Tuniu Corporation

Hello and thank you for standing by for TUNU's 2021 fourth quarter and full year earnings conference call. At this time, all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference call, Director of Investor Relations, Mary.

Thank you, and welcome to our 2021 fourth quarter and full year earnings conference call. Joining me on the call today are Donald Yu, 2NEWS founder, chairman, and chief executive officer, and Anqiang Chen, 2NEWS financial controller, For today's agenda, management will discuss business updates, approaching highlights, and financial performance for the fourth quarter and fiscal year 2021. Before we continue, I refer you to our safe harbor statement in earnings plus release, which applies to this call, as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to most directly comparable GAAP measures. Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our founder, chairman, and chief executive officer, Donald Yu.

Thank you, Mary. Good day, everyone. Welcome to our fourth quarter and four-year 2021 earnings conference call. 2021 was a year full of challenges and opportunities. While 2NEW experienced a rapid business rebound since COVID-19 was brought under control in China, we've also been tested by its repeated recurrences. In 2021, Our revenues from package tours for the full year of 2021 maintained the same level as in 2020, despite the adverse external environment with the transaction volume of our self-operated local tour operators achieving double-digit growth. Our operating expenses have decreased year-on-year for four consecutive quarters. And the net loss for the year has also narrowed significantly compared with last year. COVID-19 has tested the abilities of tourism enterprises to manage risks on a sustained basis. It has required enterprises to continue to innovate, meet key customer demands, and upgrade products and services. It also required highly efficient internal management systems to adapt to the changing business environment using limited resources. 2NEWS development path has been differentiated by our focus on the creation of a vertically integrated supply chain, allowing us to become the industry's sole integrated digital tourism service provider. By bringing together production, supply and sales, and building our capabilities in direct procurement, as well as product design and packaging, self-operated local tour operators, and multiple sales channels, 2NEW has realized significant advantages compared to our peers. Recognizing the market changes and upgraded customer expectations in the post-COVID-19 era, 2NEO has focused on new directions for product development that leverage our advantages. In addition, we have upgraded our digitalization capabilities across the entire industry chain to improve our operational efficiency and customer experience. Our integration has shortened the industrial chain and improved the gross profit, while The addition has improved efficiency and reduced costs. With the synergies created by those two strategies, 2NEW is well positioned to provide high-quality products and services to drive our long-term development. In the post-COVID-19 era, tourism demand for better products and services has driven the upgrading of the entire tourism industry. High-quality, innovative, products, and overall service experience before, during, and after travel are the core concerns of tourists and represent the key to transforming the tourism industry. In terms of products, we work under our integrated product development or RPG model, brought together all of our departments as well as customers to participate in developing products based on market demand, with high customer satisfaction rates as the standard for launching new product offerings. Due to our strict development process, the satisfaction rate of our overall new product offerings has reached 90%, with new tool products reaching 97%. In terms of product types, due to increased Customer focus on travel experience and safety. Small and medium-sized growth tours and customized tours have seen rapid development in the post-COVID-19 era. In 2021, growth in demand for customized tours during our members' day sales exceeded our expectations, with single-day booking volume for customized tour hitting a record 30% of total booking volume. the same as for organized tours. In the second half of 2021, with the resurgence of COVID-19, we saw strong performance from local tour products as well as the establishment of the mini-workstation concept. According to two news states, bookings of luxury and theme park hotels increased by more than 50% year-over-year during this year's Spring Festival. Our HotelPlusX program model has become increasingly popular by offering more flexible and diverse options across the six key aspects of tourism, including food, accommodation, transportation, shopping, and entertainment. In terms of service, we are committed to creating a full-cycle service network for travelers, which covers before, during, and after travel. as well as departure and destination cities. Prior to establishing our self-operated local tour operators, it was challenging for us to improve tourists' experience during trips and to enhance their itineraries. The development of our self-operated local tour operators completed the missing link in our service, forming a seamless service network with our customer service team. Today, 2NEW has over 30 self-operated local tour operators covering most of China's hot scenic spots, providing direct tour guide services for our guests and supervision of other tour products, as well as a destination spot for all 2NEW customers. In 2021, the transaction volume for our self-operated local tour operators achieved over 50% growth year-on-year. even as tourists encountered frequent bad weather conditions and pandemic disruptions. Our customer service development provides assistance services for guests on the 24-7 basis, especially in care of emergencies, and we have seen the number of customer service requests increased rapidly. Under continuously high pressure, 2NEWS customer service team has steadfastly adhered to our customer-first principle, providing around-the-clock refunds and exchange services, and communicating with multiple parties in order to minimize customer losses. During the pandemic era, with its restrictions on travel, our membership team has continued to keep in touch with customers through texting and content sharing to build strong relationships and keep up the travel. As part of this, on the 16th of every month, we hold a special Two New Members Day promotion, which in 2021 generated a cumulative single-day sales exceeding RMB1. In addition, live streaming shows have become one of the key sales channels due to the impact of the pandemic. Our Member's Day promotion has also leveraged online formats, including live streaming shows for product sales, and to introduce destinations and analyze customer demands. The News Live streaming show team uses every show as an opportunity to promote product upgrades. The interests, preferences, and suggestions from guests joining our shows are also valuable assets to help us improve our product offerings. COVID-19 has accelerated the digital upgrade of various industries. Tourism enterprises have leveraged digital tools to replace labor, reducing costs and improving efficiency as an area in which we made achievements during 2021. As digital products have become a necessary part of people's lives during the pandemic, improving customer experience through digital decisions has become essential for the long-term development and is one of our main focuses in this year. As part of this, in January, we upgraded our official website to provide more elder-friendly features and content. In the future, we will continue to improve digitalization for travel confirmation, online seat selection, and tour guide systems to offer more convenient travel experience this for our customers. In 2021, Tuneo will continue to focus on integration and digitalization, as well as improving our product and service quality to meet customer demands. We will also work to provide an easier booking process pre-travel, more options during trips, and enhanced after-travel guarantees. With the improvement of the external environment and the passing of the COVID-19 impact, TuneIn will be better prepared for the recovery of the industry as we continue to introduce more high-quality products and services. I will now turn the call over to Anqiang for our financial controller for the financial highlights.