C-Trip's Conference Call: Waiting for Stocks to Recover

China-based internet travel firm C-Trip.com seems to regard the downturn as something temporary. Their focus is not on streamlining operations and hunkering down but rather on an opportunity to gain market share. C-Trip says that despite continued growth and a hefty stimulus package in China, travel won't recover until the stock market does. From C-Trip.com's Q308 conference call: 

Outlook for leisure and business travelers in China:

The whole travel industry anticipated a very healthy rebound after the Olympic games. [But then] the financial crisis [hit].... Although most of our clients are domestic travelers… every company right now is controlling their costs very tightly… That’s why we anticipate in Q4 the hotel rebound will not be so significant as we anticipated… There will be growth but… not so high as before.

The consumer behavior [of] leisure travelers are very heavily linked with the [inaudible] market and the stock market in China… So that’s why even the Golden Holiday of this October 1st, the travel industry did not come up with a very, very high rebound.

For Q4, high-end hotels will slow down a little bit but a very, very small percentage… Budget hotels maintained their prices across the board, so we don’t see a significant decrease on this room rate right now.

Roughly the gross margin for the hotel business is somewhere around 85% to 90%, and for high-end hotels, it is towards the high-end of the range and the economy hotel is towards the lower end of the range. 

I think probably some conferences reduced and but still there will be a few big conferences or exhibitions held during this season… But the visitors or even the participants will be decreased.

How they are tackling the slowdown:

Q: What measures is Ctrip taking to offset the slowdown? Specifically for the cost control, which are the main areas that we can expect to see some efficiencies?

A: Ctrip will take several measures to enhance our revenue… Since this is a difficult time, every company will encounter the same problems… If Ctrip can deliver better service and better quality, then probably we can grab more customers in the market… So this is still our major method during this tough period. In terms of cost control, we will have… across the board… recruitment freezing measures.