The tourism industry's overall performance and the bargaining power of the industry chain are resonating upwards, and the leading OTA is worth paying attention to.

Zheshang released a research report stating that the growth of the tourism industry is highly certain, and online travel agencies (OTAs) occupy a middle position in the industry, making it the most certain sector to benefit from the growth of travel and tourism. The increasing penetration rate of online travel in China and the expansion of leading companies' overseas business will also contribute to incremental growth. In terms of the external environment, concerns about industry competition have eased recently, hotel supply still needs to be digested, and the bargaining power of the OTA industry chain has increased, highlighting long-term investment value. In terms of individual stocks, it is recommended to focus on: 1) Ctrip Group (09961): the leader in online travel, with a solid base of high-quality users, entering a period of harvest for its overseas business, profitability is expected to remain high; 2) TONGCHENGTRAVEL (09699): the leading OTA in the lower-tier market, expanding the low-end customer base + tapping into existing users to drive revenue growth, optimizing the competitive landscape + slowing overseas impact will boost performance. Looking at the present: What stage has the tourism market recovered to? Domestic tourism: Returning to a normalized track, with ample room for future growth. As of the first three quarters of 24 years ago, domestic tourism numbers/income have recovered to 92%/100% of the same period in 2019, with per capita travel spending reaching 108% of 2019 levels. From the perspective of industry structure, there is still room for the tourism industry's income to GDP ratio to recover. Looking ahead to 25 years, with the increase in statutory public holidays, optimization of compensatory leave system, and the expected further release of residents' travel willingness, it is projected that domestic tourism revenue will exceed 10 trillion yuan by 2028, with a CAGR of about 13% from 24-28. Outbound tourism: Gradually recovering from near to far, with expected breakthroughs in 25 years. In the first three quarters of 24 years ago, nearly 95 million Chinese tourists traveled abroad, a year-on-year increase of 52%, reaching 82% of 2019 levels; international flights by civil aviation have returned to about 80% of 2019 levels. Outbound tourism recovery is overall slower than domestic tourism, with constraints shifting from supply-side factors such as capacity to dual-sided constraints of supply and demand, but with the advancement of related companies' overseas supply chain deployment and product optimization, it is expected to surpass the previous platform period and return to 2019 levels by 25. In the future, OTA platforms will develop and expand their overseas business while catering to the outbound demand of domestic tourists. Looking ahead: What opportunities do OTA platforms face in their development? Overview: Zheshang believes that the integration of resources by OTA platforms is a key link in transaction matching, with significant implications for transaction matching and the most certain sector to benefit from the growth of travel and tourism. For relevant companies, the performance of the tourism industry market serves as the basis for their performance, and the dual-scale effects of supply chain resource integration and user-side education release the core barriers of bargaining power. Demand: There is abundant potential for tapping into customer demand, and there is still room for market user acquisition. Zheshang believes that the overseas path for leading domestic OTAs is a four-step process: "accepting domestic outbound demand merger and consolidation to strengthen the supply chain expanding users through price-for-quality exchange enhancing retention and digging into demand", with the core focus on users and the supply chain. Leading OTAs have forward-looking layouts in the overseas market, with a noticeable trend of high growth in the Asia-Pacific market due to the relative lack of international giants in the field. Furthermore, the penetration rate in lower-tier markets is still increasing, with Tongcheng maintaining a high percentage of new paying users on WeChat from non-first-tier cities, evident increases in repeat purchases per customer and per capita spending, indicating that demand still has room for exploration. Landscape: External competition is easing, and the bargaining power of the industry chain is stable. Zheshang believes that industry competition has eased recently, and future differentiation among platforms will be based on consumption scenarios and mindset. Ctrip focuses on premium hotels and business travelers, while Tongcheng has completed initial user acquisition and education in lower-tier markets, giving them a clear first-mover advantage. In addition, hotel supply side capacity is still being digested, overall ADR levels are under pressure, the hotel industry is transitioning to fine-tuned operations, with a strong emphasis on occupancy rates. Meanwhile, leading OTAs are investing in chain hotel groups, incubating their own brands, and empowering standalone hotels, further solidifying their position in the industry chain.