Why Did Ctrip Acquire The Ground Transportation Company, TangRen World?
Ctrip is reported to have recently acquired TangRen World, a ground service transporter, in an attempt to further wow its Chinese outbound travelers. Recently, Ctrip made a number of strategic agreements and takeovers in order to cater to China’s outbound traveler segment, which is said to be the largest in the world, with the Chinese international traveler’s per capita spend being the highest globally.
In yet another move to expand services for its outbound tourists, Ctrip, the Chinese OTA giant, recently acquired the Beijing-based ground transport service provider, TangRen World. Ctrip’s CEO of the land and water transport unit, Yuchen Wang, has confirmed that the consolidation process is going on. TangRen World’s specialty in connecting ground transport suppliers will further enhance the Ctrip platform which aggregates a vast array of travel services. However, Wang has also mentioned that TangRen World will continue operating as a standalone brand. TangRen World has a presence in around 100 countries, with its platform containing over 3,000 Chinese-speaking drivers. It also has a mobile application that helps customers book rides.
Ctrip’s Recent Moves To Attract More Outbound Travelers
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Ctrip has been especially attentive towards the growth of its outbound travelers over the recent past. In October of last year, the company made strategic investments in three tour operators based in the US, namely, Universal Vision, a bus tour operator and travel agency based out of New York, Ctour, a Los Angeles-based wholesaler and China group-tour operator, and Tours for Fun, a Los Angeles-headquartered online travel agency that concentrates on destination travel in the overseas regions. These companies, considered to be the leading names in their respective segments, have vowed to work along with Ctrip to help with the supply and distribution of inventories and by sharing each other’s expertise. The move helps Ctrip in providing top quality destination travel opportunities to its outbound travelers.
Shortly after its investments in the U.S. based tour operators, and after entering into a strategic alliance with Travelling Bestone, a travel agency based in China with over 5,000 outlets, Ctrip announced its decision to acquire one of the global flight metasearch leaders, UK-based Skyscanner for $1.74 billion. Ctrip wants the Skyscanner team to work closely with another UK based travel distribution system, Travelfusion (where Ctrip holds a majority stake). The Chinese online travel leader’s global reach in the air ticket market, where it currently enjoys 10% of the total OTA market share, might significantly increase due to this. Also, this might help further with the air ticket bookings of its outbound travelers, thus giving another reason for the company to be the preferred choice of the Chinese outbound travelers. The air passenger traffic from China grew by close to 47% y-o-y over the first half of 2016.
Why Is Ctrip Focusing On Outbound Chinese Travelers?
- The United Nations World Tourism Organization reported that since 2012, China’s outbound tourism market has been the largest in the world contributing on an average of over 13% of the global tourism annual income. The Chinese outbound traffic and spending continued ranking as #1 in 2015.
- The China National Tourism Administration (CNTA) states that Chinese outbound traffic reached 120 million in 2015, reflecting a 12% y-o-y growth. The total spend by these Chinese outbound travelers amounted to $104.5 billion, thus reflecting 16.7% y-o-y growth.
- According to the United States Travel and Tourism Administration (USTTA), there were 3 million trips taken to the U.S. by Chinese travelers in 2015, thus reflecting a 16% y-o-y growth. The average spend per Chinese tourist amounted to around $6,000 to $7,000, a significantly higher sum than the per capita spend by tourists from other parts of the globe.
- Along with the growth in China’s per capita income, the relaxed visa restrictions in foreign countries, and the expansion of new routes, the outbound travelers from China are expected to rise even further.
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