Ctrip tops global travel industry in GMV amid tighter margins
Nov 13, 2018 (China Knowledge) - The gross merchandise volume (GMV) of Ctrip.com has increased by 30% from a year ago to USD 101 billion as of this September, overtaking its rivals such as U.S.-based Expedia for the first time to take first place in the global online tourism sector.
For the third quarter, this year, the company posted revenue growth of 15% to USD 1.35 billion compared to USD 1.16 billion during the same period last year. Earnings per share (EPS), however fell by 2% to USD 410 million compared to USD 420 million.
Following the release of its Q3 results, Ctrip.com saw its shares fall by 19% on 8th November and has since fallen by another 8.3% before closing at USD 25.55 yesterday. The fall in share price can likely be attributed to the net loss it of USD 165 million it posted in Q3 due to a USD 382 million loss on investments. In addition, Ctrip also faces some pressure from narrowing margins. Operating margins fell to 16% in Q3 compared to 19% in Q3 last year, signaling that it may be costing the company more to drive revenue.
Despite the upsetting data, the travel company’s business still remains robust with revenue growth across on its segments in the quarter with packaged tours taking the lead, increasing by 31.5%. In addition, Ctrip also has a strong user base for its development. As the travel season approaches China, the company has set-up a one-stop service and is continuing to develop its technological capabilities in artificial intelligence (AI), big data and cloud computing. These capabilities in the long run will help Ctrip with its product innovation in the future.
Taking a look at China’s tourism industry, domestic tourists visited domestic attractions more than 2.8 billion times in the first half of 2018, an YoY increase of 11.4%. The number of inbound and outbound tourists was 141 million, in the same period, increasing by 7%. As the Chinese economy develops and people’s incomes increases, more Chinese people go for travel. China’s growing tourism industry and Ctrip’s relatively strong business operations will likely help it to recoup its investment losses quickly.
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