In the third quarter of 2024, Ctrip (09961/TCOM) saw a significant increase in performance. After deducting sales tax and additional taxes, its net income was 15.873 billion yuan, a year-on-year increase of 15.52%, and its operating profit was 5.006 billion yuan, a year-on-year increase of 28.06%. The operating profit margin also increased from 28.43% in the same period last year to 31.48%.
After the disclosure of the third quarter financial report, Ctrip's Hong Kong and US stock prices both jumped short and opened high, and both markets provided positive feedback. By comparing data from multiple sources, Caizhongshe found that the important reason for the company's performance growth is the ride on the airline's "price for volume" policy, and its sustained high-speed growth is worth paying attention to.
Ctrip's core businesses include accommodation booking, transportation ticketing, and tourism vacation. In the third quarter of 2024, the year-on-year growth rates of the three business revenues were 21.70%, 5.27%, and 17.32%, respectively.
During the same period, the number of domestic tourists reached 1.512 billion, a year-on-year increase of 17.2%; Domestic tourists spent a total of 1.62 trillion yuan on travel, a year-on-year increase of 16.1%; According to data from the Immigration Administration, the number of mainland residents entering and leaving the country in the third quarter of 2024 was 78.55 million, a year-on-year increase of 27.30%. According to SensorTower data, in July 2024, Ctrip's international version of Trip.com had approximately 10 million monthly active users. In the past three years, the monthly active users of Ctrip app in China have reached 83.94 million. Therefore, based on the comprehensive number of trips and monthly active users, the domestic market travel situation is still the main factor affecting Ctrip's above-mentioned business.
From the data, the logical line of Ctrip's performance growth is very clear. The recovery of the tourism market has led to an increase in the company's hotel booking, transportation ticketing, and tourism vacation business revenue, which has driven performance growth.
It should be pointed out that as a transportation and accommodation booking platform, with the market gradually getting rid of the impact of sudden public health emergencies, the growth rate of the company's accommodation booking, transportation ticketing, and tourism vacation business should be anchored by the number of tourists and the growth rate of total travel expenses.
In the third quarter of 2024, the growth rate of Ctrip's accommodation booking and tourism vacation business revenue is generally consistent with the core data growth rate of the tourism market, but the growth rate of transportation ticketing business revenue is significantly lagging behind. In fact, the hidden dark line behind the above data differences is that airline ticket prices have been lowered, reducing transportation costs between cities and stimulating an increase in travel and accommodation.
According to flight management data, in the third quarter of 2024, the average economy class ticket price on domestic routes was 745.5 yuan, a decrease of 15.9% compared to the same period last year. In addition, airlines are also attracting more consumers by collaborating with online travel platforms and offering exclusive member discounts.
Therefore, although there has been a double-digit growth rate in domestic travel, due to the year-on-year decrease in airfare prices, the growth rate of travelers' transportation expenses is lower than the growth rate of travel.
From a quantitative perspective, it is clearer to see the impact of the decrease in ticket prices on Ctrip's transportation ticketing business. Assuming that everyone travels by plane instead of high-speed rail, according to the formula, the actual growth rate=(1+person times year-on-year) * (1+price year-on-year). By substituting the above data, it can be seen that under the effect of ticket price reduction, the total travel expenditure of domestic tourists in the third quarter was 98.50% of the same period last year.
Of course, this is the calculated data obtained under ideal conditions. Due to the impact of high-speed rail travel, the transportation cost of domestic travelers is likely to increase in single digits, which is consistent with the growth rate of Ctrip's transportation ticketing business revenue.
By sorting out the above logic, the reason why Ctrip's accommodation booking and tourism vacation businesses can achieve high growth rates can be easily solved. In the third quarter of 2024, the total travel expenses of domestic tourists increased by 16.10% year-on-year, while transportation expenses maintained a single digit growth rate. The growth rate of accommodation expenses is bound to be higher than the growth rate of total expenses. As the largest hotel reservation platform in China, Ctrip naturally benefited from this wave of dividends.
It should be noted that for airlines, the "price for volume" strategy has not led to significant growth in company performance compared to the same period last year. Taking China Eastern Airlines (600115) as an example, in the third quarter of 2024, its revenue growth rate was 6.29% and net profit growth rate was -27.25%.
Due to the fact that the commission rate for airline tickets is only 1% to 3%, while the commission rate for hotels and homestays is 5% to 15%, once airline ticket prices rise, the increase in transportation costs will suppress the growth of travel volume and have a more significant impact on Ctrip's accommodation booking business.