Market analysis of Ctrip. com

Lead: Foreign media published an analysis article today, saying that because of Ctrip, foreign companies trying to enter the online travel service market in China must be cautious, including Expedia, owned by American billionaire Barry Diller.

Ctrip. com maintains rapid growth

Ctrip. com is the largest online travel service provider in China, which has been growing rapidly in the past few years and attracted a huge user base. Some investors worry that Ctrip's leading edge may be lost as foreign companies enter the China market on a large scale. But Aaron Kessler, an analyst at Piper Jaffray, an American investment company, said: "The question now is not whether Ctrip can compete with Expedia, but whether Expedia can compete with Ctrip."

excluding equity incentive expenses, the annual growth rate of Ctrip's earnings per share has reached double-digit percentage in the past 11 quarters. Since mid-23, the annual growth rate of Ctrip's sales has reached at least 46%. In the second quarter of this year, Ctrip's sales amounted to $37.8 million, a year-on-year increase of 59%. The American Investor Business Daily scored 9 points for the relative strength of Ctrip's American Depositary Receipts, ranking in the top 1% of all stocks in the past 12 months. Ctrip. com ranks 96th in earnings per share.

Analysts are optimistic about China's tourism market

Ashish Tahani, an analyst at p>Gilford Securities, predicts that the average annual growth rate of Ctrip's revenue will reach 43% between 26 and 29. He said that in terms of key performance data, such as the number of hotel rooms sold and the number of air tickets, Ctrip always exceeded his expectations. Ctrip's main business is to sell hotel reservation service, air ticket reservation service and holiday travel service through the Internet, and its customers are mostly the emerging middle class in China.

JPMorgan Chase predicts that there will be 137 million Internet users in China in 26, and the number will increase to 19 million in 21. Therefore, there is still huge room for growth in China's online travel service market. In addition, with the approach of the 28 Beijing Olympic Games, the number of hotels and guesthouses in China will continue to grow at a high speed, and airlines will also add more planes and routes. Robert Lawrence Kuhn, senior adviser of investment banking department of Citigroup in China, said that the China government has been promoting consumer spending, and the best way to achieve this goal is to encourage more people to travel in China.

foreign competitors are eyeing

As the American tourism market is becoming saturated, American tourism service giants such as Expedia are seeking to expand into emerging markets. For example, Expedia acquired a controlling stake in China online travel service company E Long through acquisition; Travelocity acquired Singapore travel website Zuji； in January 26; Priceline.com runs a travel website with its partners and Huang * * *, mainly for tourists from China, Hong Kong and Singapore. It is reported that Priceline.com plans to increase its investment in the China market.

But in order to make a difference in the China market, American companies such as Expedia must face fierce competition from Ctrip. At present, the market value of Ctrip. com has reached 2.4 billion US dollars, which is more than ten times that of its main competitor E Long. In addition to Ctrip. com and eLong, there are many online travel service providers in China, which compete fiercely in the local tourism market. Due to the weak performance growth of E-Dragon, it is reported this month that Expedia may sell its shares in E-Dragon to Ctrip. Although it was established only nine years ago, Ctrip.com has gained a very high reputation in China, which is also one of its main competitive advantages.

Advantages of Ctrip.com

Ctrip.com was founded in 1999 with a start-up capital of only 25, US dollars. The founder was Liang Jianzhang and three other partners. Liang Jianzhang is currently the chairman of the board of directors of Ctrip. He is 37 years old and graduated from Georgia Institute of Technology. He has worked in Silicon Valley for many years. While other travel service companies focused on star-rated hotels in big cities, Ctrip turned its attention to the field of mid-range hotels and achieved great success.

Analysts said that compared with foreign competitors, Ctrip's main advantage lies in its familiarity with regional markets, laws and policies. Kessler said: "Ctrip knows China consumers better than any foreign company. Ctrip.com understands the needs of consumers in China and pays more attention to the regional market. " Of course, Ctrip has not neglected big cities. In June this year, Ctrip.com announced that it would open an offline travel agency in Beijing to compete with traditional travel agencies.

Kessler also said that China's online travel service industry is still in its infancy, and there is still huge room for growth in the future, so it can accommodate many winners at the same time. He said: "This is not an industry where winners take everything. China's online travel service industry has enough space to accommodate many winners. "