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Online travel agency Ctrip affected by trade standoff

By William Hennelly and Liu Yinmen | China Daily | Updated: 2018-12-19 07:43
The reception area of a Ctrip outlet in Shanghai.[Photo by An Xin/For China Daily]

The nation's biggest online travel agency is facing the short-term realities of the US-China trade dispute.

"The trade war caught many companies by surprise; nobody was really prepared," Ctrip.com International Ltd CEO Jane Sun told the Financial Times in a story published on Monday. "The trade war affects confidence in both countries."

Shares of Ctrip have dropped $6 billion in valuation this year.

The Shanghai-based company's stock closed on Monday at $27.31, down 87 cents, or 3.09 percent on a day when the major US stock indices also were pummeled.

Ctrip's stock's 52-week high of $51.91 was reached on June 15. Earlier this month, the company celebrated the 15th anniversary of its shares trading on the Nasdaq Stock Market.

It's not only the trade dispute-a weaker yuan has also discouraged some Chinese from traveling abroad.

Still, Sun said that although customers might not be making as many Western trips, "they will travel to Asia, or within China".

James Liang, Ctrip co-founder and executive chairman, was optimistic in a Dec 10 interview with Bloomberg.

"It's really a mutually beneficial situation if you have more exchange of commerce and exchange of people and ideas," he said. "So I think this is really a short-term setback. … I think the long-term prospect for travel (between the US and China), either commercial or leisure, will still be very bright.

"Outbound travel to the US is just a small part of our world business. Earlier this year there was a perception that visas were getting harder (to obtain). … We've already seen a little negative impact … hopefully we'll do better next year (in the US)."

Liang noted that the market for trips to Europe has been "doing very well, better than expected".

He also said that the industry is braced for a challenge.

"Travel is more resilient, as the Chinese economy is moving to the next stage of development, where service and consumption will grow faster than the overall economy," he said. "I think travel is going to be among the least affected industries in this kind of environment."

Ctrip Chief Financial Officer Cindy Xiaofan Wang told The Wall Street Journal earlier this month that the company, which has more than a 60 percent share of China's online travel market, has substantial cash on hand and will use targeted marketing to help sidestep any trade or economic potholes.

"The market is cooling down a lot. Naturally, a lot of loss-making players will exit," Wang said in reference to competitors.

Ctrip, which had $9.1 billion in liquidity as of Sept 30, will tap its cash reserves if necessary, according to a Dec 3 story on jingtravel.com, which focuses on the Chinese tourism industry.

A tourism official from Los Angeles, one of the top destinations for Chinese tourists, is watching to see if there are any signs that visits are slowing down.

"It is too soon to tell if trade issues will have any significant impact on our visitation from China, and we do not want to speculate," Kathy Smits, vice-president of international tourism at the Los Angeles Tourism & Convention Board, told China Daily.

Liu Yinmeng in Los Angeles contributed to this story.

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