TOUR Q3 2025: Package Tour Revenue Climbs 12% as Self-Drive and Outbound Segments Accelerate
TOUR’s Q3 showed robust travel demand, with packaged tour products driving double-digit growth and live streaming channels expanding reach. Domestic and outbound travel both contributed to gains, while self-drive and niche destination products saw breakout momentum. Management eyes continued revenue acceleration into Q4, but profit headwinds and margin pressures remain key watchpoints for investors.
Summary
- Self-Drive and Niche Offerings Surge: New product launches and dynamic packaging fueled rapid growth in emerging segments.
- Live Streaming Channel Scales: Digital engagement and influencer partnerships are reshaping TOUR’s sales mix and customer acquisition.
- Margin and Profitability Uncertainty: Q4 guidance signals ongoing revenue gains, but margin stability and cost discipline will determine bottom-line outcomes.
Business Overview
TOUR, also known as 2NEW, operates as a leading travel services platform in China, generating revenue primarily through packaged tours, self-guided travel products, and related travel services. Its business segments include domestic and outbound packaged tours, self-drive products, and a growing digital channel footprint that leverages live streaming and offline stores. The company monetizes through direct bookings, commissions, and value-added services, with packaged tours accounting for the majority of revenue.
Performance Analysis
TOUR’s third quarter net revenue rose 9% year-over-year, propelled by a 12% jump in packaged tour sales, which now comprise 89% of total revenue. The company’s core packaged tour business continued its streak of double-digit quarterly growth, underscoring the resilience of travel demand as peak season approached. Self-drive tour products, enabled by dynamic packaging technology, delivered standout performance, with transaction volumes up fivefold year-over-year during the National Day holiday. Outbound travel also contributed, with transaction volume for “new select” outbound products more than doubling versus the prior year.
Despite top-line momentum, profitability softened. Gross profit fell 10% year-over-year, reflecting a mix of higher operating expenses and a 15% increase in R&D investment, as TOUR expanded its technology stack and product portfolio. Sales and marketing costs edged up 2% as the company scaled both digital and offline channels. Notably, other revenues—mainly commissions from ancillary travel products—declined 14%, highlighting some headwinds in non-core segments. Operating cash and liquidity remain robust, with RMB 1.1 billion in cash and equivalents.
- Packaged Tour Dominance: Packaged tours remain the revenue engine, driving nearly nine-tenths of total sales and benefiting from both domestic and outbound travel recovery.
- Self-Drive and Niche Destinations: Self-drive and long-haul island products saw multi-fold volume growth, reflecting TOUR’s ability to tap into evolving customer preferences.
- Channel Expansion: Live streaming and offline store channels both posted double-digit volume increases, diversifying TOUR’s go-to-market strategy.
While TOUR maintained profitability on a non-GAAP basis, the widening gap between revenue growth and profit underscores the challenge of scaling efficiently as the business invests in technology, content, and new distribution formats.
Executive Commentary
"In the third quarter, with the peak travel season approaching, demand for travel accelerated and the tourism industry demonstrated thriving growth. 2NEW also recorded year-over-year growth in both transaction volume and the number of trips booked. From a destination perspective, both domestic and outbound travel achieved year-over-year growth in transaction volume and the number of trips booked."
Donald Yu, Founder, Chairman, and CEO
"Revenues from package tours were up 12% year-over-year to 179 million, and accounted for 89% of our total net revenues for the quarter. The increase was primarily due to the growth of overnight tours and self-drive tours."
Anqiang Chen, Financial Controller
Strategic Positioning
1. Self-Drive and Dynamic Packaging Expansion
TOUR is leveraging dynamic packaging technology, which enables customers to customize travel components in real time, to rapidly grow its self-drive and HotelPlusX offerings. These products now reach all provinces in mainland China, with particular traction in lower-tier cities. This strategy taps into the rise of self-guided travel, broadening TOUR’s addressable market and reducing reliance on traditional group tours.
2. Niche and Long-Haul Destination Focus
Management is investing in niche destinations and long-haul island products to attract experienced and higher-spending travelers. The launch of organized tours to South America and expansion into destinations like Seychelles and Mauritius signal a push to capture premium segments and diversify away from commoditized routes.
3. Channel Diversification via Live Streaming and Offline Stores
Live streaming has become a growth engine, with both payment and verification volumes up double digits. TOUR’s partnerships with top-tier and mid-tier creators, coupled with immersive on-site content, are driving engagement and conversions. Offline stores are also expanding, particularly in key cities and transportation hubs, catering to senior and community-based segments that value face-to-face service.
4. Technology and Operational Efficiency
Technology investment is central to TOUR’s operational scaling, with AI and advanced tools embedded across product development, supply chain, and marketing. The company’s focus on tech-enabled efficiency is intended to support profitability as it balances growth with cost discipline.
Key Considerations
TOUR’s Q3 reflects a business in transition, balancing growth in core packaged tours with aggressive bets on new products, technology, and distribution channels. Investors should weigh the sustainability of these gains against rising costs and competitive pressures.
Key Considerations:
- Shift Toward Self-Guided Travel: The rapid adoption of self-drive and dynamic packaging products signals changing consumer preferences and TOUR’s ability to adapt.
- Rising Cost Structure: Increased R&D and marketing expenses highlight the challenge of scaling new initiatives without eroding margin.
- Offline and Digital Channel Synergy: The combination of live streaming and offline stores is expanding TOUR’s reach, but execution risk remains as these channels mature.
- Outbound Travel Recovery: Outbound tours now comprise one-third of gross merchandise value, offering diversification but exposing TOUR to global travel volatility.
Risks
Margin compression remains a key risk, as TOUR’s cost base rises faster than revenue in some quarters. Reliance on packaged tours for the majority of revenue exposes the company to cyclical travel demand and competitive pricing. The rapid expansion into live streaming and niche destinations, while promising, introduces execution and integration risk, especially as consumer travel patterns shift post-pandemic. Macro volatility and regulatory shifts in China’s travel sector could also impact future growth trajectories.
Forward Outlook
For Q4 2025, TOUR guided to:
- Net revenues of RMB 211 million to RMB 216.1 million, representing 8% to 13% year-over-year growth
For full-year 2025, management maintained a focus on:
- Double-digit growth in packaged tours, with self-drive and outbound expected to outpace overall company growth
Management highlighted several factors that will shape Q4:
- Continued strength in off-peak and niche travel demand, including ice and snow trips
- Ongoing investment in product development and marketing to capture Chinese New Year travel demand
Takeaways
TOUR’s Q3 results underscore the company’s ability to capture evolving travel demand, but also highlight the operational and margin risks of aggressive expansion.
- Product and Channel Innovation: TOUR’s push into self-drive, niche destinations, and live streaming is yielding volume gains, but cost discipline will be critical to sustaining profit growth.
- Margin Pressure Watch: Investors should monitor the trajectory of operating expenses and the company’s ability to translate topline growth into sustainable earnings.
- Next Phase of Growth: The Q4 holiday period and further penetration into lower-tier cities will be key indicators of TOUR’s ability to maintain momentum and defend share in a competitive market.
Conclusion
TOUR delivered a quarter of solid revenue growth, underpinned by innovation in product and channel strategy. However, rising costs and margin pressure temper the near-term outlook. Investors should focus on TOUR’s execution through the holiday season and its ability to scale new initiatives profitably as the travel sector normalizes.
Industry Read-Through
TOUR’s results highlight a broader recovery in China’s travel sector, with both domestic and outbound segments rebounding and consumer preferences shifting toward self-guided and niche travel experiences. The success of live streaming as a sales channel underscores the growing importance of digital engagement and influencer marketing in travel distribution. Competitors may need to accelerate digital transformation and diversify product offerings to keep pace. The continued rise of lower-tier city demand and the integration of technology in packaging and fulfillment point to industry-wide shifts that could reshape the competitive landscape in the coming years.