Operator: Hello, and thank you for standing by for Tuniu's 2022 Fourth Quarter and Full Year Earnings Conference Call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference call, Director of Investor Relations, Mary.
Mary Chen: Thank you, and welcome to our 2022 fourth quarter and full year earnings conference call. Joining me on the call today are Donald Yu, Tuniu's Founder, Chairman and Chief Executive Officer; and Anqiang Chen, Tuniu's Financial Controller. For today's agenda, management will discuss business updates, operational highlights and financial performance for the fourth quarter and fiscal year 2022. Before we continue, I refer you to our Safe Harbor statement in earnings press release, which applies to this call as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.
Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our Founder, Chairman and Chief Executive Officer, Donald Yu.
Donald Yu: Thank you, Mary. Good day, everyone. Welcome to our fourth quarter and full year 2022 earnings conference call. In late 2022, the recovery of China's travel industry saw increased momentum due to the optimization of pandemic prevention and control measures, as well as the lifting of travel restrictions. As a result, Tuniu's (ph) nearly doubled in December 2022 compared to November. China's domestic travel sector has kicked off 2023 with continued rapid growth, while the outbound travel market has started to recover with the gradual reopening of Macau, Hong Kong and some overseas destinations. We are pleased to report that in January and February of 2023, Tuniu's booking GMV for packaged tours both increased over 100% year-on-year.
Despite the significant impact of the three-year long COVID-19 pandemic, China's tourism industry and Tuniu have both demonstrated remarkable resilience. Despite unfavorable external environment, we have managed to overcome various challenges and difficulties while leveraging the opportunities presented by the market. We have successfully upgraded our products and services while enhancing the company's capabilities and potential. In terms of products, Tuniu always adhere to placing the highest priority of meeting the demands of our customers. The pandemic has led to higher customer expeditions for quality travel experience. Guests are now (ph) better food and accommodations, more flexible itineraries and personalized activities. This changes in demand have promoted Tuniu to upgrade our traditional packaged tour products.
We have shifted our (ph) to a higher-end model, which we call (ph) premium products, and have implemented a strict quality control process for both our self-operated products and choice of flyers. During COVID-19, the satisfaction rate for our newly launched products reached 90%. Additionally, we have introduced a new mechanism to immediately take down products that receive extremely (ph) ratings for further development. Moreover, leveraging our deep experience in supply chain, products and local tour operators, Tuniu has launched several unique and differentiated travel products. For example, our (ph) is a high-quality packaged tour product, featuring photography (ph), that employs well-trained photography tour guides to take photos for guests during their trips.
The photos are then shared with customers in addition to the standard hospitality services. Another effect of the trend towards higher-end products is the rise of small group and customized tours. Small group tours, consisting of 10 people or less, are increasingly popular as they better fulfill increased demand for travel quality and safety in the post-pandemic era. With this model, group of friends or families can form small group tours for a better travel experience, while enjoying discounted organized tour prices. In addition, customized tours are gaining popularity among guests due to their flexibility and personalization, and have expanded from organized tours to self-guided tours. We have also seen that a considerable number of guests on self-guided tours also book individual travel products that are customized for the tours and the recommended by Tuniu.
In January of this year, the GMV of customized tour booking increased by more than 150% year-on-year. In terms of services, Tuniu has always had customer satisfaction above all. Following the outbreak of COVID-19, our product and customer services team has been available around the clock to provide timely response and excellent services for customers. And our tour guides have continually -- continued to work closely with local tour operators to ensure guests' safety during travels. Since 2020, Tuniu's (ph) related to customer cancellations and booking modifications have totaled over RMB100 million due to the pandemic, and we have advanced another RMB100 million in response to our customer. During the pandemic, we implemented a full-cycle service guarantee, including emergency planning before travel, regular prevention and control measures during travel and (ph) post-travel feedback.
We also keep close tab with our regular customer by sharing short videos and live-streaming shows to introduce destinations and promote strong relationships and for travel. Our high-quality services help customers feel safe and secure throughout their travel experiences and have earned us their favor and trust. As the travel industry began to recover this year, Tuniu's member transaction volume in January and February increased by eight times and six times, respectively, year-on-year. Tuniu continues to achieve cost reductions and greater efficiency through digitalization and use of technology. On the supply chain side, we employ digital systems to process simple orders and perform product maintenance. We are also in the process of developing a system to automatically respond to customer inquiries to further improve efficiency and customer experience.
Travel, Map, Camera
Photo by Glenn Carstens-Peters on Unsplash
In terms of (ph), we are leveraging digital technology for order processing and intelligence marketing campaigns. By leveraging technology, our products, customer service and marketing staff are more efficient and have greater capacity to handle increasing late complex matters. Tuniu's operating expense decreased nearly as much as (ph) year-on-year for the fourth quarter of 2022, benefiting from our digital transformation. During the pandemic, Tuniu also explored new directions in our business development in response to market trends, while maintaining our core competencies. For example, live-streaming shows have gradually become a part of people's daily life. In 2020, Tuniu started our own live-streaming shows and we have since developed over 40 accounts on several main stream media platforms, creating our own effective marketing package.
Leveraging over 10 years of professional tourism and frontline sales experience, our live-streaming team has achieved positive results for both sales and supply of travel products. In January, Tuniu's live-streaming show on Douyin in Eastern China ranked as the top hotel and travel live-streaming show in the region, and secondly in China. Several of our single live-streaming shows featuring hotels, authentic spots, . And we've ranked as the top outbound travel products flyer on Douyin in January. Furthermore, we have collaborated with a well-known domestic MCN company to jointly launch travel products with the total GMV of each live-streaming show exceeding 10 million. Additionally, China's rural revitalization strategy has gained significant attention in recent years and is regarded as crucial aspects of the country's future economy development, in line with guest preference for experiential tourism following the pandemic, Tuniu has ventured into rural tourism by adopting an asset-light model to operate B&B around urban areas.
During Chinese Spring Festival, the occupancy rate of our Tianjin B&B doubled year-over-year. And overall occupancy rate of our Chengdu hotels reached nearly 90%. Moving forward, we plan to expand our destination options to more locations and (ph) B&Bs, as the tourism industry continues to recover. After three years of the pandemic, the tourism industry is finally seeing a full recovery along with new opportunities and challenges. In 2023, Tuniu will focus on newer travel at our core markets, while remaining committed to our overall business recovery. For domestic travel, we will further refine our management process, leverage Tuniu's brand advantages and increase our profitability. For outbound travel, we will actively rebuild our supply chain and team and restore products and services for destinations that have reopened.
We are committed to the ensuring the safety and travel insurance of tourists and we will remain focused on providing timely and responsive service during unexpected situations. In our internal operations, we will continue to strictly monitor costs, improve per capita output and greater value for our customers and shareholders. I will now turn the call over to Anqiang, our financial controller for the financial highlights.
Anqiang Chen: Thank you, Donald. Hello, everyone. Now I will walk you through our fourth quarter and fiscal year 2022 financial results in greater detail. Please note that all the monetary amounts are in RMB, unless otherwise stated. You can find the U.S. dollar equivalents of the numbers on the earnings release. Starting from the fourth quarter of 2022. Net revenues were RMB27.3 million in the fourth quarter of 2022, representing a year-over-year decrease of 63% from the corresponding period in 2021. The decrease was primarily due to the negative impact brought by the operating and the spread of COVID-19. Revenues from packaged tours were down 88% year-over-year to RMB5 million and accounted for 18% of our total net revenues for the quarter.
The decrease was primarily due to the resurgence of COVID-19 in certain regions in China. Other revenues were down 27% year-over-year to RMB22.4 million and accounted for 82% of our total net revenues. The decrease was primarily due to the decrease in the fees for advertising services provided to tourism boards and bureaus. Gross margin was 45% in the fourth quarter of 2022 compared to a gross margin of 47% in the fourth quarter of 2021. Operating expenses for the fourth quarter of 2022 were RMB32.5 million, down 58% year-over-year. Gain on disposals of subsidiaries, which was allocated to operating expenses, was RMB32.2 million in the fourth quarter of 2022. Research and product development expenses for the fourth quarter of 2022 were RMB10.9 million, down 19% year-over-year.
The decrease was primarily due to the decrease in research and product development personnel related expenses. Sales and marketing expenses for the fourth quarter of 2022 were RMB22.9 million, down 20% year-over-year. The decrease was primarily due to the decrease in promotion expenses and sales and marketing personnel related expenses. General and administrative expenses for the fourth quarter of 2022 were RMB33.1 million, down 29% year-over-year. The decrease was primarily due to the decrease in general and administrative personnel related expenses and allowance for expected credit losses. Net loss attributable to ordinary shareholders was RMB4.4 million in the fourth quarter of 2022. Non-GAAP net loss attributable to ordinary shareholders, which excluded share-based compensation expenses, amortization of acquired intangible assets and gain on disposals of subsidiaries, was RMB34.2 million in the fourth quarter of 2022.
As of December 31, 2022, the Company had cash and cash equivalents, restricted cash and short-term investments of RMB922.3 million. Capital expenditures for the fourth quarter of 2022 were RMB1.1 million. Now moving to full year 2022 results. In 2022, net revenues were RMB183.6 million, representing 57% year-over-year decrease. The decrease was primarily due to the negative impact brought by the outbreak and spread of COVID-19. Revenues from packaged tours was down 77% year-over-year to RMB70.3 million and accounted for 38% of our total net revenues in 2022. The decrease was primarily due to the resurgence of COVID-19 in certain regions in China. Other revenues were down 6% year-over-year to RMB113.3 million and accounted for 62% of our total net revenues in 2022.
The decrease was primarily due to the decrease in the fees for advertising services provided to tourism boards and bureaus. Gross margin was 49% in 2022 compared to a gross margin of 40% in 2021. Operating expenses were RMB299.8 million in 2022, down 15% year-over-year. Impairment of goodwill offset by gain on disposals of subsidiaries, which were allocated to operating expenses, were RMB47.2 million in 2022. Research and product development expenses were RMB50.8 million in 2022, down 7% year-over-year. The decrease was primarily due to the decrease in research and product development personnel related expenses. Sales and marketing expenses were RMB103.6 million in 2022, down 31% year-over-year. The decrease was primarily due to the decrease in promotion expenses and sales and marketing personnel related expenses.
General and administrative expenses were RMB108.9 million in 2022, down 37% year-over-year. The decrease was primarily due to the decrease in general and administrative personnel related expenses and allowance for expected credit losses. Net loss attributable to ordinary shareholders was RMB193.4 million in 2022. Non-GAAP net loss attributable to ordinary shareholders, which excluded share-based compensation expenses, amortization of acquired intangible assets, gain on disposals of subsidiaries and impairment of goodwill, was RMB134.1 million in 2022. Capital expenditures were RMB4.4 million in 2022. For the first quarter of 2023, Tuniu expects to generate RMB60.1 million to RMB64.3 million of net revenues, which represents a 45% to 55% increase year-over-year compared with net revenues in the corresponding period in 2022.
Please note that this forecast reflects Tuniu's current and preliminary view on the industry and its operations, which is subject to change. Thank you for listening. We are now ready for your questions. Operator?
