Chinese online travel service Tuniu (NASDAQ:TOUR) found itself in hot water today after its removal of one travel agency from its site listings led to a boycott from many of China’s top travel agencies.
This morning, Tuniu released a statement explaining that it was removing all the travel products of Chinese travel agency U-tour from its site, saying that the company had not respected the spirit of its contract with Tuniu and harmed the customer experience after U-tour suddenly terminated its collaboration with Tuniu.
Unfortunately for Tuniu, U-tour apparently wasn’t alone in its frustration with the online travel platform. In the afternoon, a group of major international travel agencies including U-tour, AoYou, HY Tours, Caissa, and Nanhu Travel announced a boycott of Tuniu. A total of 17 agencies are participating in the boycott, which will see them stop offering any travel products via Tuniu’s platform beginning July 15.
Based on the statement issued by the agencies, the true source of the dispute seems to be pricing: Tuniu insists that partners price their travel products lower than they would like. That shouldn’t come as much of a surprise given that China’s online tourism industry has been embroiled in a price war since late last year and Tuniu is particularly interested in beating rival LY.com. But low prices hurt the travel agencies providing the tours, enough that apparently Tuniu’s move against U-tour was impetus enough for 16 other major agencies to jump on board with a boycott.
Tuniu has responded to the boycott by calling it irrational and suggesting that it will hurt the healthy development of China’s international tourism industry.
Assuming the boycott goes through, though, Tuniu will likely be the first company to get hurt. The list of boycotting agencies is a veritable who’s who of top players in China’s international travel industry, and the loss of all of their travel lines at once is not something Tuniu will be able to quickly fix. Tuniu has other lines of business including domestic travel, of course, and it also offers international tours through other partners. But make no mistake, these agencies are big and the loss of their business could have a real effect on Tuniu’s bottom line.
(Source: Sina Tech)
Image by Bernal Saborio
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