The press statement, announcing the partnership, said, “Being its first direct distribution system partner in mainland China, Shangri-La will leverage Ctrip’s cutting-edge hotel reservation platform to distribute hotels of its brands, namely Shangri La, Traders and Kerry, in the country.” (Picture shows The Brew at Kerry Hotel Pudong, Shanghai)
Under the terms of the agreement, the reservation systems of both Shangri-La and Ctrip will establish direct connectivity. Through Ctrip’s platform, travellers can make bookings at Shangri-La, Kerry and Traders hotels in China with Best Available Rate and receive confirmation for room types and rates on a real-time basis.
Members of Shangri-La’s programme for frequent guests, Golden Circle, who book Shangri-La’s hotels via Ctrip, will be equally entitled to receive Golden Circle rewards and benefits.
Shangri-La will also provide Ctrip with hotel/destination updates and promotional activities via a dedicated Shangri-La page on the Ctrip website that will be promoted to Ctrip members.
Kent Zhu, group director of sales marketing, Shangri-La International Hotel Management, told WIT the agreement is expected to increase sales. “We do expect Ctrip to take advantage of this as it provides a much better reservation service experience to the consumers.”
While he said it was difficult to predict what growth could be achieved, “it will certainly grow faster”, he said.
China is a major play for Shangri-La which operates 32 hotels under the brands of Shangri La, Kerry and Traders with more than 15,000 rooms, the largest room inventory in mainland China. In terms of rooms, that’s almost half of total global inventory of over 30,000 rooms across 72 hotels under the three brands.
And it’s a ratio that’s growing. The group currently has over 20 new hotel projects in the country under development that are planned to open within the next five years.
Domestic Chinese business account for a high percentage of guests in its China hotels but internationally, its resorts are doing well with the Chinese outbound traveller and Zhu expects the growth in the leisure market will be faster in the resort segment than in city hotels.
A report from Market Probe Travel & Tourism Group, issued in March, identifies the Chinese luxury tourist as “the most exciting opportunity”.
It said, “There are over 1 million Chinese Luxury Tourists (CLTs), who fly first or business class, stay at four or five star hotels, shop for leading brands and dine in the best restaurants. Chinese tourists are big spenders, they are travelling more and seeking new venues. Traditionally, CLTs have holidayed mainly in Asia but are beginning to look further afield to Europe, the USA, Middle East and Australia.”
Zhu sees “the formation of a network of high end leisure travel agents to share resources and expertise in developing the niche outbound markets”.
He said, “The fast increasing demand for outbound tailor-made programmes will push this segment of travel agents to find ways to provide the services the guests demand.”
Overall, he said, the demand for outbound will grow in all segments, from group tours, small groups for two to three couples and FITs. For long haul to North America, Europe and Australia, he said the demand growth would be in small groups and FITs while Asian destinations will see better growth in group tours.
On the Ctrip partnership, Zhu said, “We are very excited to extend this partnership to direct connectivity, which enables our mutual clients to enjoy a convenient and prompt hotel booking experience. We hope in the very near future partnerships of such nature will be extended globally.”
James Tang, senior vice president of Ctrip, said, “This co-operation will enhance the reach of our high-end network and enrich our hotel reservation offerings. More importantly, we will be able to provide our users with the convenience of booking luxury hotels in China. We look forward to working with Shangri-La to develop our international businesses.”
Meanwhile, analysts are eagerly anticipating the first quarter 2011 results of Ctrip, due to be announced on May 16. AnInvestors.com report, dated April 8, saying, paints a fairly bullish picture of Ctrip with analysts confident that the company will maintain its lead despite growing competition.
One Nomura analyst dismissed fears of competition as “overblown”, saying that Ctrip’s more than 6,000 call-centre workers and efficient back-end service “creates a networking impact that will be difficult to emulate, despite rising competition.”
In the report, the bank estimates that about 75% of Ctrip’s revenue comes from business travelers and other higher-end customers who value convenience and are less price sensitive. It also expects Ctrip’s packaged tour business to serve as a catalyst, “providing better-than-expected growth and taking market share from offline competitors”.
According to Nomura, about half of online travel agency revenue in China goes to Ctrip, but the Shanghai-based company gets just 2% of overall travel agency revenue.
China is expected to surpass Japan by 2013 to become the world’s No 2 travel market, according to a Boston Consulting Group report on “Taking Off: Travel and Tourism in China and Beyond”.
