After returning to Hong Kong for a second listing, Ctrip brings a new story.
Editor’s note: This article is from the micro-channel public number “deep burning” (ID: shenrancaijing), Author: Dawn, Editor: Wei Jia.
After more than half a year, Ctrip returned to Hong Kong for its second listing, and finally the dust settled. On April 6, according to the information on the official website of the Hong Kong Stock Exchange, Ctrip’s Hong Kong listing was officially approved. Not surprisingly, Ctrip will be officially listed on April 19.
In the impression of many people, the company Ctrip seems to be too old. It was founded in 1999 and belongs to the same era as Internet giants such as Ali, Baidu, Tencent, and NetEase. But unlike these giants, Ctrip ended the war in the online travel industry very early. In 2014, it became a shareholder of Tuniu and invested in Tongcheng. In 2015, it acquired eLong and merged with Qunar. The pattern of “one super, many powerful” was established. Since then, Ctrip has always been the leader of China’s online travel industry.
The eradication of the war also made the industry less waves and less exciting stories. So someone asked, is there any need for Ctrip to innovate? Does it therefore become reluctant to make progress?
In the past few years, Meituan, which is 12 years younger than Ctrip, has risen. It took only a few years to break into the wine travel market from food delivery, and it claimed that the amount of hotel room nights surpassed Ctrip. Some people have begun to question whether Ctrip’s landscape is still stable.
For many large companies, past achievements and experience may be wealth or burden. To maintain youth and combat effectiveness, it must not only rely on accumulation and deep cultivation in history, but also on future innovation and evolution.
Ctrip, which has been listed on the secondary market, has 22 years of accumulation and an absolute leading market share. There is no doubt about this. But the market is more concerned about how much imagination does Ctrip have in the future? What new tricks can you play on the track of online travel?
Standing at the node of the secondary listing, it is time to revalue Ctrip.
Ctrip’s family background
Ctrip’s business is divided into four major areas: transportation, accommodation, vacation, and business travel. Intuitively speaking, through the Ctrip APP, you can book tickets online, book hotels, buy tickets for scenic spots, and you can also travel with groups or business trips and so on. In short, you can almost meet all your travel needs on the Ctrip platform. According to the industry, this is the advantage of a “one-stop travel platform” that can cover almost all travel scenarios.
This “all-round” service model makes Ctrip much larger than its competitors. As early as 2011, Ctrip became the online travel platform with the highest GMV (total merchandise transaction) in China and ranked first for ten consecutive years. In 2018, Ctrip’s GMV surpassed Booking, ranking first in the world for the first time, and maintaining the first position for three consecutive years.
Ctrip’s GMV drawings over the years/Shenran
According to the Analysys report, according to GMV caliber statistics, in 2019, the world’s top 5 travel platforms accounted for 7.0% of the total market share, of which Ctrip accounted for 2.3%, ranking first; under the same caliber, In 2019, China’s top 5 travel platforms accounted for 21.5% of the total market share, of which Ctrip accounted for 13.7%, which is 5.8% higher than the sum of the bottom four.
The core of Ctrip’s various businesses is accommodation booking and transportation ticketing. In the past three years, the proportion of these two businesses in Ctrip’s overall revenue has remained at about 78%. Before the epidemic (2019), these two businesses contributed 13.51 billion yuan and 13.95 billion yuan in revenue to Ctrip, respectively, and they have always maintained high growth, which are regarded as Ctrip’s core competitive barriers.
Ctrip’s revenue structure charting/ Shenlian
Accommodation reservations and transportation ticketing are just needed, but the monetization ability of accommodation is stronger than that of transportation, and the types of services that can be extended are more diverse. Therefore, in the past, Ctrip’s strategy was-“traffic diversion, accommodation monetization”. In the vertical field of accommodation, high-star hotels are the most profitable. Ctrip firmly occupies this most fertile territory.
An industry insider in the hotel industry told Shenzhen Ran that Ctrip has a deep layout in Gaoxing hotels. In the Gaoxing hotel market, users rely on Ctrip the most. Among Ctrip’s hotel room nights, Gaoxing Hotels accounted for more than 50%. In addition, it is not just Gaoxing Hotels. In the entire online travel market, Ctrip’s characteristic is that it has a strong voice in the high-end market.
In the five years from 2015 to 2019, Ctrip’s total revenue increased from 10.9 billion yuan to 35.67 billion yuan, maintaining a growth rate of more than 15%, and its net profit in 2019 was as high as 7 billion yuan.
During the 2020 epidemic, the online travel industry is the hardest hit area, and the major online travel platforms have been miserable online. But from the data point of view, Ctrip’s recovery speed is faster than that of its main competitors.
The revenue growth rate of the three major OTA giants in 2020. Charting/ Shenburn
In the first half of 2020, the revenue of the Big Three has fallen sharply, but starting from the second half of the year, Ctrip’s recovery speed has accelerated significantly. The most obvious is the fourth quarter, Ctrip’s revenue decline narrowed to 40%, but Booking and Expedia revenue fell by 63% and 57%. In addition, Booking and Expedia still lost money in the fourth quarter, while Ctrip has been profitable for two consecutive quarters.
According to the “China Online Travel Industry Report 2020” released by Fastdata, in the first three quarters of 2020, Ctrip’s business recovery rate surpassed Booking and Expedia, ranking first among the top three global OTAs.
As an old giant, he not only has good performance, but also has strong anti-risk ability. It is precisely because of this that Ctrip has been firmly in the position of China’s OTA leader in the past many years, and can go overseas to compete with international giants.
Is Ctrip old?
After the overall situation has been set, compared with other highly competitive emerging industries, the online travel industry appears a bit “static”, which gives the outside world an impression that Ctrip is old.
For example, the share price of Ctrip today has not risen much compared to five years ago, that is, the income of Ctrip has doubled several times. For the capital market, Ctrip needs to inject more fresh blood and new stories.
Looking back now, the epidemic may be a turning point, allowing change to happen.
When the epidemic broke out last year, the performance of major online travel companies directly halted. Ctrip made a move that surprised the outside world. It launched the chairman of the board of directors Liang Jianzhang as a “BOSS live broadcast.”
Liang Jianzhang, born in the 60s, the boss of Ctrip, and also a professor and scholar at Peking University. Under these seemingly “serious” identities, he suddenly used cosplay in the live broadcast room to start live streaming with goods. Liang Jianzhang’s cosplay roles include Tang Bohu, Qin Shihuang, Sea King, etc., as well as more than 10 skills such as “Quite” face change, Rap and Guankou. From March to July last year, he maintained a rhythm of at least one game a week, turning the live broadcast into a reality tour.
Liang Jianzhang’s role in the live broadcast
A Ctrip insider told Shenzhen Ran that the reason Liang Jianzhang worked so hard on live broadcast was not to show the limelight, but to promote the development of the live broadcast business. “It is equivalent to the endorsement of the boss personally, and the supplier and partner will see the boss personally end. Now, the enthusiasm for participation will be higher.”
This has attracted a large number of young people to watch Ctrip’s live broadcast. Ctrip has released data. Among the audience of Ctrip’s live broadcast, the post-80s accounted for 58.4%, and the post-90s accounted for 18.4%. These two types of young people accounted for nearly 80% of the audience.
Age distribution of Ctrip’s live broadcast audience
In fact, the proportion of young users in Ctrip has been increasing year by year in the past few years.
Sun Bo, executive vice president and CMO of Ctrip, revealed that the proportion of new customers under the age of 25 has soared every year. In 2021, more than half of the new customers are under the age of 25. Analysys Qianfan data shows that the post-95s-80s generation of Ctrip platform accounts for 77.7% of the population, and the characteristics of youth and high net worth are obvious.
Young people are the main force of tourism consumption. They are active and have a high consumption frequency, and as their income increases year by year, their spending power has also increased year by year. These high-value users will become the object of competition for major platforms in the future.
Standing at a higher dimension, and looking at the live broadcast business promoted by Ctrip, we will find that live broadcast is actually only a part of Ctrip’s entire content marketing ecosystem. The upgrading of content products and marketing platforms is the bigger story Ctrip is telling.
In the past, Ctrip was a trading platform. Users need to book tickets and hotels, open the Ctrip APP, find the corresponding product, and place an order directly. After placing the order, they will leave. The stay is not long. But now, Ctrip does not want to be just a trading platform, it also wants to be a content platform, or even a travel community. Live broadcast is a form of presentation of content.
In addition to the most well-known BOSS live broadcast, Ctrip has also launched an official sale network that continues every day. In fact, when you open the Ctrip app, there are basically people on the live broadcast at every time period. In addition,Ctrip is still working on the planet number and the Ctrip community. Merchants can use the marketing tools provided by Ctrip to deposit users in their private domain traffic, raise fans on Ctrip, and even build fan groups for precision marketing.
This is very similar to Taobao’s path back then. In the beginning, Taobao was just a trading platform. The platform needed a steady stream of traffic, but the traffic would peak one day. So in 2016, Taobao set community, content, and platform life as the three major directions in the future, trying to move from a shopping platform to a content production platform and consumer community, so that it can revitalize traffic resources and move from content to transaction. Conversion. Taobao live broadcast began to rise at that time.
Taobao live broadcast brings Taobao into its second spring, and Ctrip live broadcast may also allow Ctrip to “germinate new shoots” from the old tree. Of course, it is difficult for Ctrip to go on the same path as others, and this road must be taken by Ctrip itself.
Recognize Ctrip
The epidemic has indeed changed a lot of things. Whether it is the travel needs of users, the entire online travel market, and Ctrip’s business strategy, they can no longer be viewed in the light of the past.
Ctrip is also transforming. At the tourism marketing hub strategy conference held by Ctrip on March 29, Liang Jianzhang said that what Ctrip has to do in the past period and in the future is to do a good job in marketing. Marketing has a lot of content, including traffic, Manage content, product management, etc.
In the past, Ctrip had many advantages. For example, Ctrip had the largest user base, the most high-end travel products, and the most advantageous market share, but these were just traditional advantages. If you want to be the icing on the cake, you need to find new growth points, and you need to innovate and iterate. This matter is difficult, but if done well, Ctrip’s performance and market value will be able to reach a higher level.
So, where might Ctrip’s new growth point come from?
The first is the Ctrip content marketing ecology represented by live broadcast, community, and planet.
Ctrip’s prospectus documents show that in 2020, Ctrip will launch more than 60,000 products through its online live broadcast platform, and Ctrip’s live broadcast + sale channel will achieve a total of more than 5 billion yuan in commodity transactions. More than 40% of users have made at least two transactions on the Ctrip live broadcast platform, realizing the value conversion from content to transaction.
After the content system matures, Ctrip’s revenue structure may also change. In the past, Ctrip’s income was mainly derived from agency commissions, and it may extend to marketing income in the future. According to the Analysys report, the tourism advertising market is expected to grow from 94.6 billion yuan in 2019 to 139.3 billion yuan in 2025. Ctrip, which is now vigorously investing in content ecology, will take a share of this market.
Source / Unsplash
The second is high-quality leisure travel products. The domestic tourism market can be divided into three major segments: business travel, mass leisure travel and quality leisure travel, among which quality leisure travel is represented by high-star hotels and boutique private groups. According to Analysys’ forecasts, quality leisure travel will surpass the mass leisure travel segment in 2024, and its market size will reach 3.8 trillion yuan in 2025.
The quality of leisure travel is the biggest advantage of Ctrip. In the past, Ctrip’s strongest voice in the high-end market, whether it is a high-star hotel, the supply chain of a boutique private group, or a high-net-worth user, Ctrip has a deep moat. The barriers to entry in this area are high and competition The barriers are deep. For example, Meituan’s wine travel business has developed rapidly in the past, but it is only active in the sinking market, and it is not enough to threaten Ctrip in the high-end market.
Data shows that from July to December 2020, the number of Ctrip private group suppliers increased by 50%, and the number of private group products increased by more than 400%.
There are also domestic short-distance tours and local tours. Although many overseas countries are still rolling in the quagmire of the epidemic, the domestic epidemic has basically recovered, and the domestic tourism market is the first to recover. As the industry leader, Ctrip will be the first to benefit from it.
The prospectus documents show that in the fourth quarter of 2020, the GMV of hotels in Ctrip’s province increased by more than 20% year-on-year, and the number of scenic spot ticket bookings increased by more than 100% compared with the same period in 2019. In addition, as of the end of 2020, the number of suppliers of local entertainment has increased by more than 25% year-on-year.
The overseas markets that Ctrip has invested heavily in in the past have not yet recovered, but sooner or later it will usher in the day of recovery. As the only domestic online travel giant with a wide-ranging overseas deployment, these investments will form barriers in the future.
Today, Ctrip has been established for 22 years and has been listed in the United States for 17 years. After the crit of the epidemic last year, Ctrip is no longer the Ctrip before the epidemic. Ctrip’s current market value is 23.3 billion US dollars, which is at a relatively low point in the past few years. At this point in time, how will the market respond to Ctrip in its secondary listing on Hong Kong stocks?