Ctrip (CTRP) - key points from conf call - implications for eLong (LONG)

Ctrip (ticker: CTRP) reported Q4 results today. Here are some key points from the conference call:

Statistics:

• 30% of new customers were "natural customers" - not acquired through sales and marketing expense
• 2,900 hotels in the CTRP network, up from 2,700 at the end of Q3 2004

Highlights:

• Pushing into second and third tier Chinese cities
• Consumers are spending more time in hotels
• Seeing increases in commissions on air tickets
• 35% of plane tickets acquired using credit cards - percentage increasing rapidly
• Advertising expenses increasing
• Trying to increase leisure travel business - 70-80% of revenue is from business travelers
• Substantial repeat business - 70-80% of business from existing customers
• Planning to build new IT center to improve IT infrastructure

Competition:

• CTRP believes it has a 50% market share in the hotel consolidation space
• Vs. eLong (ticker: LONG) - CTRP believes that it is way ahead of LONG in air ticketing, travel packages and technology
• CTRP claims to have 600% of LONG's ticket and hotel volume
• CTRP has yet to see increased spending from LONG arising from its relationship with IACInteractive Corporation (ticker: IACI)
• CTRP is maintaining its sales and marketing plan despite IACI's taking a majority equity stake in LONG
• CTRP sees airlines as partners - not yet as competitors

Guidance:

• No specific numbers
• Expect sluggish Q1, weak business travel is typical of Chinese New Year period
• Revenue and net income to decrease
• BUT, in 2005, CTRP expects to see 30-40% revenue and net income growth

The China Stock Blog writes:

I find it hard to believe that despite a
strong lead in travel services, CTRP is seemingly unconcerned with the
prospect of substantial increased spending from LONG. With Barry Diller
at the helm, this is surely only a matter of time. Furthermore, while
CTRP is seeing growth in its airline ticketing business, they dont seem
remotely concerned with the prospect of Chinese airlines keeping
ticketing in-house, and not outsourcing to CTRP.