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Ctrip, China’s largest travel agency, lowered its outlook for revenue growth in the first quarter to a range of 9 to 11 percent — down from the 15 to 20 percent growth it had previously forecast.
Regulatory issues and a bashing in social media in China are partly to blame.
For years, Ctrip automatically added additional services, with lucrative fees, when a consumer booked an air ticket on its website.
Last year, a Chinese watchdog organization ruled that Ctrip had to change the practice. So the company stopped forcing its users to opt out of the additional services.
That move dented its revenue derived from selling airline tickets.
In December, there was a separate consumer eruption. On social media, some consumers accused Ctrip of presenting higher prices for its products to repeat users logged into the site than to ones visiting for the first time.
CEO Jane Sun referred to the event as an “unfortunate PR incident” that may hurt its first-quarter year-over-year growth rate while speaking on a call with investment analysts on Thursday in Beijing.
Sun said, “Our principle is to make sure that the price is transparent with no discrimination.” Executives said they had responded to the outcry with a persuasive message to the news media.
A Blow to Air Ticket Revenue
In the first quarter, Sun estimated “flat-ish” revenue from airplane ticket bookings, year-over-year.
But other parts of the business were continuing to grow. Sun said that hotel bookings, for example, might grow around 18 to 20 percent, year-over-year, in the first quarter.
She said her company has “seen some recovery” in its airline sales very recently.
In the fourth quarter, overall growth across categories remained strong. In the fourth quarter, Ctrip boosted its net revenue 26 percent, year-on-year, to $980 million.
Of particular note was its non-China flight-ticket-related volume, which for the fourth quarter accounted for 30 percent of total international tickets. That speaks mostly to the 2016 acquisition of Skyscanner, but also to the launch in November of Trip.com, the company’s new brand for non-Chinese consumers.
Ctrip executives urged investors to look at long-term trends that favor growing middle-class spending on travel, especially outbound luxury travel.
Executives blithely dismissed investor concerns of growing domestic competition from Alibaba’s Fliggy and Meituan-Dianping, a Chinese e-commerce platform that includes travel sales and that in October raised $4 billion in investment — including a $450 million stake by Booking Holdings. Booking Holdings also owns a piece of Ctrip.
Executives pointed to Ctrip’s market-leading position and overall growth rates as tailwinds in its favor in any competitive battle.