Price warfare is not an end, but a means

But in the tourism website, it is a kind of not clever means, so the future price war will gradually fade, to be replaced by comprehensive service ability competition.

In the summer of 2012, the online travel market was particularly lively because of a price war. This van Ctrip just announced "get 500 million dollars budget authorization", a one-year low-price promotion since July; the mango network started "Hotel Carnival", announced the investment of 80 million cash subsidy, and in early August announced the addition of 80 million; then, the art Dragon launched the so-called "largest scale of the largest summer promotions" Activities, with the network also smashed 90 million yuan to promote large sums of money. And in order to catch the Olympic train, where the network and Lonely Planet cooperation to create a "theme hotel Sleep list" project is also in full swing, the online travel website Market makes this year's internet again not calm up.

And to seek the fuse behind this war, it is not difficult to find the hands of the war is more like the Ctrip of online tourism boss.

Ctrip is the dominant position

As the leader of online travel websites, Ctrip has been constantly in the news. The Nasdaq 100 Index was revised on July 13, according to news from Nasdaq. According to the adjustment arrangements, Ctrip (July 20) closed after the index, the data show, Ctrip from 2011 to 50 dollars all the way down, to July 14, the closing price of 14.71 U.S. dollars, creating a 3-year low, the market value of about 70%. The decline is greater than the overall trend of the Chinese concept stocks. The corresponding market value was reduced from about 8 billion dollars to $2.111 billion.

Meanwhile, the first quarter of 2012 earnings from Ctrip showed a balance of $819 million trillion in cash and short-term investments. Ctrip has also bought shares more than once. Last September, the Ctrip board approved a 100 million dollar share buyback program, and in November, CEO fan bought about 2 million U.S. dollars of Ctrip in the open market with its own funds, and in June 2012, Ctrip announced the completion of a $300 million share repurchase plan.

A series of facts show that in the tourism market has been exerting a large force in the present, Ctrip's eldest position has apparently been precarious. Then, how to maintain the existing stock price and status, become the top priority of Ctrip must consider the issue, and the launch of price war and Ctrip recently launched a large promotional activities are considered Ctrip to restore the decline of the action. Although Ctrip Senior vice President Mr. Before in the media interview that the price of online tourism is not provoked by Ctrip, but the industry itself caused by competition, but the news of Ctrip and the problems behind itself, or let the public can not help but to focus on Ctrip. And analysis behind the reasons, but found that Ctrip to this step is not accidental move.

First, the huge call center is almost an important reason for the high cost of Ctrip and its fans. Comparison of domestic and foreign tourism web site model, will find foreign call centers are taking the form of outsourcing, but its own establishment. Take the foreign PCLN and EXPE for example, its call center uses the outsourcing mode, but Ctrip and the art dragon are the own call center. It is understood that the number of PCLN and EXPE employees are only 5000 and 9000 respectively, has created 4.4 billion of dollars and 3.5 billion of dollars in revenue, and Ctrip has 15000 employees, revenue of only 600 million dollars, Art Dragon has 2000 people, the number of employees accounted for its parent company Expe 25%, but only contributed 10% predetermined amount. Thus, from the business model, China's corporate call center model has led to a large number of employees than the U.S. company. According to industry sources, the cost of setting up a call center includes site costs, personnel costs, system construction, telephone costs, system maintenance, management costs and other aspects, and each part of the cost is not expensive, so this is almost a big shackles of Ctrip, but with the current situation in China, call center but still have a considerable amount of time necessary , if you consider outsourcing, perhaps the cost of Ctrip will be much reduced.

Secondly, the tourism resort products are lack of characteristics, which has become the chicken. The size of the holiday market seems huge, and the hotel ticket a scale, but the subdivision, the proportion of outbound travel is too large, and Ctrip outbound travel, only rely on acquisitions difficult to solve the real problem, and can not compete with the services of OTA overseas. and Ctrip in the existing foundation vigorously development line, initially, it seems to be able to form the unification front of Ctrip, if once inadvertently, it is likely to become a business baggage, once the art dragon, where to extend their own customer service, while maintaining the profit model of light assets, the impact of the nature of Ctrip is not to be underestimated.

Collective suffering from growing up

Of course, the problem of online travel website is not only in Ctrip. By extension to other travel sites, the problem is the same. such as ticket booking mode proportion is too big. Foreign air ticket business, direct sales occupy a large proportion, but the domestic ticket sales mostly rely on tourism sites. Then, once the domestic direct sales business up, the impact on the tourism site will be very large.

Relying too much on search engines has become a major drawback of China's online travel website. Foreign travel sites, in the United States have Google, Microsoft, Yahoo three at the same time to EXPE and PCLN, such as the diversion of these enterprises, although Google in the common search area of a high share, but he to the online tourism enterprises to import the flow difference will not be too uneven. At the same time, the latest monitoring data show that the foreign travel site EXPE for PCLN brought 18% of the traffic, while PCLN and Orbitz also for the EXPE also brought 7% and 4% of the traffic, as the Orbitz of the second largest source of traffic, EXPE for its contribution 13% of the flow, Second only to Google's 14%. And China is different, the search engine on the flow of online tourism accounted for a large proportion of Baidu, respectively, Ctrip and the art of the contribution of 20% and 24% of the flow, and Ctrip and the art of each other to bring a lot less traffic.

The source of traffic is too concentrated will inevitably lead to the cost of domestic tourism site to increase again, and along with Baidu to get to where the equity, the status of Ctrip naturally caused no small impact. Similarly, because search engines take stakes in travel sites, it is not good for the entire online travel market, because it can easily lead to unfair market. For this phenomenon, Mango network vice President Huangguan that "the main relying on search engines to find tourism products in the way, in a few years will be significantly changed." Instead, it will be the brand-pooling model. ”

The tourism web site itself is already problematic, and the irrational price war is just at this point, and it is no doubt a further reduction in the survival rate of the industry as a whole. For any industry, long-term single price competition can not be sustained, and tourism site's particularity is that it faces the following problems: For OTA, the long-term profit-making business, and rely on promotional access to the new user loyalty is difficult to improve; For hotels, long-term rebate promotions, indirectly affect the balance between channels, Damage income system; The profit space in the upper reaches of the industrial chain is reduced and its service quality may be discounted. Moreover, the price of online tourism fight, it is likely to "kill 1000, since the loss of 800."

In terms of practitioners themselves, actually also do not want to appear price war, mango Nets vice President Huangguan told reporters "price war seems to become the domestic e-commerce (in the model for the tourism product of Mango Net E-commerce site) of the current mainstream, to the interests of investors to exchange the interests of customers, is actually zero and game, Even if the minority industry finally uses social cost to promote the monopoly of e-commerce including tourism, it is the most inefficient resource allocation method for the overall welfare of the society. "Therefore, the price war is not an end, but a means, but in the tourism site, it is a very clever means, so the future price war will gradually fade, to be replaced by integrated service capacity competition." And in the integrated service capacity, the current tourism sites are deficient, especially the topic of social tourism, although it has been repeatedly put forward, but few people can really do what consumers want, then if the practitioner more will look to the innovation or industry blank stage, is really to improve the competitiveness of enterprises effective means.

Eric Consulting statistics show that 2012Q2 China's online tourism has maintained rapid growth, the market transaction size of 41.87 billion yuan, an increase of 35.8%; online tourism, the third party online agents (OTA) market revenue scale of 2.23 billion yuan, an increase of 19.4%. In the short term, the online tourism market clearly has a broad future, practitioners should really pay attention to, not the current fierce price war and Ctrip hegemony status is not guaranteed, the future changes in the pattern of news, but how to really do what consumers need, that is the real killer. To apply a popular word on Weibo, the travel website says, "Life is not just the drifting, but also the poetry and the distance." ”