Ctrip vs Alibaba: 2 Approaches To The Chinese Travel Industry
Ctrip.com (CTRP) has long been the leading travel services provider in China. However, competitors with differentiated product strategies are looking to take on Ctrip. One such company is Alibaba’s (BABA) travel unit – Fliggy. By focusing on millennials, digital technology, and premium services, Fliggy is looking to carve a place in China’s competitive travel industry.
Investors can gain access to Ctrip.com and Alibaba and the growing China travel industry through direct purchase of the companies’ shares.
Ctrip.com – A “Jack-of-All-Trades” Approach
Ctrip.com International is China’s largest travel company, according to the company’s website which notes that Ctrip is the largest consolidator of hotels in volume of rooms booked, covering over 500,000 hotels in China and 750,000 worldwide. Ctrip also offers air, rail, bus, and other transportation services with China and globally, offers vacation packages and tours, insurance, visa services, and attraction tickets. The company also offers corporate travel services. Ctrip’s travel services are available through its mobile app, its website, and its customer calling center. Ctrip has grown its business both organically and through strategic acquisitions.
At the end of 2017, Ctrip relaunched itself under the Trip.com name. The change was to reflect the growing emphasis on international travel. Hence, the C in the company’s brand was removed.
According to Ctrip’s CEO Jane Sun, the Chinese travel industry is growing at about double the rate of the country’s economy as a whole, which is expanding at a 6% annual rate. As GDP per capita increases, more Chinese people should be able to afford to travel more often. The CEO also noted that with Ctrip continuing to gain share within this fast-growing industry, she believes the company can expand three to four times faster than China’s economy. Thus, investors can expect Ctrip to increase its revenue at an impressive 20% annual clip in the coming years.
Fliggy – A Digital Experience for Millennials
Alibaba launched its online platform “Alitrip” in 2014 to compete with Ctrip. Moving forward to 2017, Alibaba decided to scrap Alitrip and build a new travel platform, Fliggy, which in Chinese means “flying piggy.”
As opposed to Ctrip’s “jack-of-all-trades” approach, Fliggy is more focused. The platform is focused “on the millennials raised in the digital age.” The platform is also more focused on flights, particularly international flights as the company appears to be targeting more profitable market segments such as millennials and international travelers.