Why Might We Expect Ctrip To Grow Even Further And Be A Major Threat To The OTA Leaders In The Future?

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CTRP
Ctrip

When it comes to Ctrip, it is not an exaggeration to say that the Chinese online travel giant is growing in leaps and bounds. After conquering the domestic travel front in China by consolidating the Chinese online travel market, Ctrip is now on an expedition to capture a higher portion of the Chinese outbound travelers market (which happens to be the largest outbound travel market in the world) and also to grow its international presence. With around 40% stake in each of Qunar and eLong, Ctrip is currently the second largest OTA in the world in terms of its over $20 billion market capitalization. Along with this, Ctrip’s big ticket acquisition such as Skyscanner and its partnerships with international travel services providers including the leading names like Priceline and Expedia, ensure that the company is making the right moves for global domination.

What comes as an even better news for Ctrip is the current state of China’s travel market and the spending power of the Chinese travelers.

  • According to a recent report mentioned by Ctrip, Chinese tourists spent over $87 billion (600 billion yuan) in 2016, through the online travel platforms reflecting a 34% y-o-y growth and this figure was significantly higher than the money spent through the brick-and-mortar travel agencies.
  • The report also mentioned that around 250 million travelers spent around 20 billion yuan on the Ctrip platform, with an average customer spend of around 3,000 yuan. The majority of the transactions took place through mobile transactions.
  • Out of the total transactions on Ctrip, around two-thirds of the tourist spending was on overseas trips with the most popular destinations in decreasing order of preference being Thailand, Japan, Republic of Korea, and the United States.
  • Ctrip expects the total number of trips booked through its platform to shoot over 5 billion this year thereby witnessing an 11% y-o-y growth.

We see that Ctrip currently enjoys over 40% of the Chinese travelers spending on online platforms. We expect this figure to rise with Ctrip’s further growth in China and abroad, along with the rise in online spending by Chinese tourists. To add on to this growth, Ctrip is bringing more services on its platform to cater to both domestic and outbound travelers, such as the recent investments in Mobike, a smartphone enabled bicycle renting service, or the acquisition of the ground transportation company, TangReng World. In fact, its growth trajectory looks so promising that at a recent conference, the company’s CEO, Ms. Jane Sun, had mentioned that the company will reach its 1 trillion yuan gross merchandise value target by 2018 itself, two years before the earlier predicted timeline of 2020. We expect Ctrip’s outreach outside China also to increase with its strategic alliances and takeovers. Ctrip is increasingly becoming a force to reckon with, and it might not be long before Ctrip disrupts the leadership positions in the global online travel arena.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ctrip

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