Frost & Sullivan joins hands with multiple cultural and tourism institutions to release the '2021 China Cultural and Tourism Accommodation Traffic Ecology White Paper'

In the era of rapid development of mobile internet, people's demand for data traffic is increasing day by day, and the form of online traffic is no longer limited to web search engines. The increase in mobile internet applications and continuous expansion of businesses have given consumers more capabilities to obtain product information, which has also had a certain impact on their consumption behavior. Additionally, when the dividend period of traffic ends and the market enters a red ocean phase, user growth becomes slow, and internet companies have transformed from an incremental market to a current stock market. Therefore, as a new method of stock market, creating private domain traffic has become a major hot topic in the current competition for traffic markets. The rise of private domain traffic means that internet user management has shifted from 'rough' operations to 'refined' operations. Against this backdrop, the '2021 China Cultural Tourism Accommodation Traffic Ecology White Paper' was officially released.

During the conference, Frost & Sullivan, in collaboration with the Organizing Committee of the 2021 Global Cultural and Tourism Accommodation Industry Expo, Deansel, Ctrip, Rednote, and LeadLeo, officially released the 'White Paper on the China Cultural and Tourism Accommodation Traffic Ecosystem 2021'.

The '2021 China Frost & Sullivan Tourism and Hospitality Accommodation Traffic Ecology White Paper' was released by Mr. Wang Chenhui, the Managing Partner of Frost & Sullivan Greater China.

Mr. Wang Chenhui, Partner-in-Chief of Frost & Sullivan Greater China Region

Against the backdrop of the era of consumption upgrading, traditional culture has shifted its business model from 'functional consumption' to 'experiential consumption'. Coupled with the transformation of China's tourism market from 'sightseeing tours' to 'immersive deep tourism', the cultural and tourism industry relies on the rich resources of Chinese culture, providing local characteristic, themed, high-quality, diversified services to meet consumers' higher demands. Cultural and tourism accommodation, as one of the sub-industries under the cultural and tourism industry, refers to non-standard accommodation service complexes centered around accommodation, combined with surrounding dining, shopping, entertainment, cultural experiences, etc., to create a unique environment. In addition to meeting consumers' basic functional needs for accommodation, cultural and tourism accommodation integrates local or thematic features, combines surrounding resources, and provides consumers with comprehensive, customized, immersive consumer experiences.

The online travel industry's business models mainly cover three major areas: OTA platform accommodation reservations, OTA transportation tickets, and OTA vacation tourism. The traffic in the culture and tourism accommodation industry is also entering a market dividend period as the market scale of the upstream online travel industry continues to expand. By 2018, the transaction volume of OTA accommodation reservations reached 203.15 billion yuan, with an annual compound growth rate of 32.5%. The public domain traffic in China's culture and tourism accommodation industry has entered a mature phase.

In the era of increasingly precious online traffic, growth has hit a ceiling. As traffic costs continue to rise, online activities such as video and gaming are facing a growth bottleneck due to saturation of traffic. How to maximize existing traffic is one of the concerns for businesses. Therefore, for enterprises and platforms today, how to deeply cultivate existing traffic to the greatest extent possible and conduct more refined user marketing is of utmost importance. As a new method of leveraging existing assets, creating private domain traffic has become a major hot topic in the current online traffic market competition.

The advantage of public domain traffic mainly lies in its relative ease of acquiring traffic. Public domain traffic platforms are more accessible than private domains, allowing cultural and tourism accommodation businesses to distribute content to millions or tens of millions of users through exposure even without having a large fan base. This feature can help enterprises increase their market awareness. Since public domain traffic platforms are relatively easy to obtain, cultural and tourism accommodation businesses can use them at the beginning of their establishment to improve market visibility. At the same time, public domain traffic has a wider audience. Public domain traffic platforms generally target the general public, making their audience base broader compared to private domains. For example, on Douyin, the algorithm assigns each creator a traffic pool, with an initial pool size of about 200-500 people. This feature can help enterprises maintain brand activity.

However, public domain traffic also has certain limitations. For example, users of public domain traffic tend to have poor stickiness. The traffic generated by public domain traffic platforms belongs to the platform itself, making it difficult for cultural and tourism accommodation enterprises to reach out to users a second or third time, thereby hindering the creation of strong user loyalty and stickiness. There are many competitors in the same type of public domain traffic platforms, making it difficult for businesses to cultivate customer relationships. For cultural and tourism accommodation enterprises, end-users generally base their choices on the platform rather than individual products, leading to low product loyalty and resulting in a lower repeat purchase rate. Additionally, the stability of public domain traffic is relatively poor. Public domain traffic platforms have their own traffic distribution mechanisms, which do not provide stability. For instance, platforms like Douyin, Kuaishou, and Taobao allocate corresponding traffic based on the level of playthrough rates, comment rates, likes, and completion rates. For cultural and tourism accommodation enterprises, unstable traffic leads to large fluctuations in the frequency of reaching out to end-users, as well as significant variability in the number of transactions converted from traffic.

Currently, the main sources of private domain traffic include WeChat/WeCom, mini-programs, WeChat communities, official WeChat accounts, and websites or apps of cultural tourism accommodation enterprises. Against the backdrop of a slowdown in internet traffic growth in China, a gradual decrease in new internet users, and the impending decline of demographic dividends, the growth rate of public domain traffic is limited. In this context, private domain traffic, which focuses on precision marketing, high conversion rates, and repeat purchases, has emerged as a new strategy for marketing cultural tourism accommodation enterprises. On one hand, due to the lower cost of private domain traffic, merchants can provide customized services for different customer groups without excessive profit squeeze. On the other hand, customers can enjoy products and services with higher cost-effectiveness, achieving a win-win situation.

WeChat is the most ideal private domain traffic platform in the industry due to its complete ecosystem, massive user base, nearly 1 billion average monthly active users, a penetration rate of 97.2% across the entire network for active users, and it integrates instant communication, friend circle and official account information dissemination and display, as well as financial payment functions.

In terms of the future development trend of private domain traffic for culture and tourism accommodation, it is expected that this traffic will develop towards specialized and precise operations in the future. This will enhance the brand image and increase user purchase rates. Nowadays, private domain traffic has been associated with the image 'private domain traffic = WeChat business', and has been labeled with negative attributes such as poor product quality and severe marketing harassment. With culture and tourism accommodation enterprises gradually strengthening their application of private domain traffic, it is anticipated that this traffic will develop towards specialized and precise operations in the future, thereby enhancing the brand image and increasing user purchase rates.

The future development trends of traffic in the culture and tourism accommodation industry include: first, the mutual penetration of public and private domain traffic; second, traffic privatization.

There are mainly two ways for public and private domain traffic to penetrate each other: cultural tourism accommodation enterprises, primarily chain hotels, gradually shift some of their public domain traffic to private domain traffic and establish private domain pools for their brands. Some growing homestays will also shift from private domain traffic to public domain traffic.

In terms of traffic privatization, in recent years, private domain traffic channels have gradually taken on an increasingly important role by focusing on the four core aspects: awareness, understanding, purchase, and interaction within the consumer behavior cycle. The penetration rate of self-control channels represented by communities and mini-programs has reached about 20%, with a growth rate expected to reach 15-25% in the coming year, higher than that of most other channels. With the continuous rise of private domains, the full-link development of the culture and tourism accommodation industry faces more opportunities.