Ctrip.com Boosts Global Drive With Name Change to Trip.com
China’s leading online travel site operator has proposed changing its name from the current Ctrip.com to Trip.com, reflecting its ambitions to become more active in a global market where it is already competing directly with international players like Expedia and Priceline.
Ctrip.com International Ltd. disclosed the plan in its second-quarter results announcement that showed slowing revenue growth as its core China-based business faces growing competition from strongly-backed rivals including Meituan Dianping, China’s leading online-to-offline services provider, and Fliggy, which is owned by e-commerce giant Alibaba.
Trip.com is Ctrip’s main portal targeting travelers based outside of China, offering services to more than 20 markets. It also owns the online travel search site Skyscanner, which it bought in 2016 for up to 1.4 billion pounds ($1.7 billion).
“The new name reflects the services and products we provide, and can be easily remembered by global users,” said Ctrip Chairman James Liang, speaking of the proposed name change. “In October, we will celebrate the 20th anniversary. Over the next decade, we will strive to become one of the most innovative and respected companies in the global travel industry.”
Ctrip’s international revenue, which includes purchases from both outbound Chinese tourists and overseas-based tourists using Trip.com and Skyscanner, now accounts for over 35% of Ctrip’s total revenue, said CEO Jane Sun on a conference call to discuss the company’s results, including the name change and international push. Chinese outbound travel accounts for the majority of that, between 20% and 25%, while Trip.com and Skyscanner provide the remainder, she said.
“We expect this to become 40% to 50% in the next three-to-five full years,” she said on the call, referring to the total international revenue contribution.
Despite Ctrip’s big hopes for the international market, its international sales are still a highly money-losing operation. The company lost about 2.7 billion yuan ($379 million) before income tax expenses from its foreign components in 2018, which includes its interests in overseas entities, according to its latest annual report. By comparison its older domestic business posted a pre-tax profit of about 4.7 billion yuan last year.
The company is already profitable in Hong Kong, where it has a longer operating history, and is close to breaking even in other nearby markets like South Korea and the Japan, according to Sun. “But again, for the Trip.com, we are still in the very early stage of expanding our market share in (the) outside world,” she said. “So, we are still expecting some investment in the — not only the marketing, but more importantly, in the product development side to make sure that we have the best product to serve the local market.”
Ctrip announced the name change and discussed its international expansion as China’s slowing economy and competition create a drag on its overall revenue, which has slowed gradually through the year. Its revenue grew 19% in the second quarter to 8.7 billion yuan, and it forecast that growth rate would drop to between 10% and 15% in the third quarter. Both levels are below the 21% growth that Ctrip reported in the first quarter of this year.
The company posted a net loss in the second quarter due to investments unrelated to its core business. But its operating profit, which reflects just the performance of its core operations, grew 84% to 1.3 billion yuan.
Contact reporter Yang Ge (email@example.com; Twitter: @youngchinabiz)
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