Ctrip quiet on global plans, prioritises supply for China outbound


China’s biggest OTA Ctrip is concentrating on building its international inventory for its core Chinese users, CEO James Liang told analysts.

On its Q2 earnings call this week, Liang was asked about its global expansion strategy and talked about supply rather than points of sale.

His response gave little away, saying that “we are looking at, first of all, to build our product coverage advantage,” using Priceline for hotels and Travelfusion for air “while looking for more partners”.

Its relationship with Priceline and Travelfusion is more than a partnership – Priceline Inc has a stake of up to 15% in Ctrip, while Travelfusion is majority-owned by the OTA.

The Chinese market leader does have everything in place to go global. As well as the Priceline connection, Ctrip owns a stake in India’s MakeMyTrip, giving it an equity interest in India rather than a consumer presence.

Not forgetting its 2015 deal with Amadeus.

And Qunar – whose results are now consolidated within Ctrip’s – has www.qua.com although very little appears to have happened since its under-the-radar beta launch late 2014.

Ctrip’s international efforts are currently focussed on greater China, where similarities exist with Chinese travel patterns and where there is a growing mobile population, which would synch with Ctrip’s strength in mobile.

During the second quarter, around 70% of its orders came from mobile, of which 90% were via its apps.

Perhaps its global presence will be as more of a mobile travel agent than an online travel agent, but for now it looks as if there is still money on the table in its core Chinese market.

In the three months from April to June, net revenues came in at RMB4.4 billion ($664 million), up 75% year-on-year. It segments the numbers into four units – accommodation net revenues were up 61% at RMB1.8 billion ($267 million), with transportation (air, rail and bus) up 90% to RMB2.0 billion ($301 million).

Both these business lines include Qunar numbers this quarter, which would explain some of the increase.

International standalone hotel bookings accounted for 10% to 15% of its hotel volumes and 15% to 20% of its total hotel revenues.

Packaged-tour revenues were up 44% at RMB474 million ($71 million), with its corporate travel arm up 22%, at RMB147 million ($22 million).

Ctrip expects this growth to continue. Its outlook for the third quarter is for net revenue growth of 70-75%. With this level of expansion in its core markets (and with cash and cash equivalents of $2.7 billion as of the end of June) it can afford to choose its moment to go global. When that moment comes, the balance of power in the online travel landscape will change.

Related reading from Tnooz:
Ctrip invests $180 million in MakeMyTrip (Jan 2016)
Priceline Group throws another $500 million in the direction of Ctrip (Dec 2015)
Travelfusion investment gives Ctrip global tech presence (Jan 2015)



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