Message from Our CEO


I am pleased to present our first annual report for the year ended December 31, 2018 as a publicly listed company to our shareholders.

BUSINESS REVIEW AND OUTLOOK

2018 was a remarkable year for the Company. We successfully completed the merger of Tongcheng and eLong and achieved solid growth and profitability as a combined business. We listed our Shares on the Main Board of the Hong Kong Stock Exchange on November 26, 2018. Through the public listing, we have built our name in the capital market as an industry innovator, a market leader as well as a pioneer in the OTA industry. As we continue to focus on user reach, product innovation and user experience, we have achieved strong business growth in 2018 and continued our momentum, which we believe makes us one of the fastest growing companies in China’s online travel industry.

2018 Results Highlights on a Combined Basis

Our total revenues increased by 16.5% from RMB5,226.1 million in 2017 to RMB6,090.8 million in 2018. Our adjusted profit for the year increased by 66.8% from RMB684.0 million in 2017 to RMB1,140.7 million in 2018. Our adjusted net margin rose from 13.1% in 2017 to 18.7% in 2018.

Benefited from faster penetration in non-first-tier cities and continuous innovation on various ancillary value-added products and services, we have maintained high growth in our MAUs and MPUs. For the year ended December 31, 2018, our average MAUs increased by 44.6% year-to-year from 121.2 million to 175.2 million, of which 140.6 million were from Tencent-based platforms. Over the same period, our average MPUs increased by 28.2% year-to-year from 15.6 million to 20.0 million.

According to the Aladdin Index, we topped the list of “Monthly Ranking of Top 100 Weixin Mini Programs” 《( 月度微信小程序TOP100榜 》) for four consecutive months since September 2018. We were awarded the “Best Mini Program of the Year” at the Aladdin Annual Conference on January 5, 2019, in recognition of our outstanding product and service quality, the superior customer experience we deliver and our industry influence.

Business Review

We are a market leader in China’s online travel industry. Benefiting from years of experience and technological development of Tongcheng and eLong and their complementary resources, we have achieved greater economies of scale, solidified our market leading position, and enhanced our ability to provide comprehensive travel products and services offerings following the TongchengeLong Merger in March 2018. Our GMV achieved a year-to-year increase of 28.5% and reached RMB131.5 billion in 2018.

We are a one-stop shop for users’ travel needs. We offer a comprehensive and innovative selection of products and services covering nearly all aspects of travel, including transportation ticketing, accommodation reservation and various ancillary value-added products and services designed to meet users’ evolving travel needs throughout their trips. As of December 31, 2018, our online platforms offered over 6,400 domestic routes and over 1.1 million international routes operated by 438 domestic and international airlines, over 1.4 million hotels and alternative accommodation options, approximately 310,000 bus routes and over 417 ferry routes. We have established extensive long-term strategic partnerships and alliances with TSPs to support our product innovation efforts and develop more innovative ancillary value-added products and services. With the successful implementation of the one-stop shop strategy, our retention rate achieved 67% in 2018.

Our large, fast-growing and engaged user base is a key factor for our business success and future growth. Leveraging on the mutually beneficial partnership between Tencent and us as well as our effective sales and marketing strategies, we are able to reach an extensive and diversified user base in a cost-effective manner, especially a vast pool of potential users in non-first-tier cities. As of December 31, 2018, approximately 85.4% of our registered users resided in nonfirst- tier cities in China with increased spending on, and demands, for quality travel products. The percentage of users from non-first-tier cities in China in our newly acquired paying users from Weixin increased from 54.9% in January 2018 to 64.3% in December 2018, with a full-year average of 61.1% in 2018. Benefiting from our dedication to the Weixin-based mini program strategy, our average MAUs and average MPUs have grown significantly in 2018. Currently, Weixin users can access our Weixin-based mini program within the Weixin ecosystem through: (1) Weixin Payment (Wallet) portal and a drop-down list of users’ favorite or most frequently used mini programs, which generated an average MAUs of 74.2 million in 2018, accounting for 52.8% of the total average MAUs of our Tencent-based platforms; (2) interactive advertisements placed on the Tencent-based platforms, which generated an average MAUs of 49.1 million in 2018, accounting for 34.9% of the total average MAUs of our Tencent-based platforms; and (3) the sharing and search functions in Weixin, which generated an average MAUs of 17.3 million in 2018, accounting for 12.3% of the total average MAUs of our Tencent-based platforms.

As a technology-driven company, we prioritize the development of our information technology. By leveraging on our big data and AI capabilities, we are not only able to better understand the preferences and behaviors of our users to provide them with customized products and services, but can also offer insights to our TSPs and enhance our value proposition to them. As we continue to invest in our technology infrastructure, the number of transactions executed automatically through direct connect accounted for approximately 95% of the combined air ticket orders and approximately 80% of the accommodation room nights in 2018 on a combined basis. Supported by our self-developed “Huixing” (慧行) system, we offer our users intelligent travel options with product combo of railway, flight, bus and ferry. Our “Buddha” system in air ticket booking is capable of serving various demands of different users. We have rolled out our “Intelligent Hotel” initiatives, which allow users to enjoy the benefits of advanced technologies throughout the process of reservation, check-in, accommodation and departure in our pilot hotels.

Business Outlook and Strategies

China’s travel market is sizable and is expected to continue to grow rapidly, driven by the continuous increases in disposable income and consumption power as well as the increasing urbanization. Chinese consumers’ demand for quality customer service and superior user experience, including online platforms offering basic transportation ticketing and accommodation reservation services and a range of ancillary value-added products and services, have been increasing. As a leading OTA in China, we are a one-stop shop for travelers’ entire travel experience and is well positioned to capitalize on the enormous growth potential as China’s travel market continues to evolve.

We strive to fulfil our mission and further solidify our market leadership through the following initiatives. We will continue to grow the size and engagement of our user base by expanding our product and service offerings. We intend to deepen cooperation with our TSPs by delivering more compelling value proposition to them. We also plan to pursue strategically selected acquisition, investment, joint venture and partnership opportunities that are complementary to our business and operations. Furthermore, we will leverage our strong data analytics and technology capabilities to strengthen big data and AI innovations. As technologies for human-machine interactions continue to advance, we will strive to adapt to new technologies and formats with a view to becoming an intelligent travel assistant for our users.

On behalf of the Group, I would like to extend my sincere gratitude to our users and business partners, and to our dedicated employees and management team for their contributions, commitment and dedication. I am also thankful for the trust and continued support from our shareholders. We will strive to enhance our capabilities and strengthen our leading position to generate lucrative returns for our shareholders in the years to come.

Wu Zhixiang
Co-Chairman of the Board and Executive Director
Hong Kong, March 20, 2019