Ctrip facing short-term realities of US-China trade dispute

Thursday, December 20, 2018

China’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,” said Ctrip.com International Ltd. CEO Jane Sun. She added, “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 hit. Earlier this month, the company celebrated the 15th anniversary of its shares trading on the Nasdaq Stock Market.

However, it is not only the trade dispute; a weaker Yuan has also discouraged some Chinese from traveling abroad.

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 said, “It’s really a mutually beneficial situation if you have more exchange of commerce and exchange of people and ideas. 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.”

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,” Liang said. “I think travel is going to be among the least affected industries in this kind of environment.”

Ctrip, which had $9.1 billion in liquidity as of Sept 30, will tap its cash reserves if necessary.

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