In today's society, travel has become an important leisure activity, spending holidays with family and friends to visit attractions and enjoy delicious food has become a trend.

According to data from the Ministry of Culture and Tourism, during the 7-day National Day holiday in 2024, there were 0.765 billion domestic trips in the country, with a total domestic tourist expenditure reaching as high as 700.817 billion yuan. The average per capita travel expenditure exceeds 900 yuan, indicating that this is a huge market.

When traveling, it is essential to purchase round-trip tickets and book hotel accommodations, which is another business opportunity.

Currently, platforms like Ctrip and Tongcheng Travel have seized the opportunity in this market and successfully went public. Now, there are travel platforms aiming for a listing on the Hong Kong Stock Exchange.

Recently, Vitality Group Holdings Limited (referred to as "Vitality Group") submitted an application to the Hong Kong Stock Exchange, with China Merchants (Hong Kong) Limited and Cmbc Capital Limited as its joint sponsors.

Vitality Group is a comprehensive domestic travel platform. According to Frost & Sullivan data, the company's total transaction volume in 2023 was 30.8 billion yuan, ranking second among China's one-stop comprehensive travel platforms, only behind Ctrip.

How exactly did Vitality Group establish such a large business?

01

Top students from Tsinghua University join forces to start a business.

Vitality Group is headquartered in Shenzhen, with its history dating back to 2009 when Vitality Tianhui (the main operating company of Vitality Group) launched its first mobile app Flight Butler, providing real-time flight information to passengers.

Later, Vitality Group evolved from a pure travel information provider into a comprehensive travel platform, offering users one-stop travel-related services before, during, and after their trips. In 2011, the company's lodging reservation service officially launched; then in 2012, the flight reservations service was introduced, along with the domestic-first mobile app High-Speed Rail Butler, providing train dynamic information and booking services.

Unlike traditional platforms that mainly act as intermediaries in transactions between passengers and corporations, Vitality Group's asia vets travel services seamlessly integrate various modes of transportation such as planes, trains, and online car-hailing, while also offering a range of complementary services including seat selection, train seat selection, flight delay inquiries, airport information navigation, and hotel reservations to address various situations during the journey, ensuring passengers have a relaxing and enjoyable travel experience.

With continuously providing premium user services, Vitality Group has accumulated a large user base, with a total registered user count exceeding 0.174 billion as of the end of June 2024.

Products and services provided by the company, image source: prospectus

Several founders of the company are top students from prestigious universities, with rich experience in the internet field.

Wang Jiang, co-founder and CEO of Vitality Group, is 51 years old this year and holds a Bachelor's degree in Engineering Physics from Tsinghua University. Wang Jiang has worked at multiple TMT companies such as Beijing Tasting Net Technology Co., Ltd., Huayou Century Communication Co., Ltd., and Shanghai Siemens Mobile Communications Co., Ltd., before joining Vitality Group in July 2009.

Co-founder Yi Bing is 54 years old this year, graduated from Xiamen University, majoring in Systems Engineering. Yi Bing has served as Deputy General Manager of Aotian Information Technology (Shenzhen) Co., Ltd., joined Vitality Group in September 2005 and has been the Chief Operating Officer, and currently is the Executive Director and Senior Vice President of the company.

Another co-founder, Li Lijun, is 52 years old this year and holds a Bachelor's degree in Computer Science and Technology from Tsinghua University. Li Lijun once worked at the Shenzhen Posts and Telecommunications Bureau's New Technology Development Center, mainly responsible for the development and construction of data, mobile, and internet businesses; later served as General Manager and Director of Aotian Information Technology (Shenzhen) Co., Ltd., and now is a non-executive director of Vitality Group.

The rapid development of Vitality Group is inseparable from the support of capital.

As early as 2016, Vitality Tianhui received financing from Huasheng Lingshi, Shanghai Chuangji, Zhuhai Fuhai, Ningbo Kaisa, and Shaanxi Relief Fund, followed by financing from Tingrui and Linghui Foundation in the following years. In 2024, Fontus also subscribed to the company's shares, with a post-investment valuation of approximately 2.087 billion yuan.

02

Achieved a turnaround in 2023.

Most of Vitality Group's revenue comes from travel-related services.

The prospectus shows that in 2021, 2022, 2023, and the first six months of 2024 (referred to as the "reporting period"), revenue from travel-related services accounted for over 80% of the company's total revenue, while the revenue from online marketing services, data, and technology services was relatively low.

Details of the company's revenue, image source: prospectus

Specifically, the company's travel-related services include transportation ticketing services, business travel management services, online car-hailing services, lodging booking services, and others.

Among them, transportation ticketing services account for over 60% of the revenue from travel-related services, which mainly include flight and train ticket bookings, bundled value-added travel service packages, and membership services.

The company also seamlessly integrates online car-hailing services on its platform with transportation ticketing services to ensure a smooth travel experience for tourists. It also allows users to book accommodations through the company's platform, earning intermediary service commissions, although this revenue accounts for a small proportion.

In addition to serving individual customers, the company also provides end-to-end management services for corporate clients' needs such as conferences, incentive travel, large meetings, exhibitions, and other corporate travel requirements. The company typically charges package prices to corporate clients, generating revenue from business travel management services after deducting costs.

Details of travel-related service revenue, image source: prospectus

In terms of performance, from the first half of 2021 to the first half of 2024, the revenue of Vitality Group was approximately 0.344 billion yuan, 0.28 billion yuan, 0.502 billion yuan, 0.281 billion yuan respectively, with corresponding net income of approximately -0.358 billion yuan, -0.758 million yuan, 59.309 million yuan, 31.712 million yuan. The company achieved a turnaround in 2023.

During the reporting period, the gross margin of Vitality Group was 49.8%, 47.1%, 56.8%, 58.6% respectively, with some fluctuations.

In 2022, the travel demand and frequency significantly decreased due to the impact of the epidemic, leading to a substantial reduction in platform transaction activities and a corresponding decrease in gross margin. In 2023, commercial activities and tourism demand significantly recovered, platform transaction volume increased, and the gross margin also improved.

03

To travel in tandem with Ctrip, market share in 2023 was 1.2%

The tourism market includes transportation, lodging, sightseeing, dining, shopping, and other tourism activities, and the development of the tourism industry plays an important role in promoting economic growth, stimulating consumption, and employment. In the future, with the support of policies and the growth of disposable income per capita, the Chinese tourism market will continue to grow.

In terms of travel, Vitality Group and other comprehensive travel platforms can provide information inquiries, reservations, and payment services for different transportation options, and customize the best travel options based on user needs and preferences, such as users can book plane or train tickets in advance through internet platforms.

In 2023, the revenue of China's overall internet travel service market reached 861 billion yuan, and is expected to reach 2.11 trillion yuan by 2028, with a compound annual growth rate of 19.7% from 2023 to 2028.

Among them, in 2023, the revenue of China's online transportation booking market, online lodging booking market, and travel data solution was 755.5 billion yuan, 101.1 billion yuan, and 0.1 billion yuan respectively.

Image source: Prospectus

Despite having a market size of hundreds of billions, China's comprehensive internet travel service market is relatively fragmented and fiercely competitive, with over 1000 providers offering online transportation booking, online lodging booking, or travel data solution services in the market.

Vitality Group not only faces competition from other travel platforms, traditional travel agencies, and travel service providers but may also face intense competition from internet companies such as e-commerce, search engines, and social media companies.

To cope with the increasingly fierce competition, companies may need to carry out marketing activities to promote their brands and acquire new users. This will force them to incur significant sales and marketing expenses, thereby affecting their operating profit margin and profitability.

Based on the 2023 comprehensive internet travel service GMV calculation, the top five providers in China collectively account for approximately 67.3% of the total market size. Among them, Vitality Group ranks 11th with a market share of 1.2%, behind listed peers such as Ctrip (Company A), Tongcheng Travel (Company C), and H World Group (Company E).

China's top three one-stop comprehensive travel platforms account for approximately 33% of the total market share of comprehensive internet travel services, with Ctrip holding the top spot with a market share of 31.6%, followed by H World Group at second place.

Despite years of development, H World Group has become the second largest one-stop comprehensive travel platform in China, but its market share still lags far behind industry leader Ctrip. It is not an easy task for the company to increase its market share under intense industry competition.

In this listing application, H World Group intends to raise funds to enhance research and development capabilities, expand the application of AI in business operations; expand its global footprint; enrich and enhance company products; operating funds and general corporate purposes.