The accommodation reservation business achieved 45.7% year on year growth in revenues and 67% year o

Ctrip.com best time of year to buy airline tickets (NASDAQ: CTRP ) is a leading online travel service that allows users to book hotel reservations, airline tickets and tour packages for businesses and individuals best time of year to buy airline tickets in Asia. The tourism industry in China is booming as the growing middle class has more and more disposable income, and Ctrip is at the forefront to profit from this demographic change.
Ahead of the release of their second quarter earnings on the 30th July, I will analyze the company's current circumstances, and discuss the outlook for Ctrip and the Chinese online travel market as a whole. Business Model
Ctrip offers a wide range of services to customers, from the core business of flights and hotels, to local attraction tickets, an online travel forum, and restaurant reservations. Because of this wide range, it is also able to offer comprehensive vacation packages.
Ctrip controls almost half of the online travel agency market in China, with its biggest individual rival being eLong, at just 9.7%. However, the biggest rival to Ctrip in the whole travel agency industry is the offline travel agency stores and call centers, best time of year to buy airline tickets which traditionally dominated the market. However, the online agencies are taking control of the overall market because offline firms can't compete on price and product range.
As opposed to most Chinese firms, Ctrip offers multilingual services, particularly English, which makes it much more accessible to international users, and much easier to understand the company's operations for international investors. In fact, as well as English, best time of year to buy airline tickets Ctrip offers Japanese, Korean, German, French, Spanish, Russian and Vietnamese services.
Ctrip operates a travel community website, which is the top website in China's travel review industry. best time of year to buy airline tickets Users submit reviews, travel journals and questions answers, best time of year to buy airline tickets whilst members are offered exclusive deals.
In the first quarter of the year, Ctrip introduced the long haul bus ticketing reservation service. CEO James Liang commented that this was important because its means that Ctrip can cover the first and last miles of customers' trips, particularly the places best time of year to buy airline tickets where planes don't fly to, and trains are either best time of year to buy airline tickets unavailable best time of year to buy airline tickets or busy. This service will be particularly profitable during the Spring Festival holiday, which is the world's largest human migration. For roughly 40 days before, during the festival and afterwards, the number of passenger journeys is around 2 billion, with 2006 seeing over 2 billion journeys. This also gives Ctrip the opportunity to cross sell. For example, if a plane is delayed, then Ctrip will be able to suggest a train to take the same route.
Ctrip has also further expanded its hotel coverage, and as of the end of the first quarter of 2014, it offered reservation services for around best time of year to buy airline tickets half a million domestic and international hotels in over 190 countries and territories worldwide. Growth Through Acquisition
Ctrip has an acquisition strategy that focuses on complementary services to add to its core business. CEO James Liang has discussed that the company prefers to invest best time of year to buy airline tickets internally in order to improve its core business.
In April 2014, Ctrip made an investment into online tour package company Tuniu, prior to its IPO. The investment of $15m in Tuniu is relatively small, and because the market is very large, Tuniu and Ctrip are taking a very small percentage of the overall market share. best time of year to buy airline tickets It's mostly taking business away from the traditional in-store travel agencies. Therefore, there isn't much price competition or removal of the competition because they're not directly competing with each other.
Ctrip has become one of the leading players in China's local attraction ticket market. Yet despite the fact that booking volume has grown tenfold year on year, the market is heavily fragmented and the company has a market share of less than 5%. Ctrip recently best time of year to buy airline tickets made a strategic investment of $200m in Tongcheng, which operates the travel booking firm LY.com , making it the second largest shareholder of the firm behind Tongcheng's best time of year to buy airline tickets management. Cooperation with Tongcheng will involve using Tongcheng's wide selection of local attraction tickets to enhance Ctrip users' experience. Likewise, Tongcheng will be able to use Ctrip's wide selection of hotels. Therefore, both firms will gain access to customers that they wouldn't have been able to get before. Tongcheng and Ctrip have larger market share in markets than Ctrip and Tuniu do. Therefore, they are able to collaborate pricing strategies to remove the price competition. Going forward, the two teams will focus on network coverage, customer experience and mobile penetration.
Ctrip holds an 8.4% in NASDAQ listed Home Inns, a minority stake in BTC-Jianguo Hotels and Resorts, as well as a 1.3% stake in NASDAQ listed China Lodging, which is the owner of Hanting Hotels, a budget best time of year to buy airline tickets hotel chain found across China. Mobile
As with other consumption industries in China, travel agencies are seeing a mass migration to mobile. This will continue to grow, because despite China having 658m smartphone owners, it only accounts for 47% of the population.
Ctrip has been developing its mobile strategy over the past few years, as its active user base accelerates, particularly on mobile. In fact, mobile is already the primary platform for the majority of Ctrip's products and services, and is the core of the company's overall business. In terms of volume, over 70% of Ctrip's total transactions were booked through online and mobile channels in Q1, compared to about 55%-60% a year ago. Total mobile transaction value for Q1 was more than 400% of the same period last year, with the peak daily transaction volume reaching about 150m RMB. Mobile accounts for about half of the total bookings of many of the new businesses such as car rentals and local attraction tickets, and over 50% of the travel best time of year to buy airline tickets reviews were submitted through the mobile channel
Mobile internet, together with PC based internet, account for the majority of Ctrip's business. For the accommodation reservation business, best time of year to buy airline tickets PC based internet best time of year to buy airline tickets contributed about 35% of the total transactions, but mobile surpassed PC by contributing 40% during the previous quarter, with the peak daily level being over 60%. For the transaction ticketing business, PC contributed 40% of total transactions, whilst mobile contributed about 30%. Likewise, Ctrip's corporate travel services maintained a strong growth best time of year to buy airline tickets of 39% in Q1, with migration to online and mobile booking accelerating again. 40% of corporate travel bookings are made through the internet or mobile, compared to 29% a year ago.
By the end of 2014's first quarter, the cumulative number of downloads for the Ctrip app was 120m . To expand its mobile user base, the company plans to only offer certain services on mobile, for example taxis and car rentals, as the user is likely to be on-the-go, and so the service is more relevant.
Due to fast economic growth and the emergence of a large middle class, China has become the largest travel market in the Asia-Pacific region since 2012. Naturally, this has attracted many new entrants, with the number of Asian travel start-ups quadrupling from 2011 to 2013, with more than a quarter of these being based in China. This is justified given the growth in China's market. In 2013, GMV reached 220.46bn RMB , driven by air ticket sales, hotel bookings and tour packages. Likewise, revenue from online travel booking reached 11.8bn RMB. However, growth in air ticket sales will slow in the coming years as the market reaches maturity. Yet the industry has seen a rapid rise in online leisure travel, hotel bookings and package tours. In addition, the online car rental and taxi-hailing services will add to the new revenue sources that continue to generate strong growth for the industry.
2014 has seen the major online firms competing with each other on new fronts, with Ctrip providing 50% to 100% cash rebates for more than 5,000 entrance tickets purchased on PC and mobile, LY offering best time of year to buy airline tickets cash discounts and free exclusive products, best time of year to buy airline tickets and Lvmama had a '0 Yuan' entrance ticket promotion during the Chinese Spring Festival holiday. best time of year to buy airline tickets These promotions best time of year to buy airline tickets all boosted the entrance ticket market.
Firms are also diversifying their product range away from just the traditional travel ticketing markets such as planes and trains. The bus market was huge in 2013. Chinese citizens made over 30 billion bus trips compared with 2 billion train journeys and over 300 million best time of year to buy airline tickets air trips. best time of year to buy airline tickets Whilst most travelers have access to a train station or an airport, best time of year to buy airline tickets there will always be parts of their journey, which can be catered for by buses. This allows the online travel best time of year to buy airline tickets agencies to provide best time of year to buy airline tickets for every part of a traveler's journey. From A Valuation Perspective
Ctrip saw stronger year on year net revenues in the first quarter best time of year to buy airline tickets of the year, growing 36%, which were primarily driven best time of year to buy airline tickets by strong volume growth. Revenues of $254.6m beat analysts' expectations of $245.3m, whilst EPS of $0.12 was in line with expectations. The company saw strong growth across all major business lines, in terms of revenue and volume.
The accommodation reservation business achieved 45.7% year on year growth in revenues and 67% year on year growth in room nights, which is a record best time of year to buy airline tickets high for the past 10 years, with international hotel rooms growing approximately 80% year on year.
Total volume growth for the newly expanded transportation ticket business reached 71% year on year, with air ticketing contributing the majority best time of year to buy airline tickets of the volume. International air tickets grew over 70% in Q1, accounting for around 15% of total volume. Ctrip is now the number one player best time of year to buy airline tickets in the cruise reservation business in terms of transaction and customer volume. Product development expenses grew due to an increase in personnel related best time of year to buy airline tickets expenses. Previewing Second Quarter Results
Ctrip will announce its second quarter earnings on 30th July after the market closes. The hotel ASP is stable, but as they expand into lower tier cities, the ASP will fall, because prices are cheaper