Good morning, good afternoon, good evening, ladies and gentlemen. Welcome to the conference call. Our chairperson today is Kylie Yeung. Kylie, please begin your call, and I'll be standing by for the Q&A. Thank you
Thank you. Good morning and good evening, everyone. Welcome to Tongcheng Travel's 2022 Q3 result 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. Ma Heping, our CFO, Mr. Fan Lei, and our VP and Head of Capital Market, Ms. Joyce Li. For today's call, our management team will provide a review of the company's performance for the Q3 . Hope will walk us through the company's business performance for the quarter. Joyce will discuss our operational highlights, and then Julian will address the details of financial performance accordingly. We'll take your questions during the Q&A section 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 relate 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 statement. 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. Let me introduce our CEO, Hope. Hope, please go ahead.
Thank you, Kylie. Good evening, everyone. Thank you for joining our third quarter earnings call. In the past quarter, we went through a quite uneven and mixed market situation. In both July and August, we saw pent-up demand being greatly released with encouraging travel sentiments. However, entering September, we saw demand again being largely suppressed with structural travel restrictions imposed nationwide to fight against the rekindling of Omicron. In the midst of huge fluctuations, we maintained our flexible operating model while proactively seizing the bound opportunities when the market was picking up. As always, we managed to deliver solid performance, again, proving the great resilience of our business and the excellent execution capability of our team.
Our accommodation business, though under the deep shadow of wide volatility, showed greater resilience and posted a record higher revenue in the quarter as we fought tooth and nail to grasp recovery opportunities driven by the emerging demand for local and short-haul travel. During the turbulent quarter, we continued to penetrate lower tier cities, especially those in southern part of the country, which usually have a greater resilience during the pandemic. After nearly three years of persistent penetration, we have built a solid market presence in lower tier cities, which to a great extent have facilitated our recovery for the past years. During the past quarter, the transportation industry remained under huge pressure as prolonged travel restrictions were imposed nationwide to contain the highly transmittable Omicron, which led to substantial decreases in long-haul and business trips.
Despite of the persistent stress, we still managed to get the better out of the hardship and consistently outperformed the industry peers. For the past three years, we have strengthened our position in some regions, as well as having gained foothold in some untapped markets. As a result, our market share has risen, notably in these regions. Meanwhile, we have also tapped into the short-haul and local travel market by increasing efforts in our bus ticketing and carpooling businesses, which maintained impressive growth in the past quarter. To some extent, made up the shortfall caused by the decreases in long-haul travel.
For the following, we will continue to innovate our products and services in the transportation business and provide our users with convenience during their journeys. Over the past three years, we have withstood all the difficulties and reemerged stronger in the midst of COVID. Even under the extreme pressure in the Q2 , we still managed to push through and lead the industry recovery. For the short run, the uncertainties will continue to wear on the travel industry and on our business. However, as I have been seeing for the past years, I still have deep faith in our ability to grow bigger and stronger, as well as in the resilience China's travel industry possesses.
Though this year has turned out to be the most challenging one for the travel industry since the first outbreak of COVID-19 in 2020, I believe we will soon see the light at the end of the tunnel. With that, I will hand over the call to Joyce. She will walk you through our operational highlights in the Q3 . Joyce, please go ahead.
Thank you, Hope. The market in the past quarter was quite volatile. For the first two months, we had a relatively promising rebound as restrictions were relaxed nationwide and travel sentiment improved. However, in September, we had a big turnaround as COVID-19 flare up led to another round of travel restrictions. Again, the travel sentiment staggered. Fortunately, riding on our flexible operational strategy, we again pushed through difficulties and continuously delivered reliable results. Over the last quarter, as usual, we explored innovative marketing methods in the Tencent ecosystem to have closer bonds with the younger users. Esports have been the key for us to get connected with the younger generation. This year so far, we've successfully launched several Esports events in several different cities by leveraging IPs entitled by Tencent, which gained huge popularity among young people as well as tourist destinations.
We have also sponsored professional esports games to have our brand highly exposed among esports enthusiasts, which we think is an effective way to communicate with the younger generation. At the same time, we utilize the long-tail KOLs in WeChat media accounts in a cost-effective way to have an alternative interaction with the users, as well as to enhance our brand influence. In addition, we routinely push ahead our cooperation with QQ Wallet and QQ Browser to target the MZ generation. With all the innovative efforts we made in the year, we were again awarded the Best of the Year in 2022 Tencent Innovative Marketing Award. On the other side, efforts were stepped up in short video platforms during the quarter, which turned out to be efficacious as conversion rate decently improved. While cooperation with handset vendors is remain concrete and solid.
We continuously work together on enhancing user experience, membership benefits, sharing, and brand exposure at retail stores. Our offline user acquisition initiatives play a vital role in acquiring new users and have brought a considerable amount of paying users to the company. Last quarter, we further explored the mobility scenarios and tapped into public transit, such as metro and intercity bus in several cities. In search of alternative traffic sources, this has contributed greatly to the growth of our paying users in the quarter. At the same time, we firmly pushed ahead with our branding strategy during this turbulent time to further elevate our brand influence among younger generations. Over the summer vacation, we joined hands with the Shanxi Provincial Tourism Bureau and co-launched a marketing campaign in several university campuses, which lighten the passion of college students for travel to Shanxi.
More creatively, we have launched a series of NFT collections themed tourist attractions towards destinations, museum replicas, and esports in an effort to establish closer connection with Generation Z and create a distinct place in their mind. We routinely roll out advertisements both online and offline, but in a more cost-effective way, such as ad inserts in big hit TV dramas and ads on airplanes. Our Black Whale membership program continued to grow in the Q3 in spite of the vast fluctuations caused by COVID. As of the end of September 2022, the cumulative amount of members exceeded 15 million as we consistently enrich membership benefits with more optimized operations. With aforementioned efforts, the amount of users on our platform has hit all-time highs against the backdrop of massive swings.
Our average MAUs again achieved a new high of 281.5 million in the Q3 , a nearly 2% increase from same period last year. Coincidentally, our average MPUs in the quarter also climbed to an all-time high of 36.8 million. With a solid growth of around 10% versus 2021, thanks to our stable online traffic and effective offline user acquisition initiatives, in particular, our penetration in public transit. Besides, our 12-month rolling paying users was back to 200.5 million as of the end of September, representing an increase of 2.2% from the same period last year. As an innovative player in the industry, we are determined to transform from OTA to ITA. That said, we are devoted to perfecting user experience and offering them a more joyful and convenient journey by embracing new technologies.
During the quarter, we further upgraded our intelligent Huixing system, which enabled users to find more suitable and satisfied travel solutions. Our AI-driven customer service is now able to fully handle the frequent encounter problems, which help enhancing customer service efficiency as problems can be quickly settled. On the other hand, we are committed to empowering the travel industry with our internet expertise and advanced technology. Over the last quarter, we further extended strategic cooperation with airports. In addition to Xi'an International Airport, we were joined by four more airports under China West Airport Group. In the future, we'll have comprehensive cooperation, involve digitalization construction, product and service development, as well as marketing activities. We rolled out our self-service bus ticketing system and smart ticketing equipment nationwide to facilitate the digitalization of the bus ticketing business.
Besides, we provide SaaS solutions not only to the individuals, small and medium chain hotels, but also to alternative accommodations which help enhance their daily operations. As always, we place emphasis on the social and corporate sustainability. We are determined to contribute to the travel industry as well as society. To help our partners better cope with the shocks caused by COVID-19, we offered to help them direct digital systems by leveraging our internet expertise and technology. Also, we upgraded our cooperation with Yan'an local government and other regional governments to promote local produce by leveraging our industry expertise and traffic so as to help rejuvenate rural areas and support local economy. Besides, we further roll out our Tongcheng Rest Stop plan to more hotels and cities, which offer outdoor workers water and shades, had helped alleviate them the harm of extremely heat during the past summer.
The project will also provide shelters for outdoor workers if they're extremely cold in this winter. On the other hand, we have been making efforts to improve our ESG performance and disclosure. In September, we were upgraded from A to AA by MSCI in terms of ESG rating, in recognition of the achievements we have made in governance and labor management. Currently, this is the highest MSCI ESG rating received by global hotel and travel industry players. We will continue to improve our ESG practices and create more value for our stakeholders. With this, I will hand over the call to our CFO, Julian, who will share with you our detailed financial results for the Q3 . Julian, please go ahead.
Thank you, Joyce. Good evening, everyone. In the Q3 of 2022, we reported a net revenue of RMB 2.05 billion, representing a 5.6% year-over-year increase from the same period of 2021, or a 100% recovery from 2019 level. Over the past quarter, the release of pent-up demand was so strong in the first half, with demand from students to business groups, from local and short-haul travel to long-haul and family tours, which significantly benefited our accommodation, bus ticketing, and car hailing businesses. We also found demand for local travel in lower-tier cities was quite encouraging as those markets were less impacted by COVID, which to a great extent, prompted up the recovery of our business. As a result, we have again broken the historical record of our MPUs in July and August.
Since late August, the new Omicron resurgence started in some regions and then spread nationwide in September and October. The corresponding controlling measures limited the mobility in a large scale. Looking at the bottom line, we achieved a RMB 252 million adjusted net profit with 12.3% net margin compared with 8.5% net margin in Q2 this year, and 17.7% net margin in Q3 last year. The temporary margin drop year-over-year was mainly because we were optimistic about the recovery in Mid-Autumn and National Holiday, and thus increased the marketing and advertisement investment in September and in several regions which were less impacted by the COVID-19, leading to a drop in ROI in the short term.
Though facing a challenging environment in September, our accommodation reservation business remained resilient and achieved RMB 819 million for the Q3 of 2020, representing a 26.9% increase from the same period of 2021, or 18% increase from the same period in 2019. During the Q3 , we continuously deep dive into long tail demand for hotel stays and launched various featured products such as pet-themed hotels to better serve users' needs. Efforts were also stepped up to diversify value-added products and services to provide pleasant stays for users, as well as marketing tools to help hotels have easier access to users on our platform. In addition, we further rolled out our cooperation with hotels concerning offline user acquisition and engaged more chain hotels on board, which added to the growth of the business.
Our room nights registered around 5% year-over-year growth or 28% growth versus the same quarter in 2019, with 10% year-over-year increase in lower tier cities compared with last year, far better than the overall market performance. Thanks to the rising demand for staycation and short-haul travel in this summer and the accurate offline and online marketing strategies. Landed take rate stayed high in Q3 , mainly due to disciplined couponing policy and additional contribution from VAS revenue, as mentioned above, which ramped up to more than 15% total accommodation reservation revenue. Transportation ticketing revenue for the Q3 of 2022 was RMB 987 million, representing a 12% decrease compared with the same period of last year, or a 13% decrease compared with the same quarter of 2019.
As mentioned before, the recovery in long-haul transportation, like air and train, lagged behind that of the short-haul transportation, such as bus and car hailing. The impact on our business was relatively limited compared with the whole industry. As for our air ticketing business, we continuously diversified our user mix by adding more frequent business travelers, as well as deepening interaction with college students. More efforts were made in the last quarter to provide users with warm and caring customer services so as to establish solid connection with users and boost users' loyalty. With regard to our train ticketing business, we remain focused on enhancing user experience by digging deeper into the problems faced by users during their travel. We developed and launched various value-added products and services covering all possible travel scenarios for the sake of their comfort and convenience.
As always, we worked persistently to further optimize our intelligent Huixing system to provide users with more customized travel solution based on their preference and actual needs. Our bus ticketing and car hailing business maintained impressive growth during the past quarter against the backdrop of vast turbulence, thanks to the rising demand for local and short-haul travel. In terms of the bus ticketing business, we continuously pushed forward with our lower tier cities penetration strategy with even more cost-effective methods to tap into under-penetrated regions, thus enhancing our market share. Its volume, even under the volatile quarter, maintained exceptional growth with more than 100% increase year-over-year. Efforts were stepped up to develop the value-added products and services surrounding travel by bus so as to enhance the monetization capability of this business.
In the following years, we will place more emphasis on the monetization and ARPU of the business while continuing to grow user base. On the other hand, as a one-stop-shop travel platform, we aim to cover all travel scenarios to provide users with seamless and supreme experience. To further penetrate local and short-haul travel markets, we ramped up efforts in our car hailing business and introduced more car hailing service providers to our platform so as to better serve our users. For the Q3 , the volume of the business registered a glamorous growth of more than 90% compared to the same period of last year. We believe the short-haul transportation business will become additional revenue driver for the company in the post-COVID period.
Moreover, the enhanced supply and resources of short-haul transportation will enrich our Huixing system's route selections to provide our users with abundant options under different travel scenarios. Other businesses kept a very strong growth momentum, and the revenue achieved RMB 243 million in the Q3 , representing a 43% increase from the same period of 2021. Among the diversified revenue streams, the major contributions were from advertisement, Black Whale membership card, hotel PMS, and TMC business. We are very confident that those businesses will make further contribution to the growth of the company in the following quarters.
Gross margin was 75.4% for the Q3 of 2022, increased from 73.9% for the same period in 2021 and 70.9% quarter-over-quarter. The continuous gross margin improvement was mainly driven by our streamlined operations, intelligent customer service ability, and a revenue mix change in the past year. In the Q3 of 2022, our adjusted EBITDA achieved RMB 462 million, with 22.6% margin improved from 22.2% quarter-over-quarter, decreased from 26.7% year-over-year. Adjusted net profit achieved the RMB 252 million with margin improved to 12.3% from 8.5% quarter-over-quarter, decreased from 17.7% year-over-year.
As I mentioned above, the temporary margin drop was due to the decrease in ROI of our sales marketing spending under the stricter control measures towards COVID-19 situation. We will still tightly monitor the market and COVID-19 situation to make the marketing investment more effective, aiming for a better ROI. Service development and administrative expenses in the Q3 of 2022 increased by 26.2% from the same period of 2021. Excluding share-based compensation charges, service development and administrative expenses in total accounted for 21.4% of revenue in the Q3 , compared with the 19.9% of revenue in the same period of 2021 and 28.4% of revenue in the previous quarter. Selling and marketing expenses in the Q3 of 2022 increased by 19% from the same period of 2021.
Excluding share-based compensation charges, selling and marketing expenses accounted for 45.1% of revenue in the Q3 , compared with the 40.2% of revenue in the same period of 2021 and 42.7% of revenue in the previous quarter. As of September 30, 2022, the balance of cash equivalents, restricted cash and short-term investment was RMB 5.5 billion. The adverse situation in October and November was unexpected and even worse than that in the first half of 2020 and Q2 this year. Daily confirmed cases across the country exceeded 10,000 for the first time this year, led by Guangzhou and Inner Mongolia and Beijing. Hard mode lasts into this winter and strict travel restrictions remain imposed. For the Q4 , we see another unprecedented challenging facing the whole industry amid uncertainties caused by COVID.
In the short run, we are still faced with uncertainties caused by COVID. However, expectations for relaxation are ramping up. In mid-November, the government introduced a new COVID policy and eased its control measures. According to the renewed policy, quarantine time is reduced by two days for inbound travelers and close contacts of COVID infections, while identification of secondary close contact is no longer required. Moreover, local governments are not allowed to randomly use snap lockdown to contain the virus. Turning to a long-term perspective, we will definitely reemerge stronger in the wake of COVID-19 after persistent efforts in operational optimization and business expansion amid uncertainties. We are very confident that we will continue to outperform the industry whichever challenges we will encounter ahead. With that, operator, we are ready to take questions now. Thank you.
Thank you. Ladies and gentlemen, we will now open for questions. If you'd like to register for a question, please press star one on your telephone. Thank you. Once again, ladies and gentlemen, dial star one for questions. Our first question comes from Brian Gong of Citi. Please go ahead, Brian. Thank you.
Thank you. Thanks management for taking my question. I have two questions. First, can management share your expectation for the Q1 2022 and next year, our performance, including top line, the margin? Also, how do you view possibility of China to change COVID policy ahead, and how should we expect the travel market to perform next year? The second question is that we previously mentioned some, you know, plan to improve monetization. Can management share the progress on this regard, and when can we see some material progress? Thank you.
Okay. Thank you, Brian. I will put some more comments in details for your first question about the latest performance and our views in 2023. Let's start in the performance in the Q3 and then move to the October and November. Actually, as we mentioned in our prepared remarks, we have really experienced a very strong recovery in July and August. I think that is the only time that we found a recovery this year for the whole year in July and August, due to the improved market sentiment. Although numbers of new confirmed COVID cases increased in August, but actually at that time, 70% of them were just in Hainan, in one province.
However, since late August, COVID virus resurgence appeared in some regions and started to spread nationwide in September and October, especially first in Sichuan, Guizhou and then Guangdong, Tibet, Inner Mongolia, and nowadays in Beijing, leading to persistent implementation of zero COVID policy and strict travel restrictions. Turning into September, the travel sentiment was severely damaged. During the National Holiday, the pandemic situation rebound in most provinces, and the industry has actually experienced a very challenging National Holiday with air and the train passenger numbers. For air and train passenger, the industry both declined by nearly 50% year-over-year compared with last year, and declined nearly 70% compared with 2019.
Entering into November, new confirmed cases surged again and even exceeded that in August, travel sentiment continued to be weaker and weaker. On 11th November, the government announced a series of measures on easing COVID-19 rules, just like what I mentioned in the prepared remarks. Actually after the announcement on the easing COVID-19 policy, we have already observed the rapid execution of new policies and the guidance in different cities across the country. For example, Beijing more precisely managed the policy for pop-up notification and greatly eased the mobility restrictions in and out of Beijing after the announcement. Those easing measures revealed very positive signals for the recovery of the economy and the travel industry.
The impact on the travel sentiment is yet to be seen because it still takes some time to educate the public, especially after three years stringent restriction, need some time to educate the public, educate the citizens. It will also need more time to continue promoting vaccination, especially among the elderly, as well as stocking up necessary medicine, et cetera. In addition, November and December are very low seasons for travel, so the demand will not be released immediately in these two months. However, we are actually very optimistic that the public confidence to travel will continue to warm up during the next few months, which will pave the way for the full recovery.
The pent-up demand may release or even rocket up in the coming Spring Festival, Qingming and Labor Day in the first half of next year. Without any hesitation, we will adhere to our key strategic priorities and invest in advertising and marketing campaigns to strive for bigger market share during the recovery period. We believe dawn of hope lies ahead. In terms of the performance expectation for Q4 , we can see that the market is still changing every day in November and December since the new policies announced, and the users' booking window becomes extremely short after COVID. With the uncertainties brought by the resurgence of the COVID cases, it is very difficult for us now to give a concrete guidance at this moment.
As we mentioned earlier, the dawn of hope lies ahead. At this moment, we would rather be relatively aggressive than conservative in front of the market opportunities. Thus, in short term, our margin may still face some pressure because on one hand, top line revenue may still need some time to fully recover to the pre-COVID-19 level. On the other, we need to invest in advertising and marketing campaigns as we are getting more optimistic about the industry recovery in the coming months after the government eased the mobility restrictions recently. We also need to prepare for the coming Spring Festival or even a dramatic rebound of the whole industry after three years of pandemic.
We are confident that our business will be able to recover faster than industry and outperform other players, as proven from our results in the past. In terms of the monetization, Joyce, please.
Thank you, Brian. Let me address the second question concerning the monetization improvement. Firstly, for the main business we have, like the air accommodation train business, we have been developing the different kinds of VAS products and services to fulfill the users' needs. For example, current users are getting more aware of the safety and hygiene during the pandemic. We have offered a new VAS such as insurance and disposable suppliers. These new products and service are well received by our users. On the other hand, when hotels are suffered from the pandemic, the hotels are very eager to encounter opportunities to monetize. We worked with hotels to explore the revenue stream from in-store consumption cases such as dining or and hotel facilities. These new initiatives have made more revenue contribution for our accommodation business and enabled us to join the high...
enjoy the higher take rates. In Q3 , the VAS products contributed over 15% of the accommodation revenue. We believe that this kind of VAS will be the long-term needs for the users and suppliers as well. We expect the contribution from the non-room VAS product service will further increase thus enhancing our monetization on the main business. The secondly is the cross-sell improvement. As we mentioned a lot of times before, we're dedicated to utilize the huge traffic we have gained from transportation side and cross-sell to the hotel business, which will enhance, improve our monetization as well.
For the new business, like the bus ticketing business, in the past quarter, even under the challenging market environment, you can see that our bus ticketing volume in the Q3 have continued to increase significantly by over 100% when compared with 2021. I think this business will receive commissions from the bus operators, and we can also sell our value-added product and service to bus ticketing users. The bus ticketing business itself generates revenue for the company, but the main purpose of developing bus ticketing business is to quickly acquire the offline users in a very cost-effective way because the user acquisition cost is very low.
Now, with our success persecution of offline user acquisition initiatives, especially for this business, our annual paying user continue to grow even under the challenges of COVID, which made us the number one matching in terms of paying users in OTA market. Our offline user acquisition strategy was also proven to be successful as our growth in paying user passed all industry players in the past two years. Now, in the next stage, we will strive to improve the cross-sell and the monetization of this business segment. We hope we can achieve even for the bus ticketing business next year. Thank you.
Thank you.
Thank you. Once again, ladies and gentlemen, if you'd like to register for question, please press star one on your telephone. To give more opportunities for others, please ask no more than two questions. Thank you. Our next question comes from Simon Cheung with Goldman Sachs. Please go ahead, Simon. Thank you.
Hi. I have two questions as well. Thanks for the presentation. Just going back to Julian, your comment that you're gonna be continue to invest in the next one ortwo quarters just to prepare for the reopening. Can you give us a sense, how should we think about it? Like, you know, on the sales and marketing, obviously we can compare with your revenue percentage or, you know, absolute, you know, $ 90 million per quarter, kind of a trend or how should we? Also on the take rate, I remember, you know, last one or two quarters you have seen a bit of a recovery on take rate because you scaled back off some of the commissions.
So on those two fronts, how should we think about, you know, the trend in the next one or two quarters, whether it's absolute dollars or as a percent of revenue because you're emphasizing that, you know, there's a flexibility in terms of adjusting that. That's the first questions. The second question, more related to, I guess, you know, the lower tier city, which is something that you are obviously very proud of having, you know, a lot of exposure over there. I wanted to get a sense over the last COVID two years, we got a sense that lower tier cities, you know, travel have been a lot more resilient than, you know, the higher tier city.
Now that we have, travel restriction gonna lifted, it's gonna be lifted, so how are you preparing maybe just, you know, maybe getting a bit more aggressive in maybe even a bit higher tier cities or should we just, you know, thinking, the lower tier city is still your brand, but, not, there's not gonna be any strategy change? Thank you.
Yeah. First I would like to put some color on the sales marketing spending and also the take rate trends. For the sales marketing dollars, as you mentioned in the question, actually in this Q3, in last quarter Q3 and this quarter, actually our sales marketing spending as of revenue, it's really abnormal. It's like 40%-45%. I think it's a historical high in our performance.
That is absolutely abnormal because, you know, as we mentioned, in Q3 and Q4 , we think there's a very clear rebound opportunities, very clear signals for the opening of the travel industry in the future, in the near future. We don't want to cut our sales marketing dollars too much, like what we do in 2020 and 2021. And actually, you know, in this July and August, the market is so strong. At that time we think it's the same situation will happen in Middle Autumn and also the National Holiday. We still put more sales marketing dollars in the end of August and also the September.
The truth is that the performance was impacted by the.
By the COVID resurgence in September and October. We don't reach the enough top line, but we already spent on the sales marketing dollar. That is why, as I mentioned, our ROI is relatively dropped. It's dropped in the Q3 . Also in Q4 , because, you know, next is Spring Festival, just like what I mentioned, it's very earlier, it's in the middle of January, so we have to put more efforts on the advertisement and sales marketing dollar in the December to do some preparation in advance. That is why we will have a high sales marketing spending as of revenue, like 40%-45% in quarter four as well. That is really abnormal.
For the next year, when the markets recover a little bit, when our scale can back to like 2021's level, we are pretty sure that our sales marketing control can be controlled like 35%-40% as of our total revenue. Also for our sales marketing dollar, I think that is very mature. We will invest more on the cross-sell, on the monetization, but not the new user acquisition. Because, you know, in the past one year or two years, we have already accumulate like 200 million annual paying users. Also we have accumulated 400 annual paying users in our history.
Nowadays we don't want to put too much sales marketing dollars for the new user acquisition, but we will allocate more our sales and marketing dollars for the cross-sell for our old users. We want to cross-sell the transportation to accommodation. We want to cross-sell the train tickets, bus tickets, which have a very low take rate to other methods, other approach. For example, the car hailing, et cetera, for a bigger take rate. That will also explain why our take rate, both for the accommodation and also for the transportation, it step and step improved in this year, and I believe will continually improve in next year.
For accommodation, we have already emphasized a lot of times we will strengthen our one-stop-shop strategy, and we will provide more products and services to improve our VAS sales. That will also increase our blended take rate for accommodation. We have already realized that more than 15% of total revenue, VAS revenue, in accommodation segment. But that is, I think that is, still have a lot of space to improve, still have a lot of product service that we could provide to our users to fulfill their long-term needs and meanwhile to increase our monetization, increase our take rate, blended take rate on accommodations. For transportation, that is the same logic to improve the take rate, the cross-sell.
We want to cross-sell from offline to online. I think we have emphasized a lot of times. Because, you know, for example, the bus ticketing vending machine in offline, that is very useful when we acquire new users. You know, the offline scenarios, we have a very, very low take rate or nothing. We have zero take rate for the offline scenarios. For the online scenarios, for example, the bus tickets, we have like 5%-6% of the take rate. That is why we want to cross-sell from offline to online for the bus tickets in the following quarters.
Also we want to cross-sell the train tickets to our air tickets, especially for the long haul, because, you know, air tickets have a very high have the highest take rate in our all the approach of transportations. Also we want to we want to cross-sell from the train bus tickets to the car hailing business, especially for the short-haul traveling. Because, you know, the car hailing business, we have like 10% of the take rates for the short-haul transportation. That is why we think the take rates still have improvement space, and we believe next year we will have a higher take rate both for accommodation and transportation.
Also, like your questions, our sales marketing dollars will be back to normal next year when the scales back to normal. That is the first question. The second question?
Okay. For the second question, let me start from the changes what we observed after the COVID. You know, the first is the uncertainties of the pandemic. Nowadays users prefer the very instant booking, the booking window of the user is getting shorter. This practice has become a new normal for the travelers. With the various controlling measures, comparing to pre-COVID, the user frequency has been improved because they prefer the short-haul travels than vacations. More people will go for local travel during the weekends. This kind of new demand have benefit to the travel industry in China. That also contribute the improvement of our accommodation business last quarter.
In terms of customer behavior, now the users prefer non-touch booking and service after pandemic. They find it convenient to change, follow up, and cancel their orders through online booking. The pandemic has brought new trends to the travel business, such as more online bookings and increasing popularity of QR code scanning for the attraction places, more leveraging on the content, the social sharing platform, et cetera. We believe that it will also increase our penetration rate of travel industry, especially in the low-tier cities. Since the outbreak of the COVID-19 pandemic in early 2020, the smart technology has been widely adopted by the industry players. The online penetration rate of the travel industry has been accelerated. I think all these changes have created great opportunity for Tonchen Travel.
For us, you know, since the outbreak of COVID, we have been dedicated in promoting the low-tier cities online penetration, especially in the accommodation business and bus ticketing business. We have been further digging into the low-tier city market, as always, by leveraging our strengths in the traffic channels and our understanding of the users' needs and behaviors. As I mentioned before, we have aiming to becoming the leading travel brand for users in low-tier cities. At the same time, we also have further dig out opportunities in the car hailing and public transport business, as we mentioned before, so as to capture the opportunities in local and short-haul travel. We will further invest in the technology to provide a non-touch booking and capture the opportunities brought by the new booking habits. Thank you.
Thanks a lot. Those were very helpful. Thank you.
Thank you. Our next question comes from Wei Xiong with UBS. Please go ahead. Thank you.
Hi. Good evening, management. Thank you for taking my questions. I also have two questions. My first question is on our growth strategy for next year. Given our APU has exceeded 200 million, how should we think about your user growth target for next year, if any? Could you please maybe elaborate on how we can balance the growth between user acquisition and the better monetization that you mentioned just now for your existing user base? Second, just wanna follow up on the margin side. Given the cost planning around selling and marketing next year that you just shared, how should we think about the margin level for next year? Thank you.
Okay, thanks, Xiong Wei. Yeah, like, what I mentioned in last question, our annual paying user already reached 200 million in 2021 and also in this year. We have already accumulated more than 400 million paying users in our history, in all of our platforms, both for WeChat and for apps and also for our PCs. Next year, actually, we don't think the revenue drivers would be done by the new user acquisition because, you know, the Chinese people will only have... For the whole population, we only have 1.4 billion. Nowadays, we have already accumulated 400 millions users, especially for traveling users in our platform.
We don't think there's too much space for the additional new users or additional valuable users outside our platform. Next year, for the sales marketing dollar allocation, we will allocate less money on the new user acquisitions. But as I mentioned, we will allocate more on the cross-sell, on the monetization. For example, for accommodation, our one-stop-shop strategy in accommodation segment, which increased the BaaS revenue contribution and also cross-sell from transportation to accommodation for better monetization, a higher, enhanced, higher tick rates. Also converting offline users of bus ticketing business to long-term online users, and also cross-selling from transportation business with a lower tick rate. For example, the offline bus ticketing and public transport, like Joyce mentioned, to transportation business with higher tick rates, for example, the car hailing.
Also, we want to have more monetization opportunities from membership card and advertisement business, et cetera. We will invest more sales and marketing dollar on this area for our existing customer for their first try on other products in our platform, other service in our platform. That is what that is the strategic priorities for our next year to invest for sales marketing dollar. Other than this area, we will still invest like 4%-5% as of our total revenues advertisement for the awareness, user awareness, due to building the long-term awareness and also build their loyalty in our platform.
Last, I think, but still very important, we will invest more sales marketing dollars to promote our new products and service development in the next year. That is how we balance our user acquisition, how we spend our sales marketing dollars in next year. In terms of the margin, I think the answer is very easy. The margins, our margin, the most important impact is the sales and marketing dollar. In Q3 , Q4 , we have a short-term pressure on our margin. That is because our sales marketing dollar reached its highest period, like 40%-45%. We are pretty sure that we could control it under 35%-40% back to normal.
Like what I mentioned, when our revenue scale back to normal, when the economy and also the travel industry recover a little bit. But not, still, you know, this year we have more than 10 months. We have more than 10 months impact by the COVID. We don't believe next year we will still have a so long time restrictions. When the revenue scale back and also when the industry recovery, we are pretty sure that our sales marketing dollar will drop to 35%-40%. In the long run, actually, we still will tightly monitor our sales marketing investment and will tightly monitor our ROI and make it more effective and optimization. Thank you.
Thank you, Julian. That's very helpful.
Thank you. Our next question comes from Melody Chan of Jefferies. Please go ahead. Thank you.
Thank you management for taking my question. I have one question. Can management share a bit more on the user acquisition channel and also, for the next year? Thank you.
Thank you, Melody. Let me address this question. We believe that the pandemic has driving the acceleration of online penetration of travel industry, creating the ample opportunity for the large platforms like us to gain market share from small scale platforms and from offline. For the Tencent ecosystem, we believe there are still a lot of potentials for us to further develop. In the past quarters, you can see that we have further deepened the cooperation with Tencent to engage new users at different scenarios, which allow us to gain more users continuously. We also increased our advertising investment in Weixin to reach out to the enormous potential user group. At the same time, we have put extra efforts in developing other channels, including quick apps and offline user acquisition, and that have achieved outstanding results.
For the offline user acquisition, we joined hands with hotels, bus operators and tourist attraction operators to transform offline booking habit to online pattern. These offline initiatives have served as a very effective channel to acquire new users, which is demonstrated in the past quarter results. We believe that our addressable market is still very huge. The online penetration rate for the low-tier city hotels is only 25%. The online penetration rate for the bus is still at a very low single digit. For the users that we acquired from smart bus ticket equipment, as Julian has mentioned, majority was completely new to our platform. It is a golden time for us to dig into the offline market and accelerate digitalization and online penetration.
In addition, we will also strive to capture the opportunities of the international market as the border reopens, as we have already established the relationship with various international suppliers before COVID. This will also bring us more users who look for the domestic and international travel product service in the future. You can see that our MAUs and MPUs have hit record high in 2021, even on the impact of the pandemic, and still continue to record another historical high in the past quarter. It is a proof that there is still a huge potential for us to further penetrate the market. In the long run, we are very confident to grow our business further. Thank you.
Thank you. Now I'd like to pass the call back to Kylie for closing remarks. Kylie, please.
Thank you. We are closing the call now because of the time constraint. 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.
Thank you. Thank you for your participation. This concludes the conference. Goodbye.