In Q1 2025, the domestic cultural and tourism market demonstrated strong recovery momentum driven by policy support, a rebound in consumer confidence, and technological innovation.
According to data released by the Ministry of Culture and Tourism, the number of domestic trips in Q1 2025 reached 1.794 billion, an increase of 375 million compared to the same period last year, representing a year-on-year growth of 26.4%. Against the backdrop of robust supply and demand in the domestic cultural and tourism sector, the revenue of the domestic cultural tourism and online travel OTA industry grew steadily.
Taking Tuniu as an example, Tuniu (TOUR.US) recently announced its unaudited Q1 performance report for the period ending March 31, 2025. The financial report indicated that Tuniu's net revenue in Q1 2025 increased by 8.9% year-on-year, while revenue from its core packaged travel products grew by 19.3% year-on-year.
Alongside revenue growth, an important strategic shift for Tuniu in Q1 2025 was its increased investment in controlling costs. Compared to the more cautious cost control strategies of previous years, Tuniu significantly ramped up its business investments this quarter, indicating a stronger intent to capture market share and reflecting an optimistic attitude within the industry towards the future growth of the domestic cultural and tourism market.
<h2>Increasing Early Investments to Capture Future Markets</h2>
Comparing the Q1 performance from 2021 to 2024, Tuniu's revenue in Q1 2025 further increased, primarily benefiting from the gradual recovery of the domestic tourism industry in recent years, which provided a significant boost to online travel OTA companies. Consequently, Tuniu achieved its first single-quarter profit since its listing in Q1 last year.
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On the other hand, Tuniu reported a net loss of 5.4 million yuan during the period, compared to a profit of 21.9 million yuan in the same period of 2024, raising concerns in the industry. Financial data indicated that this was primarily due to Tuniu's sales and marketing expenses reaching 43.2 million yuan, a year-on-year increase of 17.3%, accounting for 36.8% of revenue.
For Tuniu, the booming consumer market and primary investment and financing market have heightened the company's expectations for the degree of market recovery. In the domestic cultural tourism investment and financing market, in the first two months of this year, the number and amount of financing projects in the main capital markets for the domestic cultural industry increased by 151.9% and 105.5% year-on-year, respectively, while the number and amount of financing projects in the tourism industry rose by 13.1% and 28.7% year-on-year, respectively. This indicates that the strong recovery of the domestic tourism consumption market and the tourism boom in multiple regions have significantly boosted confidence in the capital market.
As a result, Tuniu has gradually loosened its marketing investments in the market. However, this may also raise concerns among investors: in the face of a recovering market, will Tuniu revert to the pre-pandemic practice of aggressively spending on marketing?
According to Zhitong Finance APP, before 2020, in order to win the online OTA market share battle, Tuniu collaborated with several popular variety shows and blockbuster movies, spending a large amount on advertising. However, due to the subsequent impact of the pandemic, Tuniu's investments did not translate into profits.
This phenomenon seems to have changed in 2023. In Q3 2023, Tuniu successfully turned a profit year-on-year, marking its second consecutive quarter of profitability since Q2 of last year. Although it failed to maintain profitability in its annual report last year, Tuniu's net profit situation has been improving significantly since Q1 2022. Now that Tuniu is increasing its investments again, many investors are concerned about the balance between investment and profitability.
However, from the company's investment direction in its business, Tuniu's approach today is clearly different from the &#34;flood irrigation&#34; investment strategy of the past.
Specifically, since Q1 of this year, Tuniu has been building and improving its &#34;online live streaming + offline stores&#34; channel layout. For example, in March of this year, Tuniu's self-operated live streaming room &#34;Tuniu Maldives Island Tour&#34; collaborated with several travel influencers to conduct a 21-day on-site live broadcast across 10 hotel islands in the Maldives, with a total payment amount exceeding 100 million yuan and a cumulative exposure of over 75 million. Among them, a single live broadcast achieved a payment amount of 10 million yuan in just 3 hours. The financial report shows that during this period, Tuniu's live streaming payment amount and redemption amount increased by over 20% year-on-year, driven by multi-channel live streaming involving self-operated, influencers, stores, and supply chains.
On the other hand, in Q1 of this year, Tuniu also accelerated the layout of stores in key domestic cities. By the end of March this year, Tuniu had opened nearly 300 offline stores in major first- and second-tier cities in China.
It is not difficult to see that compared to the &#34;advertising spending&#34; strategy of the past, the &#34;online live streaming + offline stores&#34; channel layout is more in line with the current development tone of the domestic cultural tourism market, essentially representing an early &#34;hardware investment&#34; that is expected to achieve sustained performance conversion in the future.
<h2>Opportunities Brought by Changes in Tourism Supply Side</h2>
In Q1 of this year, Tuniu's revenue continued to grow, and the new business models brought about by changes in the tourism supply side are worth noting.
In recent years, the supply of domestic tourism products has shown a trend of more diversified development, from last year's Citwwalks, cultural and museum tours, and performance tourism across the country to the accelerated release of tourism consumption by users in more cities in Q1 this year, with emerging destinations such as county-level areas gaining popularity. Currently, the Chinese tourism market exhibits a &#34;hundred flowers blooming&#34; development characteristic.
Taking county tourism as an example, information from the Ministry of Culture and Tourism shows that in Q1 2025, there were 1.794 billion domestic trips, with a total domestic travel expenditure of 1.8 trillion yuan, an increase of 280 billion yuan compared to the same period last year, representing a year-on-year growth of 18.6%.
Among them, both urban and rural residents have seen significant increases in travel. Data shows that during the 5-day &#34;May Day&#34; holiday, there were 314 million domestic trips nationwide, a year-on-year increase of 6.4%, with the rural residents' travel rate at 10.7%, totaling 49.7116 million trips, accounting for 15.8% of the total domestic trips during the holiday. Hotel bookings in county towns increased by 30% year-on-year, while bookings for high-star hotels in fourth-tier cities surged by over 80%
According to data from the National Information Center, the consumption growth rate in third-tier cities and below reached 20.2% in the first quarter of this year, even surpassing the 19.6% of &#34;first-tier cities.&#34;
Against this backdrop, Tuniu has updated its strategy in the county tourism sector by leveraging its development advantages in group tours.
According to Zhitong Finance APP, it is evident from the changes in Tuniu's revenue before and after the pandemic, as well as the changes in the proportion of business revenue, that group tours have always been Tuniu's advantageous business, which differentiates this online travel company from other leading OTAs.
Therefore, in response to the new consumption demands in county tourism, Tuniu's &#34;Niu Ren Special Line&#34; continues to enrich its product offerings and supply in areas such as &#34;pure play tours,&#34; &#34;private tours,&#34; &#34;customized tours,&#34; and &#34;small group tours.&#34; With a significant increase in demand for travel products like &#34;air tickets/high-speed rail + destination group tours&#34; and day trips, Tuniu is leveraging its advantage of nationwide departures for individual travelers and deeply applying automated systems like direct connections with airlines. On the other hand, it is enhancing its direct procurement supply chain at destinations and utilizing a dynamic packaging system for all types of travel products, showcasing its differentiated advantage in packaged travel business.
From Tuniu's Q1 financial report this year, it can be seen that the company's marketing expenses have shifted from previous cost-control strategies to increased promotional investments. However, unlike the previous excessive spending, the revenue growth rate of the company's core packaged travel business in Q1 this year exceeded the current growth rate of marketing expenses, demonstrating a high input-output ratio and indirectly confirming the improvement in its operational efficiency.
However, the current profitability situation remains a key focus for secondary market investors regarding Tuniu, and the net loss has somewhat affected the company's recent stock price. According to the company's guidance, Tuniu expects its net revenue for Q2 this year to be between 131 million and 136.8 million yuan, representing a year-on-year growth of 12% to 17%. The continuously growing revenue level may help the company return to a stable profitability level

TOUR

Tuniu announced its Q1 2025 earnings report, with net revenue increasing by 8.9% year-on-year, and revenue from core packaged travel products growing by 19.3%. The domestic cultural and tourism market is experiencing a strong recovery supported by policy measures and a rebound in consumer confidence, with the number of travelers increasing by 26.4% year-on-year. Despite Tuniu increasing its investment this quarter to capture market share, it still reported a net loss of 5.4 million yuan, primarily due to increased sales and marketing expenses

Zhitong

Tuniu

The recovery of the cultural and tourism market prompts the industry to increase investment, Tuniu faces the crossroads of investment and profitability again