Ctrip is expecting the upcoming Chinese New Year to be its busiest ever period for outbound travel, with some six million people travelling overseas during the week-long national holiday.
The Chinese New Year tends to revolve around families so the biggest bump in demand comes from domestic travel. But an increasing number of Chinese people are taking advantage of the break for overseas travel.
Michelle Qi, international investor relations manager for Ctrip, told Tnooz that the trend towards international travel during the New Year break was relatively new.
"Traditionally it is Golden Week in October when Chinese people take their main leisure trip but we are seeing more and more people using the New Year break to travel overseas."
To give an idea of the scale of the Chinese New Year, some 3 billion journeys take place during the Chinese New Year week.
Shiwei Zhou, senior director of investor relations at Ctrip, described this as the "biggest movement of people in the world."
He added that APAC is the most popular choice for international visits because of "affordability and distance" although Europe and the US are growth areas for the business. Ctrip's "Chinese Preferred Hotels" programme - where it vets hotels for their ability to cater to the specific needs of the Chinese tourist - is helping to encourage Chinese visitors beyond their APAC comfort zone.
As with every peak travel period around the world, basic economic principles of supply and demand kick in during the Chinese New Year and there is a hike in prices. Discounting, which is a large part of how the Chinese online travel sector works, is part of Ctrip and its competitors' game plan, although Zhou said that even with discounts, prices for international travel were still quite high.
The peak day for travel is the Friday before the first day of the New Year on the following Monday. As with other peak periods in western markets, there is a big drop in demand and prices for the post-peak days, in the same way that European travellers can get a much better deal travelling just after Christmas than before.
However, he added that discounting was likely to become less of an issue over time, at least from a Ctrip perspective.
"We've got good relationship with Qunar and eLong on the hotel supply side, so there's less competition and more partnerships. But there will still be a place for discounting as a marketing vehicle, it's just likely to be more rational than perhaps in the past."
An interesting follow-on from discussions around discounting relates to the Chinese tradition of the red envelope, giving friends and family a cash gift. Some ecommerce giants in China, such as Alibaba and Tencent have taken this tradition and digitised it - offering users the chance to send "red envelopes" to their peers, but also sending random customers a virtual red envelope which has a genuine monetary value.
Ctrip is not giving away cash in this way, but still likes to be part of the red envelope zeitgeist by positioning some of its promotions and discounts as a red envelope-type product.
Rail and bus travel comes into their own during the Spring Festival, and Ctrip is active in both fields. Buses work well in tier 3 and tier 4 cities, whereas rail is a popular choice for travel between major cities.
Ctrip has a portfolio of new businesses, known as its Baby Tigers, and its bus ticketing platform is one of the most successful, aggregating various bus operators onto a single platform and making tickets bookable online or via its app.
Rail is different. The network is entirely state-run, as is the online booking service. Ctrip sells rail by connecting its app to the state-run portal.
Zhou explained:
"Because the booking engine is state-controlled we don't make a lot of money selling rail tickets. The business model for rail is based around cross-sell opportunities."
Rail and bus are also important in the bigger scheme of things, as these easy-to-book and lower-price point products encourage first-time Ctrip users, who then, theoretically, become comfortable booking online (or using their smartphone) and move onto higher value purchases.
NBImage by Shutterstock