China Issues New Guideline on Crowd Control at Scenic Spots

(CRI) Chinese tourism authorities have issued a set of guidelines on how to determine the maximum number of people that should be allowed in at popular scenic spots.

The fresh guidelines were issued days after 36 people died in a stampede during a New Year event in Shanghai.

The national Tourism Administration has asked all tourists hotspots in the country to calculate their respective maximum bearing capacity and formulate appropriate emergency plans to control the flow of visitors.

This is the first time that a uniform set of guidelines have been issued nationwide.

The guidelines have defined standards for seven different types of Scenic spots, such as sites with cultural relics and ancient districts.

For example, at the site of the world famous Terra Cotta Warriors, each person must have a space of 2.5 to 10 square meters to move about.

The guidelines also provide specific measures to control tourist flow. Tourists are encouraged to book tickets in advance so that managers of these scenic spots have a general estimate of the number of visitors on any given day. Tourists who buy tickets in advance can also enjoy a discount.

The guideline stresses that once the number of visitors reaches 80 percent of the maximum carrying capacity of a particular place, steps should be taken to control crowds and slow the pace of admitting new people.

Once the tourist number approaches the maximum carrying capacity, authorities in the scenic spots should make the visitors aware of this fact and even alert local government officials so that emergency control plans are on standby mode.

Once the tourist number reaches the maximum carrying capacity, authorities in the scenic spots should stop selling tickets.

Moreover, the new guidelines call for emergency control plans to be prepared for mega events as well as other festivities.

The new guidelines will take effect on April 1, 2015.

Source: CRI

Ctrip Buys UK Site to Tap Travel Needs

(CRI) China's biggest online tourism service provider Ctrip.com has bought a UK-based low-cost travel platform for more than 100 million U.S. dollars to meet the surging demand for overseas trips by Chinese travelers.

Ctrip has invested in Travelfusion by purchasing a majority stake in a UK-based low cost carrier platform, which has more than 200 budget airlines and over 30 hotel partners.

Travelfusion partners include top budget airlines such as Jet Blue, Easy Jet, Air Asia and Tigerair.

Chinese consumers will now be able to search and purchase more international budget airline tickets offered by Travelfusion on Ctrip's platform using a Chinese-language interface and after-sales support.

Source: CRI

Made in China at Hanoi's oldest market

(Xinhua) Visiting Dong Xuan Market, the largest and the oldest wholesale market in Hanoi, one can immediately see that most of the products and items being sold there are made in China.

Built by the French in 1889, Dong Xuan Market has been renovated several times, the latest in 1994 after a fire almost destroyed the market.

Currently, Dong Xuan Market is considered the largest wholesale market in Hanoi with some 2,000 shops selling everything from electronics, clothes, household appliances, toys, fashion accessories and foodstuffs.

According Tinh, a 70-year-old female shopkeeper, products made in China, particularly cheap electronics and fabrics, are the favorite of Vietnamese shoppers at the market.

She said almost 80 percent of the products sold in the market come from China.

Tinh, who has been selling fabrics at the market for over 30 years, said unlike before, it is now easy to buy goods from China.

"Years ago, there was a man who bought fabrics from China and delivered them to us, but then my family decided to go to China to buy products ourselves. It is more convenient and we earn more profits," Tinh told Xinhua.

According to Tinh, her customers patronize Chinese-made fabric not only because they are cheaper but also because of their beautiful design and excellent quality.

Thanh, who owns four shops at the market selling watches, accessories and jewellery for more than 10 years, told Xinhua that he goes to China two to three times a month to buy the items sold in his shops.

"Selling Chinese products is quite profitable as many Vietnamese, especially the young people, like products with beautiful designs at comparatively lower prices," Thanh said.

Thanh said one time he bought Chinese-made accessories worth about 10 billion Vietnamese dong ($472,000).

Thanh said he goes to China, orders the goods that he needs and pays for them and the goods are delivered to his shops without much hassles.

Hoa, a 28-year-old male shopkeeper, said if he cannot travel to China, his business partner in China will send him photos and information about Chinese-made products via email or Wechat.

"After I make my order and remit a partial payment, the items will be delivered to me in Vietnam," Hoa said.

"When I have time, I will go to China's Guangxi where I can do the purchasing myself. Many people there speak Vietnamese so I need no interpreter. It would be very easy for me to transact business," Hoa added.

Le Thi D, a 50-year-old textile dealer, said many traders at Dong Xuan have built close business contacts with Chinese partners for a long time.

"About 70 percent of the fabrics in my shop are from China's Zhejiang and Guangdong provinces. 

Once a year, traders from China come to meet Vietnamese partners for doing yearend balance sheet. 

We have kept close relations with them for years. They even took their families here to meet their Vietnamese partners and also to visit Vietnam," Le said.

According to the latest figures from Vietnam's General Statistics Office, in 2014, Vietnam imported some $43.7 billion worth of products from China, an increase of 18.2 percent compared to the 

previous year.

Among the imports, fabrics posted an increase of 20.7 percent, machinery, tools and equipment up 19.7 percent, while imports of phones and electronic accessories up 9.5 percent year-on-year.

In 2014, Vietnam was estimated to incur a trade deficit of $28.9 billion with China, up 21.8 percent compared to 2013, said the statistics agency.

"A good relationship between the two countries will make trade and business activities between the two peoples more convenient and stable. As Vietnam and China are neighbors, I hope that the two countries will keep their bilateral relations intact because this will benefit the two peoples," said Le, who has been selling textile at Dong Xuan Market for nearly 18 years.

Source: xinhua via china daily

Ctrip Announces Investment in Travelfusion

(PRNewswire) Ctrip.com International, Ltd., a leading travel service provider for hotel accommodation, ticketing services, packaged tours and corporate travel management in China, today announced that they have completed an investment transaction in Travelfusion by purchasing a majority stake in the company.

Travelfusion is a UK-based leading online Low Cost Carrier (LCC) travel content aggregator and innovator of Direct Connect global distribution solutions. Aggregating 200+ LCCs, Full Service Carriers (FSCs), rail operators and 30+ leading hotel consolidators, Travelfusion's Direct Connect distribution platform enables the world's travel agents, travel search and mobile travel services to search and book this content through Travelfusion's API, desktop or internet booking engine technologies and facilitates global payment and settlement solutions.

"Travelfusion has built a great GDS system for LCCs globally," said James Liang, Chairman and Chief Executive Officer of Ctrip, "The strategic relationship we built with Travelfusion will further extend our leadership in China's international travel market, and enhance the efficiency and effectiveness of our IT system by leveraging Travelfusion's advanced technology. We are excited to work with Travelfusion's team to create greater value for our customers."

"China is expected to be the largest travel market in the world, and Ctrip is the clear leader in the online and mobile travel industry in China. After 15 years of building Travelfusion to be an industry leader, we are thrilled to take further steps to realize and fulfil our potential in such a great market with such a powerful industry leader," said Mr. Moshe Rafiah, Chief Executive Officer of Travelfusion.

Source: PRNewswire

Six online travel agencies trapped in price war

President Xi Jinping said during the Asia-Pacific Economic Cooperation meeting in Beijing on Nov 9 that the number of outbound tourists from China will exceed 500 million in the next five years. By then, more than one third of Chinese will travel overseas each year.

The year 2014 also means a lot for China's tourism industry as the number of outbound tourist departures from the Chinese mainland has exceeded 100 million within a calendar year for the first time, according to China National Tourism Administration.

While the growth pie is big and luring, the road to a slice of it might be thorny and costly for China's online travel agencies (OTAs).

Analysts have predicted that China's OTAs have entered an "industry-wide loss-making era" as Ctrip.com, the largest Chinese online travel agency by market capitalization on NASDAQ, predicted it would make a loss of more than 400 million yuan ($64.6 million) in the fourth quarter of this year. 

The other three Chinese OTAs, which are also listed on NASDAQ, have already announced losses for the third quarter of this year.

Even under such a difficult circumstance, online travel agencies, listed or hoping to be listed, have waged a price war for the upcoming Double Twelve tourism promotion festival on Dec 12. This festival is also a key occasion "created" by travel companies to stage the year-end promotion, similar to the "Single's Day" shopping festival of the online retail industry on each year's Nov 11.

Let's take a look at the major "warriors".

Ctrip.com

Liang Jianzhang, CEO of Ctrip, announced on Dec 3 that the company would spend 1 billion yuan in the price war, rolling out 10 million products with zero profit.

For the Double Twelve festival specifically, the online travel agency has rolled out a "travelling around the globe by spending only one yuan" program. There are 16 overseas tourist destinations for prospective vacation-takers to choose. A total of 12,120 persons can be the lucky ones to win this "one yuan ticket".

Tuniu.com

Tuniu, which made a loss of 10.34 million yuan in the third quarter of this year, has filed to the US Securities and Exchange Commission for a up to $100 million new share issuance plan.

Analysts said this fundraising plan is for the price war. Tuniu has prepared 12 kinds of tour packages for those planning for a vacation to grab beginning 10 am, Dec 12. The destinations are mainly in Asia, such as Jeju Island and Seoul in South Korea. Tuniu promised the prices to be "the lowest on the whole Internet". The lucky one who succeeds in 'grabbing' a four-day package tour departing from Shanghai on Jan 14, 2015, to Jeju Island only needs to spend 798 yuan. But Tuniu did not say how many people can win the "grabbing" game.

LY.com

LY.com, an online travel agency that was set up in 2004, has spent 120 million yuan on its overseas tour services and cruise travel tour services, aiming to surpass Tuniu.

For Dec 12, LY.com, has rolled discounted prices for spring, skiing and other entertainment.

Aoyou.com

Aoyou.com, an online travel agency listed in Shanghai, will cut 1,000 yuan from the whole price for a family who has a child under 12 years old and who book designated tours between Dec 10 and Dec 19.

The whole price needs to be above 10,000 and the family needs to be among the first 1,000 families that have booked.

Lvmama.com

Lvmama.com, an online travel agency targeted at self-guided tourists, announced that it has gained a credit line of 10 billion yuan from three banks.

This online agency has begun to pre-sell about 20 types of overseas tours for those who book via Lvmam's smartphone app before the end of Dec 12. The destinations rang from America to Turkey to Sri Lanka.

For example, one can buy five-day transportation service and hotel stay in Thailand at only 187 yuan if he or she books before Dec 12.

Trip.taobao.com

Trip.taobao.com, affiliated with the Alibaba Group, will hand out 1,300 plane tickets costing one yuan from 10 am to 10 pm, Dec 12.

Source: China Daily

China's booming tourism market finds new partnerships

Following the booming growth of China's outbound tourism in recent years, international tourism giants have flooded into the nation, with Turkish Airlines last weekend signing an agreement with a Guangzhou travel agency to jointly explore the huge potential of the mainland market, reports the People's Daily Overseas Edition.

The international tourism giants are hoping to conduct a reshuffle of the Chinese tourism market through collaboration with domestic tourism companies or mergers and acquisitions.

In 2013, China's outbound tourism grew rapidly, with 97.3 million Chinese nationals visiting foreign countries, up 18% from a year earlier. Abroad, they spent US$120 billion, up 20% year-on-year. In the first eight months of this year, the number of Chinese tourists in Turkey rose 40% year-on-year, thus triggering the cooperation between Turkish Airlines and the Guangdong travel agency, according to Turkey's consulate in Guangzhou.

International tourism giants already mapped out strategies in China for their potential market. In August, Priceline, the world's largest online travel agency (OTA), bought a stake in China's Ctrip.com to strengthen its global strategic partnership. Expedia, another US OTA giant, also has a local partner in China. In 2009, US-based TripAdvisor acquired a local OTA company.

Royal Caribbean International, one of the world's leadng international cruise lines, plans to park its top luxury cruise, Quantum of the Seas, in Shanghai in 2015, moving from New York.

The great promise of China's tourism market and huge consumption potential are exactly the reasons why international tourism giants are coming to China one after the other, said Dai Bin, president of the China Tourism Research Institute.

According to statistics from the United Nations World Tourism Organization (UNWTO), the number of China's outbound tourists and their travel consumption both ranked no. 1 in the world in 2013. In the next five years, about 500 million Chinese tourists will visit abroad.

Recently, during the Asia-Pacific Economic Cooperation (APEC) leaders summit, US president Barack Obama announced the relaxation of visa approvals to Chinese tourists, a move which will inject billions of dollars into the US economy and create demand to support hundreds of thousands of additional US jobs.

Following the booming growth of China's internet economy, Chinese tourism enterprises will also take the chance to expand their business scale. Spearheading the move are the three internet giants — Baidu, Alibaba and Tencent — which are already in OTA talks abroad, the report said.

Source: Want China Times

Ctrip's Net Earnings Shrink 42% in Q3

(CRI) Chinese online travel booking website Ctrip.com has seen its net profit shrink some 40-percent in the third quarter.

The company says this is because of higher expenses for marketing, along with its investments in wireless services.

Net profits for Ctrip came in at around 35-million US dollars in the third quarter.

Nasdaq-listed Ctrip is predicting revenue growth of 30 percent in the fourth quarter.

But this is weaker than analysts' original expectations of 36 percent.

Ctrip has invested heavily to build and upgrade platforms for hotels and airlines, as well as expanding into the mobile sector.

The company's sales and marketing expenses for the third quarter increased nearly 70-percent to around 100-million US dollars.

Source: CRI

China-U.S. Visa Deal a Problem for Agencies Helping Chinese Emigrate

(WSJ) A deal to ease visa requirements between China and the U.S., combined with Beijing’s crackdown on corruption, spells trouble for the industry serving Chinese who want to emigrate.

That business is already under pressure as countries such as Canada shut down programs that effectively allowed rich people to buy citizenship. China is the top source for investment-based immigration in countries such as the U.S., Canada, Australia, Cyprus and Portugal.

The deal, reached Monday between U.S. President Barack Obama and Chinese President Xi Jinping to ease visa restrictions and grant 10-year multiple-entry visas for tourists and businesspeople, will reduce demand from rich Chinese for permanent residency in the U.S.

“With a 10-year visa, some people won’t bother getting a green card,” said Bernard Wolfsdorf, a California-based immigration attorney at Wolfsdorf Rosenthal.

Chinese looking to buy permanent residency sometimes pay tens of thousands of dollars in fees to the agencies, which are based in China and overseas. The visa deal came as China agreed with other Asia-Pacific countries to set up a regional network to track down corrupt officials.

At the Investment Immigration Summit held in Hong Kong this week, industry executives were concerned. “People are waiting for the hammer to fall,” said Jean François Harvey, the organizer and global managing partner at Harvey Law Group. “There’s a lot of nervousness in China.”

China is also set to cooperate with the U.S. in providing bank-account information on U.S. citizens and green card holders in China. In return, it wants to get information from the U.S. about corrupt Chinese officials who have fled to other countries.

Immigration consultants say the sons and daughters of government officials and bosses at state-owned enterprises can account for up to half of the applicants for U.S. immigration-based visa applications in places like Beijing.

In China, authorities are scrutinizing the immigration agencies that serve the rich. Several immigration lawyers in China and Hong Kong said police have visited trying to get information about their clients, though they were quick to add that they insisted on attorney-client privilege.

“There’s lots of money to be made in this field,” said Eugene Chow, principal at Chow King & Associates. “But you may be on the wrong side of the fence. Today’s hero in China may be tomorrow’s public enemy.”

At the moment, demand is strong under programs that grant people visas if they make investments, buy property or just bring cash into a country. The U.S. EB-5 visa program, which allots 10,000 visas a year to foreigners who create jobs and invest at least $500,000, hit its quota in August for the first time. Waiting times have increased from a few months to two to three years.

But foreign governments are becoming more careful about the people they allow into their countries and some are expressing regrets about opening their doors to rich immigrants. “We should have insisted on a security check on every applicant, because some people are unscrupulous,” said Denzil Douglas, prime minister of the Caribbean island nation of St. Kitts and Nevis, which has a popular immigration-visa program.

Canada has ended a program similar to the U.S.’s EB-5 offering, saying it didn’t bring enough economic benefit and “significantly undervalued” Canadian residency.

Chinese hoping to emigrate are also realizing they may not be safe in small countries that are less likely to stand up to China. It took more than a decade for Chinese fugitive Lai Changxing to be extradited from Canada. But in Fiji, Chinese authorities working with local police went in and seized an executive suspected of running off with company money just three days after the formal start of the investigation, the Chinese government said.

For ordinary Chinese who merely want to travel, the new 10-year visas will be a game changer. Until now, they could only get visas for a maximum of one year.

The U.S. has also streamlined the visa process for Chinese. The number of Chinese who received U.S. nonimmigrant visas jumped five times from 2004 to 1.4 million in 2013. For every six nonimmigrant visas the U.S. issued globally in 2013, one was given in China, up from one in every 20 in 2004.

This easing by the U.S. may be followed by other countries such as the U.K., which has been criticized for not making things simple enough for Chinese travelers.

The long-term U.S. visas will be a boon for the travel industry. The White House expects the number of Chinese visitors to the U.S. to now quadruple to 1.8 million a year.

“With more options, wealthy Chinese are more likely to rethink the cost and benefit of a U.S. passport,” said David Lesperance, a U.S. immigration lawyer at Lesperance Associates.

Source: Wall Street Journal by Wei Gu

Online travel platform to promote China abroad

(China Daily) Qunar.com, China's leading online travel platform will invest 25 million yuan ($4.1 million) to launch a campaign aimed at promoting Chinese culture and the positive image of Chinese tourists overseas, the company said in a press release on Wednesday.

Chinese tourists abroad who participate in the campaign will be required to upload photos of foreigners with element of Chinese culture on Weibo, the Chinese equivalent of Twitter. Each participant will have the chance to win up to 500 yuan in a pool of 25 million yuan offered by Qunar.com, according to the company.

"Every Chinese abroad should be the ambassador of the Chinese culture. We hope that this campaign would encourage our citizens to promote the Chinese culture when they travel abroad and let more people in the world know about real China," said Yang Zi, assistant president of Qunar.com.

China is the fastest-growing market of outbound tourism in the world with an annual growth rate of 18.8 percent, according to Qunar.com. In 2013, the number of outbound Chinese tourists reached 98.2 million.

Source: China Daily by Li Xiang

Priceline to Invest $500 Million in Ctrip

Priceline Group Inc. plans to invest $500 million investment in Chinese online travel company Ctrip.com International Ltd., as the online reservation company seeks a larger footprint in the world's biggest outbound-travel market.

Under the new deal, Priceline's Booking.com hotel-booking site will advertise Ctrip's inventory of hotels in China. Ctrip, meanwhile, will be able to offer its users a wider array of deals from Priceline's platforms including Booking.com, Agoda.com for smaller hotels, OpenTable and rentalcars.com.

"This looks like a financial and strategic alliance of two champions," said technology hedge-fund manager Richard Ji of All-Stars Investment.

The deal helps Priceline, the world's largest online reservation company by market capitalization, root itself in a country poised to surpass the U.S. as the world's top business-travel market this year. With a broader portfolio of inventory to offer its users, Ctrip hopes to siphon business from travel agents, the company said. While about 40% of travel bookings in the U.S. and Europe are done over the Internet, in China, that level is just 15%.

"Our biggest competitors are the offline travel agencies," said Oliver Hua, managing director of Asia at Booking.com. "We want to offer better selection and value to lure Chinese outbound travelers online."

Priceline said Wednesday that it has agreed to invest $500 million in Ctrip through a convertible bond. 

As part of the deal, Priceline can buy Ctrip shares on the open market over the next year, and amass as much as 10% of the company's shares outstanding. Upon purchase of the bond, Priceline can name an observer to Ctrip's board of directors.

"We have very strong services in China, which Priceline's overseas clients can use," said Jane Jie Sun, Ctrip's chief operating officer. "Priceline will provide the best terms to our clients."

Priceline has an existing partnership with Ctrip, signed in August 2012, that allows Ctrip's hotel-reservation service to access Booking.com's portfolio of world-wide hotels for outbound Chinese travelers.

Currently, Ctrip's overseas market accounts for 10% of its revenue. The company expects that proportion to double in six years, said Ms. Sun. She said she expects Ctrip's revenue to increase tenfold by 2020, based on annual revenue growth rate of 45% a year, at which point she expects Ctrip to vault ahead of Priceline to become the world's most valuable online travel company. Ctrip's current market capitalization is $8 billion, compared with Priceline's $67 billion.

The Boston Consulting Group estimates that 49% of all passenger traffic globally will be within Asia or between Asia and the rest of the world by 2030. Chinese travelers will make up about 40% of all Asian outbound international travelers by that year, the consultancy says.

Ctrip and Priceline's tie-up came amid a string of others in China's travel sector. Expedia Inc. has a 65% stake in Chinese travel site eLong Inc. Chinese travel-site operator Qunar.com has benefited from the traffic sent by its investor, Chinese search engine Baidu Inc. 

Source: Wall Street Journal by Wei Gu

Priceline Expands China Options With Ctrip Investment

(Bloomberg) Priceline Group Inc. (PCLN), the largest online travel agent in the U.S., will invest $500 million in Ctrip.com International Ltd. to broaden the companies’ options in China.

Priceline and Ctrip, which have had a commercial partnership since 2012, will increase their cross-promotion of each company’s hotel inventory and other travel services, the companies said yesterday in a statement.

Ctrip, China’s biggest travel website, is expanding its hotel-booking business as sales increase. Chinese revenue per available room rose 7 percent in May, the highest growth since 2010, according to Bloomberg Intelligence. Ctrip’s total sales climbed 38 percent to about $276 million in the second quarter, according to a statement July 30.

The partnership with Ctrip will spur both companies’ growth, allowing them to access each other’s portfolios, said Priceline Chief Executive Officer Darren Huston. It will bring to Priceline more bookings from Chinese travelers going abroad as well as increase the selection of accommodations and broaden the company’s geographic reach within the country. Currently, Priceline is under-represented in China when it comes to accommodations, he said.

‘Broadest Selection’

“It’s like putting products on the shelf. If you put more products on the shelf, it enhances the value of the store,” Huston said.

Chinese travelers are critical to any global travel company, he said. The middle class, which has increased amid explosive economic growth, makes more money and wants to see the world. An increasing number of Chinese tourists are shifting online to book their plans, a market that Priceline is eager to tap into.

“Our primary way of growing as a company has and will be organic growth, and the commercial side of this deal is critical to helping us keep up the fast pace of organic growth,” Huston said.

Priceline has used acquisitions to drive growth and surpass Expedia Inc. in revenue, including last year’s purchase of Kayak Software Corp. for about $1.7 billion.

Priceline’s investment in Ctrip, through a convertible bond and an agreement to buy Ctrip shares on the open market over the next year, means the company may own as much as 10 percent of Ctrip.com, which is listed on the Nasdaq Stock Market. With the purchase of the convertible bond, Priceline has the right to name an observer to Ctrip’s board.

Ctrip’s American depositary receipts closed at $60.45 yesterday in New York, giving the company a market value of $7.8 billion. Priceline, based in Norwalk, Connecticut, closed at $1,280.57, for a market value of $67 billion.

Source: Bloomberg News Jennifer Surane and Jing Cao

Ctrip’s Hotel Booking Growth Seen Extending 35% Rally

(Bloomberg) Ctrip.com International Ltd. (CTRP) will extend its rally after reaching a record last week as China’s biggest travel website boosts its share of the hotel reservation market at the expense of smaller competitors, JG Capital says.

American depositary receipts of Ctrip rose 13 percent to $67 last week, pushing the year’s gain to 35 percent. The shares are outperforming a 6.6 percent year-to-date increase in online travel company Qunar Cayman Islands Ltd. (QUNR) and a 1.9 percent drop in Elong Inc. (LONG), whose top shareholder is Expedia Inc. The Bloomberg China-US Equity Index for the most-actively traded  Chinese companies in the U.S. advanced 6.3 percent last week, the most since December 2011.

Henry Guo of JG Capital says Ctrip’s investments in mobile products and marketing are helping it benefit from China’s rising incomes and growing middle class which boost demand for travel reservations and packaged tours. The Shanghai-based company is expanding its hotel booking business where transaction volume jumped 67 percent last quarter while Elong reported a 43 percent increase.

“Ctrip’s fast growth in the hotel segment shows it’s grabbing market share from Elong, and that explains its big rally over the past few months,” Guo, a San Francisco-based analyst at JG Capital, said by phone July 24. “I am bullish on China’s travel sector for its long-term growth outlook.”

Guo has a buy rating on the stock with a $70 price target. The company reports second-quarter earnings on July 30. Ctrip’s ADRs retreated 1.4 percent to $66.05 as of 10:01 a.m. in New York, halting a six-day advance.

Mobile Spending

Ctrip stepped up investments in mobile Internet and new products as mobile devices surpassed desktop computers to become the most important hotel booking platform, Chairman and Chief Executive Officer James Liang said on a May 7 conference call.

The company will report revenue of $270 million for the April-June period, up 33 percent from a year earlier, 11 analyst estimates compiled by Bloomberg show. The average projection is 5.4 percent higher than it was six months ago.

While Ctrip’s second-quarter operating profit may drop 5 percent from a year earlier to $30.3 million, it will grow 8 percent this quarter and 32 percent in the last three months of the year, according to the average of seven analyst estimates compiled by Bloomberg.

Chinese hotel revenue per available room increased 7 percent in May, the highest since 2010, according to a Bloomberg Intelligence note. This may indicate a return of higher domestic leisure and business travel offsetting a corruption crackdown that’s crimped lavish official spending, the report said.

Costly Innovation

Ctrip’s new products and features have come at a price as development expenses for the first quarter surged 65 percent from a year earlier, according to a company statement in May.

Rising competition in the web-based travel sector has “depressed” Ctrip’s operating margin, a measure of profitability, according to Michael J. Olsen, an analyst at Piper Jaffray Cos.. Ctrip said its adjusted operating margin narrowed to 12 percent in the first quarter from 23 percent a year earlier.

“It’s unclear when the intensifying competitive China travel environment will abate,” he wrote in a note dated June 26. “We have modeled margins below the 20 percent level for the next several quarters.”

Olson has a neutral rating on the company ADRs and a price target of $50.

Ctrip faces less competition from smaller rivals in the transportation ticketing business, where it posted 71 percent growth for the first quarter. High volume in both hotel booking and transport ticketing is likely to continue and Ctrip’s margins will improve in the second half of the year, according to Tian X. 

Hou, the founder of TH Capital LLC, a research firm focusing on the Chinese Internet sector.

“Its volume will keep going up at a very fast pace driven by investments in product and branding,” Hou, who has a buy rating, said by phone from Beijing July 24. “We expect the operating margin to start improving from the third quarter as investments stabilize.”

Source: Bloomberg News by Belinda Cao

Elong Leads Travel Websites’ Decline on Lower Fee Income

ELong Inc. (LONG) led a slump in Chinese online travel sites traded in the U.S. after China Eastern Airlines Corp. joined bigger rivals in cutting sales commissions.

Elong, whose top shareholder is Expedia Inc., fell 2.8 percent the lowest close since June 27. Qunar Cayman Islands Ltd. (QUNR), controlled by Baidu Inc., slid for a third day and Ctrip.com International Ltd. (CTRP), China’s biggest online travel agency, sank to the lowest level in three weeks. The Bloomberg China-US Equity Index slipped 1.4 percent to 106.97 in New York, dropping the most in seven days.

China Eastern followed other air carriers in lowering the commissions it pays to domestic ticketing agencies by 1 percentage point to 2 percent, China Business News reported yesterday, citing the airline. 

The impact of the change will be reflected in the travel sites’ third-quarter results even though the companies said the effect on sales would be limited, according to 86Research Ltd. Air China Ltd. and China Southern Airlines Co. had already notified agencies of the lower fees.

“They all will be impacted because they all have exposure” to the air ticketing business, Jeff Papp, senior analyst at Oberweis Asset Management Inc. in Lisle, Ill., said by e-mail. “Ctrip could be most impacted because they have expectations for some profits this year. This move by airlines needs to force consolidation in the travel sector.”

ETF Slips

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., declined 1.4 percent to $37.97, the biggest slump in three weeks. The Standard & Poor’s 500 index (HSCEI) fell 1.2 percent amid intensifying tension in Ukraine and the Middle East.

Elong’s American depositary receipts slumped to $19.82. Qunar fell 0.8 percent to $27.10 and Ctrip slid 2.6 percent to $58.80.

A business combination of Ctrip and Qunar makes the most sense, Papp said. In April, Bloomberg reported Ctrip and Qunar were discussing the possibility of a merger, citing two people with direct knowledge of the talks. The people, asking not to be identified because the negotiations were private, said the talks were in an early stage and may not result in a final deal.

China’s Southern Metropolitan News reported July 3 that Ctrip.com was planning to acquire Expedia’s stake through a share swap, citing an unidentified person with knowledge of the matter. Four days later, Expedia, the U.S.-based travel website that owns about 65 percent of Elong, said it remains a long-term investor and supports the company’s “drive to become the leading Chinese travel site.”

Melco Drops

Melco Crown Entertainment Ltd. (MPEL), an operator of casinos in Macau, fell 3.3 percent to $31.96 in New York, a five-week low.

Sands China Ltd. yesterday reported second-quarter profit that missed analysts’ estimates, partly because of a special bonus to retain staff before the next wave of new casinos to be opened in Macau next year.

Investors will be most concerned about Sands’ competitors as other operators have also announced new staff retention plans during the quarter, Karen Tang, a Deutsche Bank AG analyst, said in a note yesterday.

E-Commerce China Dangdang Inc., an online retailer based in Beijing, tumbled 4.9 percent to $12.14 in a third day of declines. Youku Tudou Inc. fell 3.7 percent to a one-month low of $19.80.

The Hang Seng China Enterprises Index slipped 0.1 percent to 10,467.06, sliding for a second day. 

The Shanghai Composite Index (SHCOMP) retreated 0.6 percent to 2,055.59, dropping the most in a week

Source: Bloomberg News by Belinda Cao | Photo: China Daily

Expedia Calls eLong Reports Inaccurate

(WSJ) Expedia Inc. on Monday called certain rumors reported in Chinese media about the company's majority ownership of Chinese online travel service provider eLong Inc. inaccurate.

The Bellevue, Wash., online travel site said it remains a long-term investor in eLong and supports eLong's drive to become the leading Chinese travel site.

Expedia said that as a matter of corporate policy, it doesn't comment on market rumors relating to its business.

Expedia's involvement with eLong dates back to 2005, when Expedia's then-parent IAC/InterActiveCorp. took a controlling interest in the Chinese company.

In 2011, Expedia boosted its stake to near its current level of roughly 57%, while Tencent Holdings Ltd. also unveiled a strategic investment in eLong.

Meanwhile, Expedia has continued to add to its portfolio of brands from around the world.

Late Sunday, Expedia unveiled its bid to acquire one of Australia's largest online travel agencies, Wotif.com Holdings Ltd., for 703.1 million Australian dollars ($658.4 million). The deal was embraced by Wotif's board.

Last month, Expedia agreed to buy European online car-rental company Auto Escape Group from private-equity fund Montefiore Investment, and last year paid $632 million for 62% of German travel site Trivago.

Source: Wall Street Journal by Anna Prior