Ctrip face crisis: the online travel market is facing new turmoil
Online travel industry for nearly two years to establish the fragile order is on the line. Giant mass loss means the arrival of even more brutal competition, OTA platform breaks down the line the vagueness of the hotel’s pricing system and mode of cooperation, traditional travel suppliers regain their right to speak in the platform game, and eventually formed the new pattern still takes a long time.
As one of the most important pole of ctrip next trend, effects on the pattern change speaks for itself.
Previously, ctrip in the third-quarter earnings release conference call disclosed that four quarters listed for the first time in 11 years losses for the company, the losses amounted to between 400 million and 500 million Yuan. Ctrip CEO James Liang says in the fourth quarter, on a large scale promotion, marketing costs were reserved, so the forecast could face massive losses.
Will take place between the CEO Wei Changren believes that, in order to expand market share, and ctrip all aspects of investment and basic peer competitor, the loss is inevitable, ctrip expected losses, are passive defensive strategy and want to continue to lead the competition. But once lost, seen from the competition now is forecast for the future scale of a year or two it will be difficult to achieve a profit.
Ctrip is mired in losses, concerns will lead to capital markets? In response, James Liang has been expressed to Tencent technology, capital market for Internet companies in terms of market share and more rational analysis on short-term profits, many loss-making companies have access to the higher valuation.
However, compared with the December 1, ctrip’s current share price $ 45.12, market capitalization of 6.167 billion dollars, has dropped around 16%.
“Where is the ‘ bare feet are not afraid of wearing shoes ‘, ctrip, profits were down another notch, also need response from the market, when the market has fully adjusted, if c can still prove their high growth, the value, then the market will be revalued. “A longtime concern tourism foreign fund managers tell Tencent technology. Where previous long-term losses, share prices have been hovering at 30 yuan, market clearly enough about where patterns have expectations and judgment.
Price war is an act of frustration?
Ctrip and where to go this month said it would launch more fierce “price war.” James Liang says ctrip will produce 1 billion price competition, the introduction of different grades and zero profits in the field of tourism products, where nets CEO Zhuang Chenchao (microblogging) said that where not afraid of fighting a price war and protracted competition.
Zhuang Chenchao view, where competitive advantage is cost, “such as ctrip per 100 dollars income transaction cost is four bucks, where network underpinning the transaction cost is a dollar. For our part, pricing two dollars we’re profitable, and competitive pricing to three dollars or loss. ”
However, from where the current focus on force hotel direct sales business, responsible for market development team has reached thousands of people at IBM‘s destination, where there is an urgent need to find effective passenger flow to support big-budget hotel “direct” system’s operation.
It is understood that where in recent days in addition to stars ‘ marketing in cooperation with Liu yan and Tong Dawei, also through the “thousand dollar package” activity to drive room nights through Commission-free strategies to encourage hotels directly at the front door, as well as through ctrip, elong website user traffic such as, the United States Mission.
Ctrip responded quickly, adjust the prices of a lot of high-star hotel on the list page displayed, hotels are displayed directly on the tax after the price paid price, ctrip’s aim was clearly to give the ctrip price more competitive, noteworthy is that ctrip had previously announced the launch of hotel prices in areas such as products, to expand the scale of online hotel reservations.
Some analysts believe that ctrip hotel revenue falling in the long-term price war, displays the new strategy introduced the ctrip hotel rates, hope side to prompted direct sales and price pressure control system was blown high-star hotel OTA and where cash back, slowing their competitive pressures.
As early as this year’s national day holiday, China live, such as home, Jinjiang Inn, puddings and other major hotel chains have teamed up to put pressure on ctrip, where, to halt its cash back promotions on the site.
Cheap hotels at the following threat to halt “cash back” from the “cash back” break a budget hotels price system and eroding the membership interests and profits. By returning now, OTA provided the purchase price will be far more favorable to the hotels directly to their membership prices, result in members losing into OTA user, cheap hotels would provide OTA in the future an increasing number of commissions, depress their profits.
However, the hotel chains online and offline direct marketing channels the number of room nights sold usually in the distribution ratio of 80%-90%,OTA only at 10%, for more independent hotels and high-star hotel, OTA is mastered more power.
Pricing as competitors challenge ctrip’s main rival, from the perspective of ctrip, apparently high-star hotels you want to control third party channel cash back, to maintain their competitive advantage.
How to fight worry
The news that, although James Liang says ctrip will produce 1 billion price competition, but the huge deficit in the fourth quarter put big pressure on ctrip. Ctrip have been commissions remain the same for cases requiring hotels to lower selling prices in order to ensure their own profits in a price war,
In a sense, ctrip from traditional call center models to accelerate transition to a mobile Internet, was doomed by a loss of pressure will gradually increase. The reason is that in addition to the original twenty thousand or thirty thousand employees, including call center leads personnel costs, ctrip online booking ratio than larger cash back pressure, price wars and market investment loss caused by larger, also faced a number of operational and combat stress.
Ctrip faces challenges from three aspects. From build a station type of tourism and travel service view, ctrip of positive competition opponents is Baidu its to where; from subdivision of business field view, front too long of ctrip faced from Alibaba its of to Ah, and poor tour network, art Dragon network, and with drive network and donkey mother, and taxi application, various vertical APP of competition; original market also faced hotels and airlines of direct platform, and independent tourism class APP, and beauty mission and mass reviews, local life service application of erosion.
Near two years, ctrip investment range covers short rent, and hotels, and tourism, and community, and travels, and leisure holiday, and car rental, and cruise, tourism travel ecological chain Shang downstream field, but, due to each competition opponents in subdivision field more focused, concentrated advantage resources, in tickets, and hotels, and tickets, and taxi car rental, and destinations travel, field and ctrip fierce confrontation, ctrip had to more line combat, and dispersed resources and energy.
In each segment, and c If you want to continue to maintain investments and acquisitions and high investment in marketing, price wars, and next will face greater financial and competitive pressures.
Certainly, to where also faced with similar of situation, with to where increased in TTS and direct field of inputs, and ctrip also constantly advance open platform of expansion, two home company of business and mode increasingly close, both competition also constantly intensified, to where this year maintained has development, and sales and the market promotion fee Shang of high inputs, also led to has to where today serious of losses situation.
Noteworthy is that the process and the way the bull in leisure and tourism market competition intensified, ctrip, have stakes in both companies, but is not the controlling shareholder, while in their own market share impact, how to handle the friction produced by investing in different companies, to better integrate the same ctrip is facing the challenge.
James Liang previously accept Tencent technology interview Shi, talked about has ctrip in investment external company Shi used “voted small unit” way of views, he said, in needs two home company team technology completely fusion Shi needs with holding way, if is relative independent business line, voted small unit also can keep company of independent initiative and innovation active degrees, compared to completely no capital relationship both cooperation effect will good many, like and way home, and easy road of cooperation, can to customer better of experience.