Ctrip posts across-the-board gains, huge Skyscanner revenue in Q2

Ctrip posted gains in all of its major categories in the second quarter of 2018, with total revenue of $1.1 billion, a 13% increase over the same period in 2017 and a 9% increase from the three months prior.

The biggest jump within its core business came in the packaged tour category, which posted a 31% increase in revenue year-over-year to a total of $127 million. In its earnings statement, the Shanghai-based company says the increase was “primarily driven by an increase in volume growth of organized tours and self-guided tours.”

Corporate travel revenue was also a bright spot with a 28% jump in revenue in the second quarter compared to the same period in 2017 to $38 million.

And accommodation revenue was also strong in the second quarter. Ctrip says that sector generated $425 million, a 21% increase over a year earlier, primarily driven by an increase in accommodation reservation volume.

Only transportation revenue was nearly flat, bumping up 1% compared to the second quarter of 2017 to a total of $457 million.

The company says it is also seeing more user engagement from consumers in “targeted lower-tier cities,” where usage increased 40% year-over-year.

On the international front, the company says it is continuing “to make great strides.”

Excluding Skyscanner, Ctrip reports the volume of its international hotel and air business grew 40%, attributed to “the robust growth of our outbound travel business and the popularity of Trip.com.”

Skyscanner growth

The most striking statistic in Ctrip’s earnings report comes from Edinburgh-based Skyscanner, which it acquired in 2016 and which delivered revenue growth in its direct booking program of approximately 600% year-over-year in the second quarter of 2018.

"Ctrip delivered solid results in the second quarter of 2018," says Ctrip CEO Jane Sun.

"We have achieved a healthy revenue growth rate and improved operating profit margin quarter-over-quarter thanks to the scalability of our business model. Looking ahead, we are on the right track to accomplish our long-term goals. Our persistence in ‘customer-centricity,’ deep involvement in industry value chain and solid execution in the international business will create enormous growth potentials in the years to come."

The company says a 9% increase in its sales and marketing expenses in the second quarter compared to the same period a year early, to $331 million, was due to an increase in sales and marketing personnel-related expenses. And as a percentage of net revenue, non-GAAP sales and marketing expenses in the second quarter were down to 29%, from 30% of net revenue in the same period of 2017 and from 31% in the first quarter of 2018.

Looking ahead, the company predicts net revenue growth to continue at a year-on-year rate of between 13 and 18%.

"Our team continues to drive results by putting the customer first in every aspect of our business," says Ctrip executive chairman James Liang.

"We will continue to make investments in improving customer satisfaction, as we believe this strategy will create more customer lifetime value over the long-term. In addition to pursuing the vast addressable market of potential new users, we will remain focused on better serving our large existing base of loyal customers. We will be relentless in extending our leadership in the travel industry, in China and the world."

Growth strategy

Part of the strategy to reach new users is to leverage the 7,000 offline stores the company has under franchise agreements in 200 cities.

A further priority moving forward is to drive in-destination experiences and the company recently put in place a “Global things to do” platform with 100,000 experiences in 1,500 destinations.

During the earnings call the company says more than 40% of today’s traffic “converts to in-destination demands during peak times.” It added that in-destination travel has grown more than 50% year-over-year in the second quarter.