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Q2 2010 Earnings Call

August 9, 2010 09:00 PM ET


June Zhu – Investor Relations

James Liang – Chairman

Min Fan – President and CEO

Jane Sun – Chief Financial Officer


Richard Ji – Morgan Stanley

James Mitchell – Goldman Sachs

Alicia Yap – Citigroup

Mike Olson – Piper Jaffray

James Lee – CLSA

Aaron Kessler – ThinkEquity

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Ming Zhao – SIG

Ashish Thadhani – Gilford Securities

Fawne Jiang – BMC



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Good day, ladies and gentlemen. And welcome to your Second Quarter 2010 International Limited Earnings Conference Call. My name is Shania and I will be your event manager today. Throughout the conference you will remain on listen-only. (Operator Instructions)

I would like to advice all parties that this conference is being recorded for replay purposes. And now, I’d like to hand the conference over to June Zhu, go ahead please.

June Zhu

Hello everyone. Thank you for attending Ctrip’s second 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 statements 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 potential risks and uncertainties are outlined in Ctrip’s public filing 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 business update, industry outlook and financial highlights for the second quarter of 2010, as well as the outlook for the third quarter of 2010. We will 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, June. I would thank you to everyone for joining us today on the call. We are pleased that our team delivered strong results in the second quarter of 2010. In the second quarter of 2010 our net revenues grew 46% year-over-year and net income grew 48% year-over-year.

On 27 May 2010, Ctrip successfully completed the transaction to invest 90% of the issued share capital of Wing On Travel’s travel service segment, a Hong Kong based travel service provider.

We are very excited about the opportunity to work with Wing On Travel to leverage the result of Ctrip Wing On Travel and ezTravel and to provide our customers with the best package for services in the Greater China region.

Our hotels prime network continue to expand as expected with 11,400 hotels by the end of the second quarter of 2010 compared to 8,900 hotels by the same time last year. The number of hotels with guaranteed allotment loans further increased and accounted for more than 75% of the total hotel supply.

During the second quarter compare with hotels the Chinese version of the magazine of the world wide hotel industry Ctrip issued a list of the People’s Choice, my favorite hotels, over 100,000 customers voted on over 10,000 hotels choosing favorites in the seven categories, for example my favorite best business hotel, my favorite luxury hotel et cetera.

In addition to the hotel room reservation services, Ctrip also provides a user friendly hotel review platform which already features over one million reviews. The reviews provide excellent customer value because they are written expressively by customers who actually booked their room type with Ctrip, ensuring objectivity.

Our package tour business achieved outstanding growth in the second quarter due to stronger customer confidence and increasing disposable household income, our well designed products have become the choice of leisure travelers for their vacations in China and abroad.

Through our alliance with Wing On and ezTravel we will be able to extend our leisure travel network to enhance our products and reach out to more customers in the greater China region. We will develop more middle to high-end products to which the combined market has a very good response to. For example, the sailing of our 60 Day Deluxe Group Tour starting Mainland, Hong Kong and Taiwan at the same time only took nine minutes for the tour to be fully booked online.

In May, Ctrip joined the Radius Group Network our major group travel management company, as a part of its network Ctrip will gain opportunities to better serve new connections, travel needs in the future and to provide existing clients with more services offered by other travel management companies within the network.

Our ITT has continued to bring innovation to our online and mobile platforms. We officially launched Ctrip’s wireless mobile website in only April. has web and iPhone versions for different phone models. Customers can now log on to Ctrip by mobile devices to reserve hotel rooms and book airline tickets. We’re seeing the booking value and booking volume increasing significantly.

We’re continuing with our investment in online platforms in order to further extend our leadership in both online and offline platforms. Online booking is growing at a rapid pace, during the second quarter online bookings exceeded 35% of the total revenue. A good harvest is the best reward for our efforts according to the statistics from Google double click ad planner, is the most visited travel website in China.

Unique visitors and the picture views are part of the matrix used to scientifically extract actual web traffic. Listed as the leading travel portal in the world and number 1 in China, Ctrip is the undisputed leader in China’s online travel market.

Ctrip’s call center service quality has always been an important factor for our success. During the second quarter we started to put our Nantong Call Center into service. This call center can accommodate up to 15,000 seats. The expansion of our call center will prepare us for the increase of volume in the next few years.

So with the concerted effort of the Ctrip sales and marketing team the number of our cumulative active customers increased by 77% year-over-year to $10.3 million by the end of the second quarter of 2010.

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