Chinese travel market continues to grow – Ctrip looks to dominate
The sheer scale of China’s travel market is massive. It is the largest cruise market in the world, and the Air Transport Association says that it will only take the country’s air travel market five years to catch up. By 2022, China will have more people travelling by air or boat than any other country on earth. That’s two-years earlier than expected – a definite sign as to the pace with which China’s travel market is growing. And Chinese online travel giant Ctrip has big plans to become the dominant force in this dominant market.
Ctrip’s share price has gone on a 361% journey over the last 5 years
SOURCE: Yahoo Finance
Ctrip’s CEO Jane Sun told CNBC’s “Managing Asia” that: “We have two fields that we’re working on. Outbound, definitely, is very important for us, so we made lots of investment in outbound business. And also, the domestic market is huge too. People, after they buy a house, buy a car, the rest of the money, they would like to use to explore the world. Secondly, with the income level that’s increasing, visa restrictions by many countries are being lifted so we’re free to go to many countries.”
The phenomenon Sun describes above is yet again an example of the rise of the Chinese middle class: newly empowered urban-dwellers who have more money and education than the generations that came before them. They can afford to spend on wants, as well as needs – indeed, it is (by some researchers) considered a fundamental part of the way that new Chinese are distinguishing themselves.
Outbound trips from China grew 18% in 2016 according to consultancy IPK international’s annual World Travel Monitor survey. There’s no sign of that dropping off, as MasterCard predicts 8% annual growth in outbound travel between 2016 and 2021. Domestic travel is booming too – over 700 million Chinese travelled during the October “Golden Week” holiday, going to local places like Macau.
Sun says that the company spends “lots of efforts investing in ABC. ‘A’ stands for artificial intelligence, ‘B’ is big data, ‘C’ is cloud computing.” It is also focusing on more global products, following its customers’ tastes. Sun explains: "I think our brand works very well in China and maybe we can test it out in greater China and also the rest of Asia. But I think we focus mainly on our customers, what they need. So as they are growing more global, we will offer more and more globalized products."
Dominion holds Ctrip in its Global Trends Luxury Fund.
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