Meituan surpasses Ctrip in hotel bookings, but Ctrip says it isn't worried
Unlike Meituan, Ctrip remains focused on travel and continues to attract more affluent travelers from China's biggest cities
Newcomer Meituan-Dianping may have overtaken travel specialist Ctrip in China’s hotel booking market, but Ctrip chief executive Jane Sun Jie is not concerned.
“We have 10,000 engineers working behind the scenes,” Sun said in a recent interview in Singapore. “At Ctrip we think about nothing else but travel, 24/7. All of our best talent is focused on travel.”
That means a company like Ctrip is solely focused on giving users the best experience and service in one area, not like platform companies which focus on a wide range of businesses, she added.
Last year, Meituan surpassed market leader Ctrip in hotel bookings, taking about a 45% share compared to Ctrip’s 22%. In March 2018, Meituan clocked 22.7 million hotel nights booked, compared to Ctrip’s 11 million, according to Trustdata, a Chinese data monitoring platform. Sun disputes these figures but Ctrip’s earning results do not provide a break down of room night bookings.
In the three months ended June 30, Meituan said it booked 94 million domestic hotel room nights – a jump of nearly 30% compared to the same period last year.
These figures are huge for Meituan, a relative newcomer which entered the fray only in 2014. In contrast, Ctrip has been in the travel industry for two decades and has long held the title of China’s largest online travel agency.
Sun said that Ctrip and Meituan's consumer demographics are different. Meituan is more popular among smaller cities, and offers cheaper hotel rooms, whereas Ctrip tends to attract more affluent consumers from big cities like Beijing and Shanghai with its inventory of high-end hotels around the country and internationally.
“The nature of Meituan is food-delivery, and so in lower-tier cities many people know of them,” said Sun. “But most of Meituan’s room nights are booked by locals, like mahjong players … the average room night may only cost about 100 yuan, so even if there are a lot of room nights, it’s difficult to make money.”
Meituan declined to comment on Sun’s remarks.
In late September, Ctrip said in a filing that its largest stakeholder Baidu would be selling nearly a third of its Ctrip stake for US$1 billion. Since the announcement, Ctrip’s Nasdaq-listed shares have slid nearly 9%.
The competition between Ctrip and the platforms comes as more companies adopt the platform model, where users are able to access a wide range of services and product on just one site or app. Meituan, for example, offers everything from food-delivery, to group-buying deals and movie tickets, on top of its hotel-booking platform – all of which can be accessed via its mobile app or on its mini-app in Tencent’s WeChat.
The idea is that a one-stop shop offering everything from dining, entertainment, travel and shopping will increase the amount of time users spend on a platform like Meituan, making it the go-to place for all their needs.
While Ctrip is also a platform of sorts, its strategy is to focus entirely on travel. The company already provides an array of services required for a holiday – from transport, such as flight and high-speed train tickets, to hotel bookings, package tours and attraction tickets. Users can also book car rentals or an airport transfer service on the site.
Sun believes that this end-to-end service, coupled with its round-the-clock customer service, is why travelers will keep coming back.
“When you make a reservation on flights with us and your flight is delayed, we would recommend high-speed rail, with tickets, as an alternative,” said Sun. “And then we can inform the hotel you booked that you are going to be late in arriving, to make sure that they save your room for you. As a consumer, you don’t need to think about what to do next.”
Sun said that in the aftermath of the 2017 Las Vegas shooting, Ctrip was able to reach people who booked through its platform within minutes to check on their safety. When flights in and out of Las Vegas later resumed, a team helped passengers book flights to leave the city.
While Ctrip has for years focused on mainland Chinese travelers, which have since become the biggest tourist spenders around the world, Ctrip has increasingly placed emphasis on attracting international travelers to its platform, primarily those in the Greater China and Southeast Asia regions.
The Shanghai-based company has made a string of investments and acquisitions in recent years, including buying UK-based travel search engine Skyscanner and investing in Indian online travel agency MakeMyTrip. Ctrip also bought Silicon Valley online travel agency Trip.com and relaunched it as a platform for its international customers.
As of the second quarter of 2019, Ctrip derived more than 10% of its revenue from international businesses. The company’s growth rate for international hotels and air tickets was more than double its China outbound traffic growth in the same quarter, even as it remained in the “early investment” phase for platforms like Trip.com, Ctrip said in its earnings call.
To be sure, Ctrip still faces an uphill challenge when it comes to international expansion, especially since its Trip.com platform is not as well known to overseas consumers who may be used to travel platforms like Expedia or Booking.com.
“Trip.com needs to catch up with the main Ctrip site. Right now it probably only has 20% of the functions that [Ctrip has],” Sun said. “Currently we offer 19 languages, and we aim to offer 34 languages perhaps by the end of next year, and add a service team in the United States.”
Ultimately, the battle for travel industry dominance is one that has to be fought on two fronts. For Ctrip, domestic travel is still most of its business, and lower-tier cities have showed a lot of potential for this business to grow. For example, Ctrip might push high-speed train tickets to users in smaller cities for a quick weekend getaway, which is more affordable than taking a flight to a different country for a holiday.
However, there is no denying that the biggest growth potential will come from outbound and international travel. And for the well-heeled consumer, Ctrip is working on offering luxury services such as intracontinental private jets, some of which Sun has personally tested.
“It’s a fight on two battlefields, and so you need two [different] campaigns,” she said.