IDG, Sequoia form tourism fund with China CYTS Tours

The three parties have established a fund management company, namely CYTS Hong Qi Fund Management, to operate the vehicle, according to a filing. CYTS Tours, Sequoia and IDG will each appoint one director to join the board. The target fund size was not disclosed.

"With the change in population structure and expansion of the middle class, Chinese consumers have higher expectations as to the quality of food and beverage, entertainment, culture, sports and tourism. The theme of consumer upgrades has created a new market worth several trillion of renminbi. Within that, travel is a key entry point for investors,” Cen Wan, a partner at Sequoia, told local media.

Founded in 1997, CYTS provides domestic and outbound travel services, including online hotel and flight ticket booking services, and local tours. Its revenue dropped 0.28% year-on-year to RMB10.58 billion ($1.5 billion) in 2015, while net profit fell 18.86% to RMB295 million.

China's travel and tourism industry was worth RMB5.4 trillion in 2015, accounted for 7.9% of national GDP, according to the World Travel & Tourism Council. Already the second-largest market globally after the US, it is expected to grow 7% a year over the next decade - enough to surpass the US by 2024.

With a view to capturing this growth, Ocean Link was formed last year as China’s first private equity firm dedicated to investing in the travel and tourism industry. With seed capital of $400 million, the firm then won backing from General Atlantic and Ctrip, China’s largest online travel company.

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• Topics
• Greater China
• Fundraising
• Consumer
• China
• Sequoia Capital
• IDG Capital Partners