What Is Driving Ctrip’s Strong Revenue Growth?

by Trefis Team
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Ctrip (NASDAQ: CTRP) is the largest online travel agency (OTA) in China and offers accommodation reservation, transportation ticketing, packaged tours, and corporate travel services. It operates four prominent brands: the global OTA Trip.com, the Chinese OTAs Ctrip and Qunar, and the global travel search company Skyscanner.

Trefis summarizes trends in Ctrip’s revenues over the last few years in an interactive dashboard along with our near-term expectations. You can make changes to the associated revenue streams in the dashboard to come up with your forecast for the company. Additionally, you can see more of our Information Technology company data here.

Understanding Key Drivers Of Ctrip’s Revenues 

Accommodation Reservations:

  • Ctrip earns commissions from hotel suppliers for online bookings. The commission charges depend on the arrangement with the hotel supplier, which could be based on a fixed rate or a variable rate. Moreover, the company enables its suppliers to enter into a guaranteed allotment contract, where hotel suppliers have to keep room inventory for instant bookings, or an on-demand contract, where the supplier is requested for confirmation.
  • Revenues from accommodation reservation grew by 48%, 39% and 15% in 2016, 2017, and 2018, respectively. The growth in 2016 was primarily driven by the consolidation of Qunar’s business. Moreover, the strong growth of 8% (y-o-y) in Ctrip’s hotel supply base has been the key driver for the segment.

Transportation Ticketing:

  • Apart from air tickets, Ctrip offers railway and bus reservations under its transportation ticketing services. The company acts as an agent for all major Chinese airlines such as Air China, China Eastern Airlines, China Southern Airlines, and most of the international carriers.
  • The commissions from transportation ticketing observed strong growth in 2016, due to Qunar’s acquisition, and 2017, possibly due to strategic collaboration with China Eastern Airlines. However, the growth remained subdued in 2018 and we expect it to remain low in the near term due to global economic tensions.

Packaged Tours:

  • Ctrip primarily targets independent travelers as opposed to tourist groups
  • However, the company provides packaged tours and bundled transportation arrangement services as a complementary offering.

Corporate Travel:

  • The company offers all its travel-related services such as hotel bookings and ticket reservations as a separate service for corporates, enabling them to efficiently manage business travel costs.
  • Travel management solutions such as travel data collection and analysis, cost-saving analysis, and industry benchmarks are few additional services under this segment.

Other Businesses:

  • The company’s advertising revenues are recognized under the other business category.

 

The growth in packaged tours, corporate travel services, and other business have remained relatively stable over recent years, primarily due to the complementary nature of these business segments. Data around how Ctrip’s segment revenues have trended over the years is available in our interactive dashboard.

 

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