In today's society, travel has become an important leisure activity, and going to attractions and enjoying delicious food with family and friends during the holidays has become a trend.

According to data from the Ministry of Culture and Tourism, during the 7-day National Day holiday in 2024, there were 0.765 billion domestic trips nationwide, with a total domestic tourist expenditure of as high as 700.817 billion yuan. The average per capita travel expenditure exceeds 900 yuan, indicating a massive market.

When away from home, it's inevitable to purchase round-trip tickets and book hotel accommodations, which is also a business.

Currently, Ctrip, Tongcheng Travel, and other travel platforms have seized the business opportunities in this market and successfully listed. Now there is another travel platform aiming for a Hong Kong IPO.

According to Glorun Hui, recently, Vitality Group Holdings Limited (referred to as "Vitality Group") submitted documents to the Hong Kong Stock Exchange, with China Merchants Securities (Hong Kong) Co., Ltd. and CMBC Capital Co., Ltd. as its joint sponsors.

Vitality Group is a comprehensive domestic travel platform. According to Frost & Sullivan's data, the company's total transaction volume in 2023 was 30.8 billion yuan, ranking second among China's one-stop comprehensive travel platforms, second only to Ctrip.

How did Vitality Group manage to grow its business so significantly?

01

Top students from Tsinghua University team up to start a business.

The headquarters of the Vitality Group is located in Shenzhen. Its history can be traced back to 2009, when Vitality Tianhui (the main operating company of the Vitality Group) launched the first mobile app Flight Master, providing real-time flight information to passengers.

Later, Vitality Group evolved from a pure travel information provider into a comprehensive travel platform, offering users one-stop travel-related services before, during, and after their travels. In 2011, the company's lodging booking service was officially launched; then in 2012, it provided flight booking services and introduced the first domestic mobile application High-speed Rail Master, offering train schedule information and ticket booking services.

Different from traditional platforms that mainly act as intermediaries in transactions between passengers and enterprises, Vitality Group's smart travel services seamlessly integrate various modes of transportation such as planes, trains, and online car-hailing, while also providing a range of ancillary services including check-in seat selection, train seat selection, flight delay inquiries, airport navigation, and hotel reservations to handle various situations encountered during the journey, ensuring passengers have a relaxed and enjoyable travel experience.

With the continuous provision of quality user services, Vitality Group has amassed a large user base. As of the end of June 2024, the cumulative registered users across all its platforms exceed 0.174 billion.

Products and services provided by the company, image source: prospectus

Several founders of the company are top students from prestigious universities and have rich experience in the internet field.

Wang Jiang, the co-founder and CEO of the Vitality Group, is 51 years old this year and holds a bachelor's degree in Engineering Physics from Tsinghua University. Wang Jiang has worked in many TMT companies such as Beijing Pinwei Technology Co., Ltd., Huayou Century Communication Co., Ltd., and Shanghai Siemens Mobile Communications Co., Ltd., and later joined the Vitality Group in July 2009.

Co-founder Yi Bing is 54 years old this year, graduated from Xiamen University, majoring in Systems Engineering. Yi Bing previously served as the Deputy General Manager of Aotian Information Technology (Shenzhen) Co., Ltd., joined the Vitality Group in September 2005 and has been serving as the Chief Operating Officer, as well as the Executive Director and Senior Vice President of the company.

Another co-founder Li Lijun is 52 years old this year and holds a bachelor's degree in Computer Science and Technology from Tsinghua University. Li Lijun previously worked at the New Technology Development Center of Shenzhen Posts and Telecommunications Bureau, mainly responsible for the development and construction of data, mobile, internet, and other businesses; later served as the General Manager and Director of Aotian Information Technology (Shenzhen) Co., Ltd., and is now a non-executive director of the Vitality Group.

The Vitality Group's rapid development cannot be achieved without the support of capital.

As early as 2016, Vitality Tianhui received financing from Huasheng Lingshi, Shanghai Chuangji, Zhuhai Fuhai, Ningbo Caesar, and Shaanxi Shukun Fund. In the following years, they successively obtained financing from Tingrui and Linghui Foundation. In 2024, Fontus also subscribed to the company's shares, with a post-investment valuation of about 2.087 billion yuan.

02

Achieved a turnaround in 2023.

Most of the Vitality Group's revenue comes from travel-related services.

According to the prospectus, in 2021, 2022, 2023, and the first half of 2024 (referred to as the "reporting period"), revenue from travel-related services accounted for over 80% of the company's total revenue, while revenue from online marketing services, data, and technology services was relatively low.

Details of the company's revenue, image source: prospectus

Specifically, the company's travel-related services include transportation ticketing services, business travel management services, online car-hailing services, lodging booking services, and others.

Among them, transportation ticketing services account for over 60% of the revenue from travel-related services, which mainly includes flight and train ticket bookings, bundled value-added travel service packages, and membership services.

The company also seamlessly integrates online car-hailing services on the platform in addition to transportation ticketing services, ensuring a smooth travel experience for tourists. It also allows users to make lodging bookings through the company's platform, earning intermediary service commissions, although this part of the revenue is relatively small.

In addition to serving individual customers, the company also provides end-to-end management services for corporate clients' needs, such as conferences, incentive travel, large-scale meetings, exhibitions, and other corporate travel requirements. The company typically charges package prices to corporate clients, generating revenue from business travel management services after deducting costs.

Details of travel-related service revenue, image source: prospectus

In terms of performance, from the first half of 2021 to the first half of 2024, the revenue of H World Group is approximately 0.344 billion yuan, 0.28 billion yuan, 0.502 billion yuan, 0.281 billion yuan respectively, with corresponding net profits of approximately -0.358 billion yuan, -0.758 million yuan, 59.309 million yuan, 31.712 million yuan. The company achieved a profit turnaround in 2023.

During the reporting period, the gross margin of H World Group was 49.8%, 47.1%, 56.8%, 58.6%, with some fluctuations.

In 2022, the travel demand and frequency greatly decreased due to the impact of the epidemic, leading to a significant reduction in platform transaction activities and a corresponding decrease in gross margin. In 2023, commercial activities and tourism demand significantly recovered, platform transaction volume increased, and the gross margin also improved.

03

To travel alongside Ctrip, market share in 2023 is 1.2%

The tourism market includes transportation, lodging, sightseeing, dining, shopping, and other tourist activities. The development of the tourism industry plays an important role in promoting economic growth, stimulating consumption, and employment. In the future, supported by policies and driven by the growth of per capita disposable income, the Chinese tourism market will continue to grow.

In terms of travel, comprehensive travel platforms like H World Group can provide information on different transportation options, booking, and payment services, and customize the best travel plans based on user needs and preferences, for example, users can pre-book flights or train tickets through internet platforms.

In 2023, the revenue of China's comprehensive internet travel service market reached 861 billion yuan, and is expected to reach 2.11 trillion yuan by 2028, with a compound annual growth rate of 19.7% from 2023 to 2028.

In 2023, the revenue of China's online transportation booking market, online lodging booking market, and travel data solution market were 755.5 billion yuan, 101.1 billion yuan, and 0.1 billion yuan, respectively.

Image source: Prospectus

Despite having a market size of several hundred billion yuan, China's comprehensive internet travel service market is relatively scattered and fiercely competitive. There are over 1000 providers in the market offering either online transportation booking, online lodging booking, or travel data solution services.

Vitality Group not only faces competition from other travel platforms, traditional travel agencies, and travel service providers, but also intense competition from internet companies such as e-commerce, search engines, and social media companies.

To cope with the increasingly fierce competition, companies may need to carry out marketing activities to promote their brand and acquire new users. This will force them to incur significant sales and marketing expenses, thereby affecting their operating profit margins and profitability.

Based on the 2023 GMV of comprehensive internet travel services, the top five providers in China account for approximately 67.3% of the total market size. Among them, Vitality Group ranks 11th with a 1.2% market share, lagging behind listed peers like Ctrip (Company A), Tongcheng Travel (Company C), and H World Group (Company E).

China's top three integrated travel platforms collectively account for approximately 33% of the total market share of internet travel services, with Ctrip leading with a 31.6% market share, followed by HNA Group in second place.

Despite HNA Group's development over the years as the second largest integrated travel platform in China, there still exists a significant gap in market share compared to industry leader Ctrip. In the intense industry competition, it is not easy for the company to increase its market share.

In this listing application, HNA Group plans to raise funds to enhance research and development capabilities, expand the use of AI in business operations, expand their global footprint, enrich and enhance company products, and use the funds for operational purposes and general corporate use.