Online Travel Grows in China: An Interview with Tuniu CEO Donald Yu

Tuniu's Donald Yu

In the West, online travel has long since eclipsed the brick-and-mortar industry, but in China, real-world travel agencies are very much alive. Travel patterns are also very different here; Chinese tourists often prefer to travel in groups as part of meticulously crafted travel packages, not just hop a flight to a vacation destination and figure the rest out later. That means operating a travel site in China presents some unique challenges, and recently, we got an opportunity to talk via email with Donald Yu, the CEO of Tuniu, about some of them.

Tuniu’s development has been surprisingly rapid. How was this accomplished? Can you tell us a little about the founding and development of Tuniu?

We started Tuniu as a community tourism website in October of 2006 and sped its pace of development as an online travel package and group tour booking around six months later. Our vision was to make tourism simple for the still-nascent Chinese travel market. To make this goal a reality, we targeted customer service and experience as our key differentiators from other market players.

Back then, there were three major trends in China’s online tourism industry: do it yourself tours and outdoor activities; air tickets and hotel booking; and tourism package products with cooperation from tourism agencies. Tuniu targeted the third category because we felt it was an underexploited market with great potential.
In order to ensure that customers had a wide range of choices for the types of travel packages and group tours that they really wanted, we built out a business operation supporting system, which we call “BOSS,” built upon sophisticated technology. We use this system to identify trends in the market quickly and leverage our trained travel experts to tailor tours that Chinese consumers will appreciate.

We were fortunate that we got into the Chinese travel market just as it was beginning to take off. The last five to six years have seen remarkable growth in the Chinese tourism industry, and we’ve been excellently positioned to capitalize on that trend.

In the West, traditional brick-and-mortar travel agencies have been almost completely eliminated by online travel sites, but China’s market is different. Do you think online travel sites in China will be able to eliminate traditional brick-and-mortar establishments?

From its start, Tuniu has been focused on leveraging our excellent technology to meet trends and needs in the market in a way that traditional travel companies cannot. Our goal has always been making tourism simple for our customers, which we believe will ensure our leading position in the market.

I don’t think that traditional travel agencies are leaving the market anytime soon, but I also don’t think that they are incompatible with online travel companies. Many traditional travel agencies have expanded into the online realm. However, fundamentally, we provide a different offering than they do. We can arrange one stop travel solutions that are easy to book. And our BOSS system lets us give travelers the kind of package travel and group tour options that they want without requiring them to spend months planning.

So what is so different about Tuniu, as compared to traditional travel agencies or other online services (like Qunar)?

We are focused on tourism solutions and are dedicated to providing a broad range of travel options, while continuing to improve service quality. Our focus on packaged tourism means we don’t sell separate air tickets or hotel bookings. Simply put we don’t focus on travel, but rather tourism. We provide our customers with full package solutions. Everything needs to be simple and intuitive.

Our BOSS system also allows us to track the progress and satisfaction of our customers very well in the pre-sale and post-trip timeframe, as well as during travel. If there is a problem, we’ll know almost immediately.

BOSS further provides us database analysis, which gives us insights into the ever changing tourism market and enables us to react quickly and effectively. We understand what Chinese customers are buying and adjust our offerings quickly to meet the demands. As a result, our products are richer than peers who are less focused on staying ahead of Chinese tourism trends.

E-commerce in China has had trouble dealing with customer complaints, and travel is an industry in which the customer demands are high because normal service can be disrupted by all kinds of things (for example, weather delaying flights or regional instability making travel to a particular place suddenly unwise). How does Tuniu deal with this problem, and how are you handling customer service as your site and the number of trips offered continues to grow?