Ctrip to use discounts to lure travelers as economy slows
Ctrip’s hefty cash pile gives it flexibility to target specific markets within China with advertising and attract customers with special deals and lower prices, said CFO Cindy Xiaofan Wang.
Chinese travel-booking company Ctrip.com International says the slowdown in the country’s economy presents a strategic opportunity to spend some of its surplus cash on gaining market share.
Ctrip’s hefty cash pile gives it flexibility to target specific markets within China with advertising and attract customers with special deals and lower prices, Chief Financial Officer Cindy Xiaofan Wang said Thursday in an interview with CFO Journal.
The company plans to offer more packaged deals consisting of flights, train tickets and hotel nights both inside and outside of China, said Ms. Wang. When customers bundle all three services for domestic travel on Ctrip, they typically save around 10% compared with making separate reservations, she said.
Ctrip also plans to expand its reach in China’s so-called lower-tier cities through targeted advertising, Ms. Wang said. The company serves those markets through offline travel bureaus operated by franchise partners, but would like to see more of these customers book travel through its popular smartphone app, Ms. Wang said.
Despite the discounts and additional marketing spending, Ctrip is sticking to its long-term profit margin target of 20%, Ms. Wang said. The company’s profit margin was 16% in the third quarter.
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