Produced by | Bullet Finance

Art Directed by | Qianqian

Reviewed by | Songwen

The fiercely competitive travel service market is extremely convoluted. However, amidst this chaos, the market has also welcomed a unique development.

On August 28, Ruqi Travel, which successfully listed on the Hong Kong Stock Exchange on July 10, released its 2024 interim report. The data shows that Ruqi Travel's revenue in the first half of 2024 reached RMB 1.037 billion, a year-on-year increase of 13.6%, with all three core businesses recording growth. Notably, Ruqi Travel's gross margin significantly improved in the interim report, with a year-on-year increase of 59.7%.

In particular, the main travel business, as the primary revenue driver, grew by 11.1%, serving as a crucial engine for Ruqi Travel's sustained development. This is particularly noteworthy in the highly convoluted travel service market. Investors and observers alike are eager to understand how Ruqi Travel has broken free from this conundrum.

In fact, analyzing Ruqi Travel's interim report data reveals that this travel service platform adopts a unique strategy distinct from others, which may very well have helped it escape the clutches of the convoluted market.

On the one hand, Ruqi Travel has always been characterized by its deep cultivation in the Greater Bay Area, focusing on refining its operations within a manageable scope of influence. This unique approach has now yielded remarkable results due to its sustained efforts. According to the financial report, since its establishment in 2019, Ruqi Travel, as a rising star in the travel service sector, has grown into a formidable player with significant influence in the Greater Bay Area.

On the other hand, investment in technology, particularly the construction of a new technology system centered on Robotaxi, has become the driving force behind Ruqi Travel's development. Public information indicates that Ruqi Travel is committed to commercializing Robotaxi and launched the world's first open Robotaxi operation technology platform in April 2022. Meanwhile, based on the realization of Robotaxi technology, Ruqi Travel's "technical service" revenue increased by 175.8% year-on-year in the first half of the year.

Furthermore, leveraging the gradual implementation of Robotaxi, Ruqi Travel has introduced an autonomous driving data solution that centers on data to drive closed-loop iteration of autonomous driving.

At first glance, these strategies for transcending the convoluted market may seem ordinary. However, it is precisely these mundane choices, difficult to sustain, that hold the key to success when persevered through.

According to Ruqi Travel's IPO prospectus and interim report data, the company has achieved steady revenue growth for three and a half consecutive years. From 2021 to 2023, its total revenue reached RMB 1.014 billion, RMB 1.368 billion, and RMB 2.161 billion, respectively, with a compound annual growth rate of 46%. In the first half of 2024, the company's total revenue soared to RMB 1.037 billion, a year-on-year increase of 13.6%.

In a sense, doing difficult yet right things is precisely about building a company's core competitiveness. A company with core competitiveness is bound to break free from the convoluted market as part of its development trajectory.

1. Enter the narrow gate and take the long road

Renowned management media personality Liu Run once elaborated that committing to difficult yet right things means "choosing a narrow entrance and embarking on a long journey."

In the afterword to his book "Brothers," Yu Hua wrote, "The essence of writing lies in the ability to depict a vast landscape from a narrow starting point, whereas starting from a broad perspective may only yield a narrow view."

Many endeavors seem exceedingly difficult at their inception, causing many to retreat and abandon them. Only those who persevere will find the path gradually widening.

This has been the guiding principle behind Ruqi Travel's development.

Since entering this fiercely competitive landscape in 2019, Ruqi Travel has consistently adhered to a unique development path, focusing its strategic efforts on cultivating the Greater Bay Area. In particular, it has refined its vehicle deployment management and optimized operational efficiency.

Unlike other nationwide travel platforms, Ruqi Travel recognized from the outset that the Greater Bay Area would serve as its foundation for growth. Rather than competing nationwide with other players through convolution, Ruqi Travel chose to deepen and refine its travel services in the Greater Bay Area, thereby establishing its own competitive edge.

This focused cultivation has yielded remarkable results.

According to Ruqi Travel's interim report, the number of registered passengers on the platform reached approximately 33.8 million by the end of June 2024, an increase of 56.5% year-on-year. The company's primary business, "travel services," which includes ride-hailing and Robotaxi, generated revenue of RMB 879 million, a year-on-year increase of 11.1%.

Notably, Ruqi Travel has successfully explored an efficient operational model that reduces subsidy expenditures while satisfying driver needs, thereby further optimizing operational efficiency and achieving revenue growth.

Regarding the company's development strategy, Ruqi Travel CEO Jiang Hua once clearly stated in a media interview, "The core purpose of large automakers venturing into the travel sector lies in gaining deep insights into and grasping market demands for future automobiles and travel modes. In strategic planning, we firmly believe that meticulous market cultivation far surpasses blind scale expansion and speed competitions."

Thanks to this strategic focus on cultivation, despite the decline in average daily revenue per vehicle in multiple travel service markets in the first half of the year, Ruqi Travel, with its deep roots in the Greater Bay Area, demonstrated countercyclical growth. The interim report revealed that Ruqi Travel's order volume in the first half of the year totaled approximately 48.5 million, a year-on-year increase of 12.3%.

Moreover, according to the authoritative report by Frost & Sullivan, as of the end of December 2023, Ruqi Travel's user penetration rate in the Greater Bay Area exceeded 45%, ranking second in the market. Simultaneously, in terms of transaction value, the company's market share in the travel service industry in the Greater Bay Area also reached 5.6%, again securing second place.

2. Finding the narrow gate within the wide gate

The travel service industry boasts vast market prospects, attracting an increasing number of giants, thereby intensifying the market's convolution.

To break free from this convolution, it is imperative to establish one's own developmental advantages.

This entails finding the narrow gate within the wide gate – that is, seeking a seemingly more challenging path with fewer competitors in the vast market.

As this path gradually narrows and becomes increasingly challenging, the company can effectively avoid fierce market competition. When other competitors flood the market, the company can leverage this to build its core competitiveness, refine specific skills, and forge a solid defensive system.

Ruqi Travel has chosen Robotaxi, widely regarded as challenging yet promising by industry insiders.

According to Frost & Sullivan's authoritative forecast, global Robotaxi transactions are projected to soar to RMB 834.9 billion by 2030. Meanwhile, in China, the penetration rate of the smart travel market is expected to reach a substantial 31.8% and may further grow to 69.3% by 2035.

Given the unique advantages of autonomous driving technology, Robotaxi, as an iconic application scenario, will undoubtedly propel the commercialization of autonomous driving technology, fostering a virtuous cycle between technology and market development.

Notably, data from China International Capital Corporation Limited (CICC) indicates that the global Robotaxi market is projected to exceed USD 2 trillion by 2030, marking a qualitative leap from the current travel service market valued at just USD 82.42 billion. This presents a pivotal breakthrough for Ruqi Travel.

Through substantial technological investments and closely related R&D activities in this field, Ruqi Travel has gradually accumulated its competitive edge.

The prospectus reveals that Ruqi Travel proudly launched the world's first open Robotaxi operation technology platform in April 2022, garnering widespread industry attention and high praise. In the first half of this year, Ruqi Travel accelerated its Robotaxi commercialization process, conducting manned demonstration runs and road tests in various locations, including Shenzhen, with some regions even initiating charging services.

In the first half of the year, to facilitate technology implementation and advance technical services, Ruqi Travel injected massive R&D funds totaling RMB 73.52 million, a notable 27.5% year-on-year increase. The interim report discloses that these investments primarily focused on deepening autonomous driving technology research, attracting top talent, and comprehensively expanding the Robotaxi business.

Furthermore, by forging deep partnerships with major automakers and leading enterprises in the autonomous driving sector, Ruqi Travel has constructed a complementary "golden triangle" ecosystem, thereby gaining an edge in the Robotaxi race.

As of the end of 2023, Ruqi Travel's Robotaxi fleet size surpassed 281 vehicles, ranking first among domestic travel platforms. Its Robotaxi service has operated for over 20,080 hours, covering 545 stations, and safely completed a test run of 450,699 kilometers.

According to the blueprint outlined in Ruqi Travel's IPO prospectus, the company aims to achieve a single-kilometer cost for Robotaxi services lower than that of traditional manned travel services by 2026, marking a significant acceleration in the popularization of Robotaxi.

3. A glimmer of hope for Ruqi Travel

Finding the narrow gate within the wide gate involves discerning and seizing opportunities that peers may overlook, underestimate, or fail to comprehend. Even as market dividends gradually diminish, enterprises can still forge ahead steadily towards long-term development.

Essentially, this reflects the solid foundation built upon and the core competitiveness consolidated by an enterprise.

Based on the prospectuses published by various travel platform companies, we observe that in 2023, Ruqi Travel, Caocao Chuxing, and Dida Chuxing all achieved notable revenue growth, with increases of 57.97%, 39.8%, and 43.23%, respectively.

Notably, while Caocao Chuxing specializes in traditional ride-hailing services and Dida Chuxing focuses on hitchhiking, Ruqi Travel, having embarked on Robotaxi layout early in its existence and initiated commercial operations, stands out with its strong technological attributes and diversified operational strategy.

Particularly noteworthy is Ruqi Travel's relatively stable share price performance during this period. Even amidst widespread pressure on the tech stock market, its share price managed to surge by over 14% on its second trading day, pushing its market value above HKD 8 billion.

This phenomenon profoundly reflects the capital market's long-term optimism about autonomous driving operation technology and the Robotaxi sector, as well as its recognition of Ruqi Travel's value.

Indeed, backed by a solid foundation, sustained high-intensity technological investments, and strong support from automakers, Ruqi Travel has carved out its own long-term stable development space within the travel service industry.

In particular, leveraging its travel service advantages, Ruqi Travel supports the development and iteration of intelligent driving technology through low-cost, high-quality, and compliant data sources. In 2023, Ruqi Travel introduced an autonomous driving data solution encompassing one-stop data processing capabilities to facilitate industrial chain research and development. This solution has already served multiple autonomous driving technology enterprises and automakers.

The implementation of this technological solution has emerged as Ruqi Travel's second growth trajectory, complementing its online travel services. Coupled with the intense Robotaxi technology testing and commercialization preparations underway, Ruqi Travel, having been established for just five years, has unveiled its third growth trajectory, built upon cutting-edge technologies.

This fact underscores the company's identity as a technology enterprise.

According to the latest interim report data, Ruqi Travel's financial performance and position have shown continuous improvement over the six months ended June 30, 2024, with total revenue increasing by nearly 14% year-on-year.

Inaki Nobuhiro, known as the "Saint of Japanese Management," once said, "The muddy paths that no one dares to tread may be arduous, but they lead to an unimaginably bright future." The reason why some things are deemed "great" lies precisely in their immense difficulty and high thresholds, achievable only by a select few.

Those who manage to accomplish such feats or enterprises that succeed in this endeavor possess the potential for long-term success. Ruqi Travel exemplifies this very principle.

The rest is up to time to reveal.