Ctrip trouble: Electricity merchants fighting spread online tourism by mobile internet impact

The electricity business has spread to the online tourism market.

"Return" war and "group buying" war ... Ctrip Travel Network, art Dragon, the same process, Mango and other online tourism companies are constantly pushing the price war to the boiling point.

Although, Ctrip Travel Network (NASDAQ:CTRP, hereinafter referred to as "Ctrip") in the online tourism market hegemony, but the opponents are no longer the weak follower. In the competition under the strangulation of Ctrip Cheng into an increase does not increase the circle.

Ctrip reported in the second quarter of 2012 earnings, Ctrip's total operating income of 1 billion yuan (162 million U.S. dollars), an increase of 16%, but its operating profit of 168 million yuan (26 million U.S. dollars), down 37%. At the same time, the operating profit rate for the quarter was 17%, compared with 32% in the same period in 2011, straight 15%. Recently, the world's largest exchange company Nasdaq group released the Nasdaq-100 Index adjustment changes-Ctrip has been excluded from the index range. Since the last two years Ctrip's share price has been declining, shrinking by nearly 70%, also more than the overall trend of Chinese concept stocks.

In the operating environment (macro-economic) uncertainty has not yet been eliminated, Ctrip's competitors art Dragon comprehensive encirclement hotel market, where to focus on airline ticket booking business, a group of emerging mobile application enterprises corners, Ctrip, the online tourism market leader status seems to be not insured.

October 2011-Tonight Hotel Special co-founder Jinxin is anxious.

He worries that he has just launched a new model of online travel (that is, the night after the 6-point rear room can be booked by mobile terminals such as mobile phones, etc.) will be blocked by Ctrip. Because when a single big Ctrip has a strong control of the hotel, in accordance with the agreement, with Ctrip Hotel and do not dare to cooperate with other hotels in private.

Helpless, the same is the Jinxin of Shanghai Jiaotong University alumni on Sina Weibo to fan to Ctrip CEO wrote a long letters, express the reverence for the giant ship Ctrip, and said that their operation is only a small enterprise, the emergence of new models for the entire industry also has the benefit, Hope Fan can give its living space. But fan did not respond to this little brother who wanted to be treated kindly.

Time passed quickly, July 26, 2012, fan leader of Ctrip, in order to buy art, where to search, tonight hotel specials for the representative of many new online tourism model under the impact, has been facing continued decline in performance problems.

As of March 31, 2012, Ctrip cash and short-term investment balance of 819 million U.S. dollars. As share prices continued to fall, Ctrip said it would spend 300 million of dollars to buy back shares, and then invest 500 million of dollars to start a low price promotion. In the surge in travel complaints, market share was crazy to grab food, commission model challenges such as the surge in the pressure, Ctrip seems to be entering also difficult, retreat also difficult.

500 Million Dollar gamble

As China's online tourism market, "Big Mac", Ctrip's industry status and market share in the past 10 years no one can shake. But with the decline in performance, stocks from the 50-dollar highs all the way down to about 15 U.S. dollars, in the outside world seems to have always been "sitting on Taishan" with thread face the crisis of loss of advantage.

According to Iris Statistics, online tourism market share is gradually eroded by the emerging tourism enterprises. In the first quarter of 2011 China Travel Reservation Market third party online agent revenue share, Ctrip accounted for 47.3%, art Dragon account for 7.5%, and in the first quarter of 2012, Ctrip down to 32.5%, art Dragon rose to 10.5%.

Although Ctrip's boss status has not been shaken, but Ctrip saw the crisis, can't restrain. According to the reporter of China Business newspaper, Ctrip will launch the first large-scale low price promotion since 12. According to the plan, Ctrip will invest 500 million dollars (about 3.2 billion RMB) in a year, and play a real price war in the hotel, air ticket and Tourism resort area.

The so-called "500 million dollar Plan" includes the start of the full start of the July "monthly and daily low price" activities. and promotional products include hotels, air tickets, travel tickets, vacations and other full line o TA (online Travel agent on-line travel) business. Ctrip has determined from the passive-plugging-maintenance mode into an active challenge.

For this plan, Ctrip senior vice president Mr. to reporters: "This is the general trend, only involved in price war, can promote the entire industry back to the rational track, in order to achieve from the chaos to the Zhi." ”

And in order to deal with 500 million of dollars of big moves, the Mango network announced a high-profile investment of 80 million yuan cash subsidy to start the Hotel carnival, the same way network will throw 90 million yuan yuan to advance OTA "price war"; Where to go net announced investment of 30 million U.S. dollars (about 200 million RMB) to build tourism intelligent service Platform Taobao is also ready to launch large-scale online tourism promotion activities ...

Although Mr. Said, "Ctrip has always had a very good financial performance and excellent cash flow, we are more powerful than our competitors to win the price war." "But the 500 million-dollar gamble is likely to weigh on Ctrip's profits," he said.

Capital market investors are not optimistic about this price war, after the announcement of the price strategy on July 6, closed by 24th, Ctrip's share price has fallen from the 2010 peak of 52.15 U.S. dollars to 14.9 U.S. dollars, shrinking nearly 70%, the decline is also greater than the overall trend of Chinese concept stocks.

A competitor who declined to be named said: "The price war has good and bad, the bad side will be reflected in the follow-up performance." Ctrip is now facing a stock repurchase, low prices burn down the risk of gross margin, the share price is bound to continue to fall. The good thing is that stocks fall and the value of employee options is lowered, which helps us dig people. ”