Ctrip.com's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Ctrip.com International, Ltd. ( CTRP)

Q4 2011 Earnings Conference Call

February 20, 2012 8:00 PM ET


Lin Zhang – IR Manager

Min Fan – President and CEO

James Zhang Liang – Chairman

Jane Sun – CFO


Richard Ji – Morgan Stanley

Alex Yao – Deutsche Bank

Chen-Yi Lu – Cowen & Company

Catherine Leung – Goldman Sachs

Eddie Leung – Merrill Lynch

Mike Olson – Piper Jaffray

Alicia Yap – Barclays Capital

Wendy Huang – RBS

Andy Yeung

Elinor Leung – CLSA

Chun Zhao – SIG

Ida Yu – CICC

Aaron Kessler – Raymond James

Long Lin – Brean Murray



Good day, ladies and gentlemen and welcome to the Q4 and Full-Year 2011 Ctrip.com International Ltd. Earnings Conference Call. My name is Walter and I will be your operator for today. At this time, all participants are on 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 hand the conference over to your host for today, Investor Relations Manager, Ms. Lin Zhang. Please proceed, Ma’am.

Lin Zhang

Thanks, Walter. Thank you for attending Ctrip’s fourth quarter and full year 2011 earnings conference call. Joining me on the call today, we have Mr. James Liang, Chairman of the Board; Mr. Min Fan, President and the Chief Executive Officer; Ms. Jane Sun, Chief Financial Officer and Ms. Jenny Woo, Deputy 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 US 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 filings with the Securities and Exchange Commission. Ctrip does not undertake on any obligation to update any forward-looking statements, except as required under applicable law.

Min, James and Jane will provide a business update, industry outlook and the financial highlights for the fourth quarter and full year 2011, as well as the outlook for the first quarter of 2012. We will also have a Q&A session toward the end of this call. With that I will turn to Min for our business update.

Min Fan

Thanks Lin, and thank you to everyone for joining us on the call today. Despite our high 2010 comparison base, the Ctrip team delivered solid results in 2011. For the fourth quarter of 2011, our net revenues grew by 18% year-over-year and net income decreased by 16% year-over-year. For the full year of 2011, our net revenue grew by 21% year-over-year and net income grew by 3% year-over-year.

We increased our sales marketing investment to further penetrate the leisure market during the fourth quarter, with a continuous focus on delivering the best product was the best service at the best price. We’ve diversified product offerings and elevated customer service to a higher level. The Ctrip team further expanded our hotel supply network to meet growing traveler demand, reaching approximately 25,000 hotels by the end of 2011 compared to 17,000 hotels at the same time in 2010. The number of our hotels with a guaranteed room allotment accounted for over 70% of the total hotel supply.

In addition to ongoing efforts to expand our hotel network and enlarge our hotel, our product offerings, we launched our cash rebate e-coupon program for hotel reservations, to stimulate the market from the beginning of the quarter. With precise positioning, the program helped increase customer stickiness and drive incremental bookings by encouraging customers to book online and effectively increases online penetration.

Ctrip has always been a pioneer in the travel market. We recently launched our new Smart Choice hotel channel. Ctrip’s customers, especially leisure customers will be able to enjoy great discounts and extraordinary savings without hurting hotels’ pricing system. This new innovation will offer customers a brand new booking experience. Ctrip strategically invested in (inaudible) a hostel booking and review website to explore more opportunities in the leisure travel market. With more hostels headed into our network, Ctrip now supplies a full range of accommodation types for customers to meet fast growing leisure travel demands. Ctrip group buying product (inaudible) during the quarter. We made great efforts to ensure a range of choices and meet an increasing variety of customer needs.

In spite of last year’s high comparison base, air ticketing continued to outperform a market in the fourth quarter. We’ve further expanded our airline partnerships, working closely with them. We’re able to display airlines’ promotional rates on Ctrip air ticketing channel. We also worked with many commercial banks to offer special promotions with special prices for popular loads. All those efforts help us obtain the most competitive air ticket prices on the market.

Train ticketing business brought great convenience to middle to high end of train customers. Through our efforts, we have expanded the geographic coverage of our train ticketing service to 14 provinces and cities nationwide.

Ctrip package tour business has been enjoying strong growth, supported by a healthy rising market and strong market share gain. Our package tour product is the most complicated of all of our travel products. It requires many years of industry experience and knowledge, a strong operation team, close vendor relationships besides market positioning. Ctrip offers thousands of package products in more than (inaudible) destinations. From short distance domestic tours to long distance tours and from FIT packages to middle to high end group packages.

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