Ctrip profit jumps as more Chinese travel

More people travel. More people buy travel tickets. Travel agencies, especially those who know how to work the Internet properly, make more money. China’s top online travel agent, Ctrip.com, made what has been called an ‘unexpectedly strong quarterly profit’ — probably the only people who did not expect it were the analysts — driven by rising travel demand.

Third-quarter profit almost doubled to $15 million, or 21 cents per American Depositary Share, from 12 cents a year earlier. Revenues rose to a record $46 million, as hotel reservations, flight bookings and package tours all posted strong growth.

Ctrip shares have risen about 84% this year. Ctrip said it was looking at opportunities presented by the 2008 Beijing Olympics to begin catering to inbound traffic, but added such business would be negligible next year.

CFO Jane Sun told an analyst conference, ‘The financial impact from the Olympics next year will not be significant.’

Revenue was split roughly in half between the mainland’s first tier and second tier cities. However, revenue growth from second-tier cities was 40-45%, almost double the 20-30% growth in the main cities such as Beijing and Shanghai.

The company is also facing pressure from airlines that increasingly sell directly to customers. This is true all over the world. The airlines, no matter what they say, love cutting out any intermediary. To overcome this, CTrip, and all the other players, must offer one stop shopping which is cheaper than the Internet savvy user could assemble from three or four sites.