The Zhitong Finance App learned that Dongwu Securities released a research report saying that based on the high willingness of residents to travel and the intensive introduction of policies to promote the continuous improvement of the cultural tourism industry, OTA platforms will continue to benefit from the rise in inbound and outbound travel and the prosperity of the basic domestic travel market. A stable pattern will help keep the OTA platform's monetization rate stable. The overall traffic growth rate facing OTA platforms in 2024 is expected to be in the 10-15% range, and the transaction scale growth rate may be around 15%; in 2025, the traffic market growth rate will be around 9%, and the transaction scale growth rate may be slightly higher than 10%.

The main views of Dongwu Securities are as follows:

An online travel platform (OTA, or Online Travel Agency) is an Internet platform that aggregates travel resources and information from all angles and links them to end consumers. After more than 20 years of development, the transaction scale of the Chinese online travel market has reached 1.1 trillion yuan, the penetration rate of online travel platforms has reached more than 60%, and the competitive structure has evolved to an oligopoly.

Scale: In 2023, the country's total tourism revenue was about 5.3 trillion yuan, recovering to 80% in 2019, and is still on the growth channel. The OTA platform is deeply involved in various economic activities other than shopping in the mainland travel market.

Transportation reservations: The scale of domestic passenger traffic transactions is about 1.4 trillion, of which railways and civil aviation account for more than 70%. The online rate of online traffic is estimated at 54% based on the scale of transactions.

① The 10-year CAGR for railway passenger traffic is 6.2%. The resource side is dominated by China Railway Group, and the proportion of normalized online ticket sales has reached about 85%.

② The 10-year CAGR of civil aviation passenger turnover is 6.2%, civil aviation companies are highly concentrated, and more than 90% are highly online. Since the upstream resource side is all operated by central enterprises, and they all have a direct channel layout to a certain extent, the value ratio of OTA platforms in the travel and transportation part of the industrial chain is relatively low. As the most immediate part of residents' travel needs, online transportation reservations mean a stable source of traffic and possible conversion to other travel categories for OTA platforms.

Accommodation reservations: In 2023, the revenue scale of China's lodging industry will be at the level of 800 billion yuan, the annual number of nights is nearly 3.5 billion, and the online rate is in the 30-40% range.

From the perspective of upstream concentration, CR3 and CR5 in the hotel industry are 15.7%/18.8%, respectively, in terms of room volume. In comparison, OTA platforms have remarkable bargaining power. According to the structure of the Chinese lodging industry, it is currently still in the middle of an increase in the chain chain rate. We believe that the “final” chain rate may be in the 60-70% range. The OTA platform has a better traffic pattern and will have a bargaining power advantage in the accommodation reservation sector for a long time.

Travel product reservations: The scale of online travel products in China in 2019/2023 is 489.7/263.1 billion yuan respectively. Based on this, it is estimated that the online rate in 2019/2023 will be about 23%/30%, respectively.

After the epidemic, the proportion of residents following leisure travel groups decreased. Resource-side scenic spots/product-supply-side travel agencies all have low concentration, and product and sales capacity come first.

Pattern: The traffic pattern is currently quite stable.

The biggest advantage of the industry is the ability to accumulate and deliver resources. Other players rely on high-frequency payments or social media traffic, and each has their own focus. We believe that behind the stability of the competitive pattern of OTA platforms is the stability of the current high-frequency mobile Internet application traffic pattern. Using Ctrip as an example to illustrate the development path of OTA platforms, continuous traffic and pooled resources are common choices. We believe that with the cash flow model of large inflows from mobile internet platforms, the deepening layout of upstream resources will be carried out in an orderly and further manner under the regulation and supervision of mergers, acquisitions, and restructuring.

Investment advice: It is recommended to focus on OTA industry-related targets such as Tongcheng Travel (00780), TRIP.COM-S (09961), and China Civil Aviation Information Network (00696).

Risk warning: macroeconomic recovery falls short of expectations, residents' willingness to travel has declined, geopolitical relationships fluctuate, market competition intensifies, etc.