Ctrip expects bumper long-term growth from its international business

Ctrip's CEO Jane Sun has outlined the scale of its ambitions outside China following its purchase of Skyscanner and investment in MakeMyTrip.

Talking to analysts on its 2016 Q4/FY earnings call, she said:

"The contribution now for international business is about 10% to 20%. Going forward, we would like this to grow to anywhere between one-third, 40% or even more."

With India covered by MakeMyTrip and Europe by Skyscanner, Ctrip's internationalisation strategy is gaining momentum. It has a connection with the US outbound market via Priceline's investment, but for its international message to become global it needs a brand in the US.

At the end of 2016, its "cash and cash equivalents, restricted cash and short-term investments" were worth $5 billion.

Its 2016 full year results show revenues growing by north of 20% year-on-year across every vertical it operates in. For the entire business, net revenues came in at $2.8 billion, representing a 76% hike on 2015.

Ctrip constantly refers to itself as a one-stop for travellers and breaks the revenues down into four distinct segments, which gives an idea of its growth profile and some of the under-the-radar products and services it offers.

"Accommodation", generated revenues of $1.1 billion in 2016, 58% up year-on-year. But as a proportion of the total, accommodation has dropped from 40% last time to 37% this time.

"Transport" covers air, train and bus tickets, and was responsible for US$1.3 billion revenues in 2016, a 98% increase. This segment now accounts for 45% of the total, up from 39%.

One development which bosses highlighted in this segment was the introduction of multi-modal options. There are 225 airports in China, but still nearly 100 cities without an airport and Ctrip's "air plus train" packages helps travellers in these cities get to the airports.

The growth of its corporate travel business has been less spectacular, with the relative slowdown of the Chinese economy creating challenging conditions. This unit brought in revenues of $88 million, a 29% increase on 2015.

The unit's client list now covers more than eight million users.

Package tours is another relatively small but still material part of the business. When so much talk is around Chinese travellers, particularly younger ones, preferring independent travel to package tours, 2016 revenues still showed a 39% increase from 2015 at $333 million.

So while Ctrip has lifted revenues across the board during 2016, but it is worth noting that its sales and marketing expenses have also increased, coming in at $844 ~~billion~~ million, nearly 100% up on 2015.

For reference, Expedia Inc's 2016 results show that its adjusted sales and marketing costs for the year were $4.3 billion.

Click here to read Ctrip's earnings release.

Ctrip