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Report: Vertical search has great impact on China’s online travel industry

October 28, 2005 |

Analysys International predicts that the rising of vertical targeted search engines will produce a great influence on China's online travel industry and exacerbate the competition in its recently released Focus Report on Internet-online Travel 2005.

Analysys International predicts that the rising of vertical targeted search engines will produce a great influence on China’s online travel industry and exacerbate the competition in its recently released Focus Report on Internet-online Travel 2005.

As of the first half of 2005, by amount of transaction revenue, the market share of the main players in the domestic online travel market are: ETRIP with 51.2% followed by ELONG with 24.8%, where as AOYOU of ACYTS only takes 3.3% of the market, although it has the vast resources of ACYTS and a history of four years development.

Search engines provide travel consumers with information they want by summing up, combining and optimizing numerous pieces of information and thus prevents them from getting lost in the vast sea of data from various channels. To take the newly rising price comparison travel search engine of QUNAR(1) as an example, the strong interactive search function has overturned the display format of traditional travel search websites.

According to Analysys International, the core function of travel search engines is to provide price comparisons on travel products. ‘‘The newly emerged travel search engines empower consumers with the transparency of travel products. As price is the most sensitive factor that travel consumers care about, those large traditional online travel service providers, with a better awareness of brand and website but also a higher price have lost their advantage,’’ says Liu Lei, an analyst of Analysys International, ‘‘This price competition requires online travel service providers to promote its overall strength, increase consumer groups, enhance reseller resources and therefore reduce the resource costs got from travel resource vendors. So we think operations on a large scale is the only way for online travel service providers to move forward.’‘

Analysys International also cautions that the rising of vertical search engines weaken the advantage of one-stop services of online travel service providers, while enabling the travel resource providers with price advantages for online direct selling. Competition for consumers in the whole value chain and reseller channels will be intensified and finally lead to a tendency of flatter channel structure.

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