Tourism partners are flying high

Chinese and UK companies have joined forces to offer one-stop shopping for travelers

Inside a large office building in Nantong, in China's Jiangsu province, customer service assistants work assiduously on a 24/7 basis to answer around 200,000 calls per day.

This sleepless engine is one of the 10 call centers of China's biggest tourism booking company, Ctrip. Together, these centers employ half of Ctrip's entire team and fuel the company's record of answering 90 percent of customer calls within 20 seconds.

For Ctrip, customer service is a key driving factor behind its success, particularly as it operates within China's highly competitive tourism industry.

"Customers traveling through Ctrip can travel with peace of mind. We set the bar in terms of service quality; Ctrip customers enjoy guaranteed experiences," says Victor Tseng, vice-president of corporate affairs at Ctrip.

For example, customers who book flights and hotels through Ctrip can receive a hotel compensation if a flight is canceled. Even for customers who only book hotels, Ctrip can still coordinate for compensation in case of a canceled flight.

Shanghai-based Ctrip has gone from small beginnings in 1999 to become China's biggest travel booking website, cementing its market lead in 2015 after merging with its top rival, Qunar, another Chinese booking company.

Currently, its booking network encompasses 300 million flights, train tickets and hotels.

Internationally, it ranks second in market capitalization, just after Booking.com.

In the United States, it is perhaps best known for its 2003 initial public offering on the New York-based Nasdaq stock exchange, which enabled Ctrip to raise $75.6 million (61 million euros). The company saw its share value increase from $18 at the time of listing to $33.94 by the close of the first trading day, effectively growing by 86 percent, which demonstrated strong investor confidence.

In the UK, it is perhaps most famous for its $1.7 billion acquisition of the Scotland-based flight booking company Skyscanner in 2016, which Tseng says was a milestone for the company's internationalization progress.

After the acquisition, Ctrip used its expertise to help Skyscanner add train and car rental services to its core flight booking offerings.

"We have a dedicated team for each category of travel business at our headquarters. We have the insight into how the business model works within each industry, so we leverage on that experience to work with Skyscanner to offer a transportation one-stop-shop for customers," Tseng says.

Skyscanner's revenue grew by almost 40 percent in 2017, according to Ctrip's data. It now has an active user base of around 70 million in 100 countries, and more than 1,000 partner airlines, train companies and car rental companies.

This takeover is now frequently cited by business professors as an example of successful Chinese overseas acquisitions.

Michael Wenderoth, an associate professor in marketing at the IE Business School in Spain, says he sees Skyscanner as a key part of Ctrip's international expansion due to the two companies' complementarity and similar corporate cultures.

"Both companies have a similar culture in their rigor, scientific approach to growth and experimentation. Skyscanner is focused on international and airline business, which was complementary to Ctrip's business. This synergy has shown in recent investor calls, most notably helping boost Ctrip's revenue and earnings from international flights," says Wenderoth.

"Likewise, Ctrip, venturing outside of China and Asia, needs to localize to Western customers, and Skyscanner is helping them climb that learning curve more quickly," he says.

The concept of a one-stop-shopping travel experience is already very familiar to Chinese travelers.

One reason Ctrip has made its tour package-like experience attractive is the company's heavy investment into artificial intelligence technology to personalize each traveler's experience.

"If you have booked a business-class flight, then our AI algorithm will predict that you may like to look at five-star hotels. We will offer you these options immediately, rather than giving you hundreds of hotels to choose from", says Tseng.

Ctrip invests around 30 percent of its revenues in research and development, which amounts to about $1.3 billion per year, of which AI research is a key element. Ctrip currently employees nearly 8,000 R&D staff members.

Another highlight of the Ctrip offering is a tool it calls the "virtual tour manager". Effectively, Ctrip puts all of its customers traveling to the same destination during a certain period into a chat group on WeChat. Clients not only benefit from instantaneous answers from experienced local tour guides and Ctrip customer service assistants, but also enjoy the possibility of making new friends through such connections.

Ctrip's virtual tour manager has already served more than 10 million customers, providing service in 150 countries and regions, which together account for around 800 tourism destinations worldwide.

The advice the customer gets does not necessarily relate to the actual Ctrip product purchased.

Tseng explains with a hypothetical situation: "If a customer travels from Shanghai to London and realizes that he has lost his passport after landing at Heathrow Airport, he can just send an SOS plea through our virtual tour manager, and our community manager will immediately offer advice on what to do next. This makes servicing our customers even more seamless."

Nonetheless, despite Ctrip's customer focus, its image in recent years has been damaged by some high-profile incidents, the most recent of which happened earlier this year when a customer in Shenzhen complained about what she considered to be an outrageous booking cancellation fee.

The customer, who booked a Ctrip package in Febuary for two people to visit Tunisia, tried to cancel the booking within 20 minutes of the order, upon learning that her friend had become ill, according to numerous Chinese media outets, which cited a report on the website of People's Daily.

She called Ctrip, but the customer service assistant told her that cancellation required a payment of 9,262 yuan ($1,475) per person as flight cancellation compensation. The customer then checked directly with the airline and realized that this cancellation cost was higher than the cost of buying the same tickets directly, which was 6415 yuan, according to the reports.

The outraged customer complained to the Shenzhen Consumer Council. The incident, which attracted widespread attention among the general public, eventually brought apologies from Ctrip CEO Jane Sun and other management team members.

The incident also prompted other Ctrip customers to speak out on Chinese social media, saying that they, too, had encountered similar experiences.

Meanwhile, Ctrip's growth has been propelled by the Chinese mainland travel boom. In 2016, Chinese tourists made around 122 million overseas trips, spending a total of $261.1 billion. Growth of outbound travel is expected to continue, given that China's current middle-class population of 300 million is forecast to grow to 550 million by 2022.

According to Ctrip's data, the number of Chinese tourists going to Europe through Ctrip grew by almost 30 percent in 2017 compared with 2016.

"Europe is an important stop to Ctrip," says Tseng, adding that the company has an ambitious target of growing its international activities from the current 25 percent of total revenue to 50 percent within five years.

Ctrip defines international activities as Chinese outbound travel and services provided to overseas travelers, such as Skyscanner's customers.

Wang Gao, a professor of marketing at China Europe International Business School, says he feels that the strong demand from Chinese travelers could be a key factor in helping Ctrip to reach this goal, but the key challenge for Ctrip is securing enough hotel rooms, airline seats and various other tourism services

"If they are able to have a sufficient supply of international tourism services, it is possible that Ctrip can reach its goal of having 50 percent of their revenue overseas within five years," says Wang.

cecily.liu@mail.chinadailyuk.com