Wen / Gu Yue
Source / brocade (ID: jinduan006)
Ctrip（ NASDAQ:TCOM ）It will be listed in Hong Kong on April 19. Standing at a new starting point, Ctrip seems speechless. What new things can be told to the market?
There is no second growth curve, but also faced with asymmetric war, which is the main logic of Ctrip's return to the cold: media sources said that Ctrip's final public offering only recorded 16 times over subscription. This is far from 111 times of Baidu and 170 times of B station.
Between attack and defense
In the face of meituan's encroachment, Ctrip can't calm down.
Figure 1: price comparison of the same economic housing source (left meituan, right Ctrip), source: app screenshot
Figure 2: price comparison of the same high star housing (left meituan, right Ctrip), source: app screenshot
But the outbreak of the epidemic still opened a gap, giving meituan hotel business a chance to enter the field of star hotels.
Figure 3: revenue from meituan hotel's arrival business, source: Anxin Securities Research Center
In fact, looking back at the data of the two hotels in 2020, the revenue of Ctrip will drop from 13.5 billion yuan in 2019 to 7.1 billion yuan in 2020, which is almost a cut; the revenue of meituan's arrival, hotel and travel business will be 21.3 billion yuan in 2020, which is nearly 5% lower than that of the previous year, and the impact is weak and better than the market expectation.
It is worth noting that meituan's total room nights accounted for more than 50% of the industry as early as 2019, and its 2020q4 star hotels accounted for more than 15% of the total room nights, with a year-on-year growth of more than 110%.
This shows that meituan's hotel reservation business has a huge economic housing base, and the upward extension of star hotel housing has a significant momentum of development. If it continues to develop, meituan's hotel business is likely to open up the high and low hotel accommodation product line, and Ctrip's unique advantages in the past will no longer exist.
Figure 4: meituan hotel data in 2019, source: trustdata
This is the main reason for Ctrip to launch price subsidy recently. There are two key points: one is the full housing subsidy, which can attract C-end users to return to the Ctrip system through bidding; the other is to give more subsidies to high-end business travel consumers (core customers), so as to lock in the comparative advantage of Ctrip for a long time.
Volume: Currently, Ctrip has more than 400 million users, while meituan has more than 500 million users;
Scale: in 2020, Ctrip's revenue will be 18.3 billion yuan, and meituan's revenue will be 114.8 billion yuan;
Efficiency: in 2020, Ctrip's net profit will be 1.4 billion yuan, while meituan's will be 4.7 billion yuan;
Purse: by the end of 2020, Ctrip's own cash and equivalents will be 19.4 billion yuan, while meituan's will be about 17 billion yuan.
It can be seen from the above rough data that meituan has the upper hand.
However, meituan is not without worries. Its emerging businesses (including community group buying, B2B supply chain business and bike sharing business) will lose 10.8 billion yuan in 2020, and are still in the investment stage, so this business is heavily dependent on capital.
Although Ctrip has become the spokesman of people's travel after more than 20 years of development, how many times can a person or a family travel a year?
Figure 5: Chen Daoming's version of Liu Bang, source: Internet
Along the way, Ctrip has established its dominant position in the online tourism industry. With the ability of capital investment, it has gradually brought competitors and potential competitors under its command.
Figure 6: Ctrip group（ NASDAQ:TCOM ）Moon K chart, source: Snowball
The time line of Ctrip's M & A during this period is as follows:
In May 2015, Ctrip acquired about 38% of Yilong's equity. Later, with the privatization of Yilong and the merger of Tongcheng into Tongcheng Yilong, Ctrip realized its equity investment in Tongcheng Yilong. In December of the same year, Ctrip completed the distributed acquisition of qunar, with a total acquisition cost of 32.5 billion yuan.
In January 2016, Ctrip invested in makemytrip, India's largest online travel platform, through convertible bonds, and then the investment amount increased to US $1.2 billion. In 2016, Ctrip strategically invested in travel know it all, which has more than 5000 stores in the second and third tier cities. In December of the same year, Ctrip also reached an acquisition of skyscanner, with a total consideration of 120 yuan 100 million yuan.
In 2018, Ctrip spent 1.1 billion yuan to acquire all the remaining equity of an offline travel agency. The market thinks that this company may be a know it all investment in 2016.
In November 2019, Ctrip gained control of an online travel agency, which market analysis believes is a Tufeng network focusing on overseas tourism.
In April 2020, Ctrip acquired all the equity of an online travel agency for a total cash consideration of 770 million yuan, and in September of the same year, it acquired all the equity of an online payment agency for 420 million yuan.
Looking at Ctrip's prospectus, as of January 31, 2021, its cash and cash equivalents totaled 22.6 billion yuan, the total principal of outstanding convertible preferred bonds was 1.1 billion US dollars, the total principal of outstanding exchangeable preferred bonds was 500 million US dollars, and three outstanding syndicated loans totaled 2.8 billion US dollars.
Figure 7: Ctrip cash flow summary, source: prospectus
In the capital market, although Ctrip's two axes are a kind of unique competitiveness, its overall efficiency and value for the online tourism industry is still lack of transformation and creativity, so even if the income scale is expanded, the stock price is still creeping.
Photo 10: street sweeper on the court, source: Internet
It's like a scavenger on the court. It's a kind of ability to get out of danger, but few scavengers can get a high price in the player market. But on the contrary, the midfield players who control the rhythm of the court and the strikers who break through the defense can often get a sky high valuation.
The way to break through defense
When users lose their trust in you, they just look at the price, compare the price on the whole network, and even book tickets on the airline's official website, the brand you have built for many years will be worthless. This is the tragedy of Ctrip as a subsidized trading platform, and it is also a fate of powerlessness
When your OTA trading platform is rising, qunar and other companies with capital support will compete with you for subsidies;
When you become the king of Ota field through acquisition, new species such as meituan cause dimension reduction attack on you;
When you think you can find a way to improve your performance, you will find that it is just a way to lose the brand value.
How to break the fatalism of subsidy trading platform? In fact, we need to change our thinking: we need to solidify our competitive thinking, but we need to greatly strengthen our service thinking.
The essence of price increase and price decrease is to make the hotel full, which should not be regarded as competition or profit strategy. According to the industry practice, the marginal cost of the remaining 10% - 30% vacant rooms is very low. If we improve the occupancy rate, the performance of the hotel will rise very well, so the performance of Ctrip will rise very well.
For example, when we analyzed the e-commerce industry before, we wrote about the logic from transaction to industry enabling
Entering the second half of the Internet with high penetration rate, the transaction logic of collecting traffic tax on the platform will become weaker and weaker. The mode of shallow connection to earn channel fee will give way to the mode of enabling supply chain to earn money to improve efficiency. For example, if the platform increases the monetization rate to 5%, then businesses will speed up their escape from the platform. But if the platform can improve the efficiency of businesses or producers, such as fresh food, you can reduce the consumption rate from 40% to 20%, and the other party will be happy to give you 10%.
In this sense, both Ctrip and meituan should really understand that if they directly earn more money from users, they will not be able to earn money in the end; if they help hotels and other businesses to earn more money, they will be like ducks in the pond, and the water will rise.