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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.

Source: Ctrip (CTRP) - key points from conference call - implications for eLong (LONG)