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
Quick thought: 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.
I welcome your comments.
