What Does Ctrip’s Latest Investment In Tujia Suggest?

by Trefis Team
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By now we know that the reason behind Ctrip’s massive success as the top online travel agency in China and also the second largest (in terms of market capitalization) in the world, is that the company doesn’t rest on its laurels, but tries to address areas where there might be a possibility of a future increase in competition or a weakening of its position. Even after emerging as the leader in China with its stakes in Qunar and eLong and subsequent consolidation of the Chinese online travel market, Ctrip doggedly pursued the hotel markets for the lower tiered Chinese cities where it didn’t have a strong presence. So much so, that Ctrip even sacrificed its margins to invest in those markets. On the international front, Ctrip makes strategic investments that help it expand its global footprints and cater to its outbound travelers. So, it doesn’t come as a surprise that while Airbnb is emerging as a direct competitor for the OTAs, Ctrip once again made investments that might strengthen its might against Airbnb’s rising threat. A few days back, Tujia.com, Airbnb’s biggest competitor in China, raised $300 million to fund its international expansion efforts. Ctrip, along with All-Stars Investment Ltd. led the round of financing. Tujia is currently valued at around $1.5 billion, reflecting a 50% increase from its 2015 valuation.

Being the market leader in China’s vacation rental market, Tujia’s platform includes around 650,000 listings, mainly catering to the Chinese tourists who incidentally enjoy the top position among both the international and domestic tourist populations in the world. This might be Tujia’s counter move to Airbnb’s latest move of quadrupling its Chinese tech team in order to capture a bigger portion of the China market. Currently, Airbnb contains around 100,000 listings in China. Tujia’s rivalry with Airbnb will transcend China and include other international markets, including Japan, a popular destination for Chinese travelers.

 

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such 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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