Author | Zheng Qiao

Editor | Zhou Zhiyu Wang Xiaojuan

The tourism market is about to迎来 a wave of enthusiasm.

With New Year's Day, Spring Festival and other holidays approaching, the tourism industry is entering a busy period again. At the same time, the transit visa exemption policy has also been adjusted, extending the duration of foreign visitors' stay from the original 72 hours and 144 hours to a uniform 240 hours, which undoubtedly adds fuel to the upcoming tourism boom.

Global OTA industry leader Ctrip is also preparing to show its talents. On December 18, at the Global Partners Summit, co-founder and Board Chairman Liang Jianzhang and CEO Sun Jie jointly announced that Ctrip will leverage its global resources and integrated marketing advantages to fully promote inbound tourism to China, supporting the robust development of the tourism industry.

Affected by a series of bullish news, Ctrip is also flourishing in the secondary market. As of the date of publication, Ctrip's Hong Kong stock market cap reached 361.365 billion HKD, ranking seventh among domestic Internet companies listed in Hong Kong. Since the beginning of this year, Ctrip's Hong Kong stock cumulative increase has exceeded 99%, ranking high among the constituents of the Hang Seng TECH Index.

Ctrip's surge is attributed to the gradual recovery of domestic and outbound tourism from a low point, especially as it enters the peak travel season in the third quarter, allowing it, as the leading domestic OTA, to reap considerable profits.

Previously, Ctrip's Earnings Reports showed that in the third quarter, Net income reached 15.9 billion yuan, an increase of 16% year-on-year, and Net income reached 6.8 billion yuan, a year-on-year increase of 47%.

Specifically, Lodging bookings and transportation ticketing are Ctrip's largest sources of revenue, together contributing over 70% of Ctrip's income. Among them, Lodging booking revenue increased by 22% year-on-year to 6.8 billion yuan, while transportation ticketing business saw a year-on-year increase of 5% to 5.7 billion yuan; in terms of growth performance, compared to the rapid growth experienced during the unique circumstances of 2023, the current levels have returned to normal.

However, as the tourism industry gradually returns to normal, the future demand for hotels and travel may not be as strong as anticipated, making it worth discussing where Ctrip's future growth points lie, amounting to 300 billion.

From an Industry perspective, despite Ctrip's dominant position in the OTA sector for many years, it has continued to face fierce competition in the domestic market. Established hotel groups and emerging platforms such as Douyin and Meituan are accelerating their market entry, making it difficult for Ctrip to rest easy.

For OTA platforms like Ctrip, a large portion of Lodging booking business revenue comes from channel fees paid by hotels. Industry insiders have revealed that hotel commission rates can be as high as 15%, far exceeding the airline's 2% commission rate.

On one hand, hotel demand growth is limited. Data service provider STR shows that as of September this year, China’s mainland hotels have seen year-to-date declines in RevPAR (revenue per available room), ADR (average daily rate), and OCC (occupancy rate) of 6%, 4%, and 2%, respectively. OCC has experienced year-on-year declines for three consecutive quarters, and hotels of all grades have not met last year's levels.

On the other hand, large chain hotel groups have been continuously strengthening their membership systems and direct sales channels in recent years, actively reducing reliance on OTAs by expanding scale and increasing chain rates.

Ji Qi, who was a co-founder of Ctrip and is now the founder of H World Group, has repeatedly emphasized the importance of maintaining a balanced relationship with OTAs. To date, 85% of H World Group's hotel rooms are sold through its own APP.

Apart from H World Group, hotel groups such as Jin Jiang and Atour Lifestyle Holdings are also establishing their own membership systems to reduce customer acquisition costs. Data shows that in 2023, the total number of memberships for H World Group exceeded 0.228 billion, while Jin Jiang Group's memberships reached 0.195 billion. The memberships for Shoulu and Atour were 0.151 billion and 63 million, respectively.

For high-end hotels with higher price points, reducing dependence on platforms has become more urgent. Some high-star hotels are forcing consumers to choose their channels by offering different services to customers from various sources. For example, many luxury hotels no longer provide free lounge access, breakfast for two, or upgrades to platinum card members and above who book rooms through third-party channels.

In addition to hotel chains significantly enhancing direct sales, causing Ctrip to lose this commission segment, it is currently also facing a surge in complaints following the increase in orders.

According to data from the Black Cat Complaint platform, as of December 3, 2024, there were 98,979 complaints on the platform regarding "Ctrip," whereas ten days ago, this number was 98,036, indicating an increase of more than 900 complaints in ten days.

At the same time, platforms like Meituan and Douyin are also launching rapid offensives.

Meituan's data shows that in the third quarter of 2024, its in-store hotel and travel business order volume increased by over 50% year-on-year, and the number of active merchants annually reached a new high. In fact, in the second quarter of this year, Meituan's in-store hotel and travel order volume had already increased by over 60%. According to statistics on hotel room nights, Meituan ranks first in the industry and holds over half of the market share.

Wall Street Insights learned that the hotel prices offered by Meituan are relatively low, and the commission it takes is also lower. Meituan's Senior Vice President Chen Liang stated that compared to competitors, Meituan does not charge high commissions to hotels. It is understood that in certain cities, Meituan's hotel commission is only 6%.

Douyin is also an important force in the hotel and travel industry that cannot be overlooked; during this year's National Day holiday, the hotel lodging group purchase order volume on the Douyin lifestyle service platform increased by 205% year-on-year.

Under the watch of the pack of wolves, Trip.com is also looking for new opportunities, with the overseas market and inbound tourism becoming the focus of Trip.com's current bets.

In the first 11 months of this year, inbound tourist arrivals on the Trip.com platform increased by 119% year-on-year; on the Trip.com overseas platform, traffic for "popular China travel routes" increased by over 500% year-on-year; in the third quarter of this year, inbound hotel bookings on Trip.com grew by about 100% year-on-year. However, facing this lucrative inbound tourism opportunity, it also has to be shared with various competitors.

In addition, in the third quarter, Trip.com's overseas business bookings increased by 60% year-on-year. From the current situation, the overseas business is a potential sector for Trip.com to sustain significant growth and is also the focus of major investments in recent years.

The Trip.com management team also mentioned in the Earnings Conference that Trip.com's primary task now is to maximize the synergistic effects of its different brands in the international market, prioritizing direct traffic from mobile applications and cross-selling, thereby continuously improving its own operational efficiency.

Although Trip.com's stock price has shown decent growth this year, to maintain its position as the seventh largest player in the Internet sector, it must effectively counter the attacks from large competitors like Meituan and ByteDance in the domestic tourism market as it returns to normalcy, while also implementing effective measures in the overseas market to rapidly open up new avenues.

Facing the future 3-5 years, Trip.com's goal is to fully lead each business line domestically, becoming the most advanced online travel platform in Asia, as well as the most advanced global online transportation ticketing platform.

However, achieving this grand goal is no easy task. Trip.com needs to continuously improve its service level to attract users to choose the Trip.com platform, while also balancing the interests between partners, thereby making it possible to consistently remain at the top in an industry filled with competitors.