Ctrip posts big surge in second quarter revenue

Ctrip.com International Ltd, China's largest online travel agency by revenue, posted strong second-quarter earnings in all of its business segments on Tuesday on the back of the growing wanderlust of Chinese tourists traveling abroad.

The Nasdaq-listed company said sales revenue in the quarter ending on June 30 hit 8.7 billion yuan ($1.22 billion), up 19 percent year-on-year. Net profit stood at 1.3 billion yuan in the period, surging 84 percent year-on-year, its earnings report said.

Revenues generated from international business, including services for cross-border travelers in China and users in foreign countries, accounted for more than 35 percent of total revenue.

"We will cover a wider and more in-depth range of travel products and expand our exposure at home and abroad. We are confident and excited about the long-term future for the travel industry domestically and globally," said Ctrip CEO Sun Jie.

"We have seen a much higher growth rate than the industry average. We have further expanded our market share in smaller Chinese cities and our branded low-star hotel room-nights volume increased more than 50 percent year-on-year in the second quarter," she said.

Ctrip said it is bullish about its third quarter numbers and expects revenue growth to range between 10 percent to 15 percent year-on-year.

The combined market share of Ctrip and Qunar, which had been acquired by Ctrip, stood at a dominant 60 percent in the OTA market. Other major industrial players in the sector include Fliggy from the Alibaba Group, Tencent-backed Tongcheng-Elong Holdings Ltd, and Tuniu Corp, said consultancy Frost & Sullivan.

"Chinese online travel agencies boast high gross profits and user stickiness, and industry leaders are becoming stronger with more significant market centralization," said Neil Wang, president of Frost& Sullivan in China.

In the second quarter, Ctrip's accommodation reservation revenue reached 3.4 billion yuan, growing 21 percent year-on-year, as it increased its hotel booking choices. Transportation ticketing revenue also reached 3.4 billion yuan, up 13 percent year-on-year, driven by strong bookings of international flights and an increasing demand in ground transportation.

Packaged tour revenue for the second quarter hit 1.1 billion yuan, jumping 25 percent year-on-year, primarily driven by high demand from brick-and-mortar stores and customized tours, the company said.

Declining costs contributed to the better performance by the company. Ctrip spent 2.1 billion yuan in sales and marketing in the second quarter, accounting for 24 percent of the revenue. That was lower on both a quarter-on-quarter and year-on-year basis, its report said.

Last year, Chinese travelers spent an average of $762 per person abroad, surpassing the $276 average spent by non-Chinese travelers. By 2023, they are expected to spend $1,334 per person a year on overseas trips, the Chinese Academy of Social Sciences said.

Shares of Ctrip closed at $35.11 on the Nasdaq in New York on Monday, up 0.52 percent for the session and its highest finish in three weeks. Its share price had risen nearly 30 percent since the start of the year when it settled at $27.59 on Jan 2.

In late August, Ctrip became the largest shareholder of Indian travel agency MakeMyTrip and controls half of its shares after it swapped deals with Naspers, one of MakeMyTrip's investors.