Tongcheng Travel has reported a resilient second-quarter performance, with total revenue climbing 6.8% year-on-year to RMB 4.98 billion. The company's core OTA revenue rose 8.4% to RMB 4.34 billion, while tourism revenue contributed RMB 643 million. The results underscore a dual-engine strategy: stabilising the domestic baseline while aggressively scaling international operations.
Navigating domestic headwinds
CEO Ma Heping acknowledged the challenging environment, citing higher jet fuel surcharges and baseline airfares that dampened consumer appetite, particularly in May and June. Regional extreme weather also disrupted flight schedules and seasonal travel patterns. "Facing short-term headwinds arising from higher fuel surcharges, we proactively adjusted operating strategies, implemented targeted cost management initiatives, and continuously enhanced operational efficiency," Heping said.
The company responded by leaning into high-frequency platform engagement and shifting its domestic mix toward higher-value hotel stays. This strategic pivot helped offset the impact of reduced travel demand, particularly in the domestic aviation segment.
Monetisation efficiency improves despite user dip
User metrics showed a divergence: average monthly paying users (MPUs) fell 5.8% to 43.7 million, but monetisation per user improved significantly. Annual revenue per user (ARPU) reached RMB 80, a 10% year-on-year increase. Core OTA revenue growth of 8.4% was supported by higher transaction values, driven by a shift toward higher-star hotels and cross-selling in international segments.
Joyce Li, Chief Capital Officer, emphasised a focus on driving repeat transactions and loyalty among "high-value members." The company strengthened its global hotel supply, particularly in Southeast Asia and South Korea, and refined its international hotel products to address traveller pain points. As a result, international room nights sold grew by more than 50% in Q2.
Marketing innovation and efficiency
Marketing initiatives included the "Fuel Free Wednesdays" campaign, launched in response to fuel surcharge burdens, and a "regret-free card" for first-time international travellers, which addressed cancellation fee concerns and lifted conversion rates. Daily active users (DAUs) exceeded five million, and customer acquisition costs remained controlled, with sales and marketing expense ratio flat-to-down at 32.6%.
High-frequency users executed higher-value transactions, including multi-service cross-selling between transport and hotels. This focus on monetisation efficiency helped Tongcheng maintain profitability despite the challenging macro environment.
The company's international expansion aligns with broader industry trends. As seen in Philippines tourism growth, regional markets are increasingly important for outbound Chinese travel. Similarly, Saudi Arabia's leisure travel boom highlights the potential of emerging destinations.
Tongcheng's ability to balance domestic stabilisation with international scaling positions it well for future growth. As the company continues to innovate in marketing and distribution, it remains a key player in the competitive OTA landscape.
