an important platform for young people to find partners , such as special forces tourism, CityWalk, county tourism, and travel partners.

OTA platforms are the beneficiaries of this overwhelming traffic. Take Ctrip for example. Since the recovery of the tourism industry in 2022, it has been profitable for 8 consecutive quarters. Its net revenue in the first quarter of 2024 reached 11.9 billion yuan, a year-on-year increase of 29%; its net profit was 4.3 billion yuan, a year-on-year increase of 28%. Among them, because many provinces have increased their market promotion efforts, domestic hotel and air ticket bookings have increased by more than 20% year-on-year.

But Douyin and Xiaohongshu do not want to and cannot miss out on the big cake of cultural tourism. Compared with the existing market of OTA platforms, they are incremental markets.

"Before the emergence of Douyin and Xiaohongshu, Dianping, Meituan and even Mafengwo were all meeting the clear travel needs of the original tourism market, but Douyin and Xiaohongshu are meeting the unplanned and occasional needs of users," explained Wu Yanwei, content director of Youmi Cloud.

In the past two years, Xiaohongshu and Douyin, which have a lot of traffic, have tried to penetrate into the transaction links of the cultural and tourism business, but their routes are different.

Douyin’s hotel and tourism business is included in its local life business. It was once aggressive in its actions but its overall attitude was wavering.

In 2018, Douyin first entered the hotel and travel business, and had a honeymoon period with platforms such as Ctrip and Tongcheng, directing traffic to the third-party mini-programs of these platforms for transactions; in 2019, Douyin directly connected with hotel and travel merchants, and gradually enabled the booking function on the merchants' homepages.

Douyin Life Service was launched in January 2021. That year, Douyin used commission rates lower than those of OTA platforms to attract hotel and travel merchants to settle in, mainly selling group purchase coupons, which quickly drove the GMV growth of local life business.

In May 2023, Douyin launched the calendar room function, which allows consumers to book immediately. Previously, the hotel packages sold by Douyin were pay-first-come-later, and consumers who randomly checked in the store might face situations such as "no room" and "price increase". Since then, OTA platforms have cut off supply chain cooperation with Douyin and turned to cooperation with other short video platforms.

Douyin attached great importance to the hotel and travel business, and once upgraded the hotel and travel business to the first-level department of Douyin's life services, parallel to the store business. However, at the end of March this year, some media reported that "Douyin's hotel and travel business will no longer be an OTA model, but will return to the model of selling traffic." Although Douyin later denied this news, at the end of June, Douyin reported that the commission rate of the accommodation industry had increased , which was interpreted by industry insiders as "the hotel and travel business is having difficulty making profits."

Xiaohongshu was originally like Douyin, using notes to promote products and then jumping to third-party platforms such as Ctrip and Meituan for transactions. It was not until 2020 that it reached a cooperation with "Orders are Coming", which directly connected the merchant's booking entrance, attracting homestay merchants and hotel and travel merchants to settle in Xiaohongshu to run their businesses.

At the end of April 2023, Xiaohongshu began to deploy group buying projects. Some local life merchants launched accommodation and catering group buying packages in their account stores, and the relevant functions are still supported by "Orders are Coming". In March this year, Xiaohongshu invested tens of millions of yuan in "Orders are Coming", which was seen by the outside world as a signal that Xiaohongshu would further develop local life and cultural tourism businesses.

If we use one sentence to summarize the cultural and tourism business layout of Douyin and Xiaohongshu, it can be said that they have made a lot of moves, but they need to take their time to chew on this piece of cake.

2. Hotel and travel merchants choose differentiated operations

Why do hotel and travel merchants who have been operating on OTA platforms for many years switch to Douyin and Xiaohongshu? The reason is simple. They are attracted by the latter's differentiated customer base and sales categories, and can also lay the foundation for diverting traffic to their own private domains.

"Wherever the traffic is, that's where the hotel and travel businesses should go to do marketing." Wei Changren, founder of Jinlv.com, said that content marketing on Douyin and Xiaohongshu has the dual functions of sales conversion and brand promotion.

Hotel and travel businesses place ads on content platforms with the aim of attracting and converting differentiated customer groups.

Wu Yanwei pointed out that the user data held by each platform is actually different: the advantage of OTA platforms such as Ctrip lies in user order data, which can infer consumers' consumption level and consumption habits. However, Xiaohongshu or Douyin have user interest data, which can provide users with accurate recommendations. The richness of information and the degree of category segmentation delivered by content platforms are better than OTA platforms.

Song Shi, a practitioner at an agency operation agency, said that the core reason why hotel and tourism companies want to create accounts on Xiaohongshu is to gain female fans in first- and second-tier cities with certain consumption power. After testing, fans on this platform have a certain degree of stickiness and platform jump ability.

However, Xiaohongshu and Douyin entered the tourism industry late and have little experience. Merchants on both platforms have chosen to enter the market with differentiated categories. In other words, the products sold by merchants on these two platforms are different from those sold on OTA platforms.

Industry insiders pointed out that regular calendar rooms and routes are already very mature on OTA platforms such as Ctrip, but some value-added products such as meal coupons, afternoon tea packages, unused rooms, and airline "free flight" multiple-trip cards from high-star hotels have better sales effects on Douyin and Xiaohongshu. Wei Changren said that these are both incremental for hotels and airlines, and channel distribution strategies can also be diversified. These products can be appropriately discounted to meet the impulse consumption needs on short video platforms.

Song Shi has the same observation. He believes that the core purpose of airlines cooperating with Douyin and Xiaohongshu is to get more people to buy air tickets on the airlines' own apps and mini-programs and form a habit. At the same time, according to preliminary statistics from the civil aviation department, only more than 300 million people in China have taken a plane, which means that more than 1.1 billion people have never experienced flying. Compared with business travel users on OTA platforms, airlines are willing to come up with better promotional mechanisms to attract incremental customers on Douyin and Xiaohongshu.

A similar phenomenon has also occurred in hotel chains, including Jinjiang, Huazhu, Atour, Marriott, etc., which have begun to launch APPs and mini-programs, making member private domain channels a standard feature. Wu Yanwei said that the hotel's private domain transaction portion does not need to be deducted by the OTA platform. More importantly, the company can master its own "marketing sovereignty", covering the entire process of communication, customer acquisition, purchase, and repurchase, and giving users a more personalized consumption experience.

However, if merchants want to operate Douyin and Xiaohongshu well, the operating threshold is high and the cost is not low. Because in addition to commissions, merchants also need to find an agent to continuously produce content on Douyin, regularly start live broadcasts, and invest high costs to buy traffic. At the same time, they also need to find experts to post notes and buy traffic on Xiaohongshu.

Douyin has always emphasized that its commission is lower than that of OTA platforms. Recently, there is news that starting from July 1 this year, Douyin will adjust the commission rate for the accommodation industry from the original 4.5% to 8.0%. Even so, it is still lower than the 15%-20% of the top OTAs.

In Wei Changren's opinion, when making transactions on Douyin, one must not only consider the platform's commission, but also the merchant's traffic and payment of commissions and service fees to the agent operator. The total cost may not be cheaper than that of the OTA platform, and the ROI and write-off rate of cooperation with influencers cannot be guaranteed.

Xiaodong, a practitioner in the tourism industry, said that cultural and tourism businesses do not actually put their core businesses on Douyin and Xiaohongshu, but they have to pay attention to them.

3. OTA Platforms’ Defense

Although Xiaohongshu and Douyin cannot directly attack OTA platforms at present, the user and traffic advantages of these platforms cannot be underestimated. Hotels and airlines will direct some transactions to private domain transactions, which will also bring some impact to OTA.

Faced with competition, OTA platforms have opened social sections within their apps to encourage users and merchants to post graphic notes and short videos, while also frantically opening stores in lower-tier markets.

In Fliggy’s current social section, the publishers are mainly personal accounts, who update their feelings and simple travel guides about a particular trip, which is more like a personal version of Moments, with the number of interactions concentrated in the dozens or even single digits. In Ctrip’s current short video content section, the publishers are mainly travel agencies and tour guides, and the interactive content is mainly price inquiries, with an atmosphere more inclined towards sales and transactions.

In such a section, it is difficult to produce content that goes beyond the circle, but for businesses that want to accumulate private domains, it is still a vertical customer acquisition channel.

OTA platforms have also begun to increase their competition for hotel and travel merchants in lower-tier cities, and platforms such as Ctrip and Tongcheng have vigorously developed stores in the sinking market. According to Ctrip's 2023 annual report, Ctrip has opened 5,700 offline stores in more than 300 cities in China to snatch more consumers in lower-tier cities.

Many industry insiders said that the main moat of OTA platforms lies in the accumulation of supply chains and their binding with large hotel chain groups.

The biggest cake in the hotel and tourism industry - high-star hotels - is still in the hands of OTA platforms. Douyin and Xiaohongshu are currently biting more into the transportation and scenic spot sectors, and the hotel sector is also mostly homestays, single hotels or hotels in low-tier cities.

Wei Changren concluded that the advantages of OTA platforms are mainly reflected in three aspects: first, the overall service capabilities are stronger, and the OTA platform has been polished for many years; second, the product system on the OTA platform is richer, one-stop purchase is possible, and there is also a member points discount system; third, the ability to control upstream suppliers and some exclusive capabilities. For example, Ctrip buys out 10 rooms of a popular hotel every day, and has a stronger ability to control rooms.

However, judging from the latest financial report, the contribution of the hotel business to Ctrip's revenue has declined, which is probably not a good sign. In the first quarter of 2024, the revenue share of the accommodation booking business fell to 38%, while this business once contributed 45%, and the revenue share of the transportation ticketing business rose to 42%.

Revenue of various businesses in Ctrip’s financial report

Accommodation business has high customer price per customer, more service types can be extended, and ticket prices are transparent, which is a low-profit business. OTA platforms such as Ctrip have always been "traffic diversion and accommodation monetization." Xiaodong pointed out that the proportion of transportation ticketing business revenue has now surpassed that of hotels, which means that Ctrip needs to stabilize the basic plate of high-star hotel and travel business as soon as possible.

At the same time, in order to resist the siege of content platforms, Ctrip has spared no effort in marketing and subsidies. In the first quarter of 2024, sales and marketing expenses were 2.3 billion yuan, up 32% year-on-year. During the same period, Ctrip's commission income (business travel management business) reached 500 million yuan, which was surpassed by advertising income (included in others) of 1.031 billion yuan. Since the first quarter of 2023, this momentum of overtaking has already appeared, and it has continued to expand in this quarter.

However, the offensive momentum of Douyin is also slowing down and entering a period of adjustment.

According to media reports, Douyin Lifestyle Services will reorganize the three parallel departments of in-store catering, in-store comprehensive services, and hotel and travel services into three major regions, namely North, Central, and South, as well as the NKA department that serves large national chain merchants. In May this year, Pu Yanzi, the head of commercialization of Douyin Group, also served as the head of Lifestyle Services.

Songshi said that the adjustment of the entire structure, including Pu Yanzi's resume, shows that Douyin's local life business will still focus more on commercialization (advertising) rather than e-commerce, and more on large customers rather than hotel and tourism business.

This offensive and defensive battle will not end in the short term. As for who can take a bigger bite of the cake, it depends on how each company balances profits and growth.

Author: Su Qi; Editor: Wei Jia

Source: WeChat public account: "Dingjiaoone (ID: dingjiaoone)"