TRIP.COM(US:TCOM) 3 6 Ke·2025-11-26 02:48Core Insights - Ctrip's recent financial report shows a revenue of 18.3 billion and a net profit of 19.9 billion, raising concerns about the sustainability of such high profits in the industry [1] - The hotel industry is experiencing a push to reclaim direct booking power from Online Travel Agencies (OTAs), reminiscent of past movements in Europe [1][3] - The struggle against OTAs has led to significant legal and marketing efforts from major hotel groups, including campaigns to promote direct bookings [2][3] Group 1: Industry Dynamics - The hotel industry in Europe has historically viewed OTAs as detrimental middlemen, with high commissions being a major pain point [3][4] - Major hotel chains formed alliances, such as the Room Key platform, to combat OTAs by consolidating inventory and driving direct bookings [5][6] - Room Key ultimately failed due to internal conflicts and the realization that direct sales come with hidden costs that can rival or exceed OTA commissions [7][9] Group 2: Cost Analysis - Transitioning to direct sales shifted costs from OTAs to hotels, including website maintenance, marketing, and customer service expenses [8][9] - Analysis from 2016 to 2018 indicated that the total cost of direct sales often matched or exceeded OTA commission rates of 15% to 20% [9][10] - The competitive landscape requires hotels to invest heavily in marketing to compete with OTA advertising budgets, leading to a paradox where direct sales become more expensive [10][11] Group 3: Market Trends - The "advertising board effect" shows that hotels benefit from visibility on OTAs, as direct bookings increase when hotels are listed on these platforms [11][12] - Data from 2013 to 2015 revealed a decline in direct bookings from 59.4% to 55.2%, highlighting the challenges faced by hotels in reclaiming market share [14][17] - The current domestic market sees Ctrip as a dominant player, with commission rates ranging from 8% to 15%, leading to mixed feelings among hotel operators [18][19] Group 4: Comparative Analysis - Ctrip's operational costs are rising, with a 20% increase in operating costs and a 24% increase in sales and marketing expenses, outpacing revenue growth [19] - In comparison, Booking's EBITDA margin is significantly higher at 47%, indicating more efficient operations despite similar revenue growth rates [20] - The European hotel groups have adapted to the presence of OTAs, viewing them as necessary partners rather than adversaries, which contrasts with the current sentiment in the domestic market [21][22] Group 5: Strategic Insights - The hotel industry is recognizing the importance of leveraging OTAs for customer acquisition while focusing on converting high-value customers to direct bookings [22][23] - The competitive landscape in China offers various platforms beyond Ctrip, allowing hotels to diversify their distribution strategies [23][24] - The narrative suggests that without Ctrip, the market dynamics would not necessarily improve, as evidenced by the failure of Room Key [27][28]