News and Research on Ctrip.com International, Ltd. (CTRP)
Business Description
Ctrip.com International, Ltd. operates as a consolidator of hotel accommodations and air tickets in China. The company aggregates information on hotels and flights and enable its customers to make informed hotel and flight bookings.
The company also sells packaged-tours that include transportation and accommodations. The company principally engages in the provision of travel related services including hotel reservation, air-ticketing, packaged-tour services, and Internet-related advertising and other related services.
The company targets its services primarily at business and leisure travelers in China. The company derives its hotel reservation, air-ticketing and packaged-tour revenues mainly through commissions from hotels (primarily based on the transaction value of the rooms), air tickets and packaged-tour products, respectively, booked through its services.
The company operates as the consolidator of hotel accommodations in China. The company sold approximately 6.8 million hotel room nights in 2006. As of December 31, 2006, the company had room supplier relationships with approximately 4,400 hotels in China and approximately 16,000 hotels abroad, which covers various hotels. The company also operates as the consolidator of air tickets in China. The company sold approximately 6.4 million air tickets in 2006.
The company’s airline ticket suppliers include major Chinese airlines and international airlines that operate flights originating from China. The company maintains a centralized reservation system and ticket fulfillment infrastructure covering its cities, destinations and airports of China. The company offers its services to customers through an advanced transaction and service platform consisting of its centralized toll-free, 24 hour customer service center and bilingual Web sites.
Products and Services
The company offers hotel reservation and air-ticketing services. It primarily operates hotel reservation business and air-ticketing business. In addition, the company offers other products and services, including packaged-tours, bundled by it, that cover hotel, air tickets and transportation.
HOTEL RESERVATIONS: The company acts as agent in its hotel-related transactions. Its customers receive confirmed bookings and pay the hotels directly upon completion of their stays, and in general, it pays no penalty to the hotels if the customers do not check in. The company contracts with hotels for rooms under two agency models, the ‘guaranteed allotment’ model and the ‘on-request’ model.
In addition to the agreements that it enters into with the hotel suppliers, the company enters into a supplemental agreement with each of the hotel suppliers with which it has a guaranteed allotment arrangement. As of December 31, 2006, the company had contracted with approximately 4,400 hotels in China, of which approximately 2,200 hotels have guaranteed room allotments, allowing it to sell rooms to its customers.
AIR-TICKETING: The company operates as a consolidator of air tickets in China. The company sells air tickets for major domestic Chinese airlines, including Air China, China Eastern Airlines, China Southern Airlines and Shanghai Airlines and international airlines operating flights that originate from cities in China, such as United Airlines, Northwest Airlines, Air Canada, DragonAir and Lufthansa.
PACKAGED-TOUR: The company offers independent leisure travelers bundled packaged-tour products, which include both air-ticketing and hotel reservations. Its packaged-tour products cover various domestic and international destinations.
OTHER PRODUCTS AND SERVICES: The company offers travel-related businesses and other third parties the opportunity to advertise on its Web sites. The company sells travel guidebooks, which provide useful information for independent travelers. The company sells VIP membership cards that allow cardholders to enjoy certain priority in obtaining its services and receive discounts from restaurants, clubs and bars in cities in China. The company also offers the membership cards free of charge to its customers who have purchased a certain amount of travel services from it.
Subsidiaries and Variable Interest Entities
The company’s subsidiaries and certain variable interest entities include - Beijing Ctrip International Travel Agency Co., Ltd. (Beijing Ctrip); Shanghai Ctrip Commerce Co., Ltd. (Shanghai Ctrip Commerce); Shanghai Huacheng Southwest Travel Agency Co., Ltd. (Shanghai Huacheng); Guangzhou Ctrip Travel Agency Co., Ltd. (Guangzhou Ctrip); Shanghai Ctrip Charming International Travel Agency Co., Ltd. (Shanghai Ctrip Charming); and Shenzhen Ctrip Travel Agency Co., Ltd. (‘Shenzhen Ctrip’ formerly Shenzhen Shencheng Information Consulting Service Co., Ltd.).
Shanghai Ctrip Commerce: Shanghai Ctrip Commerce is a domestic company incorporated in Shanghai, the PRC. Shanghai Ctrip Commerce holds an Internet content provider (ICP) license and is primarily engaged in the provision of advertising business on the Internet website. As of December 31, 2006, the company holds 100% of the equity interest in Shanghai Ctrip Commerce.
Shanghai Huacheng: Shanghai Huacheng is a domestic company incorporated in Shanghai, the PRC. Shanghai Huacheng holds a domestic travel agency license and an air transport sales agency license and provides domestic tour services and air-ticketing services. Shanghai Ctrip Commerce and a director of the company collectively hold 98.33% of the equity interest in Shanghai Huacheng.
Beijing Ctrip: Beijing Ctrip is a domestic company incorporated in Beijing, the PRC. Beijing Ctrip holds an air transport sales agency license, domestic and cross-border travel agency license and is mainly engaged in the provision of air-ticketing services and packaged tour services. A director of the company and Shanghai Ctrip Commerce collectively hold 100% of the equity interest in Beijing Ctrip.
Guangzhou Ctrip: Guangzhou Ctrip is a domestic company incorporated in Guangzhou, the PRC. Guangzhou Ctrip holds air transport sales agency license and domestic travel agency license and is mainly engaged in the provision of air-ticketing services and packaged tour services. Two senior executives of the company collectively hold 100% of the equity interest in Guangzhou Ctrip.
Shanghai Ctrip Charming: Shanghai Ctrip Charming is a domestic company incorporated in Shanghai, the PRC. Shanghai Ctrip Charming holds domestic and cross-border travel agency licenses, air transport sales agency license and mainly provides domestic and cross-border tour services. Two senior executives of the company collectively control 98.2 % of the equity interest in Shanghai Ctrip Charming.
Shenzhen Ctrip: Shenzhen Ctrip is a domestic company incorporated in Shenzhen, the PRC. Shenzhen Ctrip holds air transport sales agency license and domestic travel agency license and is engaged in the provision of air-ticketing service. Two senior executives of the company collectively hold 100% of the equity interest in Shenzhen Ctrip.
Others: In March 2006, the company formed a new wholly owned subsidiary, C-Travel International Limited, a company with limited liability incorporated in the Cayman Islands, in connection with its investment in a minority stake in ezTravel Co., Ltd., or ezTravel, an online travel service provider in Taiwan that offers both individual and group tours in addition to hotel and airline tickets reservation services.
Suppliers
The company’s hotel suppliers include Home Inns and Hanting. Its advertising suppliers include Focus Media Holding Ltd. and Alibaba -Yahoo China.
Competition
In the hotel consolidation market, the company competes primarily with other consolidators of hotel accommodations, such as eLong, Inc.; controlled by IAC/InterActiveCorp, which owns online travel businesses, including Expedia, Hotels.com, Hotwire and the WWTE private label. In the air-ticketing market, the company competes primarily with other consolidators of air tickets with a multi-province airline ticket sales and fulfillment infrastructure in China, including eLong, Inc. and Mangocity.com, etc.
History
Ctrip.com International, Ltd. was co-founded by James Jianzhang Liang, Min Fan, Neil Nanpeng Shen, and Qi Ji in 1999.
