Ctrip Invests in China-to-U.S. Travel & Tourism

Ctrip.com (CTRP) said it is investing in two more U.S. travel agencies, according to aCitigroup read of Chinese media reports.

Shares of Ctrip.com are up 1.3% today, while shares of the iShares MSCI China Large Cap exchange-traded fund (FXI) are up 0.8%.

Tourists on a glass-floor suspension bridge in Zhangjiajie, in south China’s Hunan province. It is purported to be the longest and highest glass bridge in the world.

The strategic cooperation agreements are with two travel agencies that, combined, control half of the market share of travel packages sold to Chinese tourists headed to the United States, according to Citi: L&L Travel Enterprises based in New York and Sea Gull Holiday based in Los Angeles. The agreement also includes ToursforFun, an online travel booking platform in North America that Ctrip acquired in December 2013. The goal of the collaboration is “better local tour services and diversified products to outbound Chinese tourists visiting the U.S.” Analysts Alicia Yap andSolomon Chuen write, adding:

“… By partnering and integrating three major U.S. local agencies, we believe Ctrip could expand its user reach and market penetration and help it better serve the rising outbound tourists to North America. According to the news release, the number of Chinese outbound tourists to the United States in 2015 grew 18% year over year to reach 2.59 million with consumption spending reaching $26.9 billion. In 2016, it is estimated that the number of Chinese outbound tourists to the United States will reach 3 million, but only account for about 2% of the total number of Chinese outbound tourists of 120 million. With the U.S. being one of the popular long-haul destinations for Chinese tourists, we view Ctrip’s move as strategic and wise. We believe Ctrip will likely continue to seek other local tour partnership/investment opportunities in other continents such as South East Asia, Korea, Japan, Continental Europe, United Kingdom and Australia.”