Ctrip’s Growth Story Expected To Continue In Q3 Boosted By Strategic Alliances in China & Abroad

Ctrip, the leading Chinese online travel agency, is set to release its Q3 2015 earnings on November 18th. In Q2 2015, the company was finally able to display a healthy bottom line growth along with its usual ~ 50% topline growth. We expect the bottom line to keep improving for the company as it has entered into alliances with its two chief rivals, eLong (where it bought a 40% stake) and Qunar (through an exchange of shares). In Q2 2015, Ctrip achieved its highest organic growth rate since 2008. Ctrip’s current growth drivers include all its divisions: accommodation, air ticketing, and the transportation business. Ctrip’s top line growth was due to its aggressive market share expansion and investments in profitable projects. Currently, Ctrip is the only profitable OTA in China and it is using the money generated from the price inelastic mid to high-end travel segment to invest in the low-end or the budget segment (which is highly price elastic). Ctrip is trying to gain further share of the low-end travel segment. Ctrip’s heavy investment in IT in order to improve efficiency and a focus on a skilled employee base helped the company with its bottom line growth.

(Full disclosure – Ctrip is a preferred partner of Chinese Host Destination and has host to host booking connectivity)

Courtesy: Forbes/Investing


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