Ctrip ticks $4.5B annual revenue level for the first time

Ctrip posted a 16% increase in net revenue during 2018, solidifying its place as the third biggest online travel agency in the world.

The Chinese giant hit the $4.5 billion total revenue mark for 2018 on the back of what it says was a "robust growth momentum" in its international business during the year.

Despite the uptick in overall annual revenue, Ctrip saw a decline of 19% in fourth quarter revenues to $1.1 billion, it says due to "seasonality."

Income from operations during 2018 was $379 million, down slightly from $450 million in 2017.

Noteworthy developments around the group include a 200% revenue growth for Skyscanner's direct booking initiative in the fourth quarter of last year.

The company's ongoing drive to increase its presence in so-called lower-tier cities in China appears to be paying off, with room nights in lower-star-rated hotels growing at 50% year-over-year in Q4 2018.

Overall, revenue from accommodation reservations came in at $1.7 billion during 2018 (up 21% on 2017) and air and rail revenue increased by 6% to $1.9 billion.

The smaller package travel division is growing fast, Ctrip says, hitting $549 million for the full-year 2018 (up 27%).

Growth outlook and industry slowdown

Speaking to analysts during the company's earnings call, CEO Jane Sun says international air tickets are the "frontier of our expansion."

She says of Trip.com, the company's front for non-Chinese travelers: "The air ticket is the growth driver for that business, but also leverage our existing very powerful international air ticket platform we build to serve both the outbound travel business, as well as international demand under the Trip.com brand."

Sun admits there is a wider cooling of growth in the industry and, in turn, having an impact on Ctrip.

The company has "observed there’s some macro slowdown, especially if you compare first-half of 2018 towards the end of 2018," she says. "But we also noticed that we’re actually gaining market share in a much faster way."

She explains: "For example, in the first half of 2018, we probably doubled the industry growth when the industry growth was at a pretty high level.

"[In] the outbound travel business, which proved Ctrip as a leader, we have a very resilient business model. And if there’s any uncertainty, it’s always the best opportunity for us to outpace this industry growth in a much faster way."

The first quarter of 2019, Ctrip says, is likely to see a revenue growth figure of between 18% and 23%.

* Check out this interview with Ctrip chief financial officer officer Cindy Wang during The Phocuswright Conference 2018 in Los Angeles.