Ctrip, China’s largest OTA, opened its doors in Singapore with the official launch of its brand in Singapore this week. The move signals the company’s regional ambitions with localised websites that went live earlier this year in Singapore, Indonesia, Malaysia and Thailand.
Explaining the company’s strategy for locating its South-east Asian headquarters in Singapore, Benjamin Chua, Ctrip’s Head of Marketing for Southeast Asia, cited the island nation’s role as a gateway to the region. Despite its small population size, he said there were 8.6 million outbound travellers from Singapore, 89% of whom booked a flight online and 83% booked a hotel online. It’s small but a high frequency market, he said. Another attraction is its positioning as a transit point for intra-Asia travel.
Chua added, “Singapore has an 87% smartphone penetration, three world class airport terminals and two regional cruise centres. This makes it a natural choice for us to locate our business here.”
Ctrip establishes its base in Singapore
Its entry into Singapore and South-east Asia will be closely watched by competitors. Valued at about US$10.4 billion, Ctrip is not to be messed with. Its number one position in the world’s most-sought-after market makes it one to watch.
According to Chinese research company Analysis, Ctrip has about 37% market share in China online travel market by total transaction value.
Ctrip’s net revenues were RMB2.3 billion (US$373 million) for the first quarter of 2015, up 46% year-on-year, 82% of which came from accommodation reservation (US$154 million) and transportation ticketing (US$153 million) according to its Q1 2015 finance results.
Its mobile play will also work in its favour in a region characterised by strong mobile customer behaviour. By the end of 2014, Ctrip’s cumulative mobile app downloads reached nearly 600 million, growing over 70% from the previous quarter. Over 70% of transactions were made through mobile platforms during the Chinese New Year holiday.
Media attending the launch event were told that Ctrip has 250 million registered members on its website, 800,000 hotels, 5,000 flights and 1,000-plus packages. Its breadth and depth of content will make it a worthy competitor. The question is whether the content will be localised enough to meet Asia traveller needs.
June Zhu, recently appointed managing director of APAC, international business, said Ctrip believed in localisation. “This is the right strategy. This will not work without local teams driving it.”
Ctrip.sg is going after the same outbound travellers in Asia that Expedia, Booking.com, Agoda and other OTAs are after. At the media event, emphasis was placed on the fact that the C in Ctrip stood for Customer and that Ctrip would be bringing its strengths of product and customer service to the market. The word “trust” was also used several times.
China however is known to be a price-competitive market and the price war that has been raging in the Chinese market is well-known. In May, Ctrip paid $400 million for a 37.6% stake in eLong, previously owned in part by Expedia.
When asked if Ctrip would bring price competition to its South-east Asian business, Zhu said, “We are not interested in price competition, it is the last thing we would use…[instead] we try to understand the customer then offer them good products. We don’t need to kill ourselves over lower prices.”
Ctrip’s strength is in its understanding of the Asian market, Zhu added. This differentiates them from any other OTA with regional – and global – ambitions. “Ultimately, it boils down to company culture and how well this translates across borders.”
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