Three Hurdles That Will Define CTrip

The OTA that recorded the strongest performance in 2015 was Ctrip, which grew by an impressive estimated 58%, to reach gross bookings of $27 billion, driven by the booming Chinese domestic and outbound travel markets. Ctrip is today the third global OTA player, and is forecast to be able to challenge Expedia Inc and The Priceline Group for global leadership by 2019.

Source: State of Online Travel Agencies: Ctrip Joins Priceline and Expedia as Global Giant – Skift

Ctrip has, it seems, now officially (and to us in China, somewhat belatedly) joined the ranks of the world’s largest online travel agencies.

In fairness, the company offers the most comprehensive travel agency service in China, and has worked hard to fend off challengers for the past 15 years, either crushing them with size or, when all else fails, buying them out or co-opting them.

Now China’s leader must master three new challenges that come along with its newfound status:

Build a Better Outbound Service. First, the Chinese challenger must figure out how to match the listings and relationships that Expedia and Priceline have built around the world outside of China. Offering a handful of cheap alternatives in major cities is not going to keep hold of China’s 125 million outbound travelers, in particular as many of those who can speak English are already skipping Ctrip for international journeys and going right to Expedia and Priceline.

Defend against tougher local competition at home. Second, it must fight a growing number of challengers at home, both hungry local players all seeking to grab part of the market; platforms like Airbnb and its local imitators that are increasingly offering shared alternatives to traditional travel; and Expedia and Priceline as they bring their challenge into Ctrip’s home market.

Break out of China. Finally, at some point Ctrip must figure out how to evolve beyond the core Chinese market. Massive the travel base in the PRC may be, but the world beckons, and continued growth will eventually depend on deft expansion abroad.

The extent to which Ctrip can address these three challenges will determine whether it will remain a specialized, local player, or whether it will one day be feasting on the remains of Expedia, Priceline, or both.