Online travel firm moves into business sector

Top Chinese online travel service provider Ctrip.com International Ltd has launched a business travel service.

"We have been working on services for enterprises for two or three years, but now is a good time for us to launch it as a separate business unit for Ctrip," said Fan Min, chief executive officer of Ctrip, yesterday.

Fan said one reason for setting up a business travel unit is that demand from firms is high; companies have an increasing desire to cut down on costs as much as possible.

Also, there are few national travel service operators in China, although the country has thousands of ticket or hotel reservation agencies and travel agencies.

Fan said revenue from business customers is already over 100 million yuan (US$12 million) a year, but he expected the new business will become a pillar for the firm within three to five years.

Ctrip's total revenue in 2005 was US$64.6 million. The firm is the second most profitable Chinese Internet company listed on the NASDAQ stock market. There are 13 NASDAQ-listed Internet companies from China.

Ctrip estimates firms in China spent 33 billion yuan (US$4 billion) on business travelling last year.

"There are lots of players in the business travel market, but very few have a significant share and an outstanding brand, so we have a great opportunity to become a leader," said Fan.

He estimated American Express might be one of the biggest firms in this area in China with its global network, brand and capital.

However, he said Ctrip also has advantages: it offers an air ticket booking service in 45 cities and hotel booking in 270 cities, which are attractive to many big companies with regional branches.

Ctrip also has one of the biggest call centres in China with more than 1,200 operators and its own online information management system, which can help companies monitor their travel expenses and therefore cut down on costs.

Tetsu Kimoto, president of Panasonic China, said his company spends more than US$1 million on travel expenses a year, because his employees need to travel between Panasonic's facilities in 26 Chinese cities.

He did not give the exact amount his company would save by outsourcing travel services to Ctrip, but said by doing so the firm could lead to a significant reduction in travelling costs.

Rao Zhan, an Internet analyst with Beijing-based Analysys International, pointed out that Ctrip has been working in the consumer market for six years and has a strong reputation there, but its presence in the business market is weak.

Another challenge for Ctrip is that demand from business customers is usually more diverse than for individual customers.

Source: China Daily