Ctrip.com: China’s largest and all-round Online Travel Agent (OTA)
Founded in 1999, Ctrip.com is the largest provider of online travel services which includes services like – accommodation, reservation, transportation, ticketing, packaged tours, corporate travel management, etc…
It is an aggregator of hotel and flight information, which helps the leisure and business travelers to make the most informed and cost-effective bookings. Basically, by helping travelers plan and book their trips, and helping travel suppliers (such as hotels and airlines) connect with the people who are in need of their service, Ctrip helps in bridging the gap between the two.
The company, through its partnerships and tie-ups, helps its customers to choose and reserve hotel rooms, book and purchase transportation tickets for flights or trains, choose and reserve packaged tours including transportation and accommodations, etc.
They have partnered with almost all the well-known companies to provide its customers with the leverage of availing all kinds of ticket bookings – Air, Water and Ground. While at it they also offer guided tours and other value-added services in many instances as well.
Additionally, Ctrip also offers corporate travel management services to enable the corporate clients to effectively manage their travel requirements too.
All their travel-related destination services come with a complete package including car rental, visa services, insurance, attraction tickets, ground transportation, etc…
You can also be sure to avail other related service such as aviation and train insurance, ticket delivery, online check-in, etc., along with other value-added services like online seat selection, flight dynamics, and many more as well.
All these services are offered through an advanced transaction and service platform which consists of a 24-hour toll-free and centralized customer service center, mobile apps and websites (bilingual). They also offer various payment options such as COD, online, etc.
To sum it up – Ctrip is an all-round Online Travel Agent (OTA)!
Although, the company performs its business across all of China and the world, but it has headquarters located in Shanghai, and other than that, it also has offline branches in 17 other major cities across in China including Hong Kong, Beijing, Chengdu, Guangzhou, Shenzhen, etc as well.
What Market Segment Are They Targeting & What Business Strategies Have They Adopted?
To begin with – not many are aware that, a big reason for Ctrip’s success is because of its smart business model. It runs a commission based model, wherein, most of its revenues are generated via commissions earned on the sales of hotels reservations, air ticketing, package tour products, and other products and services.
That’s because, unlike anyone else, Ctrip has created and maintained a scalable and profitable business platform that provides them with an upper edge while operating in the market. Additionally, on the other end, since they have managed to establish partnerships with more than 5,600 hotels around the world, and have also survived to develop the largest air ticket sale network in China, Ctrip is able to offer its customers with free air tickets through their extensive and effective distribution system.
Other than that, more than 95% of its hotel bookings revenue coming from star-rated hotels, and these hotels offer higher commissions. Due to which, Ctrip holds a solid competitive advantage in the market.
Overall, the company has partnerships with almost every company that surround Ctrip’s offerings including any travel-related companies, global travel, visa services-related, and all other companies such as: – China Tour, Chongqing Expat Club, NewChinaCareer.com, ForeignerCN.com, etc…
These associations or partnerships also include various strategic alliances with various companies, such as – Taiwan-based ezTravel, NASDAQ-listed Home Inns, BTC-Jianguo Hotels and Resorts, NASDAQ-listed China Lodging, Priceline, Royal Caribbean Cruises Ltd, etc…
Because of such strategies, the company is also able to easily offer a variety of travel choices to their customers.
Now, Ctrip mainly targets the Frequent Independent Travelers (FIT) segment, who do not prefer the traditional tour-group focused travels. This is a segment that has been ignored since long, and holds immense potential.
Additionally, Ctrip also has a considerable amount of focus on their Corporate Travel Management Business Unit which greatly helps corporates to effectively manage their travel needs and to significantly reduce travel expenses.
Beyond that, Ctrip also offers the corporates various travel data collection and analysis, cost saving analysis and travel management solutions as well. A tool developed by them called – ‘Corporate Travel Management Systems,’ helps the companies in integrating information maintenance, online booking, online authorization, online enquiry and travel report system.
Moving on! Ctrip is also widely known within the industry to be a promoter of scientific management to operate the business by using rigorous data analysis in managerial decision making. And there are many examples and instances of them, to prove the success of such analytical decisions as well. These actions of Ctrip have greatly helped them in cutting costs, understanding and reaching out their customers in a better way, and reaching the desired position.
What Marketing & Brand Awareness Strategies Have They Adopted?
Ctrip uses all streams to market and promote itself. Be it – main stream media, on-site promotions, cross-marketing, online marketing, advertising, or their customer reward program, they have successfully created a strong Ctrip brand that people commonly associate to.
Their marketing and promotions are mainly focused towards creating a Brand and spreading more awareness about them. As of date, their major strategies include: -
- Main Stream Advertising: Their research says that, this is the most effective way to increase brand awareness and attract new customers. Hence, Ctrip has partnered with mostly all the top-tier newspapers, radio broadcasting and traffic hubs to advertise their brand.
- On-Site Promotions: with a presence of on-site promotion staff in more than 45 major cities, they promote their brand by distributing membership cards and introductory brochures at various locations.
- Cross Marketing: Ctrip has entered into cross-marketing relationships with major Chinese domestic airlines, telecommunications service providers, financial institutions, and various other corporations. They also run a link sharing program with several businesses to cross promote each other.
- Online Marketing: Again, Ctrip has tied up with various Internet search engines and portals and paid them to prominently feature their websites.
- Customer Reward Program: To reward the customers for their loyalty and also to further promote their brand, Ctrip offers a customer reward program, wherein, customers are given membership points on the basis of the services purchased by them, which can be redeemed later.
Who Leads The Brand?
Ctrip was cofounded by James Jianzhang Liang, Min Fan, Neil Shen and Ji Qi in 1999. Today, only James and Min directly manage a management team including – Jane Jie Sun (Co-president and COO), Jenny Wenjie Wu (Chief Strategy Officer), Cindy Xiaofan Wang (Chief Financial Officer), etc., who then collectively manage a total staffing of 30,000 employees globally.
James Jianzhang Liang – Cofounder, CEO and Chairman of the Board
James Jianzhang Liang who began as one of the co-founders of Ctrip, served as the CEO 2000 to 2006, and had later, again resumed that role in 2013. He is also the Chairman of the Board, since the time the board was formed in 2003.
Other than these, currently he also serves on the boards of Home Inns Group, Tuniu and eHi, and also serves as an Independent Director of Jiayuan.com International Ltd.
Before he decided to start his own venture, James had worked for Oracle Corporation for various technical and managerial positions including being the ‘Head of ERP Consulting Division’ from 1991 to 1999 in the United States as well as China.
James is also a registered member of ‘Institute of Management Accountants’ and ‘National Association of Manufacturers’ as well.
Talking about his qualifications – James has completed his Master’s and Bachelor’s degrees from the Georgia Institute of Technology, and also holds a Ph.D. from Stanford University in Economics. He had also attended an Under-Graduate Program at Fudan University as well.
Lastly, he has also served as a Guest Researcher and professor at various institutions such as National School of Development, Peking University, Guanghua School of Management, Peking University, etc…
Min Fan – Co-founder, President and Vice Chairman of the Board
Min Fan is one of the cofounders of Ctrip, currently serves as the President of the firm. He had also served as the CEO after James left the position in 2006 till 2013, post which, James took over the position again. Min was also the Executive Vice President from 2000 to November 2004, and currently also acts as the Vice Chairman of the board since March 2013.
Other than that, he is also on the Board of Directors of China Lodging Group Limited as well.
Before founding Ctrip, Min had worked with Shanghai Travel Service Company (a leading domestic travel agency in China) as a CEO from 1997 to 2000, and Shanghai New Asia Hotel Management Company (leading hotel management companies in China) as a Deputy General Manager (and several other Senior Positions) from 1990 to 1997.
Lastly talking about his qualifications – Min has completed his Master’s and Bachelor’s degrees from Shanghai Jiao Tong University, and has also studied at the Lausanne Hotel Management School of Switzerland.
How Has Their Growth Been So Far?
Ctrip.com that is owned and operated by Ctrip Computer Technology was incorporated in the Cayman Islands in 1999. It was founded by James Liang, Neil Shen, Min Fan, and Ji Qi.
Due to its remarkable business model and strategies, the company managed to gain substantial growth since its inception. In just 4 years, the company grew so big that it got itself listed on NASDAQ Stock Exchange in 2003 in a Merrill Lynch-led offering as well.
Their demand was so much that by 2006, about 70% of their sales were coming from just four cities of China i.e. Beijing, Guangzhou, Shanghai, and Shenzhen. Other than that, 57% of their total revenues came from hotel reservations, 36% was from Air ticketing, while services like package tours, other products and services, advertising services and sales of VIP membership cards, accounted for only 6% of total 2006 revenues.
In the next six years i.e. 2012, Ctrip had also invested in several companies like – ‘ezTravel’ in Taiwan and ‘Wing On Travel’ in Hong Kong, and had also expanded their service coverage to Taiwan, Hong Kong, Macau and various other destinations throughout Asia as well.
In the same year, they also formed a partnership with a commercial agreement with ‘Booking.com’, which leveraged Ctrip to access Booking.com’s global portfolio. Post that, to expand its services to North America as well, Ctrip then invested in ‘ToursForFun.com’ in 2014.
By now, the gross transaction value of the company had reached to $24.5 Bn, while their total commission revenues had reached to $1.3 Bn. At this point; they were closing more than 1 Mn transactions per day.
Talking about last year i.e. 2015, the market capitalisation of Ctrip had grown by more than 30 times since its listing on the NASDAQ Stock Exchange in 2003.
In the same year, they also made deal with Priceline Group for investment of $500 Mn, and also announced a deal for a stock equity exchange with Baidu (Search Engine of China). Under this deal, Ctrip received 45% shares of Qunar that Baidu was holding, in against for 25% of Ctrip’s shares. Thus led to the merger of Qunar into Ctrip! This also made Ctrip the largest company in China.
And with that, Ctrip and Qunar collectively are said estimated to account for 70-80 % of the market share of China.
Ctrip is now valued at more than $10 Bn, and has also began expansion into the Indian Territory. It has invested $180 Mn in MakeMyTrip (OTA based in India), in against for 26.6% of its existing shareholding.
Over the period of time, Ctrip has also made a few investments and acquisitions which include – Suanya (acquired for $16 Mn in 2015), Travelfusion (acquired for $160 Mn in 2015), ToursForFun (acquired for $100 Mn in 2014), Tujia (Invested $300 Mn & $100 Mn in 2015 & 2014), LY.com (Invested $200 Mn in 2014), and Yidao Yongche (Invested $60 Mn in 2013)
Other than that, Ctrip now accounts for more than 1 billion of app downloads, holds a hotel reservation network of around 1,000,000 hotels in 200 countries, has air ticketing products that cover more than 5,000 cities in six continents, and has also transformed into the largest consolidator in terms of the volume of the transactions in China.