It's the Lunar New Year, and hundreds of millions of Chinese are headed home for the holidays. China's online-travel sector could use a break, too.

The country's burgeoning middle class is spending more money online and enjoying a rapid increase in domestic and outbound tourism. That has supported strong growth in online-travel bookings. Transaction value for the industry grew from 48.6 billion yuan ($7.8 billion) in 2008 to an estimated 253 billion yuan in 2012, and is expected to hit 347 billion yuan this year, according to iResearch.

The black cloud on the online horizon is that competition for a share of travel wallets is increasingly intense. In the early years, Nasdaq-listed Ctrip.com -- one of the sector's first movers -- faced little serious competition, and its superior customer service won out over small-time rivals. Recently, though, the departurelounge has become crowded with other offerings, including Qunar -- which is majority owned by search giant Baidu -- and a travel platform from Taobao, China's dominant online-shopping site.

The ensuing fight for market share is reflected in Ctrip's declining profitability. The company's net profit margin has fallen to 16.2% from a high of 36.4% in 2010, according to FactSet. Ctrip plans to offer more discounts to customers, which could crimp margins further.

Changes in customer behavior, meanwhile, favor some of the sector's newer players. Li Muzhi, China Internet analyst at Citi, says more of the market's growth is coming from leisure travelers who typically care more about price than service. Also, growth in online booking reduces the scope for Ctrip to use its call centers to channel customers into higher-margin hotels.

Ctrip has benefited from being one of the few ways for investors to play China's travel trend. The stock has lost about 12% in the past three weeks, though the share price still values the company at a decent 26.8 times next year's forecast earnings.

That could change. Qunar's chief financial officer, Sam Sun, says the firm could launch an initial public offering when market conditions are right. As options for investors broaden, Ctrip could start looking less like an exclusive resort, and more like last year's hot spot.

Tom Orlik

• domestic [də´mestik]   a.家庭的；本国的   (初中英语单词)
• horizon [hə´raizən]   n.地平线；范围；视野   (初中英语单词)
• competition [,kɔmpi´tiʃən]   n.比赛；竞争   (初中英语单词)
• customer [´kʌstəmə]   n.顾客，买主，主顾   (初中英语单词)
• departure [di´pɑ:tʃə]   n.离开，出发   (初中英语单词)
• platform [´plætfɔ:m]   n.(平)台；讲台；站台   (初中英语单词)
• meanwhile [´mi:n´wail]   n.&ad.其间；同时   (初中英语单词)
• channel [´tʃænəl]   n.海峡；航道；途径   (初中英语单词)
• financial [fi´nænʃəl]   a.金融的，财政的   (初中英语单词)
• resort [ri´zɔ:t]   vi.求助；乞灵；诉诸   (初中英语单词)
• billion [´biljən]   num.万亿   (高中英语单词)
• intense [in´tens]   a.强烈的；紧张的   (高中英语单词)
• crowded [´kraudid]   a.充(拥)满了的   (高中英语单词)
• margin [´mɑ:dʒin]   n.边缘；空白；余地   (高中英语单词)
• behavior [bi´heiviə]   n.举止，行为   (高中英语单词)
• leisure [´leʒə]   n.空闲；悠闲；安定   (高中英语单词)
• decent [´di:sənt]   a.体面的，正派的   (高中英语单词)
• launch [lɔ:ntʃ]   vt.发动 n.发射；汽艇   (高中英语单词)
• initial [i´niʃəl]   a.最初的 n.首字母   (高中英语单词)
• offering [´ɔfəriŋ]   n.提供；礼物；捐献   (高中英语单词)
• exclusive [ik´sklu:siv]   a.独有的；集中的   (高中英语单词)
• increasingly [in´kri:siŋli]   ad.日益，愈加   (英语四级单词)
• lounge [laundʒ]   n.懒洋洋的姿势；闲逛   (英语四级单词)
• dominant [´dɔminənt]   a.统治的；占优势的   (英语四级单词)
• forecast [´fɔ:kɑ:st]   vt.&n.预测；预报   (英语六级单词)
• broaden [´brɔ:dn]   v.(使)变宽；(使)扩大   (英语六级单词)