Ctrip.com International Ltd. Q1 2010 Earnings Call Transcript

Ctrip.com International Ltd. Q1 2010 Earnings Call Transcript
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Ctrip.com International Ltd. (CTRP)

Q1 2010 Earnings Call

May 11, 2010 21:00 PM ET


Lin Zhang – Manager, Investor Relations

James Liang – Chairman

Min Fan – President and CEO

Jane Sun – Chief Financial Officer


James Lee – CLSA Limited

Richard Ji – Morgan Stanley

Kathy Chen – Goldman Sachs

Catherine Leung – Citigroup

Ming Zhao – SIG

Eddie Leung – Banc of America

Qui Jin – CICC

Mike Olson – Piper Jaffray

Chris Zee – BNP

Paul Keung – Oppenheimer

Chenyi Lu – Cowen & Company



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Good day, ladies and gentlemen. And welcome to the First Quarter 2010 Ctrip International Earnings Conference Call. My name is [Karla], and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today, Ms. Lin Zhang, Manager of Investor Relations. Please proceed.

Lin Zhang

Thank you, [Karla]. Thank you for attending Ctrip’s first quarter 2010 earnings conference call. Joining me on the call today, we have Mr. James Liang, Chairman of the Board; Mr. Min Fan, President and Chief Executive Officer; and Ms. Jane Sun, Chief Financial Officer.

We may during this call discuss our future outlook and performance, which are forward-looking statement made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.

Forward looking statements involve inherent risks and uncertainties. As such our results may be materially different from the views expressed today. A number of the potential risks and uncertainties are outlined in Ctrip’s public filings with the Securities and Exchange Commission. Ctrip does not undertake any obligation to update any forward looking statement except as required under applicable law.

Min, James and Jane will provide the business update, industry outlook and the financial highlights for the first two quarters of 2010, as well as the outlook for the second quarter of 2010. We’ll also have a Q&A session towards the end of this call.

With that, I will turn to Min for our business update.

Min Fan

Thanks Lin. And thank you for everyone for joining us today on the call. We’re pleased that our team delivered a strong result in the first quarter of 2010, which marked an inspiring beginning for the year. In the first quarter of 2010 our net revenues grew 46% year-on-year and net income grew 57% year-on-year.

Our hotel supply network continued to expand at a rapid rate with approximately 10,600 hotels by the end of the first quarter of 2010, compared to approximately 8,300 hotels by the same time last year. The number of hotels with guaranteed allotment rooms further increased and accounted for more than 70% of total hotel supply. Maintaining good relations with our hotel partners has always been crucial to our success.

During the recent global economic downturn we worked hard to help our hotel partners reach out to more customers. Towards this end we have developed new online hotel review functionalities to help hotels and customers better communicate with each other. This helps hotels gain important information about our members so they can better promote their services and attract more customers.

Our package tour business achieved robust growth in the first quarter due to the recovering customer confidence and the increasing household income. We believe our strong brand and well designed leisure products helped us to achieve the growth.

During the first quarter we held the first Ctrip travel carnival. This will be our ongoing effort to promotion. It is designed to promote the concept of free individual travel among Chinese leisure travelers.

The promotion received very positive feedback. By using our user friendly online interface and sharing personal travel experience with each community, our members will get more familiar with the FIT concept, which will help Ctrip further penetrate China’s booming leisure travel market and deliver new and appearing products to best serve our members.

Corporate travel management has been growing fast and strong, since we officially launched it in 2006. It helps corporate clients effectively manage their travel requirements. Our corporate travel management business leverages our extensive network of airlines and hotels. It provides transparent pricing structure and a reporting system to help corporate clients effectively can choose their travel costs.

We serve our corporate clients through on-site teams, adaptive call center and online platform with primary access and support. These comprehensive offerings have enabled us to grow our corporate travel business significantly through the past few years.

For the first quarter of 2010, the revenue amounted for corporate travel management to reach a significant level in total revenues. So starting from this quarter, we’ve record it in a separate line our P&L.

High service quality has always been our core competency. Through Ctrip’s membership curve we can get timely service feedback from our retirement members, which effectively helps us further improve our customer service.

In April, we launched a wireless mobile website to deliver new experience to mobile phone customers. Our efforts have been well received by our loyal customers who have contributed the majority of the revenue.

With stronger brand recognition word of mouth, our loyal customers have become one of the most cost effective sales channels for Ctrip. By working effectively with the other sales and marketing channels, the number of Ctrip’s cumulative active customer has increased by 39% year-on-year to 9.6 million by the end of the first quarter of 2010.

We have been enhancing our online system both in terms of the customer interface and backend system. Customer’s response to our ongoing efforts is very positive. We see the online booking is growing steadily.

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