Ctrip Two-quarter net profit halved: by the Up-and-comer forced transformation

Every reporter Wangxia from Shanghai yesterday (July 25), Ctrip (NASDAQ:CTRP) released the second quarter of the report, the net profit of 120 million yuan, down 55%, the level of Mao's interest rate continued to decline slightly, operating cost rate is slowly rising, overall profit margin is a downward trend.　　Ctrip in response to analyst questions, said, "Ctrip profit margin this year as a whole will decline, operating profit margins will remain around 30%", Ctrip's overall spending is rising year-on-year. In this regard, industry analysts believe that the online tourism competition with the market as a result of diversification and intensified, Ctrip industry "boss" status is challenged to protect the "boss" status, Ctrip promotions and price wars led to growth in marketing costs, at the same time, in order to reduce the turnover rate, Ctrip labor costs have improved　　Ctrip the future transformation should be to change the withdrawal of commission business model and increase the travel related products and services development. Net profit fell 55% earnings year-on-year, Ctrip net revenue for the second quarter was 974 million yuan (about 153 million U.S. dollars), the growth of 17% per cent, net profit of 120 million yuan (about 19 million U.S. dollars), down 55% year-on-year.　　Excluding equity remuneration, the net profit attributable to Ctrip shareholders in the second quarter was 228 million yuan (about 36 million U.S. dollars), down 35% per cent. Fan, President and CEO of Ctrip, said, "We have been investing heavily in product development, especially in leisure travel related products and services, to enhance our ability to provide one-stop tourism products and services." At the same time, we also launched a more aggressive marketing activities.　　"From the financial indicators can be seen, Ctrip gross profit margin level of a small decline, operating cost rate is slowly rising, so the overall profit margin is a downward trend."　　In this respect, CIC consultant analyst Li Fangting said in an interview with the Daily Economic news, the first is ctrip to protect the industry leader status, promotion and price war, etc. lead to sales and marketing costs, the second is to reduce the turnover rate, Ctrip further improve the management personnel and equity remuneration costs.　　Ctrip COO Sun, in response to analyst questions, said, "Ctrip profit margin this year will decline overall, operating profit margins will remain around 30%", ctrip overall expenditure on a year-on-year upward trend. "Ctrip is being" up-and-comer "to change the traditional development model, and strive to develop core competitiveness, business model and new customers.　　Li Fangting told reporters. "Boss" status is challenged in recent years, the pattern of online tourism has changed, competitors began to form a siege of Ctrip posture.　　Where to go before the flow of continuous streaming, art Dragon Net began to find a breakthrough in group buying, after the traditional electric business Jingdong Mall (micro-Bo), Taobao, Suning easy to buy (micro-BO) and other involved in the online tourism, as well as tonight's special hotel and other emerging rookie began to "emerge. Li Fangting that the online tourism market operators increasingly diversified, at the same time, online tourism market operators (website) isGradually towards regularization. "Ctrip's business model is to call center for the service core of the ' mouse + cement ', outsourced by the domestic helper, which directly led to its air tickets and hotel ordering business, price than Taobao, online services and search engines than to go.　　Li Fangting admits.　　The market share of Ctrip's online travel has fallen from 51.6% in 2010 to 41.1% in 2011, down 10.5%, according to the data provided by Eric Consulting.　　In order to protect the industry leader status, Ctrip increase horsepower into the price war.　　July 5, Ctrip announced that it would invest 500 million of dollars in a one-year low-price promotion, which was nearly 10 times times the annual marketing outlay of the previous year, the first large-scale sale since Ctrip's 12 establishment.　　Ctrip CFO Wu Wenjie said that in the hotel business, they hope that through promotional activities to ensure that ctrip prices are competitive in the market. In addition, hotels and airlines also began to jointly pay Bao, Tenpay and other network payment tools to promote their online direct sales business.　　As a distributor of Ctrip not only face the loss of customers, the price of control is also powerless. Wu Wenjie said that the Ctrip ticket commission rate is still at the 4%~5% level, "in the first quarter of this year, ticket commission rate fell 22% Year-on-year, at the end of June we cut this ratio, this trend is very likely to continue."　　But at the same time, Li Fangting to the daily economic news reporter, as the largest online booking distributor, Ctrip brand has a wide range of recognition and authority, at the same time, Ctrip after-sales service than other competitors more perfect. "Ctrip's future transformation direction should mainly grasp two points: one, increase the financing strength, change the business model that withdraws the Commission, in order to get rid of the press of the supplier; second, continuous product development, especially in the leisure travel related products and services have made a lot of investment to enhance the ability to provide one-stop tourism products and services. Li Fangting told reporters.