07-27-2016, 12:35 AM
In the next decade, the amount of globe-trotting done by Russian tourists will more than double, although it will still be Chinese tourists that spend the most- $255.4 billion a year by 2025- according to a study by payment processing company Visa. This is all due to a new "traveling class" that is being created thanks to increasing global incomes, said Visa, in the study released Thursday. Among those households most likely to travel internationally, Visa's study estimates that spending will reach an average of $5,305 per household, per year, by 2025, which includes average spending such as food and hotel, but not the airline ticket.
Money spent by Chinese tourist will hit record high in 2025: Study
In October, Ctrip and Qunar agreed to combine products and services. Chinese internet leader Baidu (BIDU) owns 25% of Qunar stock, and Ctrip has a 45% voting interest in Qunar. Qunar initially rejected a buyout offer from Ctrip in early 2015.
CTRP followed its peers like Priceline Group (NASDAQCLN) and Expedia Inc. (NASDAQ:EXPE) and started consolidating the market. In 2015, CTRP has made an acquisition or an investment in most of its rivals, practically creating an impression of one big family in the region. The investments include buying stake in eLong, Inc. (ADR) (LONG) from EXPE, multiple investments by PCLN in CTRP to the tune of $1.9 billion since 2014, share swap with Qunar (NASDAQ:QUNR) giving CTRP 45% voting rights in QUNR in exchange for 25% of CTRP (Baidu Inc. (NASDAQ:BIDU) is a majority investor in Qunar), and other smaller players like Uzai.com, Tuniu (NASDAQ:TOUR), Tongcheng and more. It even went a step further in January 2016 and made an investment of $180 million in MakeMyTrip Limited (NASDAQ:MMYT), India's largest OTA with 40% market share.
These investments makes one wonder about the contours of the OTA market in China in the next two or three years. Ctrip has not only been investing in these companies, but has also ramped up its mobile platform to a great deal. It currently boasts of cumulative downloads of mobile apps in excess of the 1 billion mark. Qunar-Ctrip partnership will lead to a single platform cornering close to 70%-80% of the total market. If other investments in rivals are also accounted, then the market share would be even higher. The obvious result of this consolidation is that the firm need not spend similar amounts on discounts to get customers. It also gives the firm a much stronger hand while negotiating with hotels and other firms.