Now, Beijing, Xinjiang, Yunnan, Sichuan, And Hainan See Traffic Battles As Trip.com, Ctrip, Fliggy, Qunar, And Meituan Compete — Driving Up Xiaohongshu Ad Costs And Reshaping China Tourism, Here’s More To Know

Image generated with Ai

But on the narrow streets of Beijing, the blanketing deserts of Xinjiang, the misty rice terraces of Yunnan, the panda-thronged highlands of Sichuan and the sun-drenched beaches of Hainan, a quiet conflict is raging, which has nothing to do with transportation or weather. It is a fight for visibility in the digital space, and in many cases a fight that small and midsize travel agencies are increasingly losing. The increasingly high cost of advertising on Xiaohongshu, largely due to aggressive entry of large online travel agencies (OTAs) such as Trip. com Group, Ctrip, Fliggy, Qunar and Meituan, the start of the grind of tourism marketing in China was budget battles and keyword wars.

Ad Costs for Travel Keywords Spike on Top Destinations

So have travel businesses that concentrate on important destinations abroad. Keywords associated with areas such as Xinjiang, which has been a destination for adventure travel and cultural tourism, have seen their cost-per-click prices spike into the hundreds of yuan — a huge amount of money for a niche operator. By contrast, words associated with favorite destination cities, such as Tokyo, or with ideas like “homestay” and “scenery retreat,” have jumped 20% to 50%, while in some cases costs have doubled from what they were in early spring. This accelerated price escalation has caught many small travel players off balance, leaving them to either devote more of capital or opt out from the platform altogether.

Now, a great content-centric social platform is acting more and more like a search engine marketing system, where the highest bidder gets the best placement. Bidding on Xiaohongshu rewards those with larger budgets, so that no matter how real or compelling the content, small players are effectively priced out of visibility.

Trip. com, Ctrip, Fliggy, Qunar and Meituan Take Over the Digital Ad Space

Central to the shift are five industry giants: Trip. com, Ctrip.com, Fliggy, Qunar and Meituan. Since May, these OTAs have poured more of their marketing budgets into Xiaohongshu, throwing off the site’s balance and turning it into a capital-rich battleground. Trip. com and Ctrip, siblings beneath the same parent, have been pioneers, pouring millions of dollars into campaign bidding. Fliggy, which is backed by Alibaba, has come after terms associated with hip youth destinations, such as Yunnan and Hainan. Known for budget travel packages, Qunar is going after volume with aggressive keyword targeting, especially with long-tail keywords related to backpacking and budget tourism. Meituan, best known for its food delivery and local services, has been growing its travel arm, and with Xiaohongshu it is promoting local homestays and staycations in places like Beijing and Chengdu.

The combined effect of these giants coming together in the Xiaohongshu ecosystem has led to a seismic shift in the competitive dynamics. The algorithm, increasingly shaped by paid bids, marginalizes organic content from independent hosts, guides and agencies that had been the lifeblood of travel storytelling on the platform.

Small Travel Operators Are Being Left Behind

K, the owner of an adventure tour agency based in Xinjiang, said the cost of attracting one visitor through Xiaohongshu has become exorbitant, with every piece of ill-judged content or targeting resulting in a expensive failure. For smaller agencies, each and every click is now a direct hit to already-slim profit margins. “And everything that you’d built up over two years of organic storytelling and slow, steady growth was wiped out in a matter of weeks when the competition experienced this increase in CPCs,” added S, who runs a boutique homestay business in Yunnan.

For many smaller operators though, it’s not a battle they can fight, says industry analyst Yuanshan Xiao. Some of that is because they don’t have the years of sophisticated advertising expertise, large creative departments or digital strategists that giant OTAs do. Nowadays, the monthly advertising budget for exposing your brand on Xiaohongshu will tend to be hundreds of thousands of yuan, meaning that this is unsuitable for any business which operates at a gross margin of less than 20%. If your return on advertising spend is not higher than 1:5, you’re working for the platform, not for your business,” Xiao observed.

Transition to Douyin and WeChat as Substitutes

Therefore lots of small and medium agencies are leaving Xiaohongshu, and making more and more resources to Douyin or WeChat. Today they bring cheaper customer acquisition options, and more ‘relational’ marketing opportunities. There’s less competition for keywords on Douyin, for example, where travel influencers and operators can reach audiences with live streaming and short-form video without having to compete in the same cutthroat keyword bidding wars.

WeChat lands and locks in the likes of the Lyft board’s most valuable asset: repeat customers and word-of-mouth advertising WeChat’s mini-program ecosystem and group marketing channels offer a more closed-loop model for client relations and booking services attractive to agencies chasing repeat customers and referrals.

The Increasing Influence of Xiaohongshu on Travel Decision-Making

Even with soaring ad prices, Xiaohongshu continues to be one of the most impactful digital platforms on Chinese consumers’ travel considerations. By mid 2024, the platform had 320 million active monthly users. 70% of its users use its search function and six searches are done on average daily. The result has made Xiaohongshu a big destination to discover places, plan trips and read user-generated reviews and travel diaries.

Its impact on outbound travel patterns is just as inarguable. With more and more people starting their travel research on Xiaohongshu, the platform will influence travel tendencies not only within China but also across Asia. But being transformed into a CPC-dominated platform may not be conducive to a diverse representation of voices that affects the travellers decision by commercial instead of authentic content.

China’s Tourism Industry Bounces Back, But Unevenly

More than 94 million inbound visitors were received in the reporting period, as shown by data published by the Ministry of Culture and Tourism on China’ tourism standing strong in recovery after years of travel blockage. Moreover, domestic tourism remains a strong economic stimulant, with Beijing, Sichuan, Yunnan, and Hainan all witnessing significant growth in tourism spend and footfall.

But now, the proliferation of adblocking software is also putting local travel businesses in these provinces at a disadvantage. And though there is a national promotional push for AAAA and AAAAA scenic sites, many operators in more outlying areas are finding it hard to get themselves noticed as traffic migrates to the pockets with the most financial resources behind their promotions.

What to Do: Tactics and Solutions

According to experts, smart pivots are necessary for small and medium-sized agencies in the current environment. Rather than just bidding against each other and focusing solely on CPC campaigns, travel entrepreneurs need to focus on building an interesting brand. This could be creating a distinguishable company brand or making use of personal branding — transforming agency founders or the hosts into well-known digital faces.

Another goal is to raise the efficiency of advertising conversion. Small budgets are also an option, as long as content is highly focused, genuine and deployed wisely. Using social features like influencers inviting friends, co-oping with regional tourism bureaus and creating localized storytelling campaign all drive higher ROI than traditional bidding on keywords.

Government backing might be key, too.‐‐‐What people are saying”No song is safe from skrrt skrrt. Subsidized digital marketing workshops, grants for small travel operators and provincial tourism offices working with small businesses are ways that access to digital platforms can become more democratic.”

Looking forward for Chinese Tourism

Travel is about exploring, bridging gaps, and sharing stories. But in the digital present, that spirit is determined more and more by algorithmic exposure and budget limitations. Still, there is hope. Travellers still want an authentic experience, and the touring industry relies on new voices, new stories, and something different.

The key to surviving for small operators in areas such as Xinjiang, Yunnan, Hainan, Sichuan and Beijing is adaptability. But those who adopt content innovation, spread their bets across platforms and invest in brand loyalty could find a way out of the morass. As the case may be, high ad bids or no, the saga of connecting inquiring minds with the beauty of the landscapes and cityscapes of China must move on — and there’s a story fit enough for it elsewhere.