Photo/Shetuwang

Nov. 26 (NBD) – China's online travel agency (OTA) Tongcheng-Elong Holdings Limited (00780.HK) debuted Monday in Hong Kong at 10.78 Hong Kong dollars (1.37 U.S. dollars) per share, jumping 10 percent above the initial public offering price of 9.8 Hong Kong dollars (1.25 U.S. dollars) per share.

Based on the opening price, Tongcheng-Elong was valued at 22.151 billion Hong Kong dollars (2.82 billion U.S. dollars) in terms of the market capitalization.

Industry insiders held that being listed in Hong Kong will lay a foundation for Tongcheng-Elong's globalized development, enable the company to access more diversified financing channels, improve its brand image and corporate governance, as well as attract more talents through equity incentives.

According to Tongcheng-Elong's prospectus filed in June this year, tech giant Tencent and online booking service provider Ctrip.com International, Ltd are the two major shareholders of the company, with a stake of 24.92 percent and 22.88 percent respectively. In November, the holdings of Ctrip.com in Tongcheng-Elong was raised to 24.31 percent. 

On the one hand, Tongcheng-Elong enjoyed rapid growth through Tencent's Wechat ecosystem and mini program resources. The OTA platform acquired the right to solely operate the "Rail & Flight" and "Hotel" portals in the mobile payment interfaces of WeChat and Mobile QQ.

On the other hand, Tongcheng-Elong integrated resources related to hotel and transportation with Ctrip.com and gained support of the major shareholder in the supply chain resources.

Yang Yanfeng, research fellow from the Tourism Research Center of the Chinese Academy of Social Sciences, told NBD the transformation of Tongcheng-Elong from an OTA to an intelligent trade agency (ITA) will help turn the firm's previous users into long-term users and the company will boast huge spaces for future development leveraging Tencent's social resources.

However, according to comments from the China E-Commerce Research Center, Tongcheng-Elong's dependence on Tencen's traffic will be a hidden risk for the OTA's sustainable development, since disputes between Tongcheng-Elong and its stakeholders will cause huge negative effects in the future.

The research center also commented that Tongcheng-Elong still has disadvantages such as gaps between tourist attraction resources and user demand, immature one-stop service and low brand recognition. Therefore it should deliver smart tourism through new technologies to meet people's diversified demand, the comments suggested.

According to Yan Yanfeng, the OTA segment has been dominated by Ctrip.com, Qunar.com, Meituan-Dianping, Fliggy, and Tongcheng-Elong.

In Yang Yanfeng's view, as a stable competitive landscape of the OTA industry is being formed, OTA platforms need to enhance their service quality with differentiated operation to stand out from the competition, Yang added.

Email: wenqiao@nbd.com.cn