What Segments Will Contribute to Ctrip.com’s Future Growth?
Ctrip.com Had a Historic 2015: Can It Grow More in 2016?
Hotel reservation
Hotel’s form a significant part of Ctrip.com’s revenue—40% in 2015. It’s similar to other OTA players such as Priceline (PCLN), Expedia (EXPE), and TripAdvisor (TRIP). For 4Q15, the hotel revenue grew by 41% to $183 million. For fiscal 2015, the revenue grew by 44% to $713 million.
This has been achieved due to the high volume growth. Although management didn’t provide 4Q15 volume numbers, the volumes grew by 55% in the first three quarters of 2015.
Transportation
Transportation revenue forms 39% of Ctrip.com’s 2015 revenue. For 4Q15, the revenue grew by 61% to $192 million. It displaced packaged tours as the company’s fastest-growing segment. This followed strong volume growth. The transportation volume grew by 143% in 4Q15. This was higher than management’s expectation.
For fiscal 2015, the transportation revenue grew by 51% to $688 million. The average volume growth for 2015 was 126%. It was higher than the 2014 volume growth of 90%. This also means that the realization per transaction is quite low.
Packaged tours
Packaged tours formed ~14% of Ctrip.com’s 2015 revenue. For 4Q15, the segment’s revenue grew by 50% to $54 million. For fiscal 2015, the segment’s revenue grew by 78% to $257 million. It was Ctrip.com’s fastest-growing segment for fiscal 2015.
Corporate travel
Corporate travel forms 4% of Ctrip.com’s 2015 revenue. It grew by ~26% in 4Q15 to $21 million. It grew by 27% for fiscal 2015 to $73 million.
Ctrip.com’s future growth
The transportation segment is expected to contribute the maximum share to Ctrip.com’s future growth. It’s mainly driven by increased train volumes. For 1Q16, it’s expected to grow by 100%–110% YoY (year-over-year). Hotel revenue should grow by 70%–80% YoY. Packaged tours should grow by 40%–50% YoY.
International travel is expected to grow at higher rates. It will contribute to the hotel and transportation segment. According to James Liang, Ctrip.com’s CEO, China’s outbound travelers only form 10% of the total population. This number is much lower than the US and South Korea. Also, the per capita income is at $8,000. Historically, outbound travel is known to grow beyond this point.
Ctrip.com is targeting long-term revenue growth of 30% the compound annual growth rate with gross marketing value of $185 billion–$216 billion by 2020—compared to $54 billion in 2015.
Ctrip.com is the largest holding of the Golden Dragon Halter USX China ETF (PGJ). It accounts for 5.6% of PGJ’s portfolio.
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