Markets

What Does Ctrip's Partnership With Big Bus Tours Mean For The Chinese OTA Leader?

After delivering a highly successful third quarter performance, Ctrip, the Chinese online travel leader, has recently announced yet another strategic partnership. This time around it is with Big Bus Tours , the world's largest operator of open top buses for sightseeing tours, present in over 19 cities across 4 continents. With this partnership, Ctrip will become the first and only travel service provider that will allow its 300 million users to book tours directly through Big Bus Tours. Prior to this deal, Ctrip acquired Trip.com in order to further enhance Skyscanner's features, and it also invested in Tujia.com, Airbnb's biggest competitor in China. We have a $53 price estimate for Ctrip's stock , which is around 12% higher than the current market price.

How Might Ctrip's Users Be Helped Through This Deal?

The deal will enable Ctrip to provide its customers with more offerings in its tour packages as well as more transportation services within their chosen destination. Big Bus Tours currently has a total fleet of around 400 buses which are availed by around 4 million passengers. It provides users with a one-stop booking facility that is smooth and efficient. With the help of QR codes, Chinese travelers can join the tours and select customized routes for their sightseeing. Currently, the facility is available across 13 cities but 6 more cities are being added to this list very soon.

Ctrip Is Boosting Each Of Its Segments Through Acquisitions

Ctrip derives around 13% of its revenues from its packaged tours segment. In the third quarter of 2017, the packaged tour revenues grew by 27% y-o-y to reach $155 million. The main drivers for this growth were the organized and self guided tours. The deal with Big Bus Tours is expected to significantly strengthen Ctrip's packaged tour segments along with providing a major attraction to its outbound travelers, one of the most targeted segment by the company for its future growth.

Also in November, Ctrip announced its acquisition of the Palo-Alto based travel recommendation website, Trip.com . The acquisition is expected to complement the services of Ctrip's Skyscanner by providing details and reviews about tourist attractions, restaurants, etc. The expectation is that users will also be able to add their reviews to the platform in the future. If Trip.com further elevates its services with reviews etc, Skyscanner might go on to become one of the most sought after metasearch platforms offering direct booking options in the future. This will surely help Ctrip not only with the growth of its air ticket sales, but also with its global expansion ambitions in the future.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Ctrip

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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