500 million dollars after the catalyst

In the face of irrational competitors is to be irrational. "The morning of July 1, Ctrip chairman Liang Jianzhang sent such a microblog."





it did not cause much of a storm, though it looked informative and was one of his few jobs-related microblogs.





It seems to be a signal afterwards.





July 5, Ctrip announced that the board of Directors 500 million U.S. dollars (equivalent to 3.2 billion yuan) of the marketing budget authorization, since July, will carry out a one-year term "monthly, daily low price" of the low price promotional activities. "Price war is not our pick up, but Ctrip is the most qualified to play the price war." Ctrip Senior Vice President Mr. began to shout through the media frequently.





then, where are we going? The network announced the investment of 30 million U.S. dollars to create an intelligent tourism service platform, free of charge to all travel online suppliers, with the Cheng toss 90 million follow-up; leisurely tourism network also played a "eight anniversary of the whole let 80 million" banner, and Ctrip refers to as the originator of the art dragon also put words to Swear to the end of the blood ... The first "World War" of online travel began.





but this is not the style of Ctrip. The Shanghai Internet company, which has always been a "service", is always at the same pace as the current E-commerce site. So, it is always by others "ridicule", "steady" into a "heavy", and not enough to disdain the opponents of the service is also the price war played 708 scattered. In today's online travel company's press release, the role of Ctrip is to verify the absurdity of the previous market pattern, in the enumeration of Ctrip "guilt" after the end will fill a sentence, "see, our products can do Ctrip do not!" ”





So, Ctrip's behavior seems unusually strange. Last year's "to carry the war", Ctrip do not sit, and in this node, it actually saw what?





this year





Indeed, these 500 million dollars are not in the plan of Ctrip. "At least at the beginning of the budget, I didn't get a similar mandate. "The decision was made this year, probably in April or May," said Mr., vice president of Ctrip. "He charge marketing in the company, he did not expect the market will be" brutal "to this extent. "But that's the way it is, and you have to open the garage door. ”





From March to June, Mr. and Ctrip management have countless communication, their attitude is surprisingly consistent. "We don't think it's unreasonable, of course, the company will be worried, you spend money, but the market is not doing it." ”





It's not hard to understand, to the Arts dragon led the other OTA's rebate activities are devouring the territory of Ctrip, two of the first quarter of this year is enough to explain the problem: Ctrip hotel bookings increased 21% year-on-year, operating income growth of 18%, the same subject, the art of the hotel booking volume up to 67% year-on-year, And the revenue growth rate is also ctrip one times, to 36%. One of the main reasons is that the Arts dragon in the form of rebate and group buying to attract a large number of price-sensitive consumers, it has a 19% per cent reduction in the night Commission, while the art Dragon Group buy the number of rooms sold in the second is 3 times times.





Although the two market base is not comparable, but in a fast-growing market, market share will be due to the media's viral spread of the geometric effect. Losing money does not matter, the art dragon can use this to quickly eat Ctrip's market share.





passive Ctrip situation is very embarrassing: do not fight, the hotel booking business growth is difficult to maintain, market share will be eaten; the war, the profit margin is doomed to decline, the key is that Ctrip has been maintaining the price system will face collapse. In the eyes of the capital market, Ctrip to any side is not good.





in the second half of last year, Ctrip also carried out a number of defensive counterattack, including rebate concessions, similar to the bidding mode of "preferences" and the special mode of "all-day hotel specials."





but it still can't stop the pace of the art dragon. Because Art Dragon CEO Cui already iron heart to circuitous attack Ctrip, in the media interview, he even moved out of the Clausewitz "War Theory", "Determine the enemy's center of gravity, does not mean to attack from the front, the best strategy is to play flank war." "To this end, he completely cut off the original airport, train station to distribute cards in the offline marketing channels, no longer invest in call center (these are the most accumulation of ctrip), and almost all the resources in online marketing. "If this is just one of their activities, but the key problem is that they have tasted the sweetness of the price war, rebate has been normalized," Mr. Said, "so we must fight." ”





Heavy Warehouse Hotel





Mr. Does not feel that Ctrip has become "radical", nor that the company will change its path for 500 million of dollars. Although Ctrip has not announced the use of the funds plan, but it is clearly the bottom of the heart.





from the promotional activities of Ctrip on line, rebate covers almost all products, but there is no doubt that the center of gravity in the hotel, this is not entirely because of the "aggravating" the art of the hotel business has become a "Huacheng", but the price of this piece of low transparency, large profit space, A more vendor-dependent business is the only one that is likely to produce a rapid increment.





"Hotel is like the online travel industry in the central Plains, got the world, and online booking, the equivalent of Luoyang, who took the Luoyang, who took the central plains." "Cui is not shy of his own logic. This reason is too simple, the country has a variety of 30多万家 hotels, suppliers and dispersed, this is the channel advantage of distributors are accustomed to the living environment, they have the ability to quickly change the information gap.





compared to hotels, the income contribution is comparable to the airline ticket business is difficult to do much. "You see the art dragon has basically not touched, the main reason is that the profit is too low." "Mr. Said," domestic airlines are so few, and they have to do direct sales, the Commission is indeed falling. ”





in the second half of 2010, Air China, Southern Airlines and China Eastern Airlines will be reduced to 3%, and some foreign airlines are transferred to 1%. This trend is still continuing, Ctrip CFO Wu Wenjie also tan Chen Ticket commission rate is currently maintained at 4% to 5% of the level, but still face the pressure to continue downward. Therefore, in the tourism business has not been full volume of the situation, the hotel has become the most likely to be ctrip to hit the money business.





But Mr. does not advocate simple rebate, "I asked the product manager constantly to develop the bright spot, to make can cooperate with marketing products." and marketing departments need to consider how to package these products, and then plan some consumer-sensitive activities. ”





They made the first product is "Sunday Hotel Half-price", "five-star hotel is more business guests, Monday to Friday is to make money, the hotel can not give a cheap price." On weekends, the rooms are empty. From this point of view, if the price is cheap enough, there is market space. "Mr. said. As a result, product personnel will take this train of thought to talk with many hotels, and marketing department will consciously to highlight the bright spots of different hotels.





Ticket product logic is the same, such as a certain amount of advance booking, matching insurance, or "machine + wine (refers to hotels)", and so on, indirectly make the price more competitive. It is revealed that the relevant products will soon be launched.





Acceleration





but this way in the previous Ctrip is rare. After several consecutive quarters of slow growth, Ctrip began to reflect at different levels. "We all think that the company should be quick, not just the speed of the product, the whole process should be accelerated." Mr. told the newspaper reporter.





Ctrip Wireless is a virtual department, from the market, hotels, technology and other related departments to draw some people to set up this department. But in the mobile internet age, the change speed is faster, Ctrip wireless often because communication is not smooth and delaying the fighter plane. So, Ctrip tries to turn it into an independent department, so that the decision-making process is significantly faster. This gave management a great touch, according to Mr. revealed that in the future, similar to the independent department will be more and more.




A direct effect of
acceleration is that Ctrip is more daring to try and make mistakes. Ctrip in the industry should be one of the first companies to develop apps, but compared to other companies on the line more than 10 app, Ctrip is too low-key, and the new version of the iteration speed is not fast. And now it's totally different, says Mr., "the product crews are like chicken blood." ”





again such as the official microblogging operation, Ctrip started by using Twitter to create quality content, and then let the content naturally to forward and spread, and the number of fans is also lower than the art dragon. "But you have fewer fans and no more natural fans." We also don't realize that when we have more fans, we can do all kinds of activities. "Mr. said.





in order to solve this problem from the mechanism, Ctrip has also set up an innovation committee, staffed by several senior executives, with a quarterly internal innovation proposal and project evaluation. This has changed Ctrip's innovative logic to some extent, with more innovation coming from the top down and now the other way around.





"We need a process of collecting proposals that may have been adopted or discarded, but it is a process of nurturing innovation," he said. "Mr. will also receive a lot of advice on marketing," for example, our fast booking business is not registered or can be booked, before the successful completion of the sales process. Therefore, some employees should be prompted at the end of the customer, ' Mr. Li, you have not registered on the reservation, but if you register, there will be more promotional activities to tell you, there are points to return to you. ' It was a small thing, and the product managers didn't think of it. ”




The intention of
Ctrip is clear, and it needs to keep up with the pace as users ' needs change more and more quickly. Even if Ctrip still don't think the hotel group buy is a reasonable business model, but still have to follow up, "as the value-added services to customers, but also can let us practice the team." "Mr. said.





Platform





difficult to determine whether the acceleration is still in time, but it has to face a reality, slow performance growth led to the capital market, and this negative information mapping in marketing, will lead to a reduction in brand influence, and then further affect sales, which became a "death spiral."





Ctrip just released Q2 earnings is not ideal, net profit fell 55%, the same day's share price fell 11.88%, creating a 3-year low.





Ctrip CEO Fan once put its four business hotels, air tickets, tourism and travel compared to four claws, "hotel and ticket is the front two big claws, while travel and business traveller is behind the small claws." But when the "big paws" began to shrink, the "little paws" behind it dropping.





So, theoretically, 500 million dollars has a deeper value. The most superficial understanding is to lift the hotel and air ticket business, let it restore the role of "cash cow", which directly affect the brand influence, improve customer loyalty. On this basis, give travel and business travelers enough time and resources. Ideally, of course, before 500 million dollars are spent, the two new businesses will be able to independently, so that the Ctrip business model can complete the transition smoothly.





From this point of view, the vice president responsible for tourism business Guo Dongjie pressure should be the biggest. Tourism has been for four consecutive years Ctrip internal development of the fastest business, but still insufficient overall income of 20%. "We are going to speed up this year. "In Guo Dongjie's view, this year's investment in too beautiful travel and the introduction of Honghu Yi Tour (high-end tourism products), Ctrip in high-end tourism layout has been preliminarily completed."





but before Ctrip has been insisting on its own research and development products, and high-end tourism products contain more and more elements. In addition to the wide selection of hotels and flights, the work on the ground is complicated. From the airport to the hotel bus, from the hotel to the attractions or the bustling business district of the shuttle service, shopping value-added services, traffic cards, telephone cards, special restaurants, spa and tour guides are covered. Ctrip emphasizes the "one-stop service" is not a simple distribution, but includes pre-sale, sale, after-sale services.





"This makes our research and development slow, and the operating costs are increasing." The key problem is that there is still no way to meet the rapid changes in customer demand. "Guo Dongjie said.





So, they are more tired, in order to meet the personalized needs as far as possible, have to integrate more tourism elements. "Guo Dongjie" is the trend of the future, and we serve more than 1 million times a year, are a number of random orders constitute. The challenge is great for traditional travel agencies, which are based on group mode. ”





but this makes Ctrip very inefficient, Guo Dongjie has been thinking about the problem of efficiency, how to reduce the product development cycle, and rapid replication.





"Tourism business to make a platform, which has been put on the agenda, we have organized a dedicated team for technical development and process preparation." "Here, Guo Dongjie is very excited.





walk Such a step chess, Ctrip travel will live. Ctrip's own team specializes in high-end market, can fully meet personalized service, and the richness of the product by the platform to complete, not affect the fairness of the platform, because the product grade division is very clear, but also greatly improve the efficiency.





but the biggest potential risk is, do not accustomed to the intermediary mode of Ctrip is not familiar with the operating platform. Guo Dongjie has studied a lot of Internet platform models, and he thinks the most suitable for Ctrip is the Amazon model, "This is a fully open platform, and its products are customer-centric to design." "Guo Dongjie said.





In the United States, "parasitic" Amazon companies are basically a state: through the Amazon to guide enough traffic, and then help you deal with customer payments, and retain the customer's e-mail address, you can use the Web Service database to manage the data, Finally by Amazon's distribution service fulfillment delivery, and after-sales service is also responsible for it. Of course, you need to pay a 15% commission for each order.





Therefore, if you build such a platform, Ctrip needs to do more technical preparation. In addition to the above several links, it also needs to standardize the standardization of goods, services, and even elements of commodities need to standardize.





actually from the year before last, Guo Dongjie began to test water operation platform. "We call it the joint-mission, which means that if other travel agents can make up for our vacancies and short boards, they will use their products and we are only responsible for the quality control of the products and services." "Guo Dongjie said.





started last year with a broad framework that he has already figured out, including ways to collaborate, operating rules, and profit patterns. "We are now starting to do business and, surprisingly, those former partners are very positive about this model." "But realistically, we need to know more about their needs," Guo Dongjie said. ”





's analysis reports that leisure travel will be the next "potential gold mine" in China's travel market. In the next 5 years, the growth rate of leisure tourism will be 2.4 times times the growth rate of business travel. It is expected that by 2016, the proportion of business travel has dropped to 55%, while the proportion of leisure tourism has risen to 45%.





Therefore, Guo Dongjie for this platform has some impatient, after all, rely on the natural extension of products is not enough, "we have so good brand and service accumulation, there are 40 million of users, this is to do a platform for the foundation." I knew that the more I wanted to hold the market, the more I could keep it open. ”





500 million dollars, Ctrip seems to put down all the burden, the goal is more clear. It certainly hopes that through this "catalyst" can be used to work hard before the "secret weapons" to maximize value, but it is not the product, nor service, but the mechanism, how to adjust their own rhythm more freely. Of course, enough time is equally important for a company that is clearly "demonized" at home.