Ctrip.com International, Ltd. (CTRP) Q4 2018 Earnings Conference Call March 4, 2019 7:00 PM ET

Company Participants

Michelle Qi - Senior Investor Relations Director
James Jianzhang Liang - Co-founder, Executive Chairman of the Board
Jane Jie Sun - Chief Executive Officer
Cindy Xiaofan Wang - Chief Financial Officer

Conference Call Participants

Gregory Zhao - Barclays Capital, Inc.
Ronald Keung - Goldman Sachs
James Lee - Mizuho Securities Co., Ltd.
Wendy Huang - Macquarie Group
Eileen Deng - Deutsche Bank
Billy Leung - Haitong International
Jerry Liu - UBS
Natalie Wu Wu - CICC
Tian Hou - T.H. Capital, LLC.
Juan Lin - 86Research
Binnie Wong - HSBC Holdings plc

Operator

Ladies and gentlemen, welcome to the Fourth Quarter 2018 Ctrip.com International Limited Earnings Conference Call. My name is Aaron. I will be the moderator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes.

Now, I will hand the call to Senior IR Director, Michelle Qi. Please begin.

Michelle Qi

Thank you, Aaron. Good morning, everyone, and welcome to Ctrip’s fourth quarter 2018 earnings conference call.

Joining me today on the call are Mr. James Liang, Chief Executive Chairman of the Board; Ms. Jane Sun, Chief Executive Officer; and Ms. Cindy Wang, Chief Financial Officer.

During this call, we will discuss our future outlook and performance, which are forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in Ctrip’s public filings with the Security and Exchange Commission. Ctrip does not undertake any obligation to update any forward-looking statements, except as required under applicable law.

James, Jane and Cindy will share our strategy and business updates, operating highlights and financial performance for the fourth quarter and full-year of 2018, as well as outlook for the first quarter of 2019. After the prepared remarks, we will have a Q&A session.

With that, I will turn the call over to James. James, please?

James Jianzhang Liang

Thank you, Michelle, and thanks to everyone for joining us on the call today. We’re very pleased with Ctrip’s overall performance in 2018 with our teams continuing to execute well. We strengthened our core competencies in pricing, product and service, while at the same time improving customer satisfaction through our efforts in enhancing back-end service protocols, building new product channels, further automating our operations and implementing innovative new technologies.

We also improved our market shares during the past year, with GMV reaching RMB725 billion, excluding Skyscanner, up 30% from 2017. Today, I would like to update you with Ctrip’s strategies on customer-centric initiatives and platform empowerment, as well as the outlook for 2019 and beyond.

First, updates on customer-centricity. At the beginning of 2018, we emphasized our customer-centric principles of transparency, optionality, consistency and impartiality, and promised to incorporate such principles throughout our entire operation.

Over the course of 2018, we updated our service commitments across all product lines. We have also invested in back-end technologies and systems to streamline product and service protocols.

By the end of the year, our Net Promotion Score [sic] [Net Promoter Score] or NPS, an indicator for customer satisfaction levels with our products and services improved around 35% year-over-year on average in all major business units, as we demonstrated the product reliability, proactive and comprehensive customer service and strong customer guarantee. As a result, user engagement has increased and our brand image has been strengthened, providing a boost to our new customer acquisition efforts.

Second, our platform empowerment strategy. In December last year, we enhanced our platform strategy with unveiling of the open platform 3.0 strategy. The new expanded platform helps to connect us with hard-to-reach suppliers, particularly small and medium tour operators and individual trip planners and tour guides, which accounts for 80% of the in-destination travel supply.

Our open platform has and will continue to empower these suppliers with our traffic and platform data, operation training, back-end tools and finance products. For instance, in 2018, Ctrip brought over 2 million customers to over 9,000 local tour guides across the globe, which registered – who registered on our platform.

Lastly, on outlook. Looking to 2019 and the longer-term, we are confident of continued growth. From a macro perspective, it is projected that urbanization rate in China will increase to 70% to 80% from the current 50% within 10 years to 20 years, reaching the level of most middle-income countries.

This translates to 10 million to 20 million predominantly young people moving to cities to live and work each year, and indicates that there is a huge consumption capacity still to be unlocked. Even if there’s a short-term macro turbulence ahead, such times have proven to be our best opportunity to strengthen our industry leadership and outpace industry growth.

Based on the foundation we laid in 2018 and previous years, we will continue to outpace the industry growth in GMV going forward and leverage operational improvements at the same time.

With that, I’ll turn the call to over Jane for the operation highlights.

Jane Jie Sun

Thanks, James. Hello, everyone. We achieved strong results in the fourth quarter by delivering differentiated innovation and a renewed focus on strong execution. We saw increased engagement, usage and ultimately, increased the conversion. We took significant steps this quarter to make sure we’re well-positioned to gain further market share. Against this backdrop, I would like to highlight some key areas of innovation, development and the growth across our different businesses.

First, on our customer base. As of the end of Q4 2018, our group level MAU was 200 million despite weaker seasonality. Transacting users of Ctrip and Qunar brands totaled 135 million, increasing 25% CAGR over the past two years. In addition, our user base is getting younger. Customers under the age 30 make up 50% of our user base, up significantly from one-third in 2013.

We have continued to make strides in expanding into the lower-tier cities through localized products and service offerings, as well as launching targeted marketing initiatives in the cities with the biggest growth potential due to rapid urbanization. For example, we now have over 7,000 franchised offline stores in over 200 cities in China. The majority of which are located in lower-tier cities.

With an increasing mix of new customers from lower-tier cities, we saw a consistent positive ROI for our customer acquisition investment. Increases in average spending per customer saw similar growth across various city tiers, as we gradually improve to customer engagement and increased wallet share.

Second, our user engagement. On top of looking for opportunities from expansion of our customer base, we have also worked to – on revitalizing our existing customer base by offering better services and stimulating more travel demands through our platform. Our relentless effort in providing the best services for our clients is the foundation for every initiatives and run deep through the Ctrip DNA.

Every day, our service center handles customer requests via more than 1 million phone calls and 10 million instant messages, with over 90% of the requests answered within 20 seconds and close to 90% of the requests solved on the first contact. Throughout the year, we have continued to invest heavily in technology to improve our back-end system.

Over the past three years, our GMV has more than doubled, while the overall headcount of our call center has remained flat. We added a new transportation plus accommodation section in order to maximize our potential to cross-sell. Given the size of our platform and technology capabilities, the dynamic packages can save customers up to 30% of the original price. Just months after launching, this function has effectively increased the conversion rate and overall cross-sell levels.

As a result of initiatives to drive platform usage and engagement, we already have 40% to 50% of the customers repurchasing within one year and 70% to 80% of the customers coming back within two years. In the current age, a lot of travel demands are stimulated by blog posts and videos.

Our new content in social platform, Trip Moments, is another initiative we took on to enhance user stickiness. We’re still in initial stage having it just launched in December, but our user have already generated close to 1 million posts, covering over 6,000 destinations around the world, making us extremely optimistic about its development going forward. With all these innovations contributing to improve the customers’ engagement and our overall GMV, excluding Skyscanner grew 30% in 2018.

Third, expanding our supply network and strengthening partnerships. Today, I will dive deeper into how we empower supplies on our platform. Firstly, we’re expanding our supply network to new vendors across all product categories, ranging from the large global and the regional players to smaller enterprises or even individual professionals.

Our new mobile app enables sale sign up for small travel vendors, with a combined automatic plus human review process. We expect this new feature will expand our local supply network significantly.

Secondly, our new marketing channel like same tours or transportation plus accommodation packages, not only better address customers’ differentiated preference, but also help suppliers to identify their suitable customers effectively.

Thirdly, once suppliers join Ctrip’s partnership program, we’ll also – they will also enjoy the access to our online and offline training courses on how to better leverage Ctrip’s platform and resources. In 2018, Ctrip Hotel University launched more than 150 training courses, with over 100,000 hotels attending. The results showed that those hotels are outperforming their comparable peers by approximately 20%.

We’re also bringing the courses to overseas hotel partners, having just last month launched our first global training camp from Ctrip Hotel University in Thailand. We have also collaborated with EHL in Switzerland, one of the world’s top hospitality management schools to provide exclusive training to our suppliers.

Lastly, by leveraging our internal technology capabilities, we help suppliers better compact with – better connect with the end customers by building mini apps, e-ticketing systems and back-end property management software.

Fourth, our international expansion. We also want to highlight another growth lever, our international expansion. In the fourth quarter of 2018, revenue generated from the international business makes up 30% to 35% of the group level total revenue. Our international hotel and air ticketing business units both expanded at about three times the industry growth rate.

Such strong volume growth allows us to strengthen our industry position and gain price competitiveness, particularly in regions where Chinese are most frequently travel to. This has allowed us to quickly build a good foundation for our international business. Skyscanner has sustained MAU growth in the middle 20s over the past quarter. Direct bookings has increased by about 200% year-over-year for Skyscanner.

In closing, our results speak to the strength of our platform and services for both customers and suppliers. We will continue to innovate, increase product offering, improve offline store coverages, and elevate service quality. With the tremendous opportunity ahead, our goal is to continue to grow at multiple times of the industry growth and improve our operational efficiency.

With that, I will turn the call over to Cindy. She will walk you through the details of the financial results.

Cindy Xiaofan Wang

Thanks, Jane. Thanks, everyone. For the fourth quarter of 2018, Ctrip reported net revenue of RMB7.6 billion, representing a 22% increase from the same period in 2017. For the full-year ended December 31, 2018, net revenue was RMB31 billion, representing a 16% increase from 2017.

Accommodation reservation revenue for the fourth quarter of 2018 was RMB2.7 billion, representing a 22% increase from the same period in 2017, primarily driven by increase in accommodation reservation volume. In the fourth quarter, room nights in the low-end hotel segment maintained a year-over-year growth rate of over 50% for the Ctrip brand, while the average room rate in this segment was steady at around RMB200.

In the mid to high-end hotel segment, we continued to gain market share by doubling the industry growth rate. International hotels delivered another strong growth by doubling the industry growth rate.

For the full-year ended December 31, 2018, accommodation reservation revenue was RMB11.6 billion, representing a 21% increase from 2017.

Transportation ticketing revenue for the fourth quarter of 2018 was RMB3.4 billion, representing a 17% increase from the same period in 2017, primarily driven by increase in ticketing volume.

In the fourth quarter, air ticketing continued strong volume growth, while revenue growth is catching up with comparatively normalized comps on a per air ticket revenue basis. International air ticket business growth tripled the industry growth rate. And Trip.com delivered triple-digit year-on-year growth in air ticketing volume for the ninth consecutive quarter.

Ground transportation continued to impact our customers with strong and reliable services. For example, more than 50% of bus ticketing users will come back for a second purchases within six months.

For the full-year ended December 31, 2018, transportation ticketing revenue was RMB12.9 billion, representing a 6% increase from 2017. Packaged tour revenue for the fourth quarter of 2018 was RMB721 million, representing a 31% increase from the same period in 2017, primarily driven by increase in volume growth of organized tours and self-guided tours.

In the fourth quarter, GMV through our offline franchised stores delivered triple-digit growth year-over-year. Customized tours continued its exceptional performance, with GMV growth above 90% year-over-year for the fourth quarter and full-year of 2018.

Currently, we have more than 1,500 suppliers and more than 5,000 trip planners, who have joined our customized tour platform, and that number is still increasing. For the full-year ended December 31, 2018, packaged tour revenue was RMB3.8 billion, representing a 27% increase from 2017.

Corporate travel revenue for the fourth quarter of 2018 was RMB279 million, representing a 35% increase from the same period in 2017, primarily driven by expansion in travel product coverage.

For the full-year ended December 31, 2018, corporate travel revenue was RMB981 million, representing a 30% increase from 2017. Our investments in expansion and innovation of products and services for corporate users, not only yield increased spending per client, but also help us grow our client base at a very healthy pace.

Other businesses, including advertisement, financial services and others increased by 45% year-on-year in the fourth quarter of 2018, reaching RMB515 million. The acceleration of growth compared to previous quarters mainly related to the low advertisement revenue base in the fourth quarter of 2017. For the full-year ended December 31, 2018, revenue from other businesses was RMB1.8 billion, representing a 20% increase from 2017.

Gross margin was 79% for the fourth quarter of 2018, compared to 83% in the same period in 2017 and remained consistent with the previous quarter. For the full-year ended December 31, 2018, gross margin was 80%, compared to 83% in 2017. The year-over-year decrease in gross margin was mainly due to the decrease of per air ticket revenue as a result of operating adjustment we discussed in previous quarters, our investments in service upgrades in domestic and international market unchanged in the revenue mix of different business segments.

Excluding share-based compensation charges, total non-GAAP operating expenses grew 29% year-on-year and 4% quarter-over-quarter in the fourth quarter of 2018. In the fourth quarter, the total headcount in product and development, as well as administration function was generally consistent with the level of the third quarter.

The sequential increase to operating expenses as a percentage of net avenue in the fourth quarter was primarily due to weaker seasonality and increased personnel costs. We continued to improve sales and marketing efficiencies in the fourth quarter of 2018, with our average new user acquisition cost slightly decreased from the previous quarter.

For the full-year ended December 31, 2018, total non-GAAP operating expenses grew 17% from the – from 2017. Non-GAAP operating profit in the quarter was RMB261 million, compared to RMB703 million in the same period in 2017 and RMB1.9 billion in the previous quarter.

Non-GAAP operating profit for 2018 was RMB4.3 billion, compared to RMB4.8 billion in 2017. Non-GAAP operating margin for the fourth quarter was 3% decreased from 20% in the previous quarter. The decrease has resulted from the change in revenue due to seasonality. Non-GAAP operating margin for 2018 was 14%, compared to 18% in 2017.

The company adopted the new financial instrument accounting standard from January the 1, 2018, and measures its available for sale equity securities at fair value with gain or losses recorded through the income statement. The impact of applying this new standard for the fourth quarter of 2018 resulted in a loss of approximately RMB1.3 billion in net income, net of tax. The impact of applying this new standard for the full-year 2018 resulted in a loss of approximately RMB2.7 billion in net income, net of tax.

Diluted loss per ADS were RMB2.17, or US$0.32. For the fourth quarter of 2018, excluding share-based compensation charges and fair value changes of equity security investments, non-GAAP diluted earnings per ADS were RMB0.90, or US$0.13 for the fourth quarter of 2018.

For the full-year ended December 31, 2018, diluted earnings per ADS were RMB1.96, or US$0.29. Excluding share-based compensation charges and fair value change of equity security investments, non-GAAP diluted earnings per ADS were RMB9.22, or US$1.34.

As of December 31, 2018, the balance of cash and cash equivalents, restricted cash and short-term investment was RMB62.5 billion, or US$9.1 billion.

Now turning to the outlook. For the first quarter of 2019, the company expects net revenue growth to continue at a year-over-year rate of approximately 18% to 23%. Excluding share-based compensation, the company expects the non-GAAP operating income will be around RMB1 billion to RMB1.1 billion.

For 2019, the company expects to continue to outperform the market, while delivering operating leverage from the previous year. This will cause to reflect Ctrip’s current and preliminary view, which is subject to change.

That concludes our prepared remarks. Operator, now please open the line for questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. Please note that this session is only open to sell-side analysts due to time restriction. And each analyst is only allowed to ask one question each time. If you have additional questions, please join back the queue. [Operator Instructions] Our first question Gregory Zhao from Barclays. Please go ahead.

Gregory Zhao

Hi. Good morning, James, Jane, Cindy, Michelle and [indiscernible], congrats on a strong quarter and thanks for taking my question. So in addition to the…

Jane Jie Sun

Hi.

Gregory Zhao

So in addition to the fast-growing GMV, would you please share more colors of that top line growth outlook in 2019 and a key growth driver behind? And it would be great if you can help us understand the growth trends by business segments like hotel and air ticketing? Thank you.

James Jianzhang Liang

Yes. Yes, we will continue to be very optimistic about the overall growth trends of the industry and our company. We talked about – there’s still a lot of room for growth in terms of urbanization. But on top of that, Chinese economy is continuing to move from necessity goods to experienced goods from manufacturing to services and from investment to consumption, particularly high-end consumption.

So that all these trends bodes very well for the – for industry growth and for Ctrip. Ctrip as being the leading company in the travel industry, particularly high-end travel industry, including outbound and the high-end domestic travel, Ctrip is very well-positioned to take advantage of that and Ctrip will grow at least twice the industry growth, which close to double digits. So Ctrip will continue to be one of the fastest-growing Internet companies in China.

In terms of product line, I think, the growth will be across the board. Transportation continues to grow. Air ticket, particularly international air tickets will continue to grow very well and high-speed rail will continue to grow and China build more high-speed railways. And all these will drive accommodation growth, which is the bulk of our – we’ll be taking increasing share of our overall revenue and the profit, and we’re very optimistic of all the growth prospect of all our product lines. Thank you.

Gregory Zhao

Thank you very much.

Jane Jie Sun

Yes, thanks.

Operator

Thank you. Our next question Ronald from Goldman Sachs. Please go ahead.

Ronald Keung

Thank you, James, Jane, Cindy, and the great IT team. So my question would be more on 2019, and maybe could you provide some 2020 margin targets? I’m just thinking about the first quarter EBITDA you’ve just provided, and how do you think of 2019 and into 2020 versus your long-term margin target you share a bit more color on what are the drivers behind that 2020 potential target from a by-segment basis? Thank you.

Cindy Xiaofan Wang

Thank you, Ronald. So in terms of the guidance, because given the very short booking window we have, actually, normally over 70% of our orders actually made within five days prior to travel. So we actually have a pretty limited visibility on the full-year performance for the 2019, as well as for 2020.

But as James said, we are on the right track to achieve our original 2020 guidance, and Ctrip already laid a very solid foundation in the service very comprehensive product offerings and precision marketing in the last two years. So we have the full confidence to continue to outpace the industry growth going forward. And at the same time, we can also achieve the leverage on the operational improvements.

So we think in China markets going forward, given the foundation we viewed throughout the year, we expect a continuous efficiency gaining on full-year basis, including the China outbound business. But as always, the magnitude of the margin expansion also relates to the – our market situations.

For international markets, it’s still in the pretty early stage, so we will continuously make investment. And I think, our mid-term, given the operational efficiencies gaining on the domestic market, we think the mid-term margin guidance is still very achievable. Thank you, Ronald.

Ronald Keung

Thank you.

Operator

Thank you. Our next question James Lee from Mizuho. Please go ahead.

James Lee

Thanks for taking my questions. Jane, maybe can you talk about maybe competition with Meituan at this point? Are you seeing them continue to be very aggressive providing a very high – higher subsidy and low-star or even high-star hotels? And maybe help us understand did you have the – did you need to lower your discount rate in 4Q as well?

And also it seems like your call center has done really well gaining leverage, obviously, that’s a big asset for you in terms of driving the business in general. Are you also seeing, your key competitor, Meituan, also building call center assets going to 2019? Thanks.

Jane Jie Sun

Thanks, James. First of all, you are right. I think, Ctrip competes service and technology. So every year we put a tremendous effort hiring engineers to strengthen our service capability. And as we’ve discussed before, about 90% of the phone calls are addressed within 20 seconds and about 90% of the requests are handled on the first contact. And going forward, we will continuously to invest in our service level to make sure our customers are satisfied and we deliver beyond expectation service to our customers.

In terms of our competition, I think, every year we have seen some newcomers. And we – the focus for us had always been focus on our product offering, technology and the services. If we listen to our customers understanding their trend, I think, Ctrip will be in a very good position to capitalize on the upgrade on the services.

So hardly, we initiate to develop price war. But based on our earnings ability, if there is one, we will relentlessly make sure we leave no room for other players. But I think based on our focus, I think, our earnings ability and service level will enable us to make further investments in the service and technology, and we – that’s our strength for the past 20 years.

James Lee

All right, great. Just a follow-up question for Cindy here. Your operating income guidance implies your total expense level will actually decline about 4% also from 4Q to 1Q. I think, if I look at your financial for 1Q 2018, your actually total expense level increased by 3% or so. And maybe help us understand where are you seeing leverage in first quarter 2019 in terms of expenses? Thanks.

Cindy Xiaofan Wang

Yes. We think we have the leverage in each expenses line items. But for the fourth quarter, because there’s some one-time like the year-end bonus, et cetera. So there’s some one-time impact on the fourth quarter expense line items. And going forward, we will continuously to make investments in, for example, technologies, service capabilities, but we also can, especially on the China business, we can achieve operational efficiency gaining across all the expense line item.

James Lee

Right, great. Thanks.

Jane Jie Sun

Thank you.

Operator

Thank you. Our next question Wendy from Macquarie. Please go ahead.

Wendy Huang

Thank you. First, I wonder if you can share any color on the margin difference between the international business versus domestic, especially given the international is already becoming one-third of your revenue. If you cannot really quantify the operating margin difference I, think, can you at least give us some idea at gross margin level what difference would be like for the two segments? And also what would be the different cost components be for the two different type of business? And also if you can share the same color on the high-end hotel versus low-end and top-tier cities versus low-tier cities that would be even better?

And secondly, at a high-level, if we’re actually looking back 2018, obviously, there has been a lot of uncertainties at macro level as there’s a company-level caused some, I would say, the – underperformance in the earnings slide. So what would be the uncertainties you are foreseeing for 2019 at this point of time? Thank you.

Jane Jie Sun

Thank you, Wendy. So in terms of the operating margins for the – for different product line items, I think, because there are a couple of comportment within the international business. One – biggest one actually is the outbound business. For that product – for that segment, because it is due to all the mid to high-end, actually, it bring us a pretty or higher than average operating margin compared with others.

In terms of the international expansion, for example, the Trip.com business, because it’s still in the quite early stage. So we have to plan to continue to make investment and grow that business in a factor way. And for the Skyscanner, they have a different – slightly different margin compared with Ctrip overall. So even within the international, we have a different operating margin for different brand and market segment.

In terms of the uncertainties ahead of us, as always, Ctrip has been in the travel industry in the last close to 20 years. We have experienced the peak season, slow season. But what we observed and we have the confidence is that, if there’s any, for example, macro uncertainties, it always will become the best opportunity as a leader to be more aggressively outpace the industry growth. We did – we achieved in the last year and we have the full confidence, we can continue.

Wendy Huang

Thank you.

Jane Jie Sun

Thank you.

Operator

Thank you. Our next question Eileen from Deutsche. Please go ahead.

Eileen Deng

Thank you, management, for taking my question. I’m wondering what’s the strategy on the low-tier cities, as management just mentioned on the local products and services? Can we get more color on specifically what kind of these services and products is offering to cater the demand? And what kind of investment should we expect the economy? And likewise, can we get a roughly idea on the user contribution and revenue contribution to the overall group? And how much upside do we see in the next, for example, two years? Thank you.

Jane Jie Sun

Yes. For the lower-tier cities, first of all in terms of product offering, not only we offer the hotel room in the first-tier cities. In the past couple of years, our coverage into the lower-tier cities has significantly increased.

Secondly, in transportation, many smaller cities are opening up the airport, and high-speed railway also reach the low-tier cities. We also added rental cars, buses, et cetera, to reach the last miles for our customers. So these products enable us to give the best product offerings to the customers in the lower-tier cities.

In terms of the marketing tools, not only we offer the online platform in mobile app, et cetera, we also extended our presence by opening up the offline stores, which covers the 200 cities in China, with 7,000 offline stores to cover more and more low-tier cities. And certainly, I – we believe that with the increased GDP per capita, customers from some cities will enable to travel to the first-tier cities and later to the global places. So Ctrip’s product in the domestic coverages will enable them to develop a loyal taste to our brands? Thank you.

Eileen Deng

Thank you.

Operator

Thank you. Our next question Billy from Haitong International. Please go ahead.

Billy Leung

Hi, management, thanks for taking my question and congrats on the results. Just one quick question for me. I just wanted to understand our international business, which has done really well and it contributed third of our revenue now. I was just wondering if this was just the low-hanging fruits, and the international expansion will get incrementally harder going forward, as it gets harder to penetrate. That said, how do we look at overseas growth, and what are really our competitive advantages in the overseas market? Thank you.

Jane Jie Sun

Yes, international business represents a very strong growth driver for our overall business. First of all, as we discussed, the GDP per capita is increasing quite significantly over the past couple of years. And secondly, Chinese people are very curious in exploring different parts of the world. And the large population enable us to talk with our partners to get the best deal for our customers.

And certainly, when we develop the infrastructure to help Chinese customers to go abroad, for example, international air tickets, the infrastructure is large enough. So that we can offer to the global customers.

And fourthly, because of our investment in Skyscanner, which enable us also to reach to the customers in the global spaces utilizing their brand. So all these factors combined together represents a very strong drives for our international growth. And if we look at the market share, we’re still very, very small – the percent for international business probably is below 1%. So I think as long as we work hard, understand customers’ needs, we’ll continuously to drive that business.

Billy Leung

Thank you. I’ll get back into line.

Cindy Xiaofan Wang

Thank you.

Jane Jie Sun

Thank you.

Operator

Thank you. Our next question Jerry from UBS. Please go ahead.

Jerry Liu

Hi, thank you very much. My question is really just around near-term trend. First, could we get a breakdown roughly of the growth rates for the major business units in the first quarter? And also just given the strong results and guidance, are we seeing a near-term, maybe improvement in sentiment for travelers? I understand, there’s tremendous long-term opportunity, but it seems like near-term things are improving as well. So I just wanted to get the views there. Thank you.

Jane Jie Sun

Thank you. So each of the – for each of the business line items for the first quarter 2019, accommodation reservation revenues we forecast to have – continue to have a 20% to 25% growth. And on the transportation revenues, we forecasted to have 15% to 20% year-over-year growth, and packaged tour will continue with 25% to 30% year-on-year growth.

Corporate travel revenues will grow about 25% to 30% year-over-year and revenue – other revenues will grow about 15% to 20%. So the net revenue will grow at about 18% to 23% year-over-year.

In the near-term, in terms of the uncertainties or macro slowdowns, yes, we do observed there’s some macro slowdown, especially if you compare first-half of 2018 towards the end of 2018. There’s some industry data slowdowns, but we also noticed that we’re actually gaining market share in a much faster way.

For example, in the first-half of 2018, we probably doubled the industry growth when the industry growth at a pretty high level. But towards the end of the year, the industry go slowdown, but we almost travel the industry growth, for example, the outbound travel business, which proved that Ctrip as a leader, we have a very resilient business model. And if there’s any uncertainty, it’s always the best opportunity for us to outpace this industry growth in a much faster way.

Jerry Liu

Thank you.

Jane Jie Sun

Thank you.

Operator

Thank you. Our next question Natalie from CICC. Please go ahead.

Natalie Wu Wu

Hi. Good morning, management. Congratulations on a very solid quarter and thanks for taking my question.

Jane Jie Sun

Thank you.

Natalie Wu Wu

Actually, I want to ask you about the Trip Moments that launched in last December. It’s a quite good assumption. I think, can you help us understand how does that help to your user engagement, stickiness, et cetera? Any operating metrics you can share with us to better understand the improvement brought by that feature?

And secondly, the transportation business is actually picking up much faster than expected. Just wondering what the major driving was behind? Is there any improvement you’ve observed airline ticket take rate, or it is more about the – more because of the effect from ground transportation? Thank you.

Jane Jie Sun

I think, Natalie, for the Trip Moments, because we just launched very recently and it’s a pretty new kind of a path internally. So – because it’s too early to share a very detailed operating data, but we see a very encouraging momentum on that product. People like to share their short videos, our Ctrip platform for the destinations. So we think going forward, it will help us to increase the user engagement Ctrip one-stop shopping platform.

In terms of the transportation ticketing business. As always, this revenue stream is mainly in growth, is mainly driven by the volume growth. We – I guess, for this revenue segment, it actually was negatively impacted the – in – the first three quarters of 2018 just because of the operational adjustment on the air ticket business, especially the dogmatic air ticket business.

But given the comparatively low work comp base towards the fourth quarter of 2017. So the growth recovered a little bit on the per air ticket revenue basis. But again, even though there is some – there was some negative impact on the revenue side. But we also – always see a very healthy volume growth across all the product line items within that category. Thank you.

Natalie Wu Wu

That’s it from me. Very helpful.

Operator

Thank you. Our next question Juan Lin from 86Research. Please go ahead. My apologies. Our next question Tian Hou from T.H. Capital. Please go ahead.

Tian Hou

Yes. Good morning, management. Congratulations on the better quarter. So question is related to one of your business strategy. If we go back to our 2018, and management is adopting the strategy to go lower-tier cities. you guys say a lot in lower-tier cities, you guys actually doesn’t have a brand recognition for Ctrip. They thought that Ctrip is more of a shop for shoes.

So as what James said, the population is actually moving from this – the lower-tier cities to higher-tier cities, and the travel itself is not really some kind of consumption you can actually frequently experience by the really lower-tier city people. So I wonder how you’re going to see your strategy this year? Are you going to focus more on urban people? And also are you going to be focusing on more the overseas travel? So what is the strategy you see in 2019, that’s the question?

Jane Jie Sun

Yes, thanks. I think if we look at the growth, the domestic China in terms of GDP growth is around 6% to 6.5%. It is still the fastest, compared to the rest of the world. So domestic market for is always going to be very important, and that’s what Ctrip is good at. So we have our team focusing on the expansion domestically, as well as internationally for domestic markets as we discussed.

First, our product line needs to cover all the cities that has the growth potential. Secondly, our marketing campaign needs to reach to the customers who have never used the feature before. And so far we have seen very positive ROI in both fronts.

Secondly, regarding the first-tier cities customers, in the past couple of years, they have already been going through the major travel destinations within China. And naturally, as their income level is increasing, they will join the people in a global basis to travel outside of China, and that also represents a great potential for us.

So our international team also needs to develop a strong infrastructure in terms of international air ticket, international transportation, et cetera and packaged tour, et cetera to make sure our customers who are interested in going abroad have the product and the service to help them. So our investment in the core center around the world will enable us to provide 24/7 nonstop services.

Our infrastructure for international air tickets, et cetera, also provides our customers with the connections in a global basis. So those fronts represents huge opportunities for Ctrip. And we need to work very hard to build our infrastructure and a service team to handle both fronts.

Tian Hou

Thank you, Jane.

Tian Hou

Thanks.

Operator

Thank you. Our next question Juan Lin from 86Research. Please go ahead.

Juan Lin

Hi. Good morning, James, Jane, Cindy, Michelle and [indiscernible] congratulations on the strong set of results and thank you for taking my questions. My first question is on the international…

Jane Jie Sun

Thank you.

Juan Lin

All right. My my first question is on your international expansion. Could you please share some color on the international expansion this year as to what are the key goals you would like to achieve? And how does this growth link to financial performance? Specifically, what are spending looks like for the new initiatives of international business this year versus last year?

And the second question is related to mini programs. Could you please share some color on your current business development related to the Beijing mini program operation in terms of GMV or revenue contribution and growth? Do you consider mini program as a new threat or more of a new growth opportunity? And any colors on the strategy on mini program, would be very helpful? Thank you.

Jane Jie Sun

Sure. First of all for international business, as we discussed, we saw very positive potential when we talk with our customers. So our team – the first layer should be international flight, because based on a lot of sedation, customers normally make their reservation on air ticket first.

Secondly, that air ticketing infrastructure is very scalable to an extent Chinese customers can use that infrastructure, it can also be expanded to the global places.

And thirdly, our investment in Skyscanner also enable us to rapidly grow our scalability, because they have a very strong brand in the international air ticket. So the international air tickets are frontier of our expansion.

And secondly, we also see the customers have used a lot of different products such as packaged tool. And originally, they go to probably Southeast Asia and ask their income level is increasing. The customers are making more trips to such as Japan, Korea, Australia, New Zealand, Europe, et cetera.

And thirdly, visa restrictions for Chinese customers also have become – have been lifted as well. Sa the – a lot of countries in order to attract Chinese customers are lifting the restrictions on their business. So we have seen very positive moves for the countries that make via applications very easy.

And lastly, we are also working with our partners to develop certain programs to make sure Chinese customers feels comfortable when they cover into these countries, such as signs, language capabilities, et cetera. So in terms of the international expansion, we would invest in this area to make sure our customers requests are very well fulfilled.

And secondly, on mini programs, yes, we see – it’s a good potential for us to reach to a lot of customers. So our technology team and product team and also marketing team also a lot of time making sure the mini program is well utilized to buy our customers.

Juan Lin

Thank you, Jane. Just a quick follow-up for the international spending. So if we compare the spending this year versus last year for the new initiatives, is there anyway to quantify that?

Jane Jie Sun

Yes. In – just for the international business, there’s a different product and brand within that category. For example, we have the outbound business, which grow almost triple the industry – outbound industry growth just because our positioning, our best-in-class services. And the second is the Trip.com, as Jane said, the air ticket is the growth driver for that business, but also leverage our existing very powerful international air ticket platform we build to serve both the outbound travel business, as well as international demand under the Trip.com brand.

And second is Skyscanner. They have a very healthy growth pace. And the Trip.com and Skyscanner also works very closely how to better utilize the Skyscanner huge traffic outside of China. For Skyscanner, they have over 80 million MAUs internationally, which help us a lot in terms of a user acquisitions.

Juan Lin

Thank you. That’s it from me.

Jane Jie Sun

Thank you.

Operator

Thank you. Our next question Binnie from HSBC. Please go ahead.

Binnie Wong

Hi, good morning. Thank you, management, for taking my questions. So I have two questions here. So in terms of the diversification journey, we see that we have been expanding into many different travel products to be a more comprehensive platform in order to drive that cross-selling. Is there anyways you can help us to quantify in terms of the percentage of traffic you see are coming from different sources of revenue and then by multiple products on our platform?

And then just very lastly, in terms of – because we see better than expected top line and margins delivered in 4Q. In 2019, how will you balance between market share gains and profitability? Because we also see change, James, in your opening remarks, talk about this will – expansion into market shares? So how will you balance between profitability and market share gains? And apologies for my voice. Thank you.

Cindy Xiaofan Wang

Thanks, Binnie. Yes, I think the international business definitely give us a very strong trajectory for the future growth. So we will continuously listen to our customers, understand the popular travel destinations, where they want to go. And our infrastructure is build upon our customers’ requests. So we will fully leverage the infrastructure we have built in-wall and expand based on the customers’ demand.

And secondly, I think, in terms of our – yes, continuously, we always – we’re very careful in terms of how we balance our ROI and future growth. But our investment in technology, product, branding and service has never slowed. And if we look at the past 20 years, where Ctrip invest our money and our resources during the slow time. Normally, that is the best time for us to make the investment. The ROI, if you’re looking to the future return, will be very high. So we will continuously make the investment to extend our leadership in the travel business.

Binnie Wong

And how about on my first question, in terms of like percentage of customers that are using multiple products, because I think that’s one of our strategy that being able to be a comprehensive platform, diversification into more products to drive cross-selling across different product lines. So any trend we see? So we know – yes. Thank you.

Jane Jie Sun

Yes. The trend is very clear. And we – as we discussed here. we also added a lot of sections, which encourage customers to cross by many products, such as accommodation plus transportation section, so two drivers, the convenience and also the cross-sell.

So right now, I think, if you look at our customers by year in a couple – from the time they make the first purchase to the next few years, their purchase can reach to 20 purchase a year. And normally, they will buy multiple products probably starting from air ticket transportation first and gradually they will understand future offers – our comprehensive product offerings.

So probably more than 50% of the customers will know more about the new product. In every year, we’re also adding more and more new products and by innovating ourselves. So the majority of the customers will see a comprehensive product offering in their bookings.

Binnie Wong

Okay. Thank you so much. That’s very helpful. Thank you, Jane.

Jane Jie Sun

Thank you.

Cindy Xiaofan Wang

Thank you.

Operator

Thank you. Due to time constraint, I will now hand the session back to Michelle Qi for closing remarks. Please go ahead, Michelle.

Michelle Qi

Thank you. Thank you, everyone, for joining us today. You can find the transcript and webcast of today’s call on ir.ctrip.com. We look forward to speaking with you on our first quarter 2019 earnings call. Thank you, and have a good day.

Jane Jie Sun

Thank you so much.

Cindy Xiaofan Wang

Thank you.

James Jianzhang Liang

Thank you.

Operator

Thank you. Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.