Make Money by Traveling Through China  

The travel industry is alive and well in China.

The country's leading travel portal and one of its fast-growing lodging chains delivered great quarterly results last night, and both stocks opened higher this morning.

Ctrip.com's (Nasdaq: CTRP  ) revenue soared 46%, to $86 million during the first quarter, fueled by healthy gains in hotel reservations, airline ticketing, packaged tours, and corporate travel. Net income climbed 57%, to $0.19 a share -- or $0.26 a share once you back out stock-based compensation expenses.

Home Inns & Hotels (Nasdaq: HMIN  ) also checked into a room with a view. The value-priced lodging chain's quarterly revenue grew 28%, to $100 million. The parent of the 638-unit chain -- with nearly two-thirds of its locations company-operated, and the balance run by franchisees -- was good for a profit of $0.16 a share, more than double what analysts were expecting.

In the most encouraging aspect of Home Inns' report, RevPAR (revenue per available room, a key hotel metric) rose sharply, as higher occupancy levels magnified slightly increased overnight rates.

The good times should continue. Ctrip expects revenue to grow 30% to 35% during the current quarter. Home Inns is targeting a 23% to 26% gain on the top line. These year-over-year spurts may be decelerating from both companies' first-quarter surges, but they're clearly nothing to scoff at.

The strong results should also be good news for shareholders of rival budget hospitality chain 7 Days Group Holdings (NYSE: SVN  ) and smaller travel portal eLong (Nasdaq: LONG  ) when they report their quarterly results next week.

Ctrip's 44% spike in air ticket booking revenue also bodes well for leading carriers China Southern (NYSE: ZNH  ) and China Eastern (NYSE: CEA  ) . China's fast-growing economy will naturally benefit both corporate and leisure air travel.

Travel portals, hospitality chains, and air carriers should all be toasting last night's reports from Ctrip and Home Inns. Both companies present a bright itinerary for growth, indeed.

Have you ever traveled to China? Share your experiences in the comment box below.

Ctrip.com International is a Motley Fool Hidden Gems selection. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy   

Longtime Fool contributor Rick Munarriz has been booking travel online since the 1990s, but he does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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  • Report this Comment On May 13, 2010, at 7:33 AM, bourse wrote:

    Thanks Rick for this article!

    These were indeed strong earnings reports in this fearful market we have actually.

    As a shareholder I hope that I will also profit from the revaluation of the Chinese Yuan in a not so distant future!

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