Ctrip.Com International Ltd (CTRP) Q4 2018 Earnings Conference Call Transcript

Ctrip.com International, Ltd.  (TCOM -1.28%)
Q4 2018 Earnings Conference Call
March. 05, 2019, 7:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants
  
  

  See all our earnings call transcripts.

Prepared Remarks:

Operator

Ladies and gentlemen welcome to the Fourth Quarter 2018 Ctrip.com International Limited Earnings Conference Call. My name is Aaron, and I will be the moderator for today.

At this time, all participants are in a 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'll hand the call to Senior IR Director, Michelle Qi, please begin.

Michelle Qi -- Senior Manager Investor Relations

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 US Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risk 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 Securities and Exchange Commission. Ctrip does not undertake any obligation to update any forward-looking statement, 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 the 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 -- Co-founder, Executive Chairman of the Board

Thank you, Michelle, and thanks to everyone for joining us on the call today. We are 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 backend 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 strategies, our customer-centric initiative, and platform empowerment as well as the outlook for 2019 and beyond. First updates on customer centricity. At the beginning of 2018, we emphasize our customer-centric principles of transparency, optionality, consistency, and impartiality you need to go out OK. Please go another room for me...e and promise to incorporate such principles throughout our entire operation. Over the course of 2018, we updated our service commitment across all product lines. We have also invested in backend technologies and systems to streamline product and service protocols.

By the end of the year, our net promotion score, or NPS, an indicator for customer satisfaction levels with our products and services improved around 35% year-over-year on average in all of our major business units as we demonstrated the product reliability, proactive and comprehensive customer service, and strong customer guarantees. 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 platforms empowerment strategy. In December last year, we enhanced our platform strategy with the 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 in individual trip planners and tour guides its which accounts for 80% of the in-destination travel supply. Our open platform has and will continue to empower the suppliers with our traffic and platform data, operation training, backend tools, and finance products. For instance, in 2018 Ctrip brought over 2 million customers to over 9000 local tour guides across the globe who registered on our platform.

Lastly, on outlook. Looking to 2019 in the longer term we are confident of continued growth. From a macro perspective is projected that urbanization rates in China will increase to 70 to 80% from the current 50% within 10-20 years, reaching the level of most middle-income countries. This translates to 10 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 is 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 in previous years, we will continue to outpace industry growth in GMB going forward and to leverage operational improvements at the same time.

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

Jane Jie Sun -- Chief Executive Officer, Director

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

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

We have continued to make strides in extending into the lower tier cities through localized products and service offerings as well as launching packaged marketing initiatives in the city with the biggest growth potential due to rapid urbanization. For example, we now have over 7000 franchise off-line 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 investments. Increases in average spending per customer, so similar growth across the various city tears as we gradually improved 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 on revitalizing our existing customer base by offering better services and stimulating more travel demands through our platforms. Our relentless efforts in providing the best services for our clients is the foundation for every initiative 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 salt on the first contact. Throughout the year, we have continued to invest heavily in technology to improve our backend system. Over the past three years, our GMV has more than doubled [inaudible] of our call center has remained flat.

We added a new transportation plus accommodation section in order to maximize our potential to cross sales 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 sale 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 on the social platform, Trip Moments, is another initiative we took on to enhance user [inaudible]. We are still in the initial stage having it just launched in December, but our users have already generated close to 1 million posts covering over 6000 destinations around the world making us extremely optimistic about its development going forward. With all these innovations contributing to improved customer 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 are 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 sales sign-up for small travel vendors with a combined automatic plus human review process. With that, this new feature will expand our local supply network significantly. Secondly, our new marketing channels like Scene Tours or Transportation Plus accommodation packages not only better address customers differentiated preference, but also help suppliers to identify their suitable customers effectively. Thirdly, our suppliers joint Ctrip's partnership program, they will also enjoy the access to our online and off-line 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 are also bringing the courses to overseas hotel planners 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 connect with the end customers by building many apps, e-ticketing systems, and backend 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 to gain prized competitiveness, particularly in regions where Chinese are most frequently traveled to. This has allowed us to quickly build a good foundation for 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 offerings, improve off-line 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 -- Chief Financial Officer

Thanks, Jane, thanks, everyone. For the fourth quarter of 2018, Ctrip reported net revenue of RMB 7.6 billion representing a 22% increase from the same period in 2017. For the full year ended December 31, 2018, net revenue was RMB 31 billion, representing a 16% increase from 2017. Accommodation reservation revenue for the fourth quarter of 2018 was RMB 2.7 billion, representing a 22% increase from the same period in 2017, primarily driven by an increase in accommodation reservation volume. Room nights in the low-end hotel segments 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 RMB 200.

In the mid to high-end hotel segment continued to gain market share by doubling the industry growth rate. International hotels delivered another strong growth about tripling the industry growth rate. For the full year ending December 31, 2018, accommodation reservation revenue was RMB 11.6 billion, representing a 21% increase from 2017. Transportation ticketing revenue for the fourth quarter of 2018 was RMB 3.4 billion, representing a 17% increase from the same period in 2017, primarily driven by an increase in ticketing volume. In the fourth quarter, air ticketing continued strong volume growth, while revenue growth is catching up with comparatively normalized accounts on the 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 continue to impress our customers with strong and reliable services. For example, more than 50% of first ticketing users will come back for a second purchasing within six months. For the full year ending December 31, 2018, transportation ticketing revenue was RMB 12.9 billion, representing a 6% increase from 2017. Packaged-tour revenue for the fourth quarter of 2018 was RMB 721 million, representing a 31% increase from the same period of 2017, primarily driven by an increase in volume growth of organized tours and self-guided tours.

In the fourth quarter, GMV through our off-line franchise source 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 the full year of 2018. Currently, we have more than 1500 suppliers and more than 5000 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 RMB 3.8 billion representing a 27% increase from 2017.

Corporate travel revenue for the fourth quarter of 2018 was RMB 279 million representing a 35% increase from the same period in 2017 primarily driven by expansion and travel product coverage. For the full year ended December 31, 2018, corporate travel revenue was RMB 981 million representing a 30% increase from 2017. Our investments in expansion and innovation of products and services for corporate users not only yielded increase spending per client but also helped 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 RMB 515 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 for our other businesses was RMB 1.8 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 remain 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 investment in service upgrades in domestic and international markets and change in the revenue mix of different business segments, excluding share-based compensation charges, total non-gap 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 operating expenses as percentage of net revenue in the fourth quarter was primarily due to weaker seasonality and increased personnel cost. We continue to improve self and marketing efficiencies in the fourth quarter of 2018 with our average new user acquisition costs slightly decreased from the previous quarter.

For the full year ended December 31, 2018, total non-gap operating expenses grew 17% from 2017. Non-gap operating profit in the quarter was RMB 261 million compared to RMB 703 million in the same period in 2017 and RMB 1.9 billion in the previous quarter. Non-gap operating profit for 2018 was RMB 4.3 billion compared to RMB 4.8 billion in 2017. Non-gap operating margin for the fourth quarter was 3%, decreased from 20% in the previous quarter. The decrease is resulted from the change in revenue due to seasonality. Non-gap operating margin for 2018 was 14% compared to 18% in 2017.

The company adopted the new financial instrument accounting standard from January 1, 2018, and measures it's available for sale equity securities at fair value with gains or losses recorded through the income statements. The impact of applying this new standard for the fourth quarter of 2018 resulted in a loss of approximately RMB 1.3 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 RMB 2.7 billion in net income, net of tax.

Diluted loss for ADS were RMB 2.17 or USD0.32. For the fourth quarter of 2018 excluding share-based compensation charges and fair value changes of equity security investments, non-gap diluted earnings per ADS were RMB 0.90 or USD0.13 for the fourth quarter of 2018. For the full year ended December 31, 2018, diluted earnings per ADS were RMB 1.96 or USD0.29. Excluding share-based compensation charges and fair value change of equity security investments, non-gap diluted earnings per ADS were RMB 9.22 or USD1.34. As of December 31, 2018, the balance of cash and cash equivalent, restricted cash, and short-term investments was RMB 62.5 billion or USD9.1 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-gap operating income will be around RMB 1 billion to 1.1 billion. For 2019, the company expects to continue to outperform the market while delivering operating leverage from the previous year. This forecast reflects Ctrip's current and preliminary view which is subject to change.

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

Questions and Answers:

Operator

Thank you. We will now begin the question and answer session. Please note that this session is only open to sales site analysts due to trying restrictions and each analyst is only allowed to ask one question each time. If you have additional questions, please join back into the queue. Participants with questions to pose, please press 01 on the telephone keypad, and you'll be placed in the queue. To cancel the queue, please press 02. Our first question, Gregory Zhao from Barclays, please go ahead.

Gregory Zhao -- Barclays -- Analyst

Hi, good morning, James, Jane, Cindy, Michelle and [inaudible]. Congrats on the strong quarter and thanks for taking my question. So, in addition to the faster growing GMV, would you please share more color of that topline growth outlook in 2019 and the key growth driver behind that? And it would be great if you can help us understand the growth trend spike business segments like hotel and air ticketing. Thank you.

James Jianzhang Liang -- Co-founder, Executive Chairman of the Board

Yeah, we are continuing to be very optimistic about the overall growth trends of the industry and of our company. We talked about there is still a lot of room for growth in terms of urbanization, but on top of that, the Chinese economy has continued to move from necessity goods to experience goods, from manufacturing to service, and from investment to consumption, in particular, high in consumption. So, all these trends bowed very well for the overall industry growth and for Ctrip. Ctrip has been the leading company in the travel industry, particularly the high-end travel industry including outbound and high-end domestic travel which puts us very well-positioned to take advantage of that and Ctrip will grow at least twice the industry growth with close to double-digit so Ctrip will continue to be one of the fastest growing Internet companies in China.

In terms of topline here, I think the growth will be across the board. Transportation is continuing to grow, air ticket, particularly international air tickets will continue to grow very well in high-speed rail will continue to grow as China builds more high-speed railways and all these will drive accommodation growth which is the bulk of -- will be taking increasing share of the overall revenue and the profit and were very optimistic on all the growth prospects of all our product lines. Thank you.

Gregory Zhao -- Barclays -- Analyst

Thank you very much.

Operator

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

Ronald Keung -- Goldman Sachs -- Analyst

Thank you, James, Jane, Cindy, and the great IR team. So, my question will be more on 2019 and maybe could you provide some 2020 margin targets and just thinking about the first quarter that you just provided and how do you think of 2019 and into 2020 long-term margin target? Can 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 -- Chief Financial Officer

Thank you, Ronald. So, in terms of the guidance, because giving the very short booking window we have actually, normally over 70% of our orders essentially are 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 Jane 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 built throughout the year, we expect to continue efficiency gaining on the full year basis, including the China outbound business. But as always, the [inaudible] of the margin expansion also relates to our market situation. For international markets, it's still in the pretty early stage so, we will continuously make investments, and I think our midterm, given the operational efficiencies gaining on the domestic market, we think the midterm margin guidance is still very achievable. Thank you, Ronald.

Ronald Keung -- Goldman Sachs -- Analyst

Thank you.

Operator

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

James Lee -- Mizuho Securities -- Analyst

Thanks for taking my questions. Jane, can you talk about maybe competition with [inaudible] at this point, are you seeing them continue to be very aggressive providing a higher subsidy and low star or even high star hotels? And maybe help us understand did you need to lower your discount rate in 4Q as well? And also, it seems that 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 [inaudible] also building call center assets going into 2019? Thanks.

Jane Jie Sun -- Chief Executive Officer, Director

Thanks, James. First of all, you're right; I think Ctrip competes on service and technology. So, every year we put tremendous efforts hiring engineers to strengthen our service capability, and as we 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 continue to invest in our service level to make sure 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 in the focus for us has always been focus on our product offering, technology, and services. If we listen to our customers, understanding their trend, I think Ctrip will be at a very good position to capitalize on the upgrade on the services. So happily, we initiate develop price for 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 that's our strength for the past 20 years.

James Lee -- Mizuho Securities -- Analyst

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

Yeah, we think we have the leverage, each expense line items for the fourth quarter because there is some one-time, you're in bonus, etc. So, there some one time impact on the fourth quarter expense line items in going forward we will continuously make investments in, for example, technology service capabilities but we also can, especially on the China business, we can achieve operational efficiency gains across all the expense line items.

James Lee -- Mizuho Securities -- Analyst

All right, great, thanks.

Operator

Thank you, our next question Wendy from Macquarie, please go ahead.

Wendy Huang -- Macquarie -- Analyst

Thank you. First, I wonder if you can share any color on the margin difference between the international business versus domestic, especially given that international is already becoming one third of your revenue; if you can't really quantify the operating margin difference, can you at least give us some idea at gross margin level, but the difference would be like for the two segments? And also, what would be the different cost components be for the two different types 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 high level, if we actually look back at 2018; obviously, there have been a lot of uncertainties at macro level as there is at company level because some underperformance in the earnings line. So, what would be uncertainties you are foreseeing for 2019 at this point of time? Thank you.

Cindy Xiaofan Wang -- Chief Financial Officer

7Thank you, Wendy. So, in terms of the operating margin different product line items, I think because there are couple of components within the international business. One, the biggest one actually, is the outbound business. For that product, for that segment, because it is still toward the mid to high end, actually it brings us a 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 a plan to continue to make investment and grow that business in a factor way. And for the Skyscanner, they have a slightly different margin compared with Ctrip overall. So, even within the international, we have a different operating margin for different brands and market segments.

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 observe, and we have the confidence is that if there is any, for example, macro uncertainties it always will become the best opportunity as a leader to be more aggressively outpaced industry growth. We did, we achieved it in the last year, and we have the full confidence we can continue.

Wendy Huang -- Macquarie -- Analyst

Thank you.

Operator

Thank you, our next question Eileen from Deutsche, please go ahead

Eileen Deng -- Deutsche Bank -- Analyst

Thank you for taking my question. I'm wondering with the strategies on the low tier cities as management just mentioned on the local product and services, can we get more color on specifically what kind of services and products is offering to cater the demand and what kind of investment should we expect accordingly? Likewise, can we get a rough idea on the user contributions and the revenue contribution to the overall growth and how much upside do we see in the next, for example, two years? Thank you.

Jane Jie Sun -- Chief Executive Officer, Director

Yeah, for the lower tier cities, first of all, in terms of product offering, not only do we offer the hotel rooms in the first tier cities, in the past couple of years our coverage into the lower tier cities have significantly increased. Secondly, in transportation, many smaller cities are opening up airports, and high-speed railway also reach the low tier cities. We also added rental cars, buses, etc. 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 do we offer the online platform and mobile apps, etc., we also extended our presence by opening up the off-line stores which covers the 200 cities in China with 7000 off-line stores to cover more and more low tier cities. And certainly, we believe that with the increased GDP per capita, customers from subsidies will be enabled 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 loyalties to our brands. Thank you.

Eileen Deng -- Deutsche Bank -- Analyst

Operator

Thank you, our next question, Billy from Haitong International, go ahead.

Billy Leung -- Haitong International -- Analyst

Hi, management, thanks for taking my question and congrats on the results. Just one quick question from me, I just wanted to understand how international business which is done really well and contributed a third our revenue now, I was just wondering if this was just low hanging fruits and that 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 -- Chief Executive Officer, Director

Yeah, international business represents a very strong growth driver for 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 planners to get the best deal for our customers. And certainly, we developed 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 enables us also to reach to the customers in the global spaces utilizing their brand. So, all these factors combined together represent a very strong drive for our international growth. And if we look at the market share, we are still very, very small, the percent for international business probably is below 1%. So, as long as we work hard and understand the customer's needs, we'll continue to drive that business.

Billy Leung -- Haitong International -- Analyst

Thank you, I'll get back into line.

Operator

Thank you, our next question Jerry from UBS, please go ahead.

Jerry Liu -- UBS -- Analyst

Hi, thank you very much. My question is really just around near term trends. First, could we get a break down 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 may be improvement in sentiment for travelers? I understand this 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.

Cindy Xiaofan Wang -- Chief Financial Officer

Thank you, so 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 in the packaged tour will continue with 25 to 30% year on year growth. Corporate travel revenues will grow about 25 to 30% year on year, and 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 on macro slowdowns; yes, we do observe this macro slowdown, especially if you compare the first half of 2018 to the end of 2018. There some industry data slowdown but we also noticed that we are actually gaining more market share in a much faster way. For example, in the first half of 2018, we probably doubled industry growth when the industry growth was at a pretty high level, but toward the end of the year the industry growth slowdown that we almost tripled 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 the industry growth in a much faster way.

Operator

Thank you, our next question, Natalie from CICC, please go ahead.

Natalie Wu -- CICC -- Analyst

Hi, good morning management and congratulations on a very solid quarter and thank you for taking my question. Actually, I want to ask you about the Trip Moments that launched last December. It's quite good function I think, can you help us understand how does that help your user engagement thickness, etc.? 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. I'm just wondering what the major driving force behind it? Is there any improvement of the airline ticket take rate or is it more because of the ground transportation? Thank you.

Cindy Xiaofan Wang -- Chief Financial Officer

Thank you, Natalie. For the Trip Moments, because we just launch that very recently and it's a pretty new kind of task internally, so it's too early to share very detailed operating data. But we see a very encouraging momentum on that product. People like to share their short videos on Ctrip platform for the destinations. So, we think going forward it will help us to increase the user engagement of Ctrip's one-stop shopping platform.

In terms of the transportation ticketing business, as always, this revenue stream growth is mainly driven by the volume growth. For this revenue segment, it actually was negatively impacted in the first three quarters of 2018 just because of the operational adjustment on the air ticket business, especially the domestic air ticket business. But given the comparatively lower comp base throughout the fourth quarter of 2017, so the growth recovered a little bit on the per air ticket revenue basis. But again, even though there was some negative impact on the revenue side, but we also always see a very healthy bottom growth across all the product line items within that category. Thank you.

Natalie Wu -- CICC -- Analyst

Thanks, Cindy, very helpful.

Operator

Thank you. Our next question Tian Hou TH capital, please go ahead.

Tian Hou -- T.H. Capital -- Analyst

Yes, good morning management, congratulations on the better quarter. So, my question is related to one of your business strategies. If we go back to 2018 and management is adopting the strategy goal of lower-tier cities, you guys say a lot of lower-tier cities, you guys actually doesn't have [inaudible] of Ctrip, it's thought that Ctrip is more of a [inaudible]. So, what Jane said, the population actually moving from the lower tier cities to higher tier cities and the travel itself is not really some consumption you can actually frequently experience by the really lower tier city people. So, I wonder how you see your strategy this year, are you going to focus more on the urban people and also are you going to be focusing more of the overseas travel? So, what is the strategy getting into 2019? That's the question.

Jane Jie Sun -- Chief Executive Officer, Director

Yeah, thanks. I think if we look at the growth, domestic China in terms of GDP growth is around 6 to 6.5%. It is still fastest compared to the rest of the world. So, the domestic market is always going to be very important, and that's what Ctrip is good at. So, we have our team focusing on expansion domestically as well as internationally. For domestic markets, as we discussed, first our product line needs to cover all the cities that have a growth potential. Secondly, our market team campaign needs to reach to the customers who have never used the trip 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 the global spaces 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, etc., and packaged tour, etc. to make sure our customers who are interested in going abroad have the product in the service to help them.

So, our investment in the core center around the world will enable us to provide 24x7 nonstop services. Our infrastructure for international air tickets, etc., also provides our customers with the connections in the global places. So, both fronts represent huge opportunities for Ctrip, and we need to work very hard to build our infrastructure and service team to handle both fronts.

Tian Hou -- T.H. Capital -- Analyst

Thank you, Jane.

Operator

Thank you, our next question, Juan Lin from 86 research, please go ahead.

Juan Lin -- 86Research -- Analyst

Hi, good morning James, Jane, Cindy, Michelle and [inaudible], congratulations on the strong set of results and thank you for taking my questions. 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 these goals linked to financial performance, specifically, what does spending look like for the new initiatives of international business this year versus last year?

In the second question is related to your mini-programs. Could you please share some color on your current business developments related to the mini-programs' operations in terms of GMV or revenue contribution and growth? Do you consider many programs of a new stress or more of a new growth opportunity and any colors on strategy would be very helpful? In queue.

Jane Jie Sun -- Chief Executive Officer, Director

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 flights because based on our observations, customers normally make the reservation on air tickets first. And secondly, that contributing infrastructure is very scalable. To an extent, Chinese customers can use that infrastructure; it can also be extended 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 tickets. So, the international air tickets are the frontier of our expansion.

And secondly, we also see the customers have used our different products such as the packaged tool and originally, they go to probably Southeast Asia, and as their income level is increasing, the customers are making more trips to such as Japan, Korea, Australia, New Zealand, Europe, etc. And thirdly, visa restrictions for Chinese customers also are being lifted as well. So, a lot of countries in order to accept Chinese customers are lifting the restrictions on their visas. So, we have seen very positive moves for the countries that make these applications very easy.

And lastly, we are also working with our planners to develop certain programs to make sure our Chinese customers feel comfortable when they travel into these countries, such as science, language capabilities, etc. So, in terms of the international expansion, we will invest in this area to make sure customers' requests are very well fulfilled. And secondly, our mini-programs we see it's a good potential for us to reach our customers, so our technology team and product team and also marketing team also spend lots of time making sure the many programs is well utilized by our customers.

Juan Lin -- 86Research -- Analyst

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

Cindy Xiaofan Wang -- Chief Financial Officer

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

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

Juan Lin -- 86Research -- Analyst

Thank you, Jane, thank you, Cindy.

Operator

Thank you. Our next question, Binnie HSBC, please go ahead.

Binnie Wong -- HSBC -- Analyst

Hi, good morning, thank you management for taking my question. So, two questions here. So, in terms of the diversification, we see that we have been extending into many different travel products to be a more comprehensive platform in hopes to drive better cross-selling. Is there any ways you can help us to quantify, in terms of the percentage of traffic you see coming from different sources of revenue identify multiple products on our platform? And then just very lastly, in terms of because we see better-than-expected outlying and margins delivered in 4Q into 2019 how you balance between market share gains and profitability because we also see, Jane, in your opening remarks, talked about expansions into market shares. So, how will you balance it's between profitability and market share gains? And apologies for my voice, thank you.

Jane Jie Sun -- Chief Executive Officer, Director

Thanks, Binnie, yeah, I think that the international business definitely gives us a very strong trajectory for the future growth. So, we will continuously listen to our customers to understand the popular travel destinations where they want to go, and our infrastructure is viewed upon our customers' requests so we will fully leverage the infrastructure we have built in extend based on the customer demand. And secondly, I think in terms of our ­-- continuously we are always careful in terms of how we balance our ROI [audio cuts out]. But our investment in technology products branding and service has never slowed down, and if we look at the past 20 years where Ctrip invest our money our resources, during the slow time normally, that is the best time for us to make the investment. The ROI if you're looking into the future return will be very high. So, we will continuously make the investment to extend our leadership in the travel business.

Binnie Wong -- HSBC -- Analyst

And how about for my first question, in terms of percentage of customers that are using multiple products, because I think that's one of the strategies, right? Being able to be a comprehensive platform, diversification into more partners to drive cross-selling across different product lines. So, in the return, we see, so we know. Thank you.

Jane Jie Sun -- Chief Executive Officer, Director

Yeah, the trend is very clear, and as we discussed, we also added a lot of sections which encourage customers to cross buy many products such as accommodations plus transportation sections. So, to drive up the convenience and also the cross-sell. So, right now I think if you look at our customers by year, from the time they make the first purchase to the next few years, their purchase can reach 20 purchases a year and normally they will buy multiple products probably starting from air tickets transportation first and gradually they will understand that Ctrip offers a comprehensive product offerings.

So, probably more than 50% of the customers will know more about the new products. And every year we are also adding more and more new products by innovating ourselves. So, the majority of the customers will see comprehensive product offerings in their booking.

Binnie Wong -- HSBC -- Analyst

Okay, thank you so much, that's very helpful. Thank you, Jane.

Operator

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

Michelle

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

Jane Jie Sun -- Chief Executive Officer, Director

Thank you very much.

Cindy Xiaofan Wang -- Chief Financial Officer

Thank you.

James Jianzhang Liang -- Co-founder, Executive Chairman of the Board

Thank you.

Operator

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

Duration: 68 minutes

Call participants:

Michelle Qi -- Senior Manager Investor Relations

James Jianzhang Liang -- Co-founder, Executive Chairman of the Board

Jane Jie Sun -- Chief Executive Officer, Director

Cindy Xiaofan Wang -- Chief Financial Officer

Gregory Zhao -- Barclays -- Analyst

Ronald Keung -- Goldman Sachs -- Analyst

James Lee -- Mizuho Securities -- Analyst

Wendy Huang -- Macquarie -- Analyst

Eileen Deng -- Deutsche Bank -- Analyst yes

Billy Leung -- Haitong International -- Analyst

Jerry Liu -- UBS -- Analyst

Natalie Wu -- CICC -- Analyst

Tian Hou -- T.H. Capital -- Analyst

Juan Lin -- 86Research -- Analyst

Binnie Wong -- HSBC -- Analyst

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