Jaunts abroad offer useful cover for China’s Ctrip
05/22/2019|3:57:54 PM|Reuters Breakingviews

Ctrip’s overseas forays offer some welcome cover. China’s $20 billion answer to Expedia already owns Edinburgh-based Skyscanner. Now it has raised its stake in India’s leading travel site, MakeMyTrip, to become the single largest shareholder. The April deal, a share swap with South Africa’s Naspers, is a prudent effort to reduce dependence on mainland travellers.

Having secured a strong grip at home – an impressive 52% market share, according to Bernstein analysts – the 20-year-old company has started to look elsewhere. It first stepped into Indian online heavyweight MakeMyTrip in 2016, with a $180 million investment. It has now raised its stake to 49%.

There are good reasons to push beyond the mainland. Border crossings have increased, but only 44% of those travellers in the last quarter of 2018 ended up beyond Hong Kong, Macau or Taiwan, statistics from the China Outbound Tourism Research Institute show. 

Bookings beyond China’s borders are also usually more profitable, and a heftier presence abroad helps capture that. Indeed, Morningstar analysts estimate that the take rate for international air tickets is twice as high than for more modest, domestic fares.

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