Phocuswright: Leap to mobile driving growth for China’s Ctrip

The Chinese outbound market is expected to grow by ten times over the next five to seven years, according to the country’s largest travel agent.

The Chinese outbound market is expected to grow by ten times over the next five to seven years, according to the country’s largest travel agent.

James Liang, Ctrip founder, told the Phocuswright conference in Los Angeles last week that consumers in the country were moving away spending on goods to services.

He said although growth in the Chinese economy is expected to slow from 10% to 6%-7%, the travel sector is expected to expand by 20% in coming years.

And he said growth will be particularly strong in the high-end luxury sector.

“If you look at other countries like Japan and Korea when they reached the same level of development China now has, they experienced a very rapid growth in outbound travel.Liang said China was now the biggest internet market in the world, with three times the number of users as the US.

This has been driven by the roll out of mobile. “A lot of Chinese a few years ago never had a PC, now they are accessing mobile internet. That’s very exciting for OTAs like us.”

Ctrip has a full-service app offering its entire product range to book on smartphones. It has seen 200 million downloads. Liang said lower-value transactions were the most likely to be booked on mobile.

The recent rapid rise in mobile has seen Ctrip’s growth rate increase from 20% to 30% to 40% it is now the world’s fourth largest travel company by market capitalisation.

The firm employs 1,500 developers drawn from some of the leading technology companies. “We are still a little behind some of the best companies in the world, but in mobile we are ahead in many respects,” Liang said.

To try to stimulate innovation, Liang said Ctrip has set up a decentralised structure designed to support entrepreneurial units incentivised to succeed.

“Basically I want the right people, very talented, young, hungry people to lead these business units,” Liang said.

“With our platform and culture of entrepreneurship and innovation, we are confident we will continue to be the leader in the space.

“In a few years when China’s travel market becomes one of the biggest in the world, we will become one of the biggest travel companies in the world.”

Forecasts for the Chinese outbound market to the US suggest that visitor numbers will grow from two million to 20 million over the next seven years.

Liang said this would go some way to closing the huge trading deficit the US has, primarily with China, and will “make the world a better and safer place”.