E-travel sites report profits boom

If recent company results are to go by, China's online travel business is booming. The country's largest online travel company, Ctrip.com, has just reported revenues up 47 percent year-on-year to Rmb190 million in the second quarter. Net profits were up by a more modest 7.1 per cent year-on-year to Rmb61 million, but this was good enough to see the company's Nasdaq-listed shares rise earlier this month on the news.

Strong growth in the company's plane ticket booking compared to its hotel booking business saw gross margins drop to 81 percent compared to 85 percent at the same time last year. This was due to the margins on air-bookings being lower than those for hotel bookings. Hotel bookings brought in revenue of Rmb118 million up 28 percent year-on-year, while air-booking revenues were up 94 percent to Rmb73 million.

Ctrip's nearest Chinese rival is E-long, which also recorded its first ever profits this month. Nasdaq-listed E-Long, reported an unaudited profit of Rmb10.2 million over the second quarter, more than eighteen months after listing its New York debut. The company recorded a net loss of Rmb3.3 million for the same period last year. Revenue improved 55 percent year-on-year and 26 percent quarter-on-quarter to Rmb71.3 million. This compares with average market growth in the sector of around 10 percent.

CMI - 22/8/06