The price war has almost become the "main melody" of the competition among OTA enterprises

Two days ago, the Mango network announced a further 80 million yuan from August 1, will double the size of hotel discounts, launched a second round of promotional offensive. Last month, Mango Net has launched the "80 million yuan Hotel reservation subsidy" program. Industry eldest brother Ctrip also not to be outdone, the company announced August 2, its holiday products will be launched "reviews return", free line, short-distance, self-driving products per night the cash return of up to 101 yuan. Following last month's offering of "500 million dollar marketing quota", Ctrip's products realize a full promotion.

Art Dragon then also immediately follow up, Taobao Travel, where, cool news network, such as cattle and other enterprises to join the promotion, for a price war fuel. The pitched of these companies affects the nerves of the entire online tourism industry.

Accompanied by a price war is a large amount of predetermined volume of growth, but the other, the decline in profits and even a loss of OTA industry around the ridge. According to Eric Consulting statistics, by the season and promotional drive, the second quarter of 2012, China's online tourism industry to maintain rapid growth, market transactions reached 41.87 billion yuan, an increase of 35.8%. At the same time, OTA overall profit margins fell sharply. As early as 35 years ago, OTA industry average profit rate of about 25%, but in recent years the industry's profit margins continue to decline, taking into account the hotel group purchase and the recent marketing investment increase, OTA enterprise profit margin is likely to further decline.

Take Ctrip as an example, the first quarter of this year, Ctrip's total operating income of 964 million yuan, an increase of 18%, but the same period operating profit fell 33% year-on-year decline of 23%. Ctrip released the second quarter earnings, the company's net revenue of 974 million yuan, compared with the same period last year, the growth of 17%, when the net profit of only 120 million yuan, the year-on-year decline of 54%, the level of Mao's interest rates declined slightly.

Ctrip Senior Vice president Mr. Frankly, in a price promotion sound, Ctrip joined the price war Army is helpless, in order to consolidate and increase market share, and maintain the user's stickiness. For now, consumers are more sensitive to product prices and less loyal to OTA brands, a feature that will not change in the short term. In this case, the price war became the most effective way for OTA enterprises to compete for the market.

"If the industry's own profits are higher, companies can keep the profits in a steady state through constant price, but when the whole industry's profits have stabilized, then the price war will make all companies in a profit or loss." Mr. Said, "at this point, to see who can support to the end, the end result is only a few OTA can survive." In other words, after the price war, OTA industry concentration will be further increased.

Obviously, Ctrip is so high-profile to launch a 500 million-dollar promotional program, the industry to shuffle the desire to imagine. But it has to be said that the development of online tourism so far, such as Art Dragon, where to go, mango and other market segments of the online travel agencies are only a few months of price war can be knocked down?

In fact, for Ctrip and other Ota, "loss impulse" price war can only take into account for a while. In the short term, it can really squeeze out competitors ' living space and complete their own enclosure-but in the long run, this does not enhance the core competitiveness of the enterprise. To be sure, intermediaries ' past performance would be unsustainable if they relied solely on commission models. To get rid of the quagmire of price war, enterprises must rely on innovation and research and development to create a new product model or service advantages, to jump out of a single "mouse + Cement" mode.

On the move, the company put forward a few years ago, "four-legged walking" strategy, and in the recent development of the "Mystery Hotel", "Hui selected hotels" and other products, but the strength of product innovation is still inadequate. In the simple hotel ticket booking, the company how to deploy resources on a number of product lines, the hotel ticket booking and other external service forms combined "boxing", related to its transformation and the success or failure of innovation.

On the basis of price and products, thread tries to strengthen the construction of supply chain cohesion, user experience and service flow system, in order to integrate more tourism elements to meet more personalized needs, and to implement the details in place. You know, this is far more difficult than a simple price war, but it constitutes OTA's core competitiveness, but also more easily accumulate brand effect. In the presence of external rivals, the transition to Ctrip is not long.