The entire tourism industry works for Ctrip.

Author | Zhang Fan

Editor | Huang Yida

On November 18, Ctrip Group (9961.HK) announced its financial results for the third quarter of 2025.

The financial report shows that Ctrip achieved an operating income of 18.3 billion yuan in Q3 this year, a year-on-year increase of 16%; the net profit in the same period reached 19.9 billion yuan, a year-on-year increase of 194%; the net profit in the first three quarters of this year reached 29 billion yuan, a year-on-year increase of 95%.

The short-term sharp increase in Ctrip's net profit in Q3 was mainly due to the disposal of certain investments, which led to a significant increase in non-operating gains and losses. Ctrip did not disclose many details about this part. It is speculated that it was the equity income from the disposal of "India's Ctrip" MakeMyTrip.
 

However, from the perspective of revenue, for a leading company like Ctrip, based on its current market share, future penetrable space, and the prosperity of the industry itself, there is reason to believe that its profit growth rate will remain at a relatively stable level.

Ctrip achieved a net profit of 14.9 billion yuan in the first three quarters of 2024, and the year-on-year growth rate of its revenue in the first three quarters of this year was 16%. Based on the above inference, it is reasonably assumed that in the first three quarters of 2025, the growth rate of Ctrip's non-recurring profit after deduction will be roughly in sync with its revenue, reaching a level of about 17 billion yuan.

Chart: Other non-operating gains and losses GSD of Ctrip Group; Source: wind, 36Kr

01 What does a profit of 17 billion yuan mean?

The net profits of various sub-sectors in the A-share tourism chain in the first three quarters of this year were 1.5 billion yuan for hotels, 2.6 billion yuan for scenic spots, and 14.9 billion yuan for air transportation, totaling about 19 billion yuan. Ctrip's non-recurring net profit of 17 billion yuan is approximately equal to 90% of the net profit of the entire tourism sector, not to mention the 29 billion yuan on the surface of the financial report.

However, in terms of revenue, the total revenue of the three major sub-sectors of hotels, scenic spots, and air transportation in the first three quarters of this year was about 515.9 billion yuan, while Ctrip only had 47 billion yuan in the same period. This means that Ctrip generated more than 90% of the profit of the entire tourism chain with less than 10% of the revenue of the entire tourism chain. The profitability efficiency of its current business model is astonishing .

In terms of profitability, Ctrip's gross profit margin in Q3 this year was as high as 81.68%, even exceeding that of Hermès (70% in the same period) and comparable to that of Moutai (91% in the same period). Moreover, Ctrip's gross profit margin has long exceeded 80%.

Chart: Comparison of profits and revenues between Ctrip and sub-sectors of the travel chain; Source: wind, 36Kr

02 The hotel industry is the hardest-hit area

From the perspective of Ctrip's revenue structure, accommodation booking is the largest part. In Q3 2025, accommodation booking achieved a revenue of 8 billion yuan, accounting for about 44% of the company's total revenue, a year-on-year increase of 18%.

Looking at a longer period, if we take the pandemic as the dividing line, the peak of Ctrip's accommodation booking business before the pandemic was in Q3 2019, with a single-quarter revenue of 4.1 billion yuan; by Q3 2025, the single-quarter business revenue nearly doubled to 8 billion yuan.

Vertically comparing, since the full reopening in 2023, the year-on-year growth rate of Ctrip's accommodation booking business revenue has been significantly higher than that of the A-share hotel sector in the same period.

Chart: Comparison of the revenue growth rate of the A-share hotel sector and Ctrip's travel booking business; Source: wind, 36Kr

The core reason behind this is Ctrip's "traffic strategy".

After 2021, due to the partial oversupply in the entire hotel industry and the downward trend of industry prosperity, the intensity of competition increased significantly. Under the pressure of performance, some hotels were forced to increase their investment in OTA platforms like Ctrip in order to obtain traffic support.

Ctrip is the absolute leader in the OTA market. According to QuestMobile data, in May 2025, the number of Ctrip App users reached 104 million, far exceeding other competitors. Moreover, the platform with the second-largest market share is also Qunar, a subsidiary of Ctrip, with about 46.02 million users in the same period. Therefore, logging on to the Ctrip platform has become a must for many hotels.

This is like a prisoner's dilemma. If a hotel doesn't join, it's difficult to get hotel booking orders. But when everyone joins, the total market demand for accommodation actually doesn't change much, while hotels have to continuously pay high channel fees to OTAs.

In fact, many hotels have tried to reduce their dependence on Ctrip, build their own service apps, and increase the proportion of self-operated business, but the results have generally been poor. There are mainly the following four reasons behind this phenomenon:

Firstly, it is the result of the excessive fragmentation of the domestic hotel industry. In 2024, the market scale of the Chinese hotel industry has recovered to 983.2 billion yuan, and the chain rate is about 40%. Although it is in a continuous improvement stage, there is still a gap compared with the average level of 70% in developed countries;

Secondly, the domestic hotel market is mainly dominated by low-star hotels, which generally lack the ability to build their own direct sales channels. Therefore, they have a strong dependence on OTA platforms represented by Ctrip, which further strengthens the bargaining power of the channel parties;

Thirdly, compared with the overseas market, there are significant differences in the development rhythm of the domestic hotel industry and the Internet. The overseas hotel industry matured much earlier than the rise of the Internet, and leading chain brands have perfect self-operated channels; the significant increase in the domestic hotel chain rate came later than the development process of the Internet, which is one of the main reasons for OTA platforms to seize the traffic entrance;

Fourthly, it is affected by consumer habits. Hotel bookings in the domestic market are mainly made through mobile devices, which is one of the key factors for OTA platforms to form a traffic barrier. In contrast, in the overseas market, PC orders account for a larger proportion, and consumers mainly book hotels through multiple channels such as search websites. Therefore, the competitive pressure on hotel self-operated channels is relatively small.

The above reasons have limited the bargaining power of the Chinese hotel industry against OTA platforms like Ctrip.

Chart: High-star hotels in the domestic market are scarce resources; Source: Guojin Securities, 36Kr

From the perspective of the commission rate, Ctrip's commission rate for merchants is related to the specific sub-industry and the bargaining power of the merchants. According to a research report by Zhongtai Securities, Ctrip's comprehensive commission rate for accommodation booking business is about 8%-10%; for special and gold-level merchants with traffic tilt, the commission rate is as high as 12-15%.

Chart: Commission rate of Ctrip's accommodation booking business; Source: Zhongtai Securities, 36Kr

In the air ticket market with relatively higher market concentration, Ctrip's bargaining power has significantly weakened, and the policy orientation has further compressed the market space for OTAs like Ctrip. In 2015, the State-owned Assets Supervision and Administration Commission proposed "increasing direct sales and reducing agency sales" for airlines. The core orientation was to significantly increase the proportion of direct sales and reduce agency fees, clearly stipulating that the agency fee for economy class should be charged at a standard of 10-15 yuan per flight segment.

Considering the cost, 12306 has a dominant position in the railway ticket market, and Ctrip's bargaining power and agency commission income growth in the air ticket market are both significantly limited. Ctrip's profit space in the transportation ticket agency business is being squeezed from multiple aspects. Without the right to dominate, it has almost become a traffic diversion channel. With such business value, it is difficult for the capital market to give it a high valuation.

*Disclaimer:

The content of this article only represents the author's views.

The market is risky, and investment should be cautious. Under no circumstances do the information in this article or the opinions expressed constitute investment advice to anyone. Before making an investment decision, if necessary, investors must consult professionals and make careful decisions. We have no intention to provide underwriting services or any services that require specific qualifications or licenses for the parties involved in the transaction.