Why Did Ctrip Announce A Partnership With Tennis Australia?

by Trefis Team
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In yet another effort to attract Chinese outbound travelers, Ctrip (NASDAQ: CTRP), the Chinese OTA leader, has announced a partnership with Tennis Australia. This initiative will enable Ctrip’s 300 million users to buy the Australian Open tickets directly through Ctrip’s platform. Ctrip has always been on the lookout to provide enriching travel experiences to both its domestic as well as overseas travelers and this partnership seems to be another step in that direction. Shortly after partnering with Big Bus Tours, the world’s largest operator of open top buses for sightseeing tours, Ctrip announced its partnership with the Hungarian Tourism Agency. While Ctrip is the undisputed leader of China’s online travel market, the two areas where it is strengthening its position are: i) in the lower-tiered Chinese cities where it still lacks a major presence and ii) in expanding across the markets beyond China, specifically to cater to the outbound Chinese travelers — the most coveted consumer group in the travel world today. The current agreement might aid Ctrip in its second objective. Here we discuss a few possible reasons why Ctrip might have partnered with Tennis Australia. We have a $53 price estimate for Ctrip’s stock, which is  higher than the current market price.

Why Might Ctrip Have Entered Into This Partnership?

  • Ctrip tries to be the one-stop shop for Chinese travelers and hence it tries building partnerships with entities that deal with activities and sites that are popular among Chinese travelers.
  • Chinese travelers have been one of the most important segments in the world of travel today. Among the Chinese travelers, Chinese millennial travelers are said to be one of the most important segments that is constantly boosting the growth of tourism across the world. The outbound travel among Chinese millennial travelers rose by 36% y-o-y in the first quarter of 2017 and amounted to 62 million outbound trips. One of the favorite activities of millennial travelers are engaging in or watching sports related activities. Hence, this partnership might further boost outbound Chinese travelers to travel to Australia.
  • Chinese travelers generally have a language problem when booking through other international websites. Ctrip offers them the ease to book smoothly in their local languages through its platform.
  • This partnership is one more step by Ctrip towards expanding its international footprint. Previously, it had acquired the U.K.-based metasearch giant, Skyscanner, to gain a greater presence in the international air ticketing market. Ctrip is currently integrating the booking option into Skyscanner’s platform and that has met with tremendous success so far.
  • A recent Skift report shows how the United States is slowly losing its popularity among international tourists, including Chinese tourists, and hence collaborating with Asian and European partners seems to be a prudent move by the Chinese OTA giant.

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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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