China’s trade war with the US has left Ctrip – China’s largest online travel agency – out in the cold. It has hit consumer spending on outbound trips and contributed to a $6 billion fall in US-listed Ctrip’s valuation this year, according to Jane Sun,company’s chief executive. “The trade war caught many companies in China by surprise; nobody was really prepared,” Sun told the Financial Times.
The company’s listed Nasdaq shares, which have a stock market valuation of $15.8 billion, fell 19% last month in their biggest one-day drop for five years after the company forecast an operating profit margin of less than 1% for this year — down from 11% last year — because of macroeconomic weakness and higher spending on marketing. “When the stock market is tanking people don’t have the confidence to spend,” said Sun.
Ctrip is hoping to stem the share price fall with boosts in the domestic market. “In the face of slowing economic growth, we expect international trips to be curtailed, and for some of those travel plans to be replaced by trips within China,” said Maggie Rauch, an analyst at Phocuswright, a travel industry consultancy.