Ctrip prepared for raging war of e-travel
Updated: 2012-09-12 11:21
(chinadaily.com.cn)
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The price war of online travel market intensified to a historic high as the Chinese leisure travel is embracing a peak season in September.
Lan Tang, Senior VP of Ctrip, said Ctrip would roll out more promotions in September, across multiple business lines. According to Tang, the price competitions will not end soon. "Ctrip is well prepared for the price war as long as it takes," said Tang.
Unlike the e-commerce price war between the electronic appliance retailers, which has turned out to be PR events, the war of online travel agencies costs "real dollars" and drives down the margin of each participant.
Ctrip net income declined 55% year-over-year in the second quarter of 2012. Tang said that the cost for more aggressive promotions starting from June this year is high, and it affects the short-term financial performance. He expected the lasting price war would help the volume growth, but not necessarily the revenue growth and the net income might continue to decrease as a result.
Tang said that the Company believes that it is worthy to take some short-term profit pressure for significant market share gain, and Ctrip would remain profitable under the current market competition.
Tang expected the market would re-gain balance when the profitability of online travel players hits the bottom level. Competition focus will move back from "price" to "products", "service", and "customer user experience".