Ignore no more - why Ctrip has to be part of a distribution strategy

As incomes in China have risen in recent years, so too has the amount of international travel taken by its 1.4 billion residents.

Here are some things that we (hopefully) know already.

China has been tourism’s top market since 2012, and it will soon be the world’s largest source of international travelers.

More of these travelers are eschewing group travel trend of previous years to create their own trips.

A recent survey by J. Walter Thompson Intelligence found there are 12 emerging types of Chinese travelers, including tourists traveling in multigenerational groups, foodies who enjoy trying novel cuisine, business people, young women who like to travel solo or with their friends and adventurous, sporty travelers.

And, how do these Chinese adventurers across all ages and demographics book their travel? Increasingly, it’s online.

With all these factors considered, hotels aiming to attract these multitudes of Chinese travelers must think about the domestic marketplaces, rather than solely relying on their existing distribution channels.

In other words: Shanghai-based Ctrip, China's largest travel company.

Ctrip is the brand that many talk about (and admire) but, interestingly, many hotels do not consider as an obvious distribution partner.

It's worth, therefore, understanding exactly what Ctrip has.

Ctrip dominates half of the Chinese OTA market and is a major player in the rapidly expanding world of international travel from China.

Hoteliers are finally tapping into Ctrip’s booking potential, which is substantial and growing, as the next few data points illustrate.

According to the United Nations World Tourism Organization, Chinese tourists spent more than $261 billion overall in 2016, more than a fifth of all international tourism spending in the world. The most frequent long-haul destinations of Chinese travelers are the U.S. and Europe.

This year, in fact, has been dubbed “EU-China Tourism Year.” A joint campaign between the EU and China, dubbed “Ready for China,” aims to increase the number of Chinese visitors to the EU by 10%, which would mean an increase of at least €1 billion per year for the EU tourism industry.

And the market is expected to continue growing. The China Outbound Tourism Research Institute projects that this year, Chinese travelers will make 86 million trips to international destinations, an increase of 10% over 2017.

It’s projected that by 2020, nearly 190 million Chinese will travel internationally, and they will spend almost $350 billion per year.

Why Ctrip is so popular

In other countries, people tend to use a combination of smartphones, tablets and computers to research their travel, but most often they complete their bookings on a computer. Generally, only about 6% actually book on a mobile phone.

That’s not the case in China, where about 25% of travelers complete their bookings on a smartphone, according to Worldpay.

Ninety-seven percent of Chinese travelers purchase a data plan or make other arrangements to use their smart device while traveling internationally, another clear indication that the Chinese are heavy mobile device users.

So, back to Ctrip...

The Ctrip mobile app, recently rebranded as Trip.com, has been downloaded more than one billion times.

Travelers using the app can easily book around 800,000 hotels in more than 5,000 cities. The app also offers real-time flight tracking and reservations within China, as well. It’s available in Chinese, English and seven other languages.

The app does not only offer bookings. Users can also post and read 30 million hotel, flight, train and other reviews on Ctrip.

Similar to China travel, Ctrip is growing

Like the number of international travelers coming out of China, Ctrip too sees its numbers significantly increasing.

In just the first three months of 2018, Ctrip earned $170 million, 19 times more than its earnings during the first quarter of 2017.

It’s projected that by 2020, nearly 190 million Chinese will travel internationally, and they will spend almost $350 billion per year.

Samantha Wai

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According to the Beijing-based World Tourism Cities Federation, global tourists made 11.9 billion trips last year overall, which generated $5.3 trillion in tourism dollars and accounted for 6.7% of the worldwide GDP.

Ctrip chairman and co-founder James Liang Jianzhang sats his company currently serves fewer than 5% of those trips, and it is actively working to increase that number.

The company plans to expand its overseas revenue from 2% to at least 20% in the next five years, he says, especially into such Asian markets such as South Korea and Japan as well as to London.

The company purchased the U.K.-based travel search engine operator Skyscanner in 2016 and the Silicon Valley startup Trip.com in November 2017. It has also acquired three Chinese travel agencies that operate in the U.S. and has invested extensively in the Indian OTA MakeMyTrip.

To say the company is ambitious and as important player in the marketplace as Booking.com and Expedia Group for hotels would be an understatement.