Portfolio | Time for online travel agency shares to shine as Chinese tourism booms

With   money managers looking for value targets in Chinese stocks after the equity rout,  online travel agencies could  be the major beneficiaries of China’s 10-year travel boom with higher growth and a leaner business model, according to Macquarie Research.

China’s online travel industry has hit an inflection point in 2015 as leisure travel takes off and competition stabilises. In 2014, leisure travel accounted for 53 per cent of global tourism revenue.

While China’s travel market has been mainly driven by business travel in the past decade, the mainland  is quickly catching up with global patterns given its rising middle class and improvements in travel, according to the report.

“Rising disposable incomes, currency appreciation and easing restrictions on foreign travel have made China the world’s top spender in international tourism,” said Macquarie analysts led by Wendy Huang, who highlights Ctrip and Qunar as two leaders in the online travel agency industry to benefit from the trend. Ctrip and Qunar took 49 per cent and 27 per cent of China’s online travel market last year, respectively.

“We forecast China’s online travel market revenue to expand at 27 per cent between 2014 and 2018, compared with 13 per cent for the overall travel market,” it said.