Tongcheng Travel, one of China's leading online travel agencies, posted a 6.8% year-on-year increase in second-quarter revenue, reaching RMB 4,987.0 million (approximately US$700 million). The growth, driven by sustained demand in domestic travel and expansion in lower-tier cities, came despite a slight dip in monthly active paying users.
Adjusted net profit for the quarter rose 9.8% to RMB 850.9 million, up from RMB 775.1 million in the same period last year. The company's ability to convert revenue into profit improved, reflecting tighter cost controls and higher-margin ancillary services.
User metrics show mixed trends
Average monthly paying users (MPUs) declined 5.8% year-on-year to 43.7 million in Q2 2026, down from 46.4 million in Q2 2025. However, annual paying users (APUs) for the twelve months ended June 30, 2026, increased 0.9% to 253.9 million, up from 251.7 million in the prior-year period. The divergence suggests that while monthly engagement softened, the overall customer base continues to expand.
Notably, non-first-tier cities now account for over 87% of Tongcheng's total registered users, underscoring the company's strategic focus on China's vast lower-tier market. This demographic has become a key growth engine for domestic travel, a trend echoed by other players in the region.
The company's performance aligns with broader industry momentum. For instance, China's budget hotels are becoming a gateway for international visitors, and Tongcheng's stronghold in smaller cities positions it to benefit from rising travel demand in these areas.
While Tongcheng did not break out international revenue, its partnership with Fliggy and Ryanair to sell European low-cost fares highlights the growing appetite for outbound travel among Chinese consumers. As international travel rebounds, Tongcheng's ability to offer cross-border options will be crucial.
The company's results come amid a competitive landscape where OTAs are vying for market share. Rivals like Trip.com Group and Fliggy have also reported strong growth, but Tongcheng's focus on value-conscious travelers in lower-tier cities differentiates its approach.
Looking ahead, Tongcheng is likely to continue investing in technology and user experience to retain its customer base. The slight decline in MPUs could be a concern, but the steady growth in APUs suggests that the company is successfully converting occasional users into loyal customers.
For travel industry professionals, Tongcheng's performance offers insights into the health of China's domestic travel market, which remains a critical driver for global tourism. As the company expands its offerings and strengthens its position in non-first-tier cities, it will be a key player to watch in the coming quarters.
