[photopress:travel_Ctrip.jpg,full,alignright]In China CTrip.com has the business travel business well under control. Think Orbitz or Expedia except for the fact that CTRP is effectively a monopoly. Bear Stearns estimates that the company holds a 57% market share of the Chinese online travel market and it has been growing.
The company’s future growth prospects remain bright because the online travel market itself in China is expected to grow at a 37% rate through 2010.
However, there is still the problem of the reluctance of the Chinese to use credit cards for booking on the Internet. And, in truth, China is just getting used to the idea of online travel booking. So the prospects for long term gorwth are pleasing.
Look at it another way. Bear Stearns estimates that the company only accounted for 2.7% of total hotel bookings in 2005, and 4% of total airline tickets in 2006. Take a medium term view abd by 2010 those figures will be around the 10% mark with plenty of room for growth.
Yes, the are other players in the market by at the moment it is CTrip right out there in front. This in the context of a robustly growing overall industry. Some of the major airlines have created their own online offering platforms, but at this point they have not been able to reach critical mass in order to effectively compete against CTRP. Nor, in truth is that likely for it takes a while for airlines to build up the infrastructure regarding total packages that are needed.
Citigroup notes that after Q2, management guided analysts to model 35% growth for Q3 but instead delivered 55% growth.
A look at industry trends shows that while hotel bookings are a strong cash flow driver for the company (and this business is expected to continue to grow), the primary growth engines will likely revolve around air ticketing and packaged tours. CTRP looks set on a winner.
Source: Seeking Alpha