Ctrip's troubles: The dual impact of low price and mobile internet

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"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 (micro-blogging) 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, with the network will throw 90 million yuan yuan into OTA "price war"; Where to go to the network announced investment of 30 million U.S. dollars (about 200 million RMB) to create tourism intelligent service Platform Taobao is also ready to launch a large-scale online tourism promotional 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. ”

The new online tourism model is constantly emerging, in fact, the root cause of the impact on Ctrip.

Ctrip was founded in May 1999, when it tried to sell tourist information, sell tickets and even sell performance tickets and other business, but finally rely on the acquisition of business travel, Modern express two main hotel booking business after the development of the company.

Ctrip's innovation lies in, when the internet has just started in China, Ctrip on the use of online advantage, will be the Line hotel, air ticket resources integration, through the telephone call the front desk payment mode to obtain commission, the first to achieve the Internet concept of booking, and thus obtain high valuation of the financing.

At present, the model is still the mainstream model of online tourism, which is represented by Ctrip. All along, to commission as the main income of Ctrip in the domestic tourism distribution industry has an absolute strong position. For example, before the price war, Ctrip has the industry's higher proportion of the rebate: 15%~20% around. Ctrip usually signed a cooperation agreement with the hotel, cooperation agreement will have "not allowed its hotel room sales price lower than ctrip price" such terms. Through a variety of outside known as "hegemony" of the terms, Ctrip to hotels and airlines to obtain lower discounts, strengthen the control of their prices.

However, with the rapid development of mobile Internet, Ctrip's competitors appear, and hotels and airlines also want to seek to expand the share of direct sales, their dependence on the "hotel intermediary" is gradually weakened-this is no doubt in the life of Ctrip to earn commissions and spreads the model posed a challenge.

Jinxin told reporters, now many hotels are experimenting with new sales models, such as "Last Minute discount" sales model, or the hotel directly to consumers to buy activities and so on. At present, more and more competitors, suppliers are also working with a variety of tourism sites, while the traditional offline enterprises are also developing their own online platform, Ctrip Travel network control how to maintain is a problem.

In the "Monopoly" is broken in the case, Ctrip model of the short board also appeared-for example, Ctrip is not like Tencent QQ, Baidu has a search engine that has its own products. Its core product is the hotel or airline resources to maneuver. Once the hotel or the airline has chosen other partners, the middleman's Ctrip is unsustainable by earning a commission.

At present, for hotels and airlines, a large number of users of the travel site is not only a ctrip. and Ctrip's net price is not the lowest, consumers have a variety of channels can be compared to carry a lower price. Like tonight's Hotel. A recent special offer is: July 24 to 25th, after six, Beijing Lido four-star Hotel deluxe room for 700 yuan per night, luxury suites of 1100 yuan per night, and the same time on the same day Ctrip show the price is 989 yuan back to now 40 yuan, luxury suites 1334 yuan return to now 50 yuan.

Tonight hotel special sale model, for Ctrip direct impact is to disrupt Ctrip has been firmly grasp the price system.

In the air ticket booking, according to the reporter understand, to the characteristics of low fares "where to" net ticket out of the ticket volume has exceeded the number of Ctrip online.

Mr. Says our price flexibility is intensifying, which requires a process.

In addition to the hotel, ticket business by competitors in the extrusion, there are insiders told reporters, because of the emerging more cost-effective products appear, Ctrip front-end call center mode of operation and the entire back end of the supply chain does not match. All along, Ctrip's telephone call mode of operation is, the guest orders, Ctrip 8,000 customer service will recommend to the customer and the relationship between the hotel, through artificial diversion, priority order to this part of the hotel, while strengthening the hotel's reliance on Ctrip.

But with the Internet and mobile internet users more independent choice, Ctrip's artificial diversion function weakened, followed by the core hotel control is also gradually weakened.

"We believe that internet-based online booking services in the future, the market share will certainly exceed the telephone call business." Therefore, we currently have the online booking business as the focus of development direction. Mango nets under the green Mango Travel Network general manager Gaogo told reporters.

In fact, several big industry giants have seen the growth potential of online bookings. Analysys International (micro-blog) analyst Zijianzhe told reporters, 2008 years ago, telephone call mode is the main tourism distribution market, Ctrip in this business has won the market the first position. 2008 years later, the online booking gradually increased significantly, the arts dragon began to make a reservation in the field, after the tourism products distribution channels have more choices, the competition pattern began to change.

2009, later, like Cheng Net, mango nets and so is also more enthusiastic about online booking market, gradually to the phone call mode poses a threat. In the case of a large reduction in phone call business, Ctrip is a little worried, trying to get back online booking market.

In the face of the pattern of conflict, Mr. Said, OTA in addition to the traditional Commission model, the current also did not explore a better model. After all, Ctrip, a 8000-person call center, is seen by the industry as a traditional business with an internet shell, which makes it impossible to travel lightly. Now Ctrip is in fact a medium and long term business model in the transition to the mobile internet model pressure.

Mobile Internet Tide

When the mobile Internet tide hit, the hotel's talent, Hotel Butler, Miche, tonight hotel specials, such as small and special apps appear, by micro-blog, mobile IM and other social media to promote.

Compared to these small applications, as the industry boss of Ctrip has not come up with a person to make a bright Ctrip brand innovation app. Ctrip is still all-inclusive style: Hotel air tickets, tourism, high-speed rail are all in one application. Does this not conform to the habits of mobile internet users?

From the user experience, the overall development trend of the app is minimalist, that is, a function of the application of the simpler the better, the function too much to let users start. For example, the Hotel Butler is targeted at the economic chain hotel business, tonight the hotel is targeted at the sale of the tail room, and hotel talent to play is the search location of the quick advantage. Just like at the mobile terminal an angry bird (Micro bo) game led a company to fire all over the world, in the era of fine differentiation of consumer demand, small and fine applications can penetrate the market to break the monopoly. In addition, in the innovation speed, Stoding of these vertical applications are better than the 8000 customer service Ctrip.

At present, from these independent application of the real user, the hotel Butler user volume of nearly 2 million, hotel talent up to 2 million, tonight hotel special price of around 1 million, although compared to ctrip more than 10 million of the user volume, the volume is small, but mobile internet began to divert users trend can not be blocked.

Ctrip will carry a big fan, style pragmatic low-key, from its business development trajectory, he attaches great importance to the line of business expansion, and finally landed. But the industry evaluation, fan to the internet's sensitivity seems to be weaker, this virtually affect the pace and style of Ctrip into mobile internet.

In the hotel group buying just appeared in the bud, as the most powerful hotel resources Ctrip is not optimistic about group buying. But after more than a year of development, hotel group purchase has become a stable form of hotel reservations, and sales are soaring. As a result, previously said not to do the Ctrip in June this year also online hotel group buying business, and has always claimed that the boss of the hotel's art Dragon Network launched "hand-to-hand combat." Ctrip even ahead of the "3 years do not make money, wholeheartedly to serve the world," the preparation, but from the big environment, it is clear that the best opportunity for the development of group buying has been missed.

Mr. admits that some days ago, Ctrip may indeed not be actively challenged, but now Ctrip will be more actively involved in the new model (mainly group buying, app application brings new hotel sales model, etc.).

Yi, secretary general of China Mobile's Internet Industry Alliance, says big companies are prone to turn around. Many big business enterprises will gradually lack of innovation and sense of crisis. Mr. To reporters that Ctrip is speeding up the pace of opening and cooperation, and in line with the principles of Ctrip brand younger internet companies, will expand multi-channel marketing channels, and in the field of app segmentation breakthroughs.

has a capital advantage of Ctrip, recently confirmed the acquisition of mobile applications, "flying constant." Mr. said that the specific amount of investment and shareholding is inconvenient to disclose, but "flying often quasi" flight dynamic information can make Ctrip wireless function map more complete.

Insiders said that Ctrip hopes to accelerate the pace of development in the mobile Internet field through this cooperation.