TRIP.COM(US:TCOM) 21世纪经济报道·2025-11-21 02:36Core Viewpoint - Ctrip Group reported a significant increase in net profit for Q3 2025, reaching 19.9 billion RMB, a year-on-year growth of 194%, primarily driven by a strategic exit from its investment in MakeMyTrip, which generated approximately 17 billion RMB in revenue from the sale of shares [1][4]. Investment in MakeMyTrip - Ctrip's investment in MakeMyTrip began in January 2016 with a convertible bond of 180 million USD, marking its entry into the Indian market, which was seen as having high growth potential due to a rapidly rising middle class [4][5]. - The investment was strategically timed, as the IMF projected India's economic growth at 7.5% in 2016, with a significant increase in the middle-class population, providing a strong foundation for tourism consumption [4]. - Over nine years, Ctrip's stake in MakeMyTrip grew, with the book value of the investment reaching 6.2 billion RMB by the end of 2023 and 7.1 billion RMB by the end of 2024, indicating a stable appreciation [5][6]. - In June 2025, Ctrip sold part of its shares in MakeMyTrip for 2.5 to 3 billion USD, reducing its voting rights from 45.3% to 16.9%, transitioning from a strategic to a financial investor [5][6]. Growth Engines - Ctrip's management highlighted three main growth engines: AI technology, inbound tourism, and targeted market segmentation [8][9]. - AI is positioned as a core strategic pillar, with Ctrip's AI travel assistant, TripGenie, expanding its user base significantly, indicating a strong focus on enhancing customer experience through technology [8]. - The inbound tourism sector is identified as a rapidly growing area, with Ctrip noting that China's inbound tourism revenue as a percentage of GDP is significantly lower than that of developed countries, suggesting substantial growth potential [9]. - Ctrip is also focusing on the silver economy, targeting older consumers who have three times the spending power of younger demographics, and has seen significant growth in its "Old Friends Club" membership and transaction volume [9][10]. Market Challenges - Despite strong Q3 performance, the online travel industry faces renewed price competition, with major players like JD and Douyin entering the market [13]. - Ctrip's management emphasized the importance of quality service over price competition, as the market trends indicate a persistent decline in hotel and flight prices [13][14]. - The recovery of international business remains slow, with global airline capacity only at 88% of pre-pandemic levels, which could hinder faster growth for Ctrip's international operations [14]. - Ctrip is adopting a differentiated competitive strategy, including a global SOS service network for customer support and a refined marketing approach based on market maturity [14].