Ctrip (NASDAQ:CTRP) is slated to release its Q3 2016 earnings on November 23rd. For the first half of the year, the Chinese OTA giant continued with its stellar performance of around 65% y-o-y top line growth. However, the bottom line for the company remained dampened due to its aggressive penetration in the low to mid-tier hotel segments through reduced pricing and discounts, which it financed with the profit it gained through its high-end hotel rooms. Along with this, Ctrip's investments in its acquired entities led to the erosion of its bottom line. After its consolidation in China's online travel market through its stakes in eLong and Qunar, Ctrip currently is the second largest OTA in the world, in terms of market capitalization (~$21 billion). Presently, the company is focused on gaining a larger share of the Chinese outbound traveler's spending and hence it is focusing on providing more products and services to suit this demography. Though Ctrip's bottom line is currently dampened because of investments, the company is showing all signs of a promising future ahead.
Entry To The U.S. Through Alliances
In October 2016, Ctrip made strategic investments in three tour operators based in the U.S. This move will not only expand Ctrip's global footprints in the world's largest online travel market, but it will also help in providing greater choices to the Chinese outbound travelers. The tour operators in which Ctrip invested are: Universal Vision, a bus tour operator and travel agency based out of New York; Ctour, a Los Angeles-based wholesaler and China group-tour operator; and Tours for Fun, a Los Angeles-headquartered online travel agency that concentrates on destination travel in the overseas regions. All these players occupy leading positions in their respective segments. In the past, it has entered into such agreements in regions including Asia, the Middle East, and Europe. Along with these alliances, it is noteworthy to mention that Ctrip has existing partnerships with both Priceline (NASDAQ:PCLN) and Expedia (NASDAQ:EXPE) in the hotels, packaged tours, and airline services segments.
Gaining A Greater Share Of China's Lower Priced Hotel Market
Also in October, Ctrip entered into a strategic alliance with Travelling Bestone, a travel agency based in China with over 5,000 outlets. Certain Chinese financial agencies reported that Ctrip assumed a controlling stake in Bestone. Bestone has a strong presence in the second and third tier cities in China and this alliance might further help the company as it is already looking for aggressive penetration into these cities. Along with Ctrip's deep discounts to capture a greater portion of the lower tiered cities' lodging markets, the partnership with Bestone is yet another move by the company to gain a stronger foothold in this segment.
A few days back, Ctrip announced Ms. Jane Jie Sun as its Chief Executive Officer and a member of the board of directors, effective immediately. Mr. James Liang, who had been Ctrip's Chairman and former Chief Executive Officer, will be serving as Executive Chairman of the board with a focus on the company's strategies related to innovation, geographic expansion, investments, and strategic alliances. Ctrip is said to have made history by appointing the first woman CEO in a publicly traded online travel company.
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