Ctrip Profit Soars Tenfold as Discounts, Deals Fuel Revenueby and
Net income climbs as more Chinese travelers book trips online
Deal with Qunar eases competitive pressure faced by Ctrip
Ctrip.com International Ltd. profit soared almost tenfold last year as the China-based online travel-booker’s alliances and discount policies drew more customers and raised revenue.
Net income attributable to shareholders soared to 2.5 billion yuan ($387 million) in 2015, compared with 243 million yuan in the previous year, the Shanghai-based company said Wednesday in a statement. Sales rose 48 percent to 10.9 billion yuan.
Ctrip is offering discounts and allying with rivals amid intensifying competition. The company has joined in a Baidu Inc.-backed share-swap deal with rival Qunar Cayman Islands Ltd., giving the two companies an estimated 80 percent of the Chinese hotel and air ticket markets. The company has also purchased a majority stake in Elong Inc., an online trip-booking service.
“After the consolidation with Qunar, competition in the online travel market has become much more reasonable,” Marie Sun, a Shenzhen-based analyst at Morningstar Investment Service, said by phone. “China’s online travel market is still a very fast growing sector.”
Net revenue growth will probably increase 75 percent to 80 percent in the first quarter, reflecting the consolidation of Qunar’s financial results, according to the statement.
“We expect Ctrip’s investment in other industry players last year to help improve services and products to better serve Chinese travelers,” James Liang, chief executive officer, said in the statement.
Net income was 76 million yuan in the fourth quarter, compared with a net loss of 224 million yuan a year earlier, Ctrip said. Gross margin gained to 73 percent in the period compared with 69 percent a year earlier.
Sales and marketing expenses rose 20 percent in the fourth quarter, a slower pace than the 39 percent gain for 2015, the company said.