Ctrip announced in third quarter earnings that daily transaction value from mobile channels has hit a record $16.4m (RMB100 million).
The company expects mobile to become the most important booking platform in the near future.
Overall, Ctrip reported a net revenue of $252m (RMB1.5 billion) for Q3 2013, up 31% year-on-year with other key highlights as follows.
All signs point towards mobile
Ctrip released an updated version of its mobile app (version 5.1) enabling users to easily book air, hotel, car rentals, activities and dynamic packages. Other features include: calendar integration, destination guides and a reviews board.
Ctrip's mobile app ranks number one in Apple's App Store in China and has also been selected as "Editors pick" a number of times.
By the end of Q3 2013, the number of accumulated downloads of the Ctrip app stood at 70+ million.
In Q3, more than 60% of transactions were booked online (+mobile) with 30% of hotel transactions from mobile and 15% of air bookings from mobile.
Among other products offered by Ctrip, attraction tickets has the highest percentage of transactions from mobile because of its convenience to book. However, air ticket transactions via mobile are the lowest.
The company says margins from mobile are similar to other online channels.
Ctrip is noticing a move from desktop and call center to mobile as well as an increase in mobile app usage by young customers.
When asked about how Ctrip differentiates its mobile product with other competitors and what unique values are offered on mobile versus its desktop site, the company says:
"There is fundamental difference between mobile and desktop site. Some of our competitors, especially eLong offer a unique price on mobile and we are matching it in Ctrip.
"It is difficult for price comparison engines (such as Qunar) to scrap these prices from mobile, its just not possible. In terms of instant confirmation and fulfilment in Ctrip's mobile - in seven seconds an air ticket can be issued on mobile. [eLong's $100 million investment on mobile products]."
When asked about the percentage of mobile transactions that involve a call center, the company says:
"The vast majority of mobile transactions are purely mobile. Ctrip does have an advantage when compared to other players offering mobile services. Only a small percentage of customers (if they have difficulty in navigating the mobile site or if they want to talk to the customer team) use the "click to call" feature in the mobile app to talk to the call center."
Revenue - by line of business
Hotel reservation revenues amounted to $100m (RMB611 million) for Q3 2013, representing a 34% increase year-on-year. This is primarily driven by an increase of 40% in hotel reservation volume.
By the end of Q3, Ctrip's domestic hotels supply network covered approximately 70,000 domestic hotels, up from 46,000 a year ago.
Ctrip's international hotel network has expanded to more than 240,000 hotels, representing hotel volume growth of more than 300% year-on-year.
Air ticket business saw a 31% volume growth year-on-year for the quarter.
In Q3, international air ticket volume grew more than 80% YOY achieving record transactions. Ctrip has now works with more than 400 airlines.
Packaged-tour revenues for Q3 2013 were $52m (RMB320 million), representing a 43% increase year-on-year because of the increase in leisure travel volume. The revenue from mainland china grew about 50% compared to the same period last year.
The company says China is seeing an increase in personal income, and other countries are easing visa restrictions to welcome Chinese tourists. This creates a positive effect for the outbound leisure travel market, and hence the company has seen an increase in demand across all products.
Ctrip's package tour business offers products to 1000+ destinations. During the october holiday season in China, Ctrip's attraction ticket volumes grew 700% over the same period last year.
Corporate travel revenues for Q3 2013 were $12m (RMB72 million), representing a 33% increase YOY, primarily driven by the increased corporate travel demand from business activities. Ctrip has provided travel solutions to 250,000 corporate travellers across 3,000 companies, including china's many large firms and global MNCs.
Approximately 10% of Ctrip's revenues are from outbound transactions.
Investment plans
Ctrip says it will continue to invest in technology in mobile, sales and marketing efforts, supply network, and backend services to meet the enormous complex needs of Chinese travellers.
The company says its first goal is to look for opportunities to expand its business, in likes of its local tour and attraction ticket business where it will continue to invest. Ctrip is open to invest in smaller teams in the market (domestic, international) in which it sees synergies.
Ctrip wants to accelerate its time to market. The domestic market continues to be the priority for the company, greater China (Hongkong, Taiwan etc) market comes second in terms of investment, and other Asia countries come third.
In the next five to ten years when Ctrip sees much stronger presence in the domestic market, it is open to look at international markets.
Qunar partnership
Ctrip says the travel metasearch service Qunar, which listed on the NASDAQ last week, is offering a different model compared to Ctrip. Qunar relies on partners particularly for hotels with Ctrip one of its suppliers.
However, on the air side - Ctrip is more of a competitor to Qunar. In other products - Ctrip says it is somewhere in between, sometimes a partner, sometimes a competitor to Qunar.
The company says it works with all major travel services and it just started listing some of its products in Qunar.
When asked whether the 26% of traffic that Ctrip gets from Baidu (the search engine company that has a stake in Qunar) will have a negative effect going forward, Ctrip says:
"If Baidu is willing to sacrifice trade for direct advertising from travel companies like us, we have other choices and we will shift our revenues from Baidu to other search engines."
Plans for Q4 2013 and 2014:
For Q4 2013, the company expects 30-35% growth in its hotels volume and 20-25% in air volume.
In China's travel industry, Q2 ands Q3 are usually the strongest quarters because people move to the spring and summer season. Q4 and Q1 are winter season with Q1 the weakest quarter because of the Chinese new year.
Ctrip says its priority is to gain marketshare. In the next quarters, it plans an 'intense' marketing campaign.
When asked about the profitability of Tujia (the vacation rental company where Ctrip invested), it says:
"Tujia is too young right now, but its revenues are growing, gradually they will move towards profitability in the next two to three years."
NB: Mobile image via Shutterstock.