Online travel bookings boom in China

By Simon Burns on Aug 10, 2007 2:05 PM
Filed under Software

Largest agent now handling five per cent of flights.

China's leading online travel agent, Ctrip.com, reported stronger than expected second quarter results this week, indicating growing interest in online flight, hotel and vacation package bookings in the world's most populous nation. Ctrip's Net revenues jumped 52 per cent year-on-year to US$37.8m.

The company saw strong growth in all its business units, commented Paul Cheung, senior Chinese market analyst with Zacks Equity Research. Ctrip's profit margins recovered due to strong revenue growth and increased commission per ticket sold, he added.

Ctrip's strongest growth was in air ticket sales, which rose 67 per cent over the past year. The company sold about 2.55 million air tickets during the three months from April to June, Ctrip's CFO Jie Sun said. Ctrip is now handling approximately five per cent of all ticket sales by China's airlines, Sun said.

“We expect the third quarter of 2007 to be equally bright for the company, given strong industry growth, a dominant market share position, a smart business model, innovative programs, and an efficient and experienced management team. This combination will help sustain the company's positive trends in sales, earnings, and margins,” said Cheung.

However, the company's forecast of 35 per cent sales growth in the third quarter is slightly below many analysts' earlier estimates.

Ctrip's smaller local rival, eLong, will report its second quarter results next week.

In related news, Japanese online retailer and travel agent, Rakuten, yesterday announced that it is selling its stake in Ctrip for approximately $575m – in part because its own Chinese operation is now large enough to be a competitor to Ctrip. Ctrip executives said they did not expect the sale to have a significant impact on their operations.