Serve the best

Since established five years ago, a local travel agency, Ying Hai, has developed into a publicly traded firm at the GEM Board of Hong Kong Stock Exchange with a market capitalisation of more than HK$190 million (US$24.28 million) riding on the coattails of the robust local tourism.

By Tony Lai

Photos by Cheong Kam Ka

Investing in areas from real estate to food and beverage for years, Choi Wai Chan took a look at the local tourism in 2014: betting on the growth prospect of the industry, he established a wholesale travel agency named Ying Hai with a business partner.

One of the very first partners of Ying Hai was L’Arc Macau, a hotel in the city’s downtown, which provided the travel agency only six guestrooms a day at the time for sales and distribution.

Fast forward to five years later, the travel agency has developed into Ying Hai Group Holdings Company Limited, which has recently been listed on the Growth Enterprise Market (GEM) board of the Hong Kong Stock Exchange since September with a market capitalisation of over HK$190 million (US$24.28 million).

“Our development throughout the years has been stable, in line with the robust growth of Macau,” Mr. Choi said in an October interview. As the city’s tourism is expected to continue growing, he is positive towards the future of the company with a simple philosophy: make your customers happy.

The chairman, chief executive officer and executive director of Ying Hai Group said the group has planned the listing for two to three years. “Besides the financial support from the raising exercise, the listing could improve the company’s image and enhance our exposure, which could help us in the process of negotiations with hotel operators and other clients,” he noted.

The company now generates over 90 percent of its revenue in the sales and distribution of hotel rooms, air tickets and other travel-related products and services, while the car rental business, which it has run since 2015, accounts for the remaining.

Its latest quarterly report shows the revenue from the hotel room and other travel products totalled HK$127.7 million in the first nine months of 2019, rising 11.7 percent from a year earlier, while the revenue from its car rental segment amounted to HK$9.3 million, up by nearly half over the same time period.

Main sales channel

“We have been in discussions with other hotel operators for establishing business cooperation, and we hope to grow [this business network],” Mr. Choi said. In the first four months of 2019, Ying Hai has had agreements with eight hotel operators — including L’Arc, Hotel Waldo, Regency Art Hotel Macau, The Macau Roosevelt and others — which guarantee the company average daily sales and distribution of 396 hotel rooms, while the company has helped 35 local hotels and 30 overseas hotels in total sell rooms, its listing prospectus show.

While hotels market their rooms directly to customers or via other platforms, their main sales channel is travel agencies like Ying Hai. According to market research company Ipsos, large-scale hotels — which consist of at least 1,000 rooms — sell 60-70 percent of their rooms through wholesale travel agencies, which will in turn distribute the rooms to online platforms and smaller agencies for sales or directly market to customers. For smaller hotels, which are composed of less than 1,000 rooms each, 80-90 percent of their rooms are sold via the wholesale travel agencies, the research company said.

With over 200 travel agencies in the Macau market, the revenue of the entire sector amounted to MOP8.5 billion (US$1.06 billion) last year and could expand to MOP9.44 billion this year, Ipsos said. The compound growth rate of the sector in the 2018-2022 period might hit 5.2 percent with the revenue exceeding MOP10.4 billion in 2022, the research firm said.

Albeit the more fierce competition from online booking platform, Ipsos still expects the travel agency sector could sustain a mid-single-digit growth in the next few years given the robust tourism fundamentals.

Latest official figures show Macau welcomed 33.41 million travellers in the first 10 months of 2019, up by 15.3 percent from the previous year, and the visitation figure is poised to post another new annual record after hitting 35.8 million in 2018.

Limited impact

“We’re also confident towards the future prospect [of this segment],” Mr. Choi said. “It’s true that tourism expenditure in Macau has declined in recent times but this has limited upon us.”

Government figures show the total non-gaming spending of visitors declined 17.2 percent year-on-year to MOP15.2 billion in the third quarter, marking the third consecutive quarterly decline over the global economic uncertainties like the slowing Mainland Chinese economy and the ongoing trade war between China and the United States. The per capita spending of visitors from the mainland in Macau also reduced by 26.7 percent in the July-September period, the data said.

“Although visitors might spend less when buying luxury goods and others, accommodation and transportation — the sectors in which we provide services — are the necessities for their stay here,” Mr. Choi reasoned. “Basically we could still sell every room we have at hand every day.”

The Ying Hai prospectus said a total of 151,233 hotel rooms were sold through the network of the company last year, and only 294 rooms remained unsold, or less than one room a day. In the first four months of 2019, the sales volume totalled 51,968 rooms, while only 18 rooms were unsold, the document said.

Car rental

After deducting the underwriting fees and other expenses, Ying Hai Group raised HK$39.3 million through the September listing. The company plans to spend HK$6.5 million and HK$6.9 million respectively in expanding cooperation with hotel operators and increasing its marketing and sales channels, as well as developing an online platform to market its own products and services.

But the major part of the net proceeds, about HK$20.6 million, will be used for expanding its current car fleet to develop its car rental business.

“There is a market for car rental business in Macau…, some airlines, hotels or casinos have to rent our vehicles to provide transportation for their guests on peak days,” Mr. Choi said.

According to the company’s prospectus, the usage rate of its vehicles hit 100.3 percent, 86.9 percent and 97.9 percent respectively in 2017, 2018 and the first four months of 2019, and it aims to add 20 more vehicles to its existing fleet of over 40 cars.

The company has also been granted three permits, equalling to three vehicles, from the authorities to operate a point-to-point private transportation service between Macau and Hong Kong via the Hong Kong-Zhuhai-Macau Bridge. The service, priced at MOP2,000-MOP3,000 per ride, is expected to become operational by the end of this quarter.

“We’ve seen the demand for this type of service, especially for top-tier Macau and Hong Kong businessmen,” said Mr. Choi. “This service guarantees a high degree of privacy, as the passengers don’t have to get off from the vehicle before arriving at their destination after getting on.”


Due to the city’s low unemployment rate, which has stayed at 2 percent or below since May 2012, one of the biggest challenges for Ying Hai is the human resources shortage, alike other companies here,

“We have about 70-80 employees at the moment, and we will continue to recruit more, especially drivers, albeit the tight supply given the fact that only resident workers could become commercial transportation drivers here,” he illustrated.

In the wake of the listing, a big change for the company is definitely the regular publication of its financial results. The revenue of Ying Hai amounted to nearly HK$137 million in the first three quarters of 2019, up by 13.6 percent from a year earlier, but it recorded a loss of HK$0.7 million in the first nine months of this year, compared with a profit of HK$11.3 million a year earlier, due to the listing expenses, its latest financial report show.

Talking about the transparency, which has been a daunting factor for some local companies when mulling the possibilities of being publicly traded, Mr. Choi remarked: “The market has already been very transparent and open, and we have no problem letting people know with whom we are doing business with.”

With regards to the success recipe of the firm so far, Mr. Choi, who is still in his early thirties, divulges a simple concept: give the best service. “As Macau is a travel destination, travellers are the major customers for businesses here,” he noted. “Whether you’re running the F&B service or gaming operation, the key is to give the best service, make your customers happy and hope they will come back again.” And that’s what Ying Hai is trying to do.

Dip below IPO

The stock of Ying Hai Group Holdings Company Limited has been underperforming, after becoming publicly traded since the end of September.

According to the information from financial news agency Bloomberg, the initial offer price of the stock was HK$0.24 per share but its price stood at HK$0.16 as of November 22, representing a one-third discount from the IPO.

The past 30-day average trade volume of Ying Hai was over 2.22 million with the market cap of the company at HK$193.2 million.