Thank you for standing by, and welcome to the Tongcheng Travel 2023 third quarter results announcement. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Ms. Kylie Yeung, Investor Relations Director. Please go ahead.
Thank you. Good morning and good evening, everyone. Welcome to Tongcheng Travel's 2023 third quarter results conference call. I'm Kylie Yeung, Investor Relations Director of the company. Joining us today on the conference call are our Executive Director and CEO, Mr. Heping Ma, our CFO, Mr. Julian Fan, and our VP and Head of Capital Markets, Ms. Joyce Li. For today's call, our management team will provide a review of the company's performance in the first quarter. Hope will brief us on the company's performance. Joyce will discuss our business and operational highlights, and then Julian will address the details of financial performance accordingly. We'll take your questions during the Q&A session that follows. As always, our presentation contains forward-looking statements.
Such statements are based on management's current expectations and current market operating conditions, and relates to events that involve known or unknown risks, uncertainties and other factors, which may cause the company's actual results, performance or achievements to differ from those in the forward-looking statements. This presentation also contains some unaudited non-IFRS financial measures. They should be considered in addition to, but not as a substitute for, measures of the company's financial performance prepared in accordance with IFRS. For a detailed discussion of non-IFRS measures, please refer to our disclosure documents in the IR section of our website. Now, let me introduce our CEO, Hope. Hope, please go ahead.
Thank you, Kylie. Good evening, everyone. Welcome to our earnings call for the third quarter of 2023. 2023 is a prosperous year for China's travel industry, with travel demand being immensely unleashed since the beginning of the year. In the past quarter, we were thrilled to observe the travel market rebounding and attaining a remarkable momentum during the summer travel season. With various user groups showing great enthusiasm again to travel, we once again surpassed the market and maintained vigorous growth across all our business segments. Mainly owing to our relentless efforts to implement our expansion strategies, while persistently exploring untapped markets and improving our brand influence.
During the quarter, our user base has reached unprecedented heights, with revenue and business volume witnessing substantial year-over-year growth, demonstrating the immense growth potential of our business and our outstanding execution capability. The upward market trend and our splendid business performance in the last three months have further magnified my confidence for the further development of our company. Entering the fourth quarter, which is a traditional low season for the travel industry, we still see resilient travel demand under various scenarios. We will persistently dive into the diverse needs of our users and grasp opportunities to fuel our business growth and gain more market shares. The China travel market is undergoing rapid changes, and travel demand is becoming more diversified and dynamic.
We adhere to our deep-seated belief in the flourishing of China's travel industry. As we embark on the next year, we will continue to enrich and improve our products and services to cater to our users' comprehensive needs, and make their travels easier and more joyful. We will also continue to optimize our internal efficiency and enhance our core competencies, which will enable us to sustain an outstanding growth. Moreover, we aspire to strengthen our market position by fortifying our cooperation with our TSPs and business partners. Last but not least, we will diversify our revenue streams by expanding our business scope and uncovering new opportunities for long-term sustainable development. With that, I will hand over the call to Joyce for more details of our operational highlights in the third quarter. Joyce, please go ahead.
Thank you, Hope. We were once again at a fully thriving quarter with the travel enthusiasm running higher and demand being further unleashed. Riding on with extended market presence and enhanced brand awareness, our business maintained a superior growth and saw all-time highs for the third consecutive quarter. As for our accommodation business, we stayed focused on our target market, especially the lower tier cities, and made a consistent effort to provide users with a valuable money hotel products and services. Over the past quarter, the business continuously showed its vitality and set another record high, both in volume and revenue, with the room night sold recording around 100% growth compared with same period of 2019.
Amidst the soaring travel sentiment, we consistently explored the various hotel stay scenarios, such as stay strong in music festivals and concerts, as well as e-sports events, so to better accommodate users' newly surging needs. Meanwhile, we carry out more precise operations and marketing activities upon our deeper understanding of users' fundamental preference and needs. As a result, our 15-day cross-sell rate further increased, which contributed greatly to the growth of our room night sold. Moreover, efforts were stepped up to build our international business. On supply end, we continued to bring more international hotel suppliers, while on the consumer end, we launched more marketing campaigns to strengthen interaction with users. For the first time, we had an iconic singer's overseas concert tickets sellable on our platform, which greatly enhanced the exposure of our international products and services.
Besides, we value user experience and have built up efforts to develop a comprehensive value-added product services to facilitate hotel booking and stays. On the backdrop of the fully unleashed travel demand, our transportation business, again, saw unprecedented highs in its volume and revenue for a third quarter in a row, thanks to the increased market share and extended offers of the product services. As for our air ticketing business, we remained focused on building a more diverse user profile by aggressively bringing more users. As such, we were delighted to see increasing contribution from business travelers and younger users in the segment. At the same time, our international business has made a great progress over the last quarter, with its volume surpassing 2019 level, way better than the overall industry recovery.
Additionally, we have launched airport pickup and drop-off service to provide outbound travelers with convenience and comfort. For the third quarter, our air ticketing volume increased by more than 30% from 2019's level, and set another record high for the third consecutive quarter. In terms of the train ticketing business, its revenue maintained robust growth and increased significantly from 2019's level, as we consistently focused on enhancing user value as well as user experience. By constantly iterating our international Huixing system, we provided users with customized travel solutions, which facilitate their travels. Upon emerging needs for short-haul travel, we have boosted our bus ticketing business and the car hailing business, so to better serve users' needs. During the last quarter, we further enhanced the monetization capability of the two businesses.
Empowering supply chains along the travel industry has been one of the company's core strategies, and also our momentous attempt to seek sustainable growth for the company. Our hotel management business continued to expand its footprint across the country over the last quarter, with more than 1,200 franchise hotels in operation as of the end of September. By leveraging on huge traffic, advanced technology and a brand influence, we aim to manage more hotels and further increase our presence in the hotel industry. As for our package tour business, we remained focused on re-establishment of the supply chains, both at home and abroad. Meanwhile, we have started rolling out our plan to build online and offline channels to better reach out to our target users. We believe this business will enjoy a decent recovery for the coming year, adding to the growth of the company.
Under the sensational traveling enthusiasm, we spare no effort to strengthen interaction with users at multiple fronts. As always, we maintain strategic partnership with Tencent and further step into its various scenarios to extend our reach to users. During the quarter, we furthered our cooperation with QQ Browser and provided user with easy access to our travel products on WeChat Mini Program. We also co-launched top trending topics on travel to facilitate users' decision making. Moreover, we work with Tencent Video and push travel guide tailor-made for some holidays and National Day, targeting younger users. Meanwhile, we stepped up effort to further diversify our traffic sources. For the past quarter, we strengthened our cooperation with the major handset vendors. In August, we signed a strategic agreement with Huawei to provide its users with our travel product and services.
Now, Huawei users have easy access to our services, such as hotel booking, as well as train and air ticketing. We also initiated cooperation with the handset vendors to have our standalone apps pre-installed on mobile phones in an attempt to reach out to a wider range of users. Most recently, our standalone app was selected as Editor's Choice by App Store for a second time, signifying the increasing popularity of our app. In addition, we have also provided travel products and services on Alipay Mini Program as part of our attempt to diversify traffic channels. As for our online user creation initiatives, in particular, public transit, they remain an effective instrument for us to grow user base and expand our presence in lower tier cities. As such, both our MPUs and APUs are at another record high in the third quarter.
Our MPUs increased by around 20.1% year-over-year, and rose to 44.2 million for the quarter, breaking the record for a third quarter in a row. Our trailing twelve-month rolling paying users as of the end of September also climbed to a record high of 225 million from last quarter's 280 million, demonstrating the excellence of our execution capabilities. As a leading OTA in China, we aim to build a creative travel platform that echoes with the younger generation. For the past years, we've been quite innovative in our marketing campaigns. We were the first OTA that integrated e-sports game into our user engagement program. This year, we again thought outside the box and launched Travel Plus X campaigns in an attempt to extend the ultimate boundary of travel experience.
We worked with the local tourism bureaus to organize music festivals as well as open door marketplace. We also joined hands with the Luoyang Museum and co-launched a special show featuring Han costumes or Hanfu, which stirred a phenomenal discussion among younger people. More intriguingly, we rolled out our first immersive script kill game in Xi'an, which also won great popularity among younger generations. Through those innovative campaigns, we aim to build a fun and entertaining brand personality. Starting from this year, we'll be more focused on enhancing user value rather than merely acquiring new users. During the past quarter, efforts were stepped up to enhancing user loyalty. We introduced more exclusive benefits to our Black Whale members, such as movies and music festivals. Also, for the first time, we offered our high-value users free concert tickets with exclusive concert balcony to further enhance their experience.
As of the end of September, the cumulative number of Black Whale members approached 40 million, more than double the number of last year. Customer centricity has been engraved in our corporate culture, and we are devoted to providing users with a supreme travel experience. Our intelligent Huixing system remains the pivot to satisfy users' travel needs. It provides users with customized and accessible travel solutions based on their preference and demand. Meanwhile, consistent efforts were made to increase automation in our customer service, so as to further enhance efficiency and user satisfaction. Moreover, our attempts to apply AIGC in our customer service have made some concrete progress in the past quarter. Our AI model now can detect user demand and help accelerate feedback, as well as providing human-like responses, which have greatly enhanced user experience.
On the other side, we are committed to empowering the travel industry through our profound internet expertise and advanced technologies. We have built a comprehensive portfolio of hotel PMS brands, serving individual hotels, chain hotels, as well as alternative accommodation. In the past quarter, we launched a new PMS solution that is tailor-made for e-sports hotels. Meanwhile, we consistently pushed ahead with our cooperation with airports during the quarter. So far, we've had nearly 100 domestic airports on board. Back in July, we signed a strategic agreement with the Henan Province Airport Group, with an aim to improve the digitalization of the airport services. As part of the cooperation, we helped Henan Airport Group get a Weixin Mini Program, through which passengers could get easy access to vital services, such as luggage inquiry, airport transportation, and hotels.
In addition, we joined hands with a county government in Shanxi Province to help build an intelligent travel platform on which tourists can easily find local tourist attractions, accommodation, transportation, and entertainment facilities, in an effort to facilitate the development of the local tourism industry. As a socially responsible enterprise, we are fully conscious of social obligations and assets to contribute to the travel industry as well as to society. In early September, we joined hands with the hotels in Guangdong Province and offered the resting areas as well as emergency supplies to those trapped by a super typhoon in the region. On top of that, our MSCI ESG rating was given double A grade for the second consecutive year, in recognition of our excellent ESG performance.
Looking ahead, we will continuously push ahead forward with initiatives that contribute to the sustainable development of the travel industry, as well as of society. I will stop here and hand over the call to our CFO, Julian. He will share with our detailed financial results for the third quarter of the year. Julian, please go ahead.
Thank you, Joyce. Good evening, everyone. Over the past quarter, China's travel industry has sustained its revival pace with various travel cravings fully unleashed. People are eager to take part in different types of travel during summer. We have witnessed a robust travel enthusiasm throughout the entire quarter and continue to outperform the industry, largely owing to our superb capabilities to grasp market opportunities and accommodate users' needs and their different travel scenarios. While persistently strengthening our core businesses, we also strive to discover and nurture new businesses to drive future growth. In the third quarter of 2023, we attained remarkable outcomes and set new records for both quarterly top line and bottom line.
We reported net revenue of CNY 3.3 billion, representing a 61% year-over-year increase from the same period of 2022, or a 60% year-over-year increase from the same period of 2019. We implemented targeted and efficient marketing campaigns and advertisements to seize prime opportunities during this quarter. Despite increasing our investments in the market and the upward trend to capture opportunities, we still registered remarkable bottom line growth with a robust net profit margin, mainly attributable to our effective marketing strategies and efficient operations. Our adjusted net profit amounted to CNY 621 million, with an 18.8% adjusted net margin.
Our accommodation reservation business registered excellent growth and achieved CNY 1.1 billion for the third quarter of 2023, representing a 38% increase from the same period in 2022, or a 62%-63% increase from the same period of 2019. Our domestic room nights registered more than 100% growth versus 2019. This was primarily driven by our foresight strategies to penetrate untapped markets, while fortifying our edge in certain regions with established footholds. By effectively executing our cross-selling strategies, we leveraged our transportation business and channeled substantial traffic to our accommodation business to accelerate room nights growth and improve user stickiness and user value. In the third quarter of 2023, hotel ADR improved compared with 2022, mainly driven by the escalating demand for accommodation reservations.
The blended take rate declined compared with 2022, mainly because we increased the couponing level to capitalize on the market's revival opportunities. Transportation ticketing revenue for the third quarter was RMB 1.7 billion, representing a 70% increase compared with the same period of 2022, or a 47% increase compared with the same period of 2019. We registered significant growth and achieved record highs in terms of the revenue, mainly fueled by our spiking ticketing volume as a result of robust travel demand for different scenarios during the summer holiday. We also strived to enhance the monetization by optimizing our VAS offerings. For our air ticketing business, we persistently increased our market share, and our air ticketing volume increased by more than 30% compared with the same period of 2019.
Through a strategic pivot from volume expansion to monetization optimization, we accomplished a remarkable growth in our train ticketing revenue compared with 2019's level. Also, our bus ticketing business has demonstrated remarkable abundant advancement in improving its monetization, as well as elevating its operational efficiency. Other business once again delivered exceptional results, and the revenue achieved CNY 492 million in the third quarter, representing a 103% growth year-over-year, or a 115% increase from the 2019 level. The growth was mainly driven by the stellar performance of our advertisement, hotel management, Black Whale membership, corporate travel, and package tour business. Through prior acquisitions and efficacious expansions, our hotel management business grew considerably and added a new growth impetus to our other business segment.
We are also ramping up our efforts to develop the package tour business, which started to contribute more to other revenue. We uphold firm confidence that this business will persistently bolster the company's growth in the future. In terms of the profitability, our growth margin was 74.5% for the third quarter of 2023, slightly dropped from the same period in 2022. In the third quarter of 2023, our adjusted EBITDA achieved RMB 870 million, with 26.4% margin, which represents an increase from 22.6% year-over-year. Adjusted net profit achieved RMB 621 million, with an 18.8% margin, a substantial improvement from 12.3% in quarter three last year, mainly attributable to our operational leverage and effective marketing strategies.
Service development administrative expenses in the third quarter of 2023 increased by 20% from the same period of last year. Excluding share-based compensation charges, service development, administrative expenses in total accounting for 18.4% for revenue, of revenue in the third quarter, compared with 21.4% of revenue in the same period of 2022. Selling and marketing expenses in the third quarter of 2023 increased by 36% from the same period of 2022. Excluding share-based compensation charges, selling and marketing expenses accounted for 38.3% of revenue in the third quarter, compared with 45.1% of revenue in the same period of 2022. As of September 30, 2023, the balance of cash, cash equivalents, restricted cash and short-term investment was CNY 8.3 billion.
The travel industry in China has displayed a remarkable capacity for growth in the first three quarters of 2023. This extraordinary upward trend has reaffirmed the essentiality of travel pursuits. In October and November, we continue to witness the full expression of travel passion, proving the resilience of travel demands. The travel market bloomed during the recent mid-autumn and national holiday, as people crowded to various tourist destinations throughout the country. According to the official government data, the number of domestic tourists during the holiday already exceeded 2019's level, and our business once again posted a better than industry performance. Heading into the fourth quarter and a year beyond, we believe that China's travel industry is posted for another robust growth, as we foresee a continuous increase in travel demands driven by diverse desires for various travel scenarios.
Nowadays, people value enjoyment, favor experiential consumption, and aspire to engage in various entertainment and adventure activities to enrich their leisure time, driving additional growth for China's travel industry. In the long-term perspective, we maintain an optimistic outlook on the continuous advancement of China's domestic travel industry, as well as the outbound market. We are confident that we will consistently outpace the market with rapid growth and solid profitability. Furthermore, we will place more emphasis on our ESG performance and are committed to generating more benefits for society, and our stakeholders, including our users, suppliers, employees, and shareholders. With that, operator, we're ready to take questions now. Thank you.
Thank you. If you wish to ask a question, please press star, followed by the number 1 on your telephone, and wait for your name to be announced. If you wish to cancel your request, please press star then 2. If you are on a speakerphone, please pick up the handset to ask your question. As a friendly reminder, please limit yourself to two questions. Our first question today will come from Alex Poon of Morgan Stanley. Please go ahead.
Hi, management. Thank you for taking my question and congratulations on very strong results. My first question is related to the industry data recently, such as RevPAR and air passenger volume, which has showed some signs of weakness, being weaker than 2019 level for the overall industry. How should we interpret this data, for the market and also from our perspective? Is it because of the normalization of pent-up demand from second quarter to third quarter? Or is a mixed impact also because of the weaker macro? Any color would be very helpful. Thank you very much.
... Okay, thank you, Alex. For the market situations recently, actually, the domestic travel industry during the Mid-Autumn Festival and the national holidays, as we observed, continued to be very strong although the hotel room nights rate and air tickets prices were quite high this year. I think you also feel that. According to the government's data, the number of travelers reached more than 800 million during the holiday, representing an increase of more than 70% when compared with the same period last year, or even an increase of 4% when compared with the same period in 2019. So I think the data is quite strong. It's already fully recovered to 2019's level or even more than that.
For the railway passengers, volume increased by 21%, while the air passenger volume saw a 13% increase when compared with the same data of 2019. Of course, we once again outpaced the industry growth with the room nights registered more than 100% growth compared with the same level of 2019 in Mid-Autumn Festival and national holiday. And also our air ticketing volume grew by more than 30% compared with the same level of 2019, the 2019 level. So you can see that the growth engine is still very high. So the momentum is still very huge compared with the summer and also the quarter two with the national holiday.
But after, actually after, the national holiday for the fourth quarter, and, as you know, that the fourth quarter is a low season for China, for travel. The demand... But still the demand remains very resilient. As usual, we monitored an even stronger demand in this exam seasons. For example, the national exam and the postgraduate administration exam. And furthermore, people are displaying a great enthusiasm to experience the beauty of autumn and engage in skiing activities for the first snow in November 2023. So that is the industry color that we would like to address.
So, when we saw this very strong recovery and a strong demand, we are very confident that the industry and the demand, both for demand side and the supply side, recovered very well, and we think the growth momentum will continue to quarter four and also to the next year. Thank you, Alex.
Thank you, Julian.
Our next question today will come from Brian Gong of Citi. Please go ahead.
Good evening, management. Thanks for taking my question. Just a follow-up on the performance of our platform in the first quarter. Not sure if you can share more, you know, like operation data, post Golden Week on our platform. And then also, could you share your thoughts for next year growth, especially considering high base in the third quarter this year? And how should we think about industrial performance and our performance? And what are the what would be our growth drivers and strategies for next year? Thank you.
Okay. Thank you, Brian. Yes, for the first question of the quarter four performance in detail after the national holiday, as I said, as we said, the demand for long-haul travel is relatively lower than quarter three, as usual, because, you know, the quarter four is a low season for the traveling, especially for the long-haul travel. But the short-haul travel remains very robust, driven by the exam season and autumn travel, like what I had told in past questions. For accommodation and short-term transportation are experiencing a very high growth rate compared with the same quarter of 2019. We expect that both accommodation and transportation ticketing visits will continue the growing trend versus 2019.
The growing trend, like quarter three and quarter two versus 2019. With accommodation growth even faster than transportation visits, because, you know, for the short haul travel, there is more demand for accommodation than the transportation one. Other visits, other visits will display a very significant increase driven by the new initiatives in hotel chain visits and package tour visits, and also the hypergrowth of our advertisement visits, TMC visits, and also the PMS visits and membership program. For other operation data, in terms of the pricing and the Take Rate trends in quarter four, for accommodation, the ADR may slightly drop the one compared with the 2019.
Mainly because the product needs change caused by the lower tier city penetration, which is our strategic priorities. The take rate may slightly decrease when compared with the same period last year, due to an aggressive couponing strategy in some regions. We will make it more accurate. So that is only happening in some areas that we would target for more market share to gain market share in quarter four. But it will remain relatively stable throughout the whole year. For transportation segment, both the ATV and the take rate may improve for the same quarter in 2019, thanks to the favorable market conditions and increase in VAS contributions.
For the next year's forecast, actually, because the visibility is relatively low, recently, because we, for the booking windows is very short, as we talked a lot of time. But still, we confident that, the total industry, the travel industry, will have a very nice growth next year, especially, for the outbound travel and also the international travel. I think, for this year, those two areas are not recovered, fully, for 2019. But next year we will expect it... We will outlook a better recovery, for outbound and also for international. And we will invest in more resources, both for the sales marketing dollar and our research and product in this area to catch more market share next year.
So we are very confident that we will take more market share, and our growth rate will several multiples than the market next year. But if you ask for the exact forecast, we can talk about this in next January or February, when we can see the market more clear. Thank you.
Thank you.
Our next question today will come from Wei Xiong of UBS. Please go ahead.
Hi, good evening, management. Thank you for taking my question. Congrats on the solid results. I have two questions. First is that we have been achieving solid user growth in this year. Could management share your thoughts on the user growth strategy for next year? Do we have a user growth target? And how could we further improve the monetization per user, especially for lower tier markets and for the new users? And my second question is, as we're trying to diversify the revenue streams with new initiatives such as outbound business and the offline travel agency, how should we think about the revenue and margin implications of these new businesses, as we gain scale over time? Thank you.
Thank you. I will address the first question, and then I think address to give you more color on our new initiatives. As you know, our APU for the past 12 months has already reached a very high for 200, more than 225 million. So actually, the new user acquisition, as we talked a lot of times, that is not our strategic priority for this year and also for next year. Our strategic priority in the short term is to enhance the user value rather than solely pursuing the growth of the user base, as we have already got a substantial amount of paying users.
So we would like to invest more promotion on our existing users and drive improvement in frequency and output for this year and also for the short and long run. One thing is we will persist in investing in targeted promotions and improving our ability to provide precise recommendations to our existing users, thereby enhancing cross-selling from our transportation business to accommodation business. This would lead to higher revenue per order and better take rates for our overall business. And second, we aim to further engage with users who were previously acquired from offline scenarios, such as those who we acquired from the hotel QR code scanning or smart bus ticketing vending machine equipment.
To achieve this, we plan to optimize our sales marketing strategies by offering targeted promotions that motivate these users to make direct online purchase. Because, you know, we can, we can earn take rates on online scenarios, but there's no take rate on the offline scenarios. And what is more, we will also continue to invest in promoting VAS products. That is very important. And also, VAS services that are tailored to our users' travel needs. For instance, we will continue to encourage the use of our Huixing system, which offers intelligent travel solution combo to our users, and at the same time, improves our monetization. We will also launch new promotions for our innovative products and services in different scenarios to enhance user value.
Furthermore, we continue to promote our Black Whale membership program to foster greater loyalty among our users.
... with an aim to increase our overall ARPU and purchase frequency, next year. And for the, new initiative, I think Joyce, please.
Yeah, thank you, Yixiong, for the question. First, I will address our view on the outbound business, as Julian has mentioned. I would believe that the outbound travel will recover faster next year. And, you know, for this year, as for the recovery of international travel, the flight capacity continue to be the bottleneck for outbound travel recovery. And as of the end of September, the international flight capacity just recovered to over 15% of 2019 level. So there is ample room to grow next year. So in preparation for our international business development, we have made an increased effort to enrich our suppliers for the international market. This includes partnership with major international OTAs, wholesalers, international airlines, and providers over TSP.
To cater to the needs of the potential outbound travelers, we also continue to exploring and innovating new products and services. To seize the opportunities in outbound travel rebound, we also launched more marketing campaigns, as I mentioned, featuring the international travel products to strengthen the interaction with users. So our international air ticketing volume in quarter three have reached nearly 10% growth when compared to 2019's level. And as we have made a significant growth in user base in the past few years, we believe that these users, given their anticipated future demand for outbound travel, will also form the foundation for our expansion into international market. Looking ahead, our focus will be on further develop international air ticketing, hotel bookings, and package tour business.
While Hong Kong, Macau, Southeast Asia, Japan, and Korea, these countries remain the primary destinations for our outbound users, we are also keen on exploring the untapped potential for travel demand to Europe and America. We also will put more emphasis on development of international business, which will become an important growth driver for the company in the next few years. In terms of the package tour, we have already completed the acquisition of Tongcheng International Travel Service early this year, which is a platform business, and we act as intermediary between the package tour providers and the customers. Now, we are currently enriching our products mainly by sourcing quality products from other TSPs. For online channels, we are building up a broader sales channels, such as our own apps, private domains, and other online channels.
For offline, we also run this business in franchise model, and we're also building a team for telemarketing. We are currently seeking franchisees to join us. We have already provided support to franchisees regarding the brand image, products, technological infrastructure, service, and staff training, etc. Currently, we have already signed contracts with franchisees to open about more than 40 stores. We target to be more aggressive in expanding our franchise network next year. So the revenue contribution from this package tour business is still small at this moment, but it's improving month by month. During the Mid-Autumn Festival and a national holiday in early October, domestic package tour business has recovered to more than 60%, with the unit price increased when compared with the same period in 2019.
While outbound package tour business also only recovered to around 20%, but the price increased by nearly 35%. To enhance the user experience, we have worked on the seamless integration of online and offline services. For customers, they can easily get access to the information of the offline stores, as well as products and services provided by the travel agency throughout our online platform. Thank you. Very clear. Thank you, management.
Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Our next question today will come from Leo You of CLSA. Please go ahead.
Hi, good evening, management. Thank you for taking my question, and congratulations on another strong quarter. I have two questions, if I may. First is on the competitive landscape, especially on next year. So how would be our strategy to defend and grow market share and, to compete against the, short video platforms, especially they are quite aggressive in expanding the calendar date-based accommodation booking business. So how would our strategies be? And the second is the margin outlook of next year. So we're still having a quite active sales and marketing spending, and when we have, a larger, business scale next year, how would we see the, room for margin improvement? Thank you.
Thank you, Leo. I'll take the first question, in terms of the competitive landscape. So, even now, we think the market competition is still very healthy and stable. Although we have already increased the couponing level in certain markets during the peak season, our take rates remained quite stable in the third quarter. So currently, with our flexible cost structure, light operating model, and dynamic pricing strategies, we are capable to maintain price competitiveness of our products and services. I would believe that in the CS price war is not necessary as the market positioning and the user base are clearly differentiated, as we have mentioned several times before. So through our strategic approach and our consistent efforts to expand into the lower tier cities in recent years, we have already successfully established a strong foothold and strengthened the competitive advantage in these regions.
These lower tier cities still have ample room, the relative low online penetration rate from the hotel booking, and will provide enormous potential for us. We'll be more aggressive to step and gain market share there with an aim to be the leading travel brand in lower tier cities. Additionally, we think that the Chinese travel industry continues to activate a booming future, marked by the sustained upward trend. By the rising disposable income and a growing appetite for international domestic exploration, the travel sector shows a resilience and expansion, which provides lucrative opportunities for players in the market. On the other hand, we haven't observed any new entrants that could potentially present a significant competitive challenge to the well-established major OTAs in China. Therefore, we believe that the market competition will remain stable in the next quarters.
For the margin outlook, actually, I think the short to medium term, we are very confident that our adjusted net margin of our current business will continue to improve for 20% or even higher in the long run because of the reasons. One is that we will cultivate more valuable paying users and emphasize on improving user value, the R2 improvement, as we mentioned. And we will also improve the ROI of offline user acquisition and reduce our investment in some offline channels or other distribution channels which have lower ROI, as we mentioned. And we will keep convert those offline users to online. And also the scaling effect will continue and benefit the cost structure in the following years.
When we have higher revenue scale, there will be operational leverage still on our cost, sales, service and development, and also the G&A spending. Lastly, I think we will further optimize and improve our operational efficiency with the help of automation, and the digitalization or AIGC, the application of AIGC. On the other hand, we have to mention that if the revenue contribution of our package tour business that we just acquired, as George mentioned, increase in the future, our overall margin will be, will be somewhat impacted to a certain extent, because, you know, although the package tour business drives very huge revenue growth, but this business is an offline business model.
The net margin is relatively lower than our current business, the online business model business. So that is what I would like to mention for the margin margin side in the short term and long term. Thank you. Bill?
Thank you very much.
At this time, we will conclude our question and answer session. I'd like to turn the conference back over to Miss Yeung for closing remarks.
Thank you. We are closing the call now. If you wish to check out our presentation and other financial information, please visit the IR section of our company website. Thank you, and see you next quarter.