Ctrip’s net slumps 25% in Q1 on ‘price war’
Print Edition
NET profit of China’s leading online travel site Ctrip.com fell 25 percent in the first quarter despite a 36 percent rise in business revenues as a “price war” in the sector raised marketing costs and cut profitability.
Ctrip, the Nasdaq-listed travel operator, said in its financial statement yesterday that its net profit shed 25 percent from a year ago to 115 million yuan (US$18.5 million) in the first quarter, even though its net business revenues jumped 36 percent year on year to 1.6 billion yuan during the period.
Compared with the fourth quarter of last year, profit slumped by 56 percent. Ctrip said at the end of 2013 that it would spend 500 million yuan in marketing and promotions.
The deep decline was due to hiking sales and marketing fees, which jumped 61 percent year on year to 430 million yuan, Ctrip said.
Helped by its mobile phone app, Ctrip posted strong growth in hotel bookings, sales of travel tickets, tourism vacations and business trip management, with transaction volume of hotel booking and ticket sales soaring by 67 percent and 71 percent respectively.
With a growing number of Chinese turning to smartphones to book accommodation or travel tickets, about 40 percent of hotel booking transactions were submitted by mobile phones, according to Ctrip.
The firm expected its net revenue to grow 30-35 percent in the second quarter.
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