Ctrip and its opponents Despite the many challenges, but RedTechAdvisors reported that Cheng still has inherent advantages, to shake Ctrip dominance, emerging companies need to work harder. Source / RedTechAdvisors finishing / Lu Jianing as Baidu, Tencent, Alibaba and major airlines have come to participate in the game in 2014, the online travel business will be twice now. All this does not really surprising, the online travel market is still in a period of rapid growth lucrative. Ctrip enjoy in gross margin of 78%, while the industry believes that, by 2015, its profit will triple, reaching 30 billion yuan. This growth has attracted China's largest Internet predators, these predators have been looking outward for growth in other areas.
With the change in the competitive landscape, Ctrip is facing a more complex online travel market. Industry trends in the recent high-profile investment and the establishment of all online travel companies associated with the partnership event, it is easy to overlook the fact that, in fact, for China, the online travel market and offline travel market is equally important. In this regard, Ctrip is still the industry leader because of its status, the broadest most effective telephone booking service centers and online tourism service products and complacent. The company also arranged various transportation hubs powerful ground marketing staff where people issued membership cards - this way is not considered tourists who travel agent is an excellent propaganda. Despite these advantages, we can not be like from time to time as a competitor Ctrip has demonstrated its disdain. Through joint Ctrip small rivals and suppliers, these old and new enemies will further hinder the development of Ctrip in the next five years or so in this high-risk, future market share is likely to fall below Ctrip 40%, thus affecting the capital market and to put pressure on the stock. In addition, in order to face, I'm afraid Ctrip spend more on marketing, also will accelerate the expansion of services and products. Ctrip past has been in the lead position in the services and products, since it is a series of not easily be copied and replaced advantages, but also because of its ability to integrate online and offline (especially the line side, which is already high threshold , the opponent can not easily enter). While its competitors in some respects have special advantages, such as 'Where' the travel search, the way cattle Offered tours, we believe Ctrip one-stop service is still the most suitable for the Chinese market approach. Ctrip accustomed to using the Internet not only cater to tourists, but also to meet new user on telephone service. In addition, Ctrip in competition with rivals has maintained a clear advantage, such as the huge sales and to the airport and the hotel carpet marketing. Ctrip lack of a past travel experience rating of an interactive website, but now it has established such a site's ass comment like nets to achieve this. If Ctrip can begin to deal with these new competitors, we believe that between 2010 to 2015, it can achieve 23% annual growth, down from 2004 to 2009 the annual growth rate of 41%. Business analysis Ctrip ticket sold 27 million tickets in 2010, the industry accounted for 10%. Despite increasing competition, we still think it will rise in 2015 to 13% of market share, reaching 61 million flights. Ctrip's main rival will be the airline direct sales, in addition, the small agencies through emerging platforms such as 'Where' and Taobao for online sales. We expect the three major airlines will continue to enhance the direct selling business, and expand sales channels outside Ctrip bigger threat comes from the next line is transferred to the line organization, and rely on vertical corporate advertising to survive, such as 'Where' This has the advantage on the part of business. Since the ticket is the easiest standardized business, a dozen upstream suppliers are concentrating pace to expand their online sales operations, so Ctrip ticket booking is the most vulnerable part of the business. Centralization largest supplier to bring the wrath of Ctrip carried out by virtue of the size, it will always be a lingering risk. March 2009, China Eastern Airlines CEO of renowned in the National People's Congres on rap Ctrip, Ctrip said the airline will no longer work. He also visited Ma, and in Taobao online travel business. Since 2009, China Eastern Airlines online ticket outlets has increased to 10% from 5% and Air China raised to 8% from 14%. But in addition to the threat of increased foreign direct Ctrip ticket business continues to grow, and its market share is rising, in 2011 it will reach 10%, we expect 2015 will reach 13%. Eventually, the proportion of Ctrip ticket revenue will decline 37 percent in 2011 to 27%. With low barriers to entry, competition for tickets will continue to be the most intense, and this will increase the pressure on the commission, we expect Ctrip in 2010 to 2015 compound annual growth rate of 14.4% on the ticket - - will be in all aspects of tourism is the lowest, ranked hotels and tours Ctrip after the third source of income will decline in the first place. Hotel business analysis in 2010, Ctrip sold 18.7 million passengers Room nights, accounting for 49% of the online travel market share by 2015, this figure will grow to 45.1 million. The main competitors will be the online travel industry and competitor eLong Mango city, 'Where' just started this business, Taobao travel, too, and the hotel direct threat is much smaller.
Ctrip continue to play a leading role, the upstream supply of highly dispersed Ctrip huge sales force advantageous, especially in the domestic hotel, in addition to such chains like Hanting economy outside the hotel, and not a lot to go into direct sales. China about 300,000 hotel, of which over 15,000 are star hotel. Ctrip's hotel business, hotel occupies 75% market share. We interviewed more than a dozen domestic brands hotel manager, in order to prove our proposition: that most of them do not have the budget or the incentives to invest in brand-building and online direct marketing. They rely on such as Ctrip online travel site, and still intend to do so. The hotel is a fragmented industry, which requires Ctrip than its competitors eLong has a strength of more powerful sales team. Most managers we talked to say they will work cosplay costumes for sale together to enhance their performance with Ctrip, Ctrip and continue to give the best price. Some hotels still insist on a unified multinational pricing strategy, but more domestic brands more flexible, but also more conducive to Ctrip. Of course, this eLong increased pressure to reduce the effectiveness of price comparison travel search sites like 'Where' so on. In the hotel business, the only down-web technology and search algorithms are not a good choice. It is foreseeable that, by 2015, the hotel will be Ctrip biggest source of income. Even if it's online travel market share from 39% in 2011 down to 22% in 2015, and by then, the hotel's revenue is expected from the current 40% down to 35%. Ctrip tours tours business analytics revenue is the fastest growing, in 2010, an increase of 116% in 2011 may reach 80%. After 2015, it is likely to reach 31 percent, becoming the largest component of income Ctrip in second place among the hotel business by 35% before 27% of the aviation business.
Now it competes with the city, such as mango and with the way network; offline travel agencies such as the Spring Travel, CITS and CYTS and other enterprises online business; including the way cattle, donkeys mother, leisurely and "dragon ball z wigs " other emerging online players. Competition in this area needs to grow rapidly. This market seems to be able to support multiple players, we expect Ctrip likely leading one-stop shopping market. Since 2003, Ctrip began offering an innovative product style free tour, which includes airfare and hotel costs, while allowing consumers to combine their interests are free to choose the route, the number of days, hotels and airlines. In the past five years, this part is still Ctrip four business units of the fastest growing. Although Ctrip's management for the acquisition quite conservative, its recent acquisition of Wing On Hong Kong and Taiwan net to make it easy to travel in a more familiar market to expand the scope to better test its ability to travel on the 'international' in. It is also involved in the cost of up to 50 million worldwide luxury travel of such specialty products, and sold out in one day. However, this world tour is not able to become more popular overseas partners depends on Ctrip, because Chinese tourists are always complaining about the poor quality of tour groups in the world, food is also very common. Let us respect tours Another reason for optimism is maintained Ctrip advantage of rich products. For example, search for products from Shanghai to leave the tour, which has 2,200 kinds of products to choose from, not including your hotel by selecting different combinations of the change on Ctrip. The competitors can only provide up to hundreds of choices. Finally, a small city Ctrip popularity in China will help it benefit from the growing tourist demand. The strong growth in outbound tourism cities, Ctrip's high-income users are willing to join organized tours Ctrip. Tours is now only a small part of the whole industry, but because it samurai champloo cosplay is more and more standardized, and attract more and more participants, will remain the fastest-growing. Ctrip recent sector consolidation will help it maintain market leadership. 2015, Ctrip's market share in the tour will be 55% to 60% increase in the current annual compound growth rate in 2010 to 2015 will reach 47 percent, the highest in all categories. Ctrip's biggest rival: Where 'Where', Taobao, Cool News and other sites are making small business online competition easier, especially in the ticket business section that standardization is narrowing between large and small enterprises of pricing advantage. 'Where' is becoming increasingly popular among young people, because of their cheap prices, more savvy traveler will spend the extra time 'to go where.' In the US, the 'Where' Kayak.com polymerization technique used in search online best price, including those it may not provide personal travel Ctrip linked site analysis from a number of indicators, 'Where' already in Some aspects of the extent par with Ctrip and beyond the travel search site Cool News. Online travel through the integration of small and medium size businesses are increasingly popular, and its upstream suppliers (three major airlines and hotel chains), 'Where' through membership subscriptions and online advertising profits. The problem is that the online travel market, the use of technology as a unique value-added is not necessarily a viable strategy, we have seen the 'Where' management of publicly complained Ctrip industry leader with its supply chain squeeze influence lowest price , especially the hotel room price. By doing so, Ctrip raised on comparative advantage in price, such as 'Where' website so it is difficult to obtain a lower price than Ctrip. If the 'Where' really trying to steal market share from Ctrip, then it's service also needs refining. 'Where' is a significant problem in that it offers too much choice is always to search for information, and choose from a large number of intermediaries where the consumer make the final often return to the same source, or always search out a lot of price difference almost negligible options. Over time, the 'Where' service only to those users who attract the most miserly savings. 'Where' earlier on the sale of tickets and hotel reservations provided buy, as well as other travel-related products and set up their own online travel service. Recently 'Where' just started its hotel reservation service, compared with Ctrip, its market share is still small. Management said revenue tickets sector in 2011 will double in 2012 to double again - and we assume that this figure is derived from the sum of the commission as well as aviation flights ads. Meanwhile, the 'Where' expressed its investment aspect of the hotel, at least until the second half of 2012, there will be no real-time earnings performance. Through our exchanges with industry experts, airlines and hotels are increasingly used across the network platform of uniform pricing strategy, resulting in a relatively small price differences. This trend for 'Where' and wonder - will be negative, too, a number of other advantages in addition to the lack of additional price competitiveness of small and medium organizations is also bad news. Whether compared with Ctrip online travel giants such or other direct channel providers, they are no longer a competitive advantage. Ctrip will be with the 'Where' competitive process benefit from this trend. Furthermore, since the scale of Ctrip, any uniform pricing policy that we have seen will be conducive to Ctrip. Conclusion: Ctrip dominance is difficult to shake this stage we believe 'Where' and Ctrip and other sites in the struggle still can not win for three reasons: 1. The ability to integrate Ctrip class online and offline; 2 early entry into the industry. 3 In the hard-won consumer trust has been established; advantage. Our focus on Ctrip's not because it does not make things better, but because it has done a great job in the past, so that he might be underestimating the threat Ctrip newly generated. This is Ctrip fatal weakness. Cheng did not charge any big effort to obtain the majority of the market, thus not keen on active and innovative, and therefore subject to various company-sponsored attack in those areas requiring innovation. Paodingjieniu newcomers hope, because I wanted to turn themselves through another knockdown Ctrip Ctrip and too difficult, eLong and Expedia have been learned. These new companies have found a lot of Ctrip business processes weakness, and hopes to succeed by attacking its Achilles heel. However prudent, we expect like Baidu and Alibaba as Ctrip new entrants will steal some market share, some of the proceeds to the next line of the line agency Ctrip will grab some market share, third-party data show that the market share grab is already happening. Ctrip will lose the most important sector is the ticket, we believe that due to the standardization of this part of the business to reduce barriers to entry, the breeding ground for a number of low-cost competitors, but because the tickets lowest margins, injury is also smaller. In addition, visitors to the ongoing differentiation Ctrip has good self-positioning - that it is able to capture the ever-changing high-end luxury travel or provide more foreign destinations; but also to keep the share of the major and small cities of travelers. Which is just beginning to use the Internet to travel, you may still want to provide hotline services. This breadth of products is a key reason Ctrip capable of sustainable development. There is no doubt experienced Chinese tourists demand is also growing, the regional tourism and the growing development of non-Asian world tour. Ctrip through its acquisition of EZ Travel and Wing On Travel cater to the needs of these people, to cater to Hong Kong, Macao and Taiwan markets. It is also involved in Around the World in 60 days and other global tour products, such products Pay 500,000 yuan, attracted 30 visitors from Taiwan, Hong Kong and mainland China, the tickets sold out in one day. At the same time, new entrants to the small city travelers have not been ignored, Ctrip is still through the traditional marketing system in crowded transport hub Ctrip issued membership cards to expand the user base. We believe that between 2010 to 2015, Ctrip will achieve 23% annual growth. The reason is that the online travel market is still huge room for development in China. Even in the conservative case, we believe that in 2014 Ctrip online travel market is still able to occupy 38% market share, compared with 44% in 2011 slightly lower. To do this, in marketing would spend more money, and more actively expand its international business, which would make some investors nervous, because that would undermine the profitability of their short-term. Short-term and long-term macro-environment competitive threat, a conservative assessment of Ctrip is necessary. To assess the downside risk Ctrip, Ctrip in 2008 we used weighted data: 20 times price-earnings ratio of 25 times trough and moderate earnings (Ctrip five-year average of 30 times). This produces 21 times earnings in 2012, and the target price of $ 30.87, -7.2% of downside risk. According to today (refer report writing time October 26, 2011) price $ 33.27, according to generally accepted accounting principles of our 2012 EPS estimate of $ 1.47 Ctrip's future is to fine-tune rather than overhaul, like developing and expanding its customer base base. In this evolution, Ctrip will ignore opportunities is natural, but so long as it promptly absorb the latest thinking on the market, all this problem and will not have a material impact.