Monday, October 27, 2008

WebInTravel: Ctrip has more than 50% of the Chinese online travel market. But is Qunar the bigger online business?

At the WebInTravel conference last week Siew Hoon hosted a panel with ctrip Director of Biz Dev Alfred Chang and meta-search company Qunar's CEO Fritz Demopoulos.

Chang of ctrip dropped some very impressive numbers into his presentation including:
  • 8,000 employees (4,000 in call centres)
  • 28,000 hotels in 134 countries
  • 6,000 hotels direct contracted (90% of volume)
  • 1mm room nights monthly, 1mm air reservations monthly, 30,000 passenger trips in packages monthly; and
  • (most impressively) 54% market share of online in China (see pie chart below copied from his slide


But (and this is a comment I have made before), online in the China market does not have the same definition as we would use elsewhere. Online should mean "no touch". Where the transaction is completed without the interaction between the customer and the intermediary at a people level. In the case of ctrip - 80% of there transactions are conducted purely through the call centre. This is not even web referred (ie search online but complete by phone). This pure offline call centre stuff - where the consumer dials ctrip and completes the whole transaction via the phone. There is nothing wrong with this, ctrip is a highly profitable and growing company. It is just important to know what it means to be online in China.

Next to ctrip's Chang was Fritz Demopoulos of Qunar. They are Chinese largest travel meta-search and content company- claiming more than 20 million montly users. The qustion I posed and we dont have a clear answer for is "if Qunar is 100% online and ctrip is only 20% online, then doesn't that make Qunar the largest online travel player in China?". We don't have an answer because clearly ctrip is a bigger company and Qunar is in the less mature business of online media. But it again highlights the interesting nature of the online/offline travel market in China. The bigger website (Qunar) is the smaller business.

7 comments:

ccontact said...

Tim,
At the Travel Distribution Conference in Beijing in September, Ctrip, eLong and Qunar all gave presentations. eLong and Ctrip are taking very different approaches. In short, Ctrip are focused on market share and volume, retaining customer loyalty along the way. eLong are (with Expedia's influence) trying to motivate people to become pure online customers which means lower volume in the short term. I think Ctrip have it right since they understand where the market is today and will move people to book online when they are ready for it. Their risk is the fast increasing labour costs. Qunar's model is so different that I don't like to compare them. Just to say there are many like Qunar in China that don't have a Western share-holder or famous (bankrupt) investment banks behind them, so are not known outside China.
Roy

Mark said...

i guess the question is how important is it to be the "bigger online business".

the travel agency of today remains to be an important part of the travel industry distribution chain. in this regard it's not so important who's got the bigger online presence, but who's got the biggest market share.

but taking the long term view, first movers online stand to reap enormous rewards.

firstly - qunar's 20 million visitors must be seen in light of the growing internet penetration in china. even if the company merely keeps pace with the rate of internet adoption, the site could easily be serving 60-80 million in a matter of years.

secondly - the chinese propensity for the internet (they spend more time online on average compared to the west) is also driving up its acceptance of e-commerce (remarkably, one of the fastest growing applications for internet use, beating out email and instant messaging)

extrapolating from these two points, it seems clear that having a sustainable online business model is critical to the future of both companies.

the key point of difference appears to be that qunar has one - tried and tested - while ctrip is still searching for one.

Anonymous said...

Does anyone know Ctrip and eLong visitors, visits and page views monthly?

Tim Hughes said...

@Anon - i have not come across anything in their announcements. That said I would recommend you look at their last two annual reports as they may say something. Also worth a look at Alexa. Alexa numbers have lots of issues but will give you a starting point

Anonymous said...

Tim,
I have some info to share..

1) Many China local chain htls refused to work with Ctrip.

2) Ctrip will move call center out from Shanghai to save cost. (need to pay 4 extra allowance for Shanghaiese workers-by law)

3)Mango.com is looking for buyer.

4)eLong's market size is max 50% of Ctrip in Sothern China.

Cheers
Ray

Tim Hughes said...

@Ray

Thanks for the tips

Tim

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