The potential for a slowdown in the outbound tourism market is forcing Ctrip.com to shift strategic priorities, something that all major online travel agencies catering to the China market will have to consider.
Ctrip Chief Financial Officer Cindy Xiaofan Wang told The Wall Street Journal‘s CFO Journal this week that the company has substantial cash that the company will use to offer discounts to customers and engage in targeted marketing efforts to help ride out the potential downturn from trade tensions and other economic conditions.
For Ctrip, this means attempting to bundle more bookings at a discount to drive revenue and user numbers. The company is also targeting travelers in lower-tier cities, which is especially significant considering how much faster tourism growth is outside of China’s more developed metropolitan areas.
This strategy could prove expensive for the company, forcing them to absorb losses on sales for an indefinite period of time. However, it’s also an opportunity for Ctrip and other major online travel agencies like Alibaba’s Fliggy or Meituan-Dianping to increase their market shares in the long term by absorbing losses now while smaller up-and-coming competitors are forced to scale back or exit the market completely.
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