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Travel Agencies- Travel industry remains robust

Travel Agencies: Travel industry

remains robust

Stock market volatility impacts value changes

The travel agency category declined 5 percent, primarily because of stock market volatility and the value decline of one travel brand that dropped out of the BrandZ™ China Top 100. Of the two travel brands remaining, the value of Ctrip, China’s largest online travel agency, was unchanged, and the value of Qunar.com, a budget-travel brand owned by Ctrip, rose 11 percent.

Travel remained robust, with outbound travel increasing 15 percent during the first half of 2018, when over 71 million Chinese traveled abroad, according to China’s Ministry of Culture and Tourism. Inbound travel rose 11.4 percent during the same period, when 23.8 million overseas visitors came to China.

Despite strong volume increases, a one-time reduction in commissions received from airlines hurt Ctrip’s results. Celebrating its fifteenth year a publicly-traded company, Ctrip is well positioned to benefit from future domestic and international travel growth. Among the factors expected to drive growth are improved infrastructure—China’s extensive high-speed railroad network and new airports—and additional travelers—over 90 percent of Chinese do not own passports.

However, growth potential has attracted many competitors, such as Meituan Dianping, which completed an IPO, and Tongcheng-Elong a travel website that completed an IPO with backing from both Tencent and Ctrip. Alibaba operates a travel platform called Fliggy. Didi Chuxing, the ride-hailing brand, entered the hotel-booking business through an arrangement with Booking.com.

Ctrip, which has focused primarily on serving Chinese travelers, is positioning to meet the needs of overseas visitors to China, with its acquisitions of Trip.com and Skyscanner, a recommendation site. In planning for the future, Ctrip has invested in hotels, tour groups, and even a company devoted to supersonic air travel.

Across its several brands, Ctrip has around 200 million users according to the company. Using artificial intelligence, Ctrip analyzes the vast amount of data it collects from its customers to understand their travel habits and market relevant offers, such as hotels and restaurants. AI is part of the brand’s strategy for providing strong customer service and increasing sales.