Ctrip, China’s largest travel brand, believes that being its own competitor has enabled it to grow to be where it is today.
“Whether it is for a company or person, the most competition should be yourself. You should challenge yourself and go beyond your boundaries. Think about how to challenge yourself and go beyond your boundaries to achieve another level of success in a more efficient way. Only when we can improve ourselves faster than others will we continue our success,” said Jenny Wu, chief strategy officer of Ctrip.
She was a responding to a question on who she considered Ctrip’s competition to be, following its investment in MakeMyTrip – India’s largest online travel company – at the WIT Conference 2016 in Singapore this week.
In a wide-ranging conversation with Yeoh Siew Hoon, Wu shared her vision for Ctrip as it expands its reach beyond its home shores. Here are the main takeaways.
Is the MakeMyTrip-Ibibo merger a typical Ctrip playbook strategy, to take out the competition that’s creating havoc in the market? Just as you did with eLong and Qunar in China?
“I don’t think it is the typical Ctrip playbook strategy but it happened to be like that. We see the India market has great potential with a rising middle class. With huge amounts of capital flying into the India market, the competition in online travel market is so fierce, fiercer than in China. Gradually the smaller players will be out, leaving the two giants standing up.
“So it has become a very obvious trend for the two giants to make a truce, put irrational competition aside and now refocus their energy on the real business and to think about how to improve products, efficiency, and service for customers. So I think this is definitely a milestone for the India market.”
Jenny Wu: Whether it is for a company or person, the most competition should be yourself.
On Ctrip’s performance this year
The year so far seems to have been good for Ctrip. In its unaudited second quarter 2016 results, net revenues totaled RMB4.4B (US$664M), +75% year on year.
“We’re seeing very strong growth thus far. The hotel grew over 60%, air ticketing and transportation grew over 90%, package tours grew 44% and even corporate travel (TNCs) grew 22%.”
Share of online transactions
“In 2014 online transactions accounted for 10% to 15% total transactions in the travel category in China. We expect online penetration to grow to about 20% in next four to five years.”
Bringing offline online
This week, Ctrip took a controlling interest in Chongqing-based Overseas Tourist Group, operator of online and mobile travel booking platform Traveling Bestone. Ctrip and Traveling Bestone will fully partner on vacation travel services, and Ctrip will gain access to more than 5,000 offline storefronts located in second- and third-tier mainland Chinese cities. Ctrip and Traveling Bestone will also partner on product development, resource purchasing, sales channels, and travel consultant cultivation.
“The key to crack the online segment is to bring the offline online. It will help speed up penetration in lower tier cities.
“My belief is that to be a pure online company is not enough. We should go deeper into offline to have first hand experience with customers especially as it will be an effective strategy, approach for us to get a hold of the lower tier cities.
“Among all the traditional and offline guys, they are some of the best in adopting mobile apps and mobile functions. These facilitate offline stores to communicate and update information promptly… so we very much like the online-offline combination. On top of that, [many] of the stores they have are largely located in second and third tier cities. The online penetration here is even lower and it has very high potential.
“I believe we should go deeper into offline… it could be an effective approach to get a hold of lower tier cities that Ctrip doesn’t have a strong relationship with yet.”
Plans to be a one-stop travel platform
“Ctrip is very much alert and sensitive to industry change. We can stay very updated on new trends and new demands. Once we identify something good and identify some verticals, we will make the move immediately, first of all internally and then give authority to the business dealers.
“We’re looking at new things such as using messaging like WeChat for its social size. It’s become a very important channel for us to sell our products, as well as to have an interaction with our customers. As for payment, since day one we’ve been engaged in building our own e-payment system and we’re working with a variety of payment solutions.”
Future investments and approach to startups
“We are very open and as I mentioned, we look very closely at market change and industry change and whenever we see a good candidate, we will go for it.
“Technology is a pillar of the company’s growth so we very much emphasise technology and innovation. Our philosophy for the company is we invest in a company after careful selection. Once acquired we will help it to grow.”