Ctrip Open to Inorganic Growth in Asia
EyeforTravel.com | May 30, 2006
Online travel company Ctrip.com International Ltd. has indicated about its plans to buy companies in Hong Kong, South Korea and across Asia to tap rising spending on international travel by Chinese consumers? (5/30/2006)
If in some markets we find a company that is complementary, a leading player, we're interested in an equity relationship,?James Liang, co-founder of Shanghai-based Ctrip, said in an interview with Bloomberg.
Liang wants to expand Ctrip's business into smaller cities and towns in China. As per the information available, about 70 percent of the company's sales come from Beijing, Shanghai, Guangzhou and Shenzhen, the nation's four most economically developed cities. Liang reportedly added: the next 20 to 30 cities in China are growing faster economically than the three to four biggest cities.?
The report referred to Ctrip's Nasdaq-traded shares surging 70 percent this year as rising incomes spurred tourism spending in China and the company buying a stake in Taiwan's ezTravel Company Ltd. in March. More than 115 million Chinese may travel abroad by 2020, making the nation the world's biggest source of outbound tourists, according to CLSA Asia-Pacific Markets.
Chinese tourism is going to be a big trend,?Frank Shi, an analyst with CLSA in Hong Kong who has an outperform?rating on the shares, said in the same report. Asia is already benefiting from Chinese tourists. Europe will probably be the next wave.?
Earlier this month, sharing its first quarter results, Ctrip.com had stated that it posted total revenues worth US$21 million during the three-month period. The figure represents a 61 percent increase from the same period in 2005 and one percent increase from the fourth quarter of 2005. Net income for the first quarter of 2006 was RMB48 million (US$6 million) on a GAAP basis.
For the second quarter of 2006, Ctrip expects to continue strong year-on-year net revenue growth of approximately 40 percent.
Among major developments, Ctrip.com had entered into an agreement with Google earlier this month. The tie-up will enable Ctrip.com to upgrade search power for hotel information in China. Zou Hongyu, senior manager of Ctrip's marketing department, said the launch of the hotel information service is the first step of its planned cooperation with Google. Zou added that the company will expand the cooperation on information services in other fields such as air ticket booking and holiday destination guide.