What CTrip is doing to stay the best of the best

Ctrip.com International, one of China's largest travel agencies, has a data center inside its headquarters in Shanghai that looks more like a war room than anything. Decorated with huge screens and maps of the world on the walls, this data center is logging in 300 million users' travel plans in real time.

"We gather travel habits from past behavior to make an algorithm for the best personalized suggestion," said Jane Sun, the chief executive officer of Ctrip, in an interview with the Nikkei Asian Review. "Even if the user decided not to make a booking, the keywords they search are still important as they show that person's intention."

Ctrip, which brings flights, hotels and over 60 services and experiences onto a single online booking platform, has become a giant in Chinese travel since its creation 20 years ago. It has seen off foreign competitors such as Expedia, which has struggled to enter the market through acquisitions. And by snapping up domestic competitors, Ctrip now controls about 60% of China's online travel bookings in terms of value.

In 2017 its revenues reached 26.8 billion yuan ($3.9 billion), up 39% on the previous year. Its growth rate far exceeded that of global competitors Expedia at 15% and Booking Holdings' 18%, while its debt to equity ratio floats around 33%, much healthier than its global competitors' more than 60%.

Founded in 1999 by former Oracle software engineer and current Chairman James Liang and three friends, the company has benefited from China's heady economic growth over the last two decades and the rise of a middle class hungry for new experiences.

But now China's economy is slowing and its consumers are increasingly cautious. At the same time, online competition is growing rapidly as ambitious tech giants such as Tencent Holdings and Alibaba Group Holding look to the travel market for new business opportunities.

In November 2018, Ctrip shocked the market by scaling back profit expectations for the final quarter of the year and warning of new challenges for 2019.

Amid that uncertainty, Ctrip last month brought together more than 2,000 of its suppliers and business partners to set out its growth strategy. It was the first time the company had hosted such an event and Liang himself addressed the audience of hotel and flight suppliers, government tourism bodies and search engines -- including its top shareholder since 2015, Baidu -- perhaps hoping to reinforce ties in a vast network of products and services that Ctrip's new competitors have not yet achieved.

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