Ctrip vs Alibaba - Two Approaches to the Chinese Travel Industry | EMQQ
Ctrip has long been the leading travel services
provider in China. However, competitors with differentiated product
strategies are looking to take on Ctrip. One such company is Alibaba’s
travel unit – Fliggy. By focusing on millennials, digital technology, and
premium services, Fliggy is looking to carve a place in China’s competitive
How is Fliggy aiming to differentiate itself
Ctrip.com – A
Ctrip.com International is China’s largest
travel company, according to the company’s website which notes that Ctrip is
the largest consolidator of hotels in volume of rooms booked, covering over
500,000 hotels in China and 750,000 worldwide. Ctrip also offers air,
rail, bus, and other transportation services with China and globally, offers
vacation packages and tours, insurance, visa services, and attraction
tickets. The company also offers corporate travel services. Ctrip’s
travel services are available through its mobile app, its website, and its
customer calling center. Ctrip has grown its business both organically
and through strategic acquisitions.
At the end of 2017, Ctrip relaunched itself under the Trip.com
name. The change was to reflect the growing emphasis on international
travel. Hence, the C in the company’s brand was removed.
According to Ctrip’s CEO Jane Sun, the Chinese
travel industry is growing at about double the rate of the country's economy as
a whole, which is expanding at a 6% annual rate.
As GDP per capita increases, more Chinese people should be able to afford to
travel more often. The CEO also noted that with Ctrip continuing to gain
share within this fast-growing industry, she believes the company can expand
three to four times faster than China's economy. Thus, investors can expect
Ctrip to increase its revenue at an impressive 20% annual clip in the coming
Fliggy – A Digital
Experience for Millennial's
Alibaba launched its online travel platform
“Alitrip” in 2014 to compete with Ctrip. Moving forward to 2017, Alibaba
decided to scrap Alitrip and build a new travel platform, Fliggy, which in
Chinese means “flying piggy.”
As opposed to Ctrip’s “jack-of-all-trades”
approach, Fliggy is more focused. The platform is focused “on the millennial's
raised in the digital age.”
The platform is also more focused on flights, particularly international
flights. According to Jing Travel, the company appears to be targeting
more profitable market segments such as travel-hungry millennial's and
Jing Travel noted that over 80% of Fliggy’s
users have a college-level degree or higher, have white-collar jobs, and live
in a first or second-tier city.
The article noted that the perception of Fliggy is that it is a premium travel
booking experience, more youthful, refined and energetic. The site is
predominately geared toward long-haul and leisure trips versus short-term or
domestic business travel.
Another distinguishing element of Fliggy is that rather than
operating as a comparison site, it provides a direct connection between the
airline and the customer which allows airlines to gather data directly from the
customer. The site aims to eliminate the information asymmetry that stand
between brands and their customers, according to Inbound. The platform
enables brands to operate their own shop but provides them with marketing and
data analytics support.
Some airlines on Fliggy’s platforms have offered
special privileges to Fliggy customers and have integrated their loyalty
programs with Fliggy’s. According to Jing Travel, if Fliggy can become the de
facto website for flights, it will be easier to add additional products and
services down the road.
Fliggy and the Hotel or the Future
Fliggy, along with other Alibaba business units,
created a largely digital hotel. The 200-room FlyZoo Hotel, located in
Hangzhou China, uses cutting-edge technology to transform the hospitality
It all starts with booking through an app, where
guests can pick a floor and a view and explore the room. Chinese
travellers can check in via the app and go straight to their room. No need
for keys. Using facial recognition, the elevator takes you to the correct
floor and your face will open the room door. Once inside the room,
requests for water, new towels, extra pillows, and more will be taken by Ask
Genie, Alibaba’s Alexa-like assistant, and a three-foot-tall robot will deliver
Hungry guests can head to the hotel restaurant
where a robotic bartender is mixing up drinks and food ordered via the FlyZoo
app will be delivered by other robots. Face-scanning technology will send
the charges straight to your room bill.
Your Face Can Open a Door
Fliggy teamed up with Shiji, a hotel information
systems manufacturer, to launch a facial recognition system for hotel
check-ins. The technology is available in 50 hotels in Hainan Province,
China’s biggest tropical beach getaway, according to Jing Travel. The goal of the project, according
to the article, is to turn the hotel booking process into a faster, digital
experience. The company has also been testing the technology with
Marriott International in two hotels in China.
Alibaba’s Fliggy is seeking to establish its
place in the Chinese travel industry by focusing on emphasising flights,
targeting millennial's, and creating a high-tech, digital experience. The
company is looking to expand the use of technology in the hospitality business,
even developing its own hotel.
Ctrip and Fliggy represent two different approaches to the Chinese travel industry. We believe that both have their strengths and may be able to appeal to two very different types of travellers in China.
Find out more about Emerging Markets Internet & Ecommerce UCITS ETF (EMQQ).
As of 28th June 2019, the Emerging Markets Internet & Ecommerce UCITS ETF (EMQQ) held 4.43% of its weight in CTRIP.COM and 7.84% in Alibaba Group.
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