Executive Summary / Key Takeaways

• Tuniu Corporation has achieved a significant turnaround, marking its first GAAP profit for the full year 2024 since its listing, with non-GAAP net income reaching a record high. This demonstrates a successful pivot towards sustainable profitability driven by strategic execution.
• The company's dual-product strategy, featuring the premium "Niu Tour" and value-oriented "Niu Select," effectively caters to diverse customer segments, driving robust transaction volume growth, including over 25% year-over-year for combined Niu Tour and Niu Select products in Q2 2025.
• Tuniu is aggressively expanding its reach through diversified sales channels, with live streaming contributing nearly 20% of total transaction volume in Q2 2025 and offline store transaction volume growing over 20% year-over-year in the same period.
• A key technological differentiator is the recently launched "AI assistant Xiao Niu," which integrates large language models for smart search, personalized recommendations, and dynamic packaging, enhancing customer experience and operational efficiency.
• Despite intensifying market competition and potential gross profit margin pressure from competitive pricing, Tuniu forecasts continued revenue growth of 7% to 12% year-over-year for Q3 2025 and aims for overall profitability in 2025, underpinned by operational discipline and strategic investments.

Tuniu's Strategic Evolution in China's Dynamic Travel Market

Tuniu Corporation, founded in 2006 and headquartered in Nanjing, China, has evolved into a prominent online leisure travel company. Its core business revolves around offering comprehensive packaged tours, including organized and self-guided options, alongside a suite of travel-related services such as attraction tickets, visa assistance, accommodation, and ticketing. The company's journey began with a foundational commitment to quality, exemplified by the launch of its "Niu Tour" product line over a decade ago. This early focus on premium organized tours, characterized by high-quality experiences and a zero-shopping policy, cultivated a loyal customer base and established Tuniu's reputation for service excellence.

The Chinese travel market is characterized by intense competition, with numerous online travel agencies (OTAs) and emerging channels vying for consumer attention. Tuniu operates within this landscape alongside major players like Trip.com Group , Expedia Group , and Booking Holdings . While larger global competitors often boast broader ecosystems and greater scale, Tuniu strategically carves out its niche by focusing on integrated leisure travel solutions within China and for outbound Chinese travelers. Its strategy emphasizes product differentiation, a diversified multi-channel sales approach, and a strong commitment to leveraging technology to enhance customer experience and operational efficiency. This localized and specialized approach allows Tuniu to compete effectively by offering tailored experiences that resonate with its target demographic, even as it faces the challenge of matching the technological investment and global reach of its larger rivals.

The AI Advantage: Powering Personalized Travel with "Xiao Niu"

A significant differentiator for Tuniu, and a cornerstone of its future strategy, is its investment in artificial intelligence. In early April 2025, Tuniu launched its self-developed travel AI agent, "AI assistant Xiao Niu." This innovative tool integrates vertical travel application scenarios with open-source large language models to provide customers with a seamless, one-stop service experience. Xiao Niu offers smart search capabilities, automated price comparisons, personalized recommendations, and dynamic packaging, allowing customers to book preferred products directly without encountering pop-up bundling offers, ensuring a transparent and efficient booking process.

The tangible benefits of this technology are already evident. During the Labor Day holiday in 2025, Tuniu observed a noticeable increase in user engagement with its AI assistant, particularly for searches related to flights, train tickets, and hotel bookings. This indicates a growing customer adoption and reliance on AI for travel planning. For investors, this technological advancement contributes to Tuniu's competitive moat by enhancing customer satisfaction and loyalty, potentially leading to higher repurchase rates and improved conversion rates. By making customized travel more convenient, efficient, and accessible, Xiao Niu positions Tuniu at the forefront of travel technology in its market, driving operational efficiency and supporting long-term growth.

Dual Product Strategy: Catering to Every Traveler

Tuniu's product strategy is built on a dual approach, effectively segmenting the market to capture a wider customer base. The "Niu Tour" product line continues to target mid-to-high-end customers, prioritizing quality and unique experiences. These premium organized tours often include a zero-shopping policy, ultra-luxury hotels, and distinctive dining options. Niu Tour has fostered a highly loyal customer base, with over half of its customers being repeat clients and maintaining a repurchase rate twice that of regular products. In Q3 2024, Niu Tour products boasted a remarkable 98% customer satisfaction rate, with some newly launched in-depth outbound products achieving a perfect 100% satisfaction. The company continues to expand Niu Tour offerings to emerging destinations, such as its first tour to the Caucasus region in April 2025, which also received a 100% satisfaction rate.

Complementing Niu Tour is the "Niu Select" product line, launched in Q3 2023. This segment caters to price-sensitive travelers, particularly younger generations and first-time international travelers from lower-tier cities, by offering classic routes at highly competitive prices. Niu Select products have gained significant popularity, especially through live streaming channels, due to their cost-effective value proposition. The combined transaction volume for Niu Tour and Niu Select products grew by more than 25% year-over-year in Q2 2025, highlighting the success of this diversified product strategy. In Q1 2025, Niu Select products alone saw an over 80% increase in transaction volume compared to the previous quarter, demonstrating strong market acceptance.

Expanding Reach: Live Streaming and Offline Network Power Growth

Tuniu's strategic expansion across diverse sales channels is a critical driver of its growth. The company has made significant inroads into new media, particularly live streaming, which has become an increasingly vital channel. In Q2 2025, live streaming's contribution to Tuniu's total transaction volume rose to nearly 20%, up from over 15% in the previous quarter. Both payment and verification volumes through these channels achieved double-digit year-over-year growth. Tuniu leverages its extensive experience in outbound travel to offer higher-priced items, such as luxury hotels and long-haul tours, through live streaming, supported by professional presentations and comprehensive services like visa assistance. Notable successes include an in-house Dubai product surpassing 10,000 paying customers and a Singapore and Malaysia Niu Select itinerary achieving similar numbers through live streaming shows.

Alongside its digital expansion, Tuniu is strengthening its physical presence. By the end of Q1 2025, the company had established nearly 300 offline stores, strategically located in key departure cities, popular tourist destinations, and transportation hubs. These stores serve to build local scale, drive down operating costs, and provide personalized services. Transaction volume from offline stores grew by over 20% year-over-year in Q2 2025. Tuniu plans to significantly increase its offline store network in 2025, potentially doubling its current number. This multi-channel approach, combining the broad reach of live streaming with the personalized touch of offline stores, allows Tuniu to effectively capture diverse customer segments and enhance brand recognition.

Financial Resurgence and Disciplined Operations

Tuniu's strategic initiatives have translated into a notable financial resurgence. The company achieved its first GAAP profit for the full year 2024 since its listing, reporting RMB 77.2 million in net income. Non-GAAP net income for 2024 grew by over 70% year-over-year, reaching a record high of RMB 80.8 million. This profitability milestone underscores the effectiveness of Tuniu's operational discipline and strategic adjustments.

In the second quarter of 2025, Tuniu continued its positive trajectory, reporting net revenues of CNY 134.9 million, a 15% increase year-over-year. Revenues from packaged tours, the company's core segment, were particularly strong, growing 26% year-over-year to CNY 113.4 million and accounting for 84% of total net revenues. This growth was primarily driven by organized and self-drive tours. While other revenues saw a 21% year-over-year decrease to CNY 21.5 million, mainly due to lower advertising fees from tourism boards, the robust performance of packaged tours compensated for this decline. The company achieved moderate profitability on both a GAAP and non-GAAP basis in Q2 2025, with a net income attributable to ordinary shareholders of CNY 14.5 million and non-GAAP net income of CNY 16.5 million.

Tuniu maintains a strong liquidity position, with cash and cash equivalents, restricted cash, short-term investments, and long-term deposits totaling CNY 1.2 billion as of June 30, 2025. Cash flow generated from operations for Q2 2025 was CNY 46 million, indicating healthy operational cash generation.

Competitive Dynamics and Future Outlook

Tuniu operates in a fiercely competitive market, facing established online travel giants like Trip.com Group (TCOM), Expedia Group (EXPE), and Booking Holdings (BKNG). While these larger players benefit from extensive global networks and significant technological investments, Tuniu differentiates itself through a deep understanding of the Chinese leisure travel market and a tailored product offering. Its hybrid online and offline channel strategy provides a unique touchpoint for Chinese travelers, and its focus on integrated services, such as visa assistance within packaged tours, offers a more comprehensive solution for leisure travel. Tuniu's AI assistant, Xiao Niu, represents a strategic move to enhance its technological capabilities and personalize the customer journey, directly addressing a key area where larger competitors also invest heavily.

Looking ahead, Tuniu anticipates continued growth in the overall travel market in 2025, albeit with intensifying competition in both quality and price. For the third quarter of 2025, the company expects net revenues to range from CNY 199 million to CNY 208.3 million, representing a 7% to 12% increase year-over-year, and aims to achieve profitability again. Management acknowledges that competitive pricing strategies, aimed at attracting new customers and consolidating market share, may negatively impact the gross profit ratio in 2025. However, Tuniu plans to offset this through stringent internal cost controls and continued investments in product innovation, channel expansion, and AI technology. The company expects the third quarter, as the peak travel season, to contribute the majority of its annual profit. Broader market trends, such as new holiday policies extending the Spring Festival and increasing travel enthusiasm across demographics, are expected to provide tailwinds for Tuniu's continued growth.

Conclusion

Tuniu Corporation stands at a pivotal juncture, having successfully navigated a challenging period to achieve full-year GAAP profitability in 2024. This turnaround is a testament to its strategic agility, centered on a dual-product offering that caters to both premium and value-conscious travelers, a robust multi-channel distribution network, and a forward-looking investment in AI technology. The "AI assistant Xiao Niu" represents a significant technological leap, promising enhanced customer experiences and operational efficiencies that can solidify Tuniu's competitive position in the dynamic Chinese leisure travel market.

While the competitive landscape remains intense and pricing pressures may impact gross margins, Tuniu's disciplined operational execution, strong liquidity, and clear strategic roadmap for product innovation and channel expansion position it for continued growth. The company's ability to leverage its localized expertise and technological advancements to capture evolving consumer demands, particularly from emerging segments and through new media, will be crucial. For investors, Tuniu presents an intriguing opportunity as a company that has demonstrated its capacity for profitable growth through strategic adaptation and a commitment to technological leadership in a vibrant travel sector.