Ctrip.com International Ltd. ADRCTRP

Morningstar Rating

Stock Research and Analysis

by Iris Tan

As the dominant player in Chinese online travel booking, Ctrip.com International benefits from a fast-growing yet highly fragmented market. Despite increasing competition, we believe Ctrip will continue to benefit from enormous industry growth.

According Read more

Bulls Say

Ctrip is the largest agent for hotel reservation and air ticketing services in China in terms of the number of room nights booked and tickets sold.

Ctrip's business runs countercyclical. Its business may have higher bargaining power over travel suppliers when their occupancy rates are lower during the economic downturn.

Ctrip mainly serves as an agent in hotel and air ticket booking with free guaranteed room allotments from hotels. Its main business is commission-based and doesn't require much capital.

Ctrip's dispersed shareholder base and large number of outstanding shares have made the company a hot acquisition target for overseas companies coveting the lucrative Chinese travel market. Read more

Bears Say

Ctrip's bargaining power will be undermined as higher-end and budget hotels start to consolidate in China.

The emergence of hybrid players in the Chinese online travel market, including travel search engines that rely on advertising sales and travel distribution platforms that charge their hotel alliance fixed annual fees for direct sales online, poses a threat to Ctrip's business.

Rising credit card use will erode the superiority of Ctrip's offline customer service network and allow customers to switch more easily among online travel agencies.

Recently, overseas online travel providers have boosted their direct presence in China significantly. Expedia is entering the Chinese corporate travel market, and Priceline PCLN plans to tap the Chinese hotel reservation market. Read more

Strategy

Ctrip aims to better inform travelers by providing a cost-effective way to book hotel rooms and air tickets through its online distribution platform. The fragmented Chinese hotel market makes Ctrip's Read more

Management

Ctrip's business benefits from management's strong execution and industry insight. The management team has been quite stable, as cofounders Jianzhang Liang, Min Fan, Nanpeng Shen, and Qi Ji remain on the board. Former COO Fan was promoted to CEO in Read more

Profile

Ctrip.com International is the dominant player in the Chinese online travel market. The company generated about 90% of its 2008 sales by serving as an agent in hotel reservation Read more

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