This story is part of our Digital Deep Dive series, which we worked on with our friends over at Hylink Digital. The rapid rise of the outbound Chinese travel market has brought with it a host of digital platforms and services. Learning who these companies are, and how they operate in the Chinese tourism space is becoming more important all the time for destination marketing organizations and non-Chinese travel companies.
Ctrip is arguably the most important company, and most certainly the most important private company, in the world of Chinese outbound travel. While there is a myriad of on and offline travel companies, few have been able to consolidate themselves as effectively in their respective sectors as Ctrip.
Much of this has held true with the explosive growth of both domestic and outbound Chinese travel. But given that less than 10 percent of Chinese citizens hold passports, it’s safe to assume that the Chinese outbound travel market will continue to grow at a brisk pace. This makes it likely that Ctrip’s relative importance within the market will decline as an ever-growing number of well-funded ventures enter the fray, even as sales and the number tourists using Ctrip rise.
Ctrip’s revenue is likely to continue to grow unabated going forward, but the ever-growing number of competitors may result in a decline of the platform’s overall market share
As of 2015, Ctrip’s share of the total online travel booking market in China (domestic and outbound) was just over 25 percent. Today, this may be higher due to recent acquisitions, but more up-to-date information is not available.
Despite the company’s success, the growth in Chinese tourism and simultaneous changing consumer preferences have necessitated a somewhat challenging balancing act for the online travel agency (OTA). Ctrip is attempting to continue to cultivate sales of its traditional main offering (tour packages), while gearing the platform to better accommodate the growing number of Chinese tourists who are seeking independent travel experiences.
Of course, the company has always sold individual air tickets, hotel bookings, car rentals, among other travel goods and services. But the core of the company’s leisure travel sales mirrored that of the overall Chinese travel market when the company was founded in the late 90s: group travel. With the increasing number of free independent travelers (FITs) coming out of China, Chinese companies have been experimenting how to best reach, and sell to, this new wave of tourists, while maintaining traditional travel products, particularly tour packages.
Mobile bookings are by far Ctrip’s most important source of business, with 70 percent of bookings made on mobile platforms
Still, the company has been able to mostly embrace the most significant changes in the Chinese, online travel market, which is arguably the biggest factor in the company’s continued success. Perhaps most clearly is the company’s acknowledgment of the importance of mobile trip planning and booking. 70 percent of the company’s bookings are made on mobile platforms as of last year.
Moreover, the company’s ability to curate a large selection of hotels both in China and elsewhere and its relationships with all of China’s major airlines helps ensure that it will maintain a dominant market position for the time being. Ctrip remains the OTA with by far the biggest selection of products, making it quite useful for independent and group travel alike.
Ctrip is designed to be a platform with universal appeal, but it has attempted to gear itself towards more niche audiences
The one-stop, all-encompassing nature of Ctrip’s offerings and platform necessitates that the platform remains universal in its appeal. However, this also means that the main Ctrip platform is anything but niche, and attempts to appeal to virtually every market segment. That doesn’t mean that Ctrip doesn’t recognize the importance of more niche marketing efforts.
One such means that Ctrip is using to help bridge the gap between the niche and the general is Ctrip’s VTM service. The VTM platform serves as a “virtual tour guide.” The platform not only helps independent travelers find destinations, dining, and retail offerings, but also can aid travelers get emergency help and hosts a social feature that allows travelers to connect with one another in destinations around the world. In essence, the idea of the VTM service is to enable independent travelers to have the experience of a tour group, without the tour group.
The Ctrip VTM service is a unique attempt to Bridge the gap between group and independent travel through a digital platform
The VTM service also has another objective. Many of the newest players in the outbound travel industry are large companies that got their starts in other sectors, like Alibaba in e-commerce and Tencent in social media. These companies utilize their branding, capital, and technological resources to move into the travel market through the extension of what they already offer in an attempt to make their products an integral part of the travel experience.
Alibaba has its own OTA, Fliggy, and its mobile payment platform Alipay. Tencent’s WeChat Pay and the importance of the WeChat platform in travel and travel promotion is obvious. In fact, Ctrip is active on WeChat and promotes deals and publishes some company news through its WeChat accounts. According to Kevin Guo, General Manager, Strategic Cooperation & Marketing Innovation at Ctrip, the company has also recognized the growing importance of WeChat mini-programs and is “developing some products around this channel.”
With the VTM, Ctrip seems to be heading in the opposite direction, hoping to make its platform more than just a place to book flights and hotel rooms. The VTM service is a social media space that allows travelers to post photos and connect with other Chinese travelers in a destination, along with finding retail outlets and restaurants.
Of course, Ctrip will likely stick to its core of being a traditional, universal OTA platform, which likely provides the best opportunity to maintain market position. Going forward, Ctrip’s best bet is probably tweaking the platform in response to market changes, rather than a comprehensive shift in focus and marketing. Being universal in its appeal and availability for mainstream Chinese travelers has facilitated the company’s rise, and will continue to make Ctrip one of the most important Chinese OTAs to follow.