When you’ve been at the top of your game for so long, sooner or later a competitor will try and challenge your spot on the throne, which is exactly what China tech powerhouse Alibaba is trying to do to leading travel services provider Ctrip. This could see two of China’s biggest companies going head-to-head in the travel industry.
Alibaba’s travel unit Fliggy is taking aim at a niche market share composed of millennials, digital technology, and premium services. It will be a hefty task to try and unseat the travel sector champion Ctrip, which boasts the largest consolidator of hotels in volume of rooms booked, covering over 500,000 hotels in China and 750,000 worldwide.
That’s just the tip of the iceberg for Ctrip. The company also offers air, rail, bus, and other transportation services with China and globally, offers vacation packages and tours, insurance, visa services, and attraction tickets.
Alibaba’s Fliggy is seeking to establish its place in the Chinese travel industry by focusing on emphasizing flights, targeting millennials, and creating a high-tech, digital experience. The company is looking to expand the use of technology in the hospitality business, even developing its own hotel.
“Ctrip and Fliggy represent two different approaches to the Chinese travel industry,” wrote Kyle Parker, Director of Research and Business Development at Big Tree Capital LLC, in an email. “We believe that both have their strengths and may be able to appeal to two very different types of travelers in China.”
“China is one of the primary reasons for sustaining global growth,” Parker added. “Of course, it’s difficult to talk international investing to an investor without mentioning the world’s second largest economy.”
A mix of Chinese stimulus measures has been providing the fodder for economic growth, such as lower taxes, no corporate tax breaks, monetary policy adjustments, and more market access for foreign companies to set up shop. All in all, Wall Street is looking at the Chinese government’s latest efforts as a plus for its economy, which makes it rife for investment.
In fact, China is becoming less resistant to safeguarding its businesses, which will open the pathways to more foreign investment.
China’s government recently installed stricter regulations to prevent shadow banking, which allows consumers to obtain loans from non-banks. This dried up credit for purchases on big-ticket items, but also dampened real estate investment and infrastructure projects.
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