Wednesday, June 13, 2007

Ctrip opens a physical store - not as revolutionary as you think

Picked up some news from the Hotel Marketing blog that Chinese market leader intends to launch a physical shop front in its number one market - Beijing. Might sound strange to the casual observer that an online travel company with more than US$100mm in revenues, 50% year on year growth, stock up 50% in 6 months and years of operation would turn to offline for growth. Well the reason is buried in the definition of "online travel" in China.

In truth Ctrip has always been an offline business as defined in other markets. The online travel business in China is all about call centre sales. According to Investor's Business Daily - Ctrip has 2,000 plus people in their call centre processing customer requests and bookings at hotels and nearly 70% of all customers make a reservation by phone. This does not mean that Ctrip are a bunch of technology Luddites, in fact the contrary. They have some of the best call centre technology and customer phone tracking systems that they are. Doing all they can to build up relationships with customers to make repeat bookings easy and to track the hell out of the activities of the sales staff to make them as efficient as possible. This is not a criticism as this is what is best for growth and sales in China. But it does mean that while we can get excited about the growth of Ctrip and the potential for online travel, we have to always note that the transaction engine is drive by people and calls, not bits and boxes with flashing lights.

UPDATE - Hotelmarketing is reporting that ctrip has announced plans to open an enormous call centre (reportedly the largest in Asia) - with more than 2,400 seats (capacity of up to 5,000).

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