Price war cuts Ctrip.com's income by 39%

The Ctrip Travel Experience Center at Tianhe Airport in Wuhan, Hubei province. Provided to China Daily

Income at Ctrip.com International Ltd, the largest Chinese online travel agency by market share, continued to fall in 2012.

The agency's operational income was 655 million yuan ($105 million) last year, down 39 percent from 2011, while its net revenue was 4.2 billion yuan, up 19 percent year-on-year, according to the company's annual results released on Friday.

Ctrip.com's income has declined since the third quarter of 2011, although its net revenue has maintained double-digit growth.

The low income has been put down to stiffer competition among Chinese online travel agencies and Ctrip.com's growing expenses for sales and marketing in 2012.

Fan Min, its CEO, described 2012 as a "year of investment".

The agency spent 984 million yuan on sales and marketing last year, a year-on-year rise of 58 percent, as China's online travel agencies started a price war in the summer.

Mangocity.com, a subsidiary of China Travel Service (Holdings) Hong Kong Ltd, used an 80 million yuan cash allowance to trigger the war in June, with Ctrip.com fighting back with the launch of a $500 million promotion in July.

 

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