How Can Ctrip’s Expansion In Geographies Like The U.S. Impact Its Share Price?

Chinese OTA giant, Ctrip’s CEO, James Liang, might be hinting at a possible entry into the U.S. in the future. Speaking of the U.S. Liang mentioned that the U.S. economy is the “most dynamic” and it will be an “interesting” option for a company like Ctrip.

Ctrip is currently the second largest OTA in the world in terms of market capitalization. Last year, Ctrip had taken a few important steps to consolidate its market share in China, such as buying a 40% stake in its erstwhile competitor eLong, and buying a 45% stake in another big rival, Qunar. As a result, Ctrip’s market capitalization now stands at $21 billion compared to Priceline’s ~$70 billion and Expedia’s $17 billion. Currently Ctrip’s hotel revenue is growing at a CAGR of 56% over the two-year period ending 2016, while its overall revenue is growing at a CAGR of 46%.

Though Ctrip has partnerships with the global OTA leaders, Priceline and Expedia, the Chinese OTA itself focused on the domestic market for so long. Liang’s statement might suggest that Ctrip wants to start expanding its business focus soon and the U.S. might be one of the most plausible markets for it to do so.

We currently expect Ctrip’s global market share in hotel bookings to reach from around 4% in 2016, to around 8% by the end of our review period.

However, if Ctrip’s market share crosses 10% by the end of our review period as a result of Ctrip’s aggressive growth in international markets such as the U.S., then there can be over 20% upside to our price estimate for Ctrip.

Have more questions about Ctrip? See the links below.

• What Is Ctrip’s Revenue And EBITDA Breakdown?
• How Has Ctrip’s Revenue And EBITDA Composition Changed Over 2012-2016E?
• Ctrip Q4 2015 Pre-Earnings Report
• What Drove Ctrip’s Revenue Growth And Led To Its EBITDA Decline Over The Last Five Years?
• Ctrip: Year 2015 In Review
• Ctrip Q1 2016 Earnings Preview
• Where Can Ctrip’s Growth Come From In The Next 5 Years?
• Which Two Segments Are The Biggest Contributors To Ctrip’s Growth?
• How Fast Is Ctrip’s Hotel Revenue Growing?

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