Ctrip used its fourth-quarter results to announce that it now had over 7,000 franchised offline stores in over 200 cities in China.
The growth was part of the group’s strategy of expanding into lower-tier cities, which has also seen it add localised products and services.
CEO Jane Sun told analysts: “We have continued to make strides in expanding into the lower-tier cities through localised products and service offerings, as well as launching targeted marketing initiatives in the cities with the biggest growth potential due to rapid urbanisation. With an increasing mix of new customers from lower-tier cities, we saw a consistent positive ROI for our customer acquisition investment. Increases in average spending per customer saw similar growth across various city tiers, as we gradually improve to customer engagement and increased wallet share.”
The group added that its user base was getting younger, with customers under the age of 30 making up 50% of users, up from one-third in 2013.
During the year the company launched Trip Moments, which allows users to share content such as short videos about destination on the platform, which Sun said should help the group increase user engagement.
Ctrip highlighted its international expansion, with revenue generated from the international business making up 30% to 35% of the group-level total revenue in the fourth quarter. Sun added: “Such strong volume growth allows us to strengthen our industry position and gain price competitiveness, particularly in regions where Chinese are most frequently travel to. This has allowed us to quickly build a good foundation for our international business. Skyscanner has sustained monthly active users growth in the middle 20s over the past quarter. Direct bookings has increased by about 200% year-over-year for Skyscanner.”
For the full-year ended December 31, 2018, accommodation reservation revenue was CHY11.6bn (EUR1.5bn), representing a 21% increase from 2017. In the fourth quarter, room nights in the low-end hotel segment maintained a year-on-year growth rate of over 50% for the Ctrip brand,
In the mid to high-end hotel segment, the company said it had continued to gain market share by doubling the industry growth rate.
For the full year net revenue was up 16% on the year to CHY31bn. For the first quarter of this year, the company forecast net revenue growth of between 18% and 23%.
At Amadeus, the company continued to work ever-deeper in the hotel sector, commenting that it remained focused on delivering its PMS to Premier Inn and confirming that it had completed the roll-out of the Guest Reservation System with InterContinental Hotels Group. It said: “Going forward, there will be future updates to the platform bringing enhanced features and functionality, including attribute-based selling.”
The company reported a 6.6% increase in revenue to EUR4.94bn, with Ebitda up 9.7% to EUR2.04m.
Outside hotels, business was a little more choppy, with Luis Camino, president & CEO, Amadeus, telling analysts: “Although travel agencies’ air bookings industry grew 2.9% globally last year, during the fourth quarter the pace of expansion of the industry was notably slower (1.1% compared to 3.5% for the first nine months of the year). This deceleration was consistent across all regions, and in particular in Western Europe, where macroeconomic volatility, the bankruptcy of one airline and the evolving distribution strategies adopted by some airlines in the region continued to weigh on growth.
“We have continued to lose share in Western Europe in line with the previous quarters in the midsize online travel agency segments. This has translated into a slight reduction of our global share in the year by 0.2 percentage points.”
HA Perspective [by Katherine Doggrell]: So Ctrip is doing a reverse TripAdvisor and adding content, building a community and all those sticky shenanigans after having created a successful profitable product. Ctrip is also doing a reverse travel agency, by popping up in actual locations and creating all sorts of brand loyalty that way.
One can almost imagine a new home for TripAdvisor, finally justifying the platform’s share price, which was surely kept up on the hope that the platform would eventually be sold. But Ctrip is still only experimenting with its international expansion, through Skyscanner, which features no exotic content, but delivers what everyone wants, in the form of cheap flights.
Amadeus, meanwhile, is trying to help hotels to offer customers increased choice, as illustrated by the new IHG system, which will allow guests to choose their own rooms and hotels to yield manage more effectively. The hope on the part of the operators is that this will then cut their reliance on OTAs of the likes of Ctrip. Once the China-based OTA stops toying with its international expansion and makes a definite move, the question for the operators will be whether they keep this added functionality to themselves or allow Ctrip – with its dominance of China and its outbound tourists access too.