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Ctrip firms up number one slot in China

08/06/2015| 4:33:33 PM|

Ctrip’s position as the biggest online travel firm in China looks safe, with Q2 revenues up 47% and similar growth expected for the next three months as well.

By Martin Cowen - Ctrip’s position as the biggest online travel firm in China looks safe, with second quarter revenues up 47% and similar growth expected for the next three months as well.

The business sees itself as a one-stop shop for the Chinese domestic and international travel market and the financials offer an insight into a number of different travel verticals.

The headline figure from the financials shows net revenues of RMB2.5 billion (US$408 million), 47% up from the  same period in 2014.

Its two main business lines are accommodation and transportation. Ctrip’s accommodation numbers show volumes up by 55% compared with the same  quarter last year, resulting in a 45% hike in revenues.

On the earnings call, CEO James Liang said that four to five star hotels accounted for more than half the volumes in the quarter and  70% of revenues.

Air is a strong part of Ctrip’s business, and again, it appears that Ctrip is aiming upmarket and appealing to customers who like the service it can offer via its call centre.

Running a call centre might seem incongruous for a tech-focused business, but Ctrip bosses pointed out that the call centre was handling more business with fewer staff and that it came into its own during crisis situations.

As a sign of its move into new verticals, bosses were keen to highlight the potential of rail. In July it spent RMB100 million ($16 million) on Suanya.cn, operator of two train booking apps.

Macquarie Research recently issued a research paper analysing the Chinese online travel market and identified “packages” as the vertical with the greatest growth potential.

Ctrip’s packaged tour revenues in the quarter grew by 61% to reach RMB329 million ($53 million). More than half the volumes and 60% of the revenue comes from international packages.

Ctrip also has a sizeable corporate travel unit, which returned revenues in the quarter of RMB121 million ($19 million), 47% up on the same quarter last year.

The key driver behind all these double-digit increases is mobile, “the most important booking channel for the majority of our business operations,” according to Liang. Mobile revenues are 120% higher this quarter than in the same  period last time, while cumulative downloads for its app reached more than one billion at the end of the quarter. A year ago this number was 200 million.

A few analysts on the earnings call tried to get some colour on the Tencent/eLong announcement  yesterday. Liang was fairly circumspect, telling the analysts that they should be asking Tencent for the reasons why it wants to take eLong private, and that Ctrip, as a shareholder in eLong, will do what it considers best for the business.

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TAGS: Ctrip | James Liang | eLong | Tencent
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