Ctrip targets 50% share of China's luxury travel market

Source: Want China Times Chinese travel agency Ctrip on April 28 announced a partnership with the Hong Kong-based Taimei Group to venture into the luxury travel market. Guo Min, former president and CEO of Taimei, reported that Ctrip will take control of Taimei via cash and other sources. Ctrip will establish a company to tap the high-end travel market, of which it aims to control a 50% share within five yea rs. The company believes the luxury travel market in China to be worth several tens of billions of yuan a year. Fan Min, CEO of Ctrip, defines the high-end travel market as excursions which cost 50,000 yuan (US$7,900) per trip. Fan points to the huge potential of the sector, as there are 2.7 million people in China with personal assets in excess of 6 million yuan (US$950,000), 60% of whom have expressed their willingness to travel, and to do so in style. At the end of last year, Ctrip joined up with Wing On Travel of Hong Kong and EzTravel of Taiwan in establishing HH Travel and invested in Taimei Travel in April this year for the management of the new venture, which aims to become the largest high-end travel service in China. Just four years old, Taimei Travel has provided luxury travel services to 20,000 tourists from China. Yet while Taimei Travel has only around 2,000 members, Ctrip boasts tens of millions of members. Some 30,000 members of Ctrip are viewed as regular customers booking luxury travel services and are the target customers for the new venture. An industry figure notes that Ctrip needs to demonstrate new areas of business with strong growth potential at a time when its two mainstays, flight bookings and hotel accommodation, are encountering strong competition. In 2011, Ctrip made 1.1 billion yuan (US$174 million) in net profit on sales of 3.5 billion yuan (US$554 million). Should it be able to garner half of the luxury travel market as it hopes, its sales would triple. Market players suspect however that Ctrip appears to be overoptimistic about its prospects in this area, as high-end travel tends to be tailor-made to the traveler and limited in scale. from China Travel & Tourism News http://www.chinatraveltourismnews.com/

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