On Thursday, the US media quoted multiple sources as saying that Tongda and Ctrip-supported online travel (OTA) company, Tongcheng Yilong, plans to launch an initial public offering (IPO) in Hong Kong in the second half of this year, with an estimated financing of $1 billion to $1.5 billion.

On December 29 last year, Tongcheng and Yilong announced the merger. Before the merger, Tongcheng's business mainly focused on air tickets, hotels, train tickets and bus tickets. Yilong's business is mainly concentrated in the hotel business field. In addition to the possibility of merger at the business level, both parties have common shareholders. Tencent is the second largest shareholder of eLong and the third largest shareholder of Tongcheng. Ctrip is the largest shareholder of eLong and the second largest shareholder of Tongcheng. After the merger, the two sides integrated the advantages of resources such as hotels and transportation, obtained support from Ctrip in the supply chain resources, and accelerated the process of entering the capital market. After the merger, Tongcheng Network and eLong have already opened the two entrances of “air ticket train ticket” and “hotel” in WeChat wallet, which realizes the interoperability of the business side resources of both parties. According to statistics, Ctrip Yilong has nearly 200 million consumer members. In 2017, the number of service users exceeded 500 million, and the combined transaction volume exceeded RMB 100 billion. It has achieved a large-scale profit of more than 500 million yuan per year.

In fact, as early as 2004, eLong was listed on the NASDAQ. In 2011, Tencent invested 84.4 million US dollars to become its second largest shareholder. In 2015, Ctrip acquired 37.6% of Yilong for US$400 million and became the largest shareholder of eLong. In 2016, eLong completed the privatization transaction, while eLong applied for stocks to stop trading on the Nasdaq market and delist. Tongcheng Tourism sought A-share listing in 2015 and 2016. Unfortunately, in the process of implementing the listing plan, there was a short-term profit and operation model, which led to the failure to successfully list. In the same year, Tongcheng Tourism announced that it will split the two business segments of Tongcheng Network and Tongcheng International Travel Service (Group), focusing on tourism and non-standard products. Wu Zhixiang, CEO of Tongcheng Tourism, publicly stated in 2015: “The capital market policy is changing rapidly. We are also making timely adjustments based on changes. In the case that the overall profit cannot be guaranteed, the separate listing of profitable standard products will be more Good choice."

According to data from the Prospective Industry Research Institute, in 2016, domestic tourism was 4.44 billion person-times, up 11.0% over the same period of the previous year; inbound and outbound tourism was 260 million person-times, up 3.9%; total tourism revenue was 4.69 trillion yuan, up 13.6%. Driven by a series of favorable policies and household consumption upgrades, the tourism industry continued to maintain a high level of prosperity in 2017. With the popularity and continuous penetration of the Internet, the popularity of online travel is getting higher and higher. According to the E-Commerce Research Center report, the online travel market transaction volume in 2017 exceeded 700 billion yuan. From a macro perspective, the beneficiary population dividend and consumption upgrade, the tourism industry ushered in the golden period of development.

The merger of Tongcheng Network and eLong also shows the characteristics of China's OTA industry: the online travel market has gradually begun to integrate, and the business development has been strengthened through complementary advantages. From the long-term trend, the online competition platform will further improve the channel competition threshold, and the market concentration trend will continue to be maintained. From the perspective of Ctrip's 2016, in 2016, Ctrip invested $180 million in India's online travel company MakeMyTrip; invested 3 billion yuan into the shareholder airline; fully controlled travel know-how; acquired Skyscanner for 1.4 billion pounds .

According to the data released by Analysys in June last year, in the online travel market in China in 2016, Ctrip went to the first place with a 53.9% share, the second flying pig had a 14.8% share, and Tongcheng Yilong had a 4.9% share of the comrades. Share. After Ctrip and Qunar were merged in 2015, OTA was absolutely dominant. Both Tongcheng and Yilong have business shortcomings. Only by integrating synergies can they be more easily listed. If Tongcheng Yilong can successfully go public, Ctrip will have stronger strength in the OTA market.

Next, the competition in the online travel market will focus on the traffic competition between Ctrip, Meituan and Flying Pig. Backed by US group comments and public comments with 600 million users, Meituan users have a scene booking habit; the flying pig itself has Ali's powerful Internet enterprise gene, which can copy Ali's accumulated data and technical advantages to Tourism area. Although the traffic game between Ctrip, Meituan and Feizhu will be more intense this year, after the merger with Cheng Yilong, it will protect the development of Ctrip, so that Ctrip can sit more comfortably in the chair of the big brother. Strengthen the control of domestic resource sources and suppliers, on the other hand, peace of mind can be developed in the international arena.

(The author is a senior investment consultant of Tianyuan Finance

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