Where to start a new journey: difficult to expand the hotel business

of the day

Since 2011, China's largest IPO in the United States came from the net. The China's largest online travel search site, which was listed on the Nasdaq on November 1, 2013, was priced at $28.35 a day, up 89% from its IPO price, with a maximum of 34.99 U.S. dollars on the date and a closing price of about $3.4 billion.

In the past three years, the company's performance has grown rapidly, with an annual compound growth rate of 101%. In the first half of 2013, where to go net income of 360 million yuan, of which 88% of the income from Pay-per-click mode. Nevertheless, 2010-2011 Where to go still accumulated a loss of 150 million dollars.

A company that has no profits and only one-seventh of its revenue from its peers can get close to half of the market value of Ctrip.

On the day of listing, where to go net CEO Zhungchengsu accepted the "financial" interview, said its unique platform business model is one of the motives of the pursuit of capital. And Ctrip, Art Dragon Ota (online travel agent) mode, go to where there is no huge offline sales team, but through the search technology will 28 airlines, 1240 online travel agents, 53,360 hotels, the supply needs of integration for consumers to choose. Now, of all the planes flying in the sky, 16 out of every 100 seats are sold.

Another key reason is Baidu. After the listing Baidu held to where the net more than 50% of the shares, as the largest shareholder. Baidu's help to make it in the PC-side traffic entry in the battle of the dominant position, in 2012 and the first half of 2013, to where from the Baidu channels of traffic accounted for 51%.

Where to go on the successful listing, for China's small and medium-sized Enterprises opened a new model: the start-up companies to choose the most conducive to their own business development platform for large shareholders, to take this high-speed development and the fastest speed of the IPO.

This kind of pure Internet mode brings the imagination space to where to go, also brings the challenge to it. One is that the model in the category of expansion is not smooth, from the air ticket to the hotel business, where is slowly away from its familiar line search field, into the online travel agents are adept at the offline signing, inventory and operations management.

Second, where the PC end to Baidu's traffic has a high degree of dependence, into the wireless how to do? In addition, where to go also face the future will be how to build, establish the core profitability of the project.

For where to go, listing is a milestone in its eight-year history. But from online to offline, from PCs to wireless, their learning is just beginning.

Pattern Imagination

When Zhungchengsu and two other partners started the company in 2005, the online travel search market was Google's biggest source of search advertising revenue, and they wanted to build a better vertical search engine.

It was a highly monopolized online tourism market and a highly fragmented offline tourism market.

Ctrip and Yi Long network in its establishment a year ago, has been successfully listed on the Nasdaq, Ctrip to the industrialization of the standard service model (Network + telephone call center), replacing the offline many scattered small workshop-style agents, 10 consecutive years occupy the Chinese online tourism more than 50% of the market share.

and Ctrip to provide users with the standardization of services, where to butt is a large number of uneven horizontal line agents. Where to go in the early days just will each agent price information for the display for consumers, and then do page jump will users into the agent's website transactions, if which agent's service is not in place, where will receive a lot of complaints.

Over the past decade, there have been numerous cases of falls or silences in vertical search, such as cool news, plundering, dogs, pcpie, thunder searches, and so on. They want to reinvent Baidu in another dimension, all of which fall into the three fundamental subjects of underlying technology, search monetization, and traffic acquisition.

Where to go the successful breakout is the benefit of these three points. Under Zhungchengsu's leadership, where to put nearly half the manpower to develop the air ticket online trading system (TTS), the system is considered by the industry where the technology is concentrated embodiment.

TTS is similar to Taobao background of the trading system, users can go to where to complete the transaction, rather than jump to the agent website to pay. The input cost of this technology is huge, including the port access of the service provider, the accumulation of user data, the construction of payment system and the massive data mining in the background. Where are we going? It is through this technology to penetrate the main link of the transaction, such as filling out booking information, payment and unsubscribe, firmly control the agents, while enhancing the user experience.

In terms of monetization, where to go to the airlines and hotels to take direct customers and have the value of advertising, through the most basic revenue channels. Where to go on line six months later, Air China swept the banner ads on its homepage.

2009, in China travel website Ticket Business Quarterly total visit statistics, to where the net to 33.7% of the market share ranked first. In the favorable situation, where to start to the small and medium agents for comprehensive click Charges (CPC). Agents who are unwilling to pay for the search results will not appear in the search results where they go.

Where to go, executive vice President Peng Feiro said that within one months, almost all but a handful of agents agreed to the pay package. Three quarters of the year, where to achieve quarterly profits.

Huang Taigi founder Hering was one of the first employees to go to the net, he said, for vertical search site Most important traffic access, where to use a "stupid method"-since everyone to Baidu search, then simply do a lot of advertising on Baidu, Baidu on air tickets, hotels, tourism search results, Through the bidding rankings and a variety of optimization measures to guide the flow over.

At that time, travel search has accounted for about 20% of Baidu search volume, traffic conversion rate is only to where one-eighth. This makes Baidu, which originally wanted to enter the online travel search market, instead try to buy where to go.

Baidu Ecological Platform

A person close to Baidu to the "financial" reporter revealed that at that time Ctrip is also one of the buyers, given a premium of about 200 million U.S. dollars, and many times in different occasions hinted Zhungchengsu, if agreed to buy, he is the next head of Ctrip.

But Li's promises are undoubtedly more appealing to ZHUNGCHENGSU. Baidu has become a controlling shareholder where it can continue to develop and market independently, Li said.

In June 2011, after a year of negotiations, where the net finally decided to introduce Baidu investment, to 62% of the shares in exchange for a large number of Baidu traffic, and 306 million of dollars in investment, this money than to where the IPO financing amount is higher than twice times.

According to the recent disclosure of where to go with Baidu's "intimate search" cooperation agreement shows that Baidu to go where on the PC side Baidu "intimate search" tourism products and tourism category of the exclusive right to operate the middle page, And promised 2014 and 2015 years the lowest to where to bring 2.19 billion browsing volume, 2016 year minimum to where to bring 2.196 billion views.

Where's the one going? Former executives said Mr. Li never asked where to go to specific operational details. Each quarter, ZHUNGCHENGSU only need to have a meeting with Robin Li. One of the most asked questions of the previous meetings was: what support or help is needed.

Where to go? The network from a simple parity and flow into the platform, upgraded to online tourism products trading platform. With the use of Baidu to bring the precise flow of the entrance, where are we going? A large number of hotels, air tickets, tourism and customer resources to access its ecosystem, and then through the TTS system to enable suppliers to run and manage on the rear platform, forming a complete business closed loop, like a tourist hotel field of the cat.

Like Taobao, the cat has made a number of Amoy brands, into where to go eco-closed-loop system in the cooperative enterprises will also enjoy the platform dividend, the formation of competitive advantage, where and Baidu to create a common business business online ecological circle may also cultivate a group of new entrepreneurs.

This business model also makes it an advantage to be in a regional expansion. Zhungchengsu has traveled to Singapore frequently over the past year, and he plans to replicate a new pattern in Southeast Asia. If Ctrip to do overseas promotion, the cost will be overwhelmed, because of its agent mode, must use the line under the team to do hotel and air tickets to promote the ground. To go where you can directly copy the price platform, so that overseas air tickets or hotel agents themselves to access TTS can. So it is not impossible to go anywhere with a company that is worth tens of billions of dollars overseas.

Industry insiders think, where to go on a smooth listing for China's small and medium-sized enterprises and large companies to open up a new "Where to go mode", that is, choose the most conducive to their own business development platform as a major shareholder and rely on its final listing.

Li has put forward Baidu's "middle page" thought, that is, the use of the search based on the development of the middle page site to speed up the transformation of traditional industries, such as where to go, 58 with the city, Archie Art, home and so on. According to relevant sources, Archie will start the IPO early next year, if Archie Art smoothly listed, will become Baidu's second listed subsidiary.

Analysys Analyst Song told Caijing Reporter, where to go the model is likely to be Baidu big commercial platform transplant to education, electricity business, finance, medical, games and other intimate search core categories, which means that Baidu is likely to be in the focus of the middle page of the category to cultivate where such listed companies.

And Ctrip will have a war

Where to go and Ctrip are always put together compared, because this is a start-up company to challenge the big story.

Where to go, more than half of the 1700 employees are products and research and development staff, the boss sits in the last row of the staff seat. In Ctrip, only call center members over 20,000, the internal division of labor is clear, level clear.

Zhungchengsu in the "financial" reporter interviewed said, where to represent the entrance model, and Ctrip represents the integrated service model, after the listing, in fact, how the model is not important. Because online travel companies ultimately compete with brands, technology and teams. Zhuang believes that this is where to go to the three core competitiveness.

Cai Jinghui, chief operating officer of the poor travel network, believes that where to go is a technology-driven company whose technical strength is fully embodied in the line-trading system and the construction of the wireless system. But the team and brand advantages compared to Ctrip is not obvious, where to go under the age of 35, the price-sensitive user base to establish a good brand, but for business customers, most people prefer to choose the services and convenient Ctrip.

Zhungchengsu and Ctrip's current CEO, Liang Jianzhang, are technically born. Inside, Zhuang encourages "brick culture" and "speak loudly", and in the mail group where you go, you can even see a number of employees criticizing and advising the CEO.

Where to go to the network of air tickets, hotels, wireless three business departments, respectively, by the deep air Department, Art Dragon Department, Baidu Department of Talent, are the enemy and the advantages of the Legion of Talent, Zhuang even personally admitted to the 12 anniversary of Ctrip ran Ctrip Shanghai headquarters to dig people.

One of Ctrip's founders, Liang Jianzhang, returned at the bottom of the company in February of this year, and then moved on to Wireless. It also issued 800 million of dollars in bonds to buy and go where, and art dragon to fight price.

At present, Ctrip began to imitate where to go mode, access to a large number of online travel agents, covering the holiday, business management, group buying, car rental and other travel industry chain of the upper, middle and downstream. Eight months in the past, Ctrip Rose 190%, net profit rose 76% year-on-year, its P/E is now as high as 49 times times, than Baidu, Google, Apple are higher.

An Ctrip hotel division of the middle-level people told Caijing reporter, in the past, Ctrip staff meeting is with questions to go. And in the Liang Jianzhang era, it is absolutely impossible to go with the problem. Just one months ago, Liang gave the hotel team dozens of employees a bonus of 1.6 million dollars to encourage team innovation.

Liang Jianzhang in the interview with Caijing reporter to where a strong question: "As the industry second if not profitable, no one would like to come in." In the long run, I believe that companies that burn money will not last long. ”

The difficulty of the hotel business

Where to go? The prospectus shows where the gross margin is maintained at around 80%, but in recent years it has been operating at a loss, with a total income of 500 million yuan in 2012 and a loss of 91.1 million yuan. Compared to Ctrip, income of 4.2 billion yuan, net profit of 714 million yuan.

Where to go the loss is due to the investment in product development and marketing that has been brought about by the expansion. From 2010 to 2012, marketing costs accounted for half of the revenue, down from 39% in the first half of 2013. These include the purchase of flow expenses, marketing advertising spending and sales staff, hotel development staff salaries. and its product development costs accounted for the total expenditure of 34%, in the first half of 2013, where to go employee options cost of 14.34 million yuan, the cost of elimination, where to go from the loss into profit.

' Where to go the increase in marketing costs stems from its difficult expansion in the hotel business line in recent years, ' said Wu Sanmao, a U.S. stock analyst.

and upstream by the monopoly of the airline ticket industry, the hotel industry because of the upstream dispersed and there is a huge price difference, so the online travel agents in the hotel industry, the value of maximizing the embodiment. From the beginning, the Arts and Crafts department and the Department in order to obtain more quality users and target orders to improve the hotel's bargaining power to snatch the market share from Ctrip, so where to enter the new battlefield, it spent a lot of promotional costs.

In order not to be subject to the oligarchy of online travel agents hostage, from 2010 onwards, where to try to direct and hotel contract to do direct sales, which led to its offline market and marketing staff in 2011 from 80 to 515 people, the first half of 2013 to 738 people.

When to go into a completely unfamiliar battlefield of direct selling means to compete with established online travel agents for a range of offline operations management capabilities, such as contract signing and inventory management. In the development of nearly a decade, Ctrip, Yi Long still need to put a lot of manpower to the hotel orders for room control and daily audit to prevent users to successfully book after the shop No room, or the user successfully stay after the hotel does not recognize the loss of commission. Where to? Although the technical means to improve operational efficiency, but related to the hotel management and maintenance, some problems can not be solved by technical means.

Meanwhile, from the second half of 2012 onwards, Ctrip and art dragon cost hundreds of millions of yuan in the hotel field to play a price war, where also have to join the war, such as its introduction of the first paid back to the business is to return some of the Commission to the user, or even pay to stabilize the platform Low-cost advantage, which further exacerbated the

The most brutal war has not yet come, Liang Jianzhang told Caijing Reporter: "We will resolutely participate in the price war, so as to improve our market share." I think, Ctrip will achieve the greatest success. ”

Where to go self-marketing, direct sales, distribution of three models coexist, but also by the online travel agents boycott, so triggered the April this year, Yi Long contract network and other online travel agents launched the "Anti-where alliance", they unanimously refused to access to where the ticket online trading system. After that, the Art dragon and where to go to the distribution of the distribution of the contract disputes and litigation. After much negotiation, the art Dragon finally agreed to reconnect to the online trading system.

Where to go in the hotel business experience, rather than enter the air ticket field, easily occupy more than 30% of the market share of experiences, is a hardship.

But Zhungchengsu is not worried about where he thinks the losses are planned and controlled, and one of the business priorities after the listing will be the hotel business. With the perfect layout of the hotel, marketing costs accounted for the proportion of the cost of income will gradually decline, ultimately where the profit will be generated.

Zhungchengsu said, where the business focus of the second, then on the wireless side. Due to the first advantage, where to go at the wireless end of the current download volume has been over 100 million, more than Ctrip 50 million and 25 million of the Arts Dragon. In the first half of 2013, where to go mobile search volume accounted for 23% of total search, accounting for 12% of total revenue.

Even so, the challenge is still there-on the PC side Baidu contributed about 50% of the traffic, but on the move, Baidu not only can not go directly to where the app back, and its own import advantage is also weakened.

Some of the tourism apps that are born for mobile internet and those that meet the needs of personalized market, such as poor tour and Ma Honeycomb, are emerging. Although this kind of website does not have the income, but gathers a large number of users, eats the moving end the entrance.

"Where to go, Baidu, Sina, these companies in the PC era to rely on advertising-paid mode, in the mobile internet era, are facing a business model adjustment." Companies like Ctrip, who use commission as a model, do not need to change much. Wei Changren, founder of the network, said, how to ensure the wireless traffic, how to profit, where to continue to explore.

On the day of the listing, Zhungchengsu repeatedly stressed: this is a very ordinary day, although the fact is that he had only slept two hours a night before the listing. On the third day after the listing, Zhungchengsu wrote a letter to all the staff, calling on everyone to ignore the analysis of various business models and the ups and downs of the stock market and focus on themselves.

Zhungchengsu said, where to go to the current market capitalisation of about 3.4 billion U.S. dollars, compared to global tourism leading enterprises, Priceline current market capitalisation at 54 billion U.S. dollars, TripAdvisor current market capitalisation of 13 billion U.S. dollars, where the potential of the future is huge.