Ladies and gentlemen, welcome to the first quarter 2019 Ctrip.com International, Ltd. 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.
Thank you, Aaron. Good morning, everyone, and welcome to Ctrip's first quarter of 2019 earnings conference call. Joining me today on the call are Mr. James Liang, 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 Securities 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 in our strategy and business updates, operating highlights, and financial performance for the first quarter of 2019, as well as the outlook for the second 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.
Thank you, Michelle. Thank you everyone for joining us on the call today. We are happy to report that our first quarter results reflect our continued confidence in China's travel industry, as well as in our own ability to execute and embrace any changes. We delivered a solid year-over-year result revenue growth of 21%, reaching RMB 8.2 billion. Our operating profit grew 50% year-over-year. In April, we announced a share exchange transaction with Naspers for MakeMyTrip. Today, I would like to share with everyone the strategies that we will use to drive our business expansion, as well as to reiterate our view on MakeMyTrip investment. First, our major growth drivers. Looking forward, we will continue to create long-term value for our shareholders, primarily through organic expansion with focuses on expanding our customer base and deepening user engagement.
First, we still have a long way ahead to unlock the full potential of our China customer base. Overall, travel demand remains strong, especially from lower-tier cities. So far, we have only reached just 25%-30% of the population in the first-tier cities, and much less than 10% in lower-tier cities. Second, we will work hard to enhance engagement with our existing customers. Our five-year cohort data shows average spending per user on our platform continues to increase with around 10% CAGR, regardless of which tier city our customers are from. Thirdly, we are well prepared to offer high-quality services to customers outside of China. Trip.com is one of our rising stars. The team capitalized on experience and resources accumulated from serving the large China market and works hard on building brand awareness in the global travel market.
To capture these opportunities, we will continue to invest organically in the following areas: technology, product innovation, and global service capabilities. We are confident in driving both revenue growth and margin expansion by leveraging large market scale. Focusing on our own advantages allow us to maximize synergies with our external investments. While investee companies operate largely independently, our scale, resources, and technologies have brought significant benefits to both parties. For example, Wing On Travel, a Hong Kong travel agency, generally maintain 20%+ year-on-year growth since our investment in 2010, even in a very mature market. It has also developed its online arm in unison with its offline model. Another good example is Skyscanner, which over the past two and a half years has advanced the meta search industry with a direct booking model. Second, on the MakeMyTrip investment.
India is one of the fastest-growing emerging economies with the world's second-largest population and the youngest among the major economies. In addition, India's middle class is expected to grow rapidly, along with increases in internet and smartphone penetration. In the foreseeable future, we believe India will emerge as one of the fastest-growing travel markets, while China continue to lead the scale. Being the leader in the Chinese market, we are delighted to gain exposure in the Indian travel market through the investment in MakeMyTrip. When we added our existing presence in Europe through Skyscanner, we have reached a strong position in countries that consist of half of global population. Looking forward, we are confident that MakeMyTrip will continue their success. Two companies will work together to generate greater value in our respective markets. With that, I will turn the call over to Jane for the operating highlights.
Thank you, James, for sharing our major growth drivers and our rationale behind MakeMyTrip investment. Over the last 20 years, we worked extremely hard to attain Ctrip's position in the industry as one of the largest global OTAs. In addition to being attentive and adaptive to our customers' feedback, we also invested heavily to capitalize new emerging opportunities. I will now share with you the progress our team has made in strengthening our position across all the business lines. First, I will give an overview of our customer base. Our group level MAU reached 210 million in the first quarter, thanks to robust traffic growth from the core Ctrip brand and our global platforms. This quarter, we had continuously impressive traffic acquisition and conversion, along the subsequent increases in ROI, largely due to our efficient product-driven marketing campaigns and our ever-improving service quality.
In addition, we are continuing and open more offline stores in our targeted cities nationwide. We are also expanding these stores' product coverage from package tour to include in-destination functions, offering currency exchange and the local attraction tickets, as among other examples. By combining our online and offline channels, we have been able to further penetrate into the targeted cities, where we continue to see around 30% user growth of Ctrip brand. Secondly, I will give an overview on the quarter's users engagement. As one-stop travel platform, we continue to innovate and strengthen our product offerings to meet the ever-evolving needs from our customers. We currently offer over 60 products and services, yielding our outstanding results for the quarter. The new products we launched the last year are beginning to yield fruit.
Trip Moments, which is similar to travel Instagram, continued to gain traction among travelers, with over 1 million daily active users during Q1. With a solid base now established, we are concurrently working to add booking functionality into the users' posts to convert content-driven users to transaction-driven users. The new tab, Transportation Plus Accommodation section on our mobile app homepage, has not only helped our customers to save up to 30% of their travel costs, but also brought them a more seamless experience. For example, customers who place an order from this section can enjoy free hotel cancellation and flexible airport transfer services in case of flight schedule changes. Additionally, our Prime Member program is another initiative to enhance our customers' travel experience to increase loyalty. The paid program offers a range of premium service worth of RMB 3,500, providing extra assistance and convenience in every step of a journey.
Its current benefit package includes free domestic hotel cancellation, room upgrades, free breakfast, domestic air ticket cancellation insurance, airport VIP lounge access, express security checks, upgrade of airport pickup vehicles, promotional price on selected products, and more. Since its launch in late 2017, over 2 million customers have already signed up for this program, with their spending and purchase frequency rising significantly. Lastly, customer service also plays a key role in engaging with our customers, especially during the emergencies. For instance, after the recent Sri Lanka bombing incidents, our Global SOS system allowed us to evacuate our customers within one day and efficiently synchronize all the systems for our travelers who are both in that country as well as about to depart. Third, I will give an overview on the supplier network.
We're entering into an era where travel is becoming more tailor-made and specialized. Our growth will hinge progressively more on our ability to provide a sustainable ecosystem for our suppliers. This includes traffic, scalability, technology, and services, coupled with our deep understanding of our customer space. Therefore, we have been making persistent efforts to empower our suppliers in an easy, intelligent, and comprehensive manner. Recently, our hotel business rolled out a service market platform, a one-stop marketplace to link hotel leads with various third-party vendors for property and operation management system, content improvements, procurement, design and decoration, financing, and other relevant services. Following the Trip.com Group Global Partner Summit in December last year, we officially launched the Package Tour Open Platform 3.0 and have already had 7,000 suppliers on board.
In addition to an easy supply sign-up process and a more in-depth big data analysis, the platform gives suppliers more opportunities to participate in marketing campaigns and provide services to Ctrip users. Moreover, we expanded our training programs to more travel suppliers, and recently, we launched the Ctrip Institute for Tourism Studies. This institute provides a number of certified training programs for partners, including trip planners, local tour guides, and more. We believe nurturing suppliers to offer high level of the products and services is a virtuous circle that provides enduring results for us. Fourth, an overview on our progress in international expansion. In the first quarter, revenue generated from international business continued to increase, making up approximately 35% of the group level revenue. International hotel and air ticket businesses both sustained a rapid growth rate that more than doubled the industry outbound travel growth rate.
This is vital as we acquire more overseas resources into our platform and expand our partnerships globally. Skyscanner continued to grow its MAU by 20% year-over-year without heavy advertisement efforts in the first quarter. Its direct booking business also kept up strong growth momentum of approximately 250% year-over-year. The excellent performance of Trip.com this quarter continued with strong air ticketing volume growth as a result of strengthened product coverage, price, and excellent services. Specifically, Skyscanner's contribution to Trip.com's flight booking resulted in explosive growth, reflecting in Trip.com's increasing price competitiveness. To conclude, our team's efforts not only collectively drive remarkable results but also demonstrate our determination and perseverance to accomplish our mission, which is to provide the best travel experience in the world through our one-stop travel platform.
As always, I want to take this opportunity to thank our customers, our business partners, our employees, and shareholders for your continuous support. With that, I will turn the call to Cindy.
Thank you, Jane. Thanks, everyone. For the first quarter of 2019, Ctrip reported net revenue of RMB 8.2 billion, representing a 21% increase from the same period in 2018. Accommodation reservation revenue for the first quarter of 2019 was RMB 3 billion, representing a 21% increase from the same period in 2018, primarily driven by increase in accommodation reservation volume. Ctrip branded low-star hotel room night increased about 60% year-on-year. In domestic mid to high-end hotel segment, we continued to outperform the industry with double the industry growth rate. International hotel growth more than doubled the industry growth rate. Transportation ticketing revenue for the first quarter of 2019 was RMB 3.4 billion, representing a 16% increase from the same period in 2018, primarily driven by increase in ticketing volume.
Air ticketing business maintained very strong volume growth, mainly driven by fast-growing outbound travel demand and a robust growth in Skyscanner and Trip.com. Trip.com's air ticketing volume recorded triple-digit growth for the 10th consecutive quarter. Ground transportation, including train ticketing, bus ticketing, ferry ticketing, and car services, registered very healthy volume growth in this quarter. Package tour revenue for the first quarter of 2019 was RMB 1 billion, representing a 25% increase from the same period in 2018, primarily driven by increase in volume of organized tours and customized tours. In the first quarter, GMV, through our offline franchise stores, continued to deliver triple-digit growth year-on-year. Customized tours also delivered high double-digit growth rate this quarter as demand shifts to more personalized product.
In addition, to better address the demand of high-end customers, we officially launched a premium customized tour platform in March, with products covering more than 80 countries and regions across the world. Corporate travel revenue for the first quarter of 2019 was RMB 238 million, representing a 32% increase from the same period in 2018. We have seen a continual expansion in corporate customer base and a healthy product mix trend with fast-growing non-air products such as hotel and ground transportation. Other businesses, including advertisement, financial services, and others, increased by 37% year-on-year in the first quarter of 2019, reaching RMB 517 million, primarily driven by the strong growth in advertisement business and our financial service business. Gross margin was 79% for the first quarter of 2019, compared to 82% in the same period in 2018, and remains consistent with the previous quarter.
Excluding share-based compensation charges, total non-GAAP operating expenses grew 13% year-on-year and decreased 10% quarter-over-quarter in the first quarter of 2019. Total headcount in product development was largely consistent with previous quarter. Marketing efficiency improved significantly thanks to our ROI-based marketing investment strategy and our previous efforts to improve brand image, product innovation, as well as better travel-related content. Despite the sequential decrease of marketing investment, we were able to maintain a stable MAU traffic growth and a stable momentum of new transacting customer acquisition. Ctrip brand users in our targeted cities maintained an approximately 30% year-on-year growth in the first quarter. Non-GAAP operating profit in the quarter was RMB 1.4 billion, grew 42% year-on-year and 427% quarter-over-quarter. Non-GAAP operating margin for the first quarter was 17%, increased from 14% in the same period of 2018 and 3% in the previous quarter.
The increase is mainly resulted from operation efficiency improvement. Diluted earning per ADS were RMB 7.45 or US$1.11 for the first quarter of 2019. Excluding share-based compensation charges and fair value changes of equity security investment, non-GAAP diluted earnings per ADS were RMB 2.93 or US$0.44 for the first quarter of 2019. As of March 31st, 2019, the balance of cash and cash equivalents, restricted cash, and short-term investments was RMB 61.6 billion or US$9.2 billion. Turning to our outlook. For the second quarter of 2019, the company expects net revenue growth to continue at a year-over-year rate of approximately 16%-21%. Excluding share-based compensation charges, the company expects the non-GAAP operating income will be in the range of RMB 1.5 billion-RMB 1.7 billion.
For the rest of the year, 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 review, which is subject to change. That concludes our prepared remarks. Operator, now please open the line for questions.
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. Each analyst is only allowed to ask one question each time. If you have additional questions, please join back the queue. Participants with question to pose, please press zero one on your telephone keypad and you'll be placed in the queue. To cancel the queue, please press zero two. Our first question, Alex Poon from Morgan Stanley, please go ahead.
Hi. Good morning, James, Jane, Cindy, and Michelle. Congratulations on the very good results. I have a question regarding the recent trade tension. Can you share with us what do you think about the possible scenarios in terms of the impact on your domestic business and also your international business separately? Regarding the international strategy, does this trade tension affect any of your strategy in future or in the near term? I see that the revenue guidance of 16%-21% year-over-year is slightly slower than first quarter revenue growth. Is that already factored in some of the concerns that you have for the trade tension? Thank you very much.
Yeah. Thanks for the question. There will be uncertainty in the macro environment and especially on the business sentiment. Compared to other industries, travel is relatively robust. I think we observe the domestic travel business in China is still growing at a very robust rate, outbound is still doing well. The non-Chinese business, Trip.com, is doing very well. I think the trade tension will force a lot of the Chinese companies and other companies that's serving the Chinese market to have closer integration with Asia, Europe, and those countries. That actually can increase the cross-country activities, including travel, between those countries. On the one hand, obviously China to U.S. travel might have some negative impact, that's only a small part of the overall international tourism market. Most of our market are within Asia.
Within Asia, we see more activities because the companies in China and those companies need to have closer, more tight integration with other Asian countries. I think overall we're still very optimistic in the long run about the growth prospect, both domestically and internationally. Thank you.
In terms of the guidance, as James explained, macro uncertainty definitely will impact all companies. At Ctrip, we always tend to be more prudent given some shorter uncertainties related to the status of the recent trade war. We did observe some slowdowns in the industry data. Nevertheless, what we always focus is to maintain or even increase our growth multiples compared with the industry growth rate in general. Given the current very low penetration rate across all targeted markets, especially in the second and comparatively lower tier city users in China, we strongly believe that we have the potential to at least double our existing targeted customer pool in China market. For example, in the first quarter, we actually intentionally increased our ROIC threshold in certain channels. We continued to see very stable growth of our MAU and adding more new transacting customers.
At the same time, on top of acquiring new customers, we also have many projects internally to improve our user engagement, as explained by James. In summary, our growth rate might be impacted due to industry slowdown, but we will make sure that we will be more effectively gaining more market share in a profit way during the period. Thank you.
Thank you. Our next question, Alicia Yap from Citigroup, please go ahead.
Hi. Good morning, James, Jane, Cindy, and Michelle. Thanks for taking my questions and congrats on the solid results. My question is related to your current and future globalization strategy. Can you help us frame your priority among the various stages and progress of your global travel initiatives? For example, you have expanded successfully into quite a number of Asian countries through the Trip.com brand, and it seems like Trip.com is also thinking about expanding to more European cities this year. Given your recent transaction on MakeMyTrip.com in India, could you perhaps help us frame your investment priority and business expansion for your international strategies? What other countries do you decide to further expand to Trip.com versus something like you would strike a deal similar to MakeMyTrip.com in other countries. Any colors that you can provide on the international expansion strategy would be helpful. Thank you.
Sure. Thanks, Alicia. I will cover your question from different perspectives. First of all, organic growth is always our focus. We strongly believe that only when we grow very strongly internally, our opportunity will unfold. We invest heavily in building a very robust technology platform to make sure it can extend not only in China but in Greater China, Asia, and later on. We focus quite a lot in our technology and open platform and also services. Secondly, with regard to geographic location, I think we started as a Chinese company hosting Chinese customers travel within China, gradually we take our customers to Greater China area, further expand into Asia. Now customers with their GDP per capita is increasing, they travel further to Europe, to Australia, New Zealand, et cetera.
With our strengthened coverage in different products, we're offering more and more products to help our customers to reach different travel destinations. Thirdly, with the following our customers' footsteps, we are able to build a network that not only will be utilized by Chinese customers, but also our customers from Greater China area, et cetera. In terms of the brand, I think our investment in Skyscanner has enabled us to do a direct booking on another search program, it has been very successful. Recently, we also announced a share exchange on MakeMyTrip because we believe that market in the future will impose lots of opportunities since it has the second-largest economy and very young population. We are positive on that. With our own brand, Trip.com, it's growing at a three-digit growth, leading by our strong product in air tickets, et cetera.
Our strategy in the global place is, first of all, following our customer's needs from China to the rest of the world. Secondly, leveraging the scale we have to build a network that not only can serve the Chinese customer, but also is helpful for other people to use. Thirdly, in the branded strategy, right now we have a Skyscanner and Ctrip parallel in different markets, covering different customers in different continents. Thank you.
Thank you.
Thank you. Our next question, Binnie Wong from HSBC, please go ahead.
Hi. Good morning, James, Jane, Cindy, Michelle. Thank you for taking my question here. My first question is actually on the improvement in the operating margin. It has been better than expected if we look at the non-GAAP operating margin here. Can you remind us in terms of the sales and marketing or maybe in your product development, what are some of the key efficiencies you have been seeing? I think in the opening remark, Jane mentioned about more effective user acquisitions. If you can give us more color on that, would be very helpful. How should we think about our margin target down the road since we have been achieving better than expected operating margins here? Very quickly is just on our 2Q outlook, how should we expect that across the different product lines? Thank you.
Thank you, Binnie. We actually achieved the operational efficiency, increased our operational efficiency across all business line items. For example, we closely monitored our marketing investments based on the ROI of every single channels. Despite the sequential decrease on the marketing investment level, actually, we were able to maintain a very stable MAU traffic growth and momentum of new transacting user acquisitions. Ctrip brand user growth in our targeted cities maintained at around 30% year-on-year. This proves that thanks to our investment in the technology, in the very comprehensive product platform as well as the best service platform we built, we are able to prove that we have a very resilient and scalable business model. Hopefully the most profitable travel business model.
In terms of the guidance for each of the business line items, for the accommodation reservation business, in the second quarter, we expect that it will increase around 19%-24%. The transportation revenues will continue to grow at around 12%-17% year-on-year. The package tour business will grow about 20%-25%. Corporate travel will grow about 15%-20%. Thank you.
Thank you. Our next question, Wendy Huang from Macquarie. Please go.
Thank you. First, management, can you give us a sense of the margin profile difference between your domestic and also international business? Also for your different business models such as transportation, hotel, et cetera. How should we think about this geographic mix impact on your ARPU and also take rate in the longer run? Thank you.
Wendy, sorry, can you repeat your first question?
First question is about different margin profile of your international and domestic business.
Okay. Yes. Within the international business, actually, there are different buckets. So far, the largest one is still the outbound business. On average, outbound business, the ADR or the selling price on average is much higher than our domestic product. At the same time, the service as well as the product investment is at the similar level compared with the domestic. Generally, our international business is more profitable than the domestic business, thanks to the outbound business. In terms of the Trip.com, it's still at the very early stage, and they have a very disciplined sales marketing strategy. We are still in the early stage of the investment cycle. Your second question is about the hotel.
My second question is about the ARPU and also the take rate trend across the different business line, transportation, hotel, and package tour.
Oh, yes. Our take rate, I think it's quite consistent in the past couple quarters across all the business line items. In terms of the selling price of the ADRs, with more contribution from the outbound business, our average selling price will trend up a little bit, but it will also offset it by our further penetration into the lower tier cities because our target is lower and of the business also growing very robustly.
Maybe follow-up on that. Actually, I just want to get a sense about the commission per ticket and also the commission for hotel room nights. How will this change with all different dynamics going on? What's the trend for this year and also next year?
It has been quite stable and consistent in the last couple quarters. So far, we don't expect any significant increase or decrease on the take rate.
Thanks, Cindy. Thank you.
Thank you. Our next question, Ronald from Goldman Sachs. Please go.
Thank you. Thank you, James, Cindy, and Michelle. My question first is on just your revenue guidance based on different segments. We see mostly the deceleration into the second quarter has been from transportation. Is that partly on when we see the airline numbers, April has been quite weak? How has the Labor Day of May been trending, and are we more being conservative based on the April trends on that deceleration in transportation revenue guidance? Just follow on that with a 17% EBIT margin, non-GAAP, second quarter guidance above 18, at the midpoint 18.4. How are we seeing that full year? You mentioned about 20% for 2020 in the last call. How do we see this midterm margin tracking based on the very strong performance so far? Thank you.
Thank you, Ronald. Yes, we did observe that slowdown in the industry data. That's also one of the reasons why we tend to be more prudent in terms of giving guidance. As I said, our key focus internally is just focusing on how much percentage we can outpace the industry growth and gaining market share. Given we already have the best product, most comprehensive product in place, as well as the highest service standards compare with other players in the market, Ctrip business model proved to be more resilient and to be more profitable. We think that the 2020 operating margin target so far is very achievable for us.
Thank you.
Thank you. Our next question, Natalie Wu from CICC, please go ahead.
Hi. Thanks for taking my question. You've mentioned that you've reached 210 million MAU this quarter. Last quarter was 200 million. Correct me if I'm wrong, I remember that you've mentioned the 200 million MAU level in several quarters last year already. Just curious, you actually become more prudent in terms of sales marketing spending in the first quarter. How come the MAU started to grow under this backdrop? Is there any shift of focus for your sales marketing spending to enhance efficiency? Also for the newly acquired users, is there a major difference in terms of the demographic features compared with your existing users one or two years ago? Do you observe any difference in terms of the transaction pattern, frequency, or RMB amount, et cetera? Thank you.
For MAU, rather than stressing on the numbers, we improve the quality of the customers. As we discussed, there are a couple of things we have done very successfully. First of all, we try to attract customers through our innovation on the product. For example, Trip Moments is very similar to travel Instagram, and we noticed the young people nowadays, rather than writing their travel journal, they prefer to use video or picture to express where they are, what they like. We have established a very young team led by a young CEO to establish this product. So far, it's very successful. The DAU already have exceeded one million DAU after a couple of months of the launch.
These customers have already expressed their interest in travel, and following the successful launch of the new product, we are going to add booking functionality to convert the content-driven customers into our transactional-driven customers. We always believe, rather than spending money in the low ROI channel, it's better for us to innovate our own product and make sure our platform is a closed-loop, one-stop shopping platform so the customers can see the content, plan their trips, book their trips, and we serve them during the trips. When they come back, they will feed back to our content again. So far, these efforts have played very well. Going forward, we will continuously innovate our products, mainly focusing on things that customer needs for their trip before, during, and after their journey. That's one thing we do.
Secondly, because the market has a little bit uncertainty, we also are very disciplined looking into different channels and make sure every RMB we spend generates very good return from a long-term perspective. These are the things we have done so far, which demonstrated a very strong return for us. To answer your question on the exact number of the MAU, because we have a seasonality. Travel, in general, have a very strong seasonality. First quarter is not the highest season for the travel business. Although we control the ROI very tightly on the sales marketing channels, but we did see very healthy growth on our users. For example, the Ctrip brand user growth in our targeted cities maintained at around 30% year-over-year.
Skyscanner, although majority of their business are still in the European countries, but their MAU continue to grow at around 20% year-over-year. Thank you.
Thank you, Jane and Cindy. Very helpful.
Thanks.
Thank you. Our next question, James Lee from Mizuho Securities. Please go ahead.
Thanks for taking my questions here. Jane, I was wondering maybe you can address competitive activities here. Looks like in the low-star hotel, you guys did really well at 60% year-over-year growth. Maybe help us understand from a competitive point of view, is your key competitor kind of become less competitive in the market that allow you to gain market share there? Do you do anything specific in the market to gain market share? Should we think about this competitive easing as potentially something tactical that's done on your competitor's side, or do you think this is more sustainable? My second question is relating to the May holiday. We noticed that this year is a little bit longer than last year. I was wondering, you seeing any benefits you're getting from the extended activity for that holiday period. Thanks.
Sure. Thanks, James. In terms of a competitive landscape, we focus a lot on our internal strength. What we have done are two-fold. One is in the domestic market. We have innovated lots of new products, such as package tour with air plus hotel, high-speed railway package, which enable us to further penetrate into the 2nd-tier, 3rd-tier cities, which is very difficult for travelers to travel to on the weekend without the high-speed railway. That has been very successful. Thirdly, we also opened many offline stores, which give us a strong penetration into the cities that people have never seen Ctrip before. Continuously, we will further penetrate into these cities and areas to strengthen our product offerings as well as the brand exposure. Globally, I think also led by our air ticketing product, we are able to understand where the customer's interests are.
When they land in certain cities, we also make our product as comprehensive as possible. That has been very well received among our high-end customers. Further, your question on May holiday. Yes, it was a big boost for the leisure travelers. Because it's only four days, we have seen domestic travel has enjoyed a strong growth and a pickup in the different destinations. We offer a very comprehensive product to make sure our customers are very well-informed as to what they can enjoy, what kind of attraction tickets they can buy, what kind of local transportations they will be able to have. The May holiday has demonstrated a strong execution on our team to take our customers anywhere within China and around China.
All right. Great.
Thank you.
Thank you so much.
Thank you. Our next question, Gregory Zhao from Barclays. Please go ahead.
Hi, good morning, management. Congrats on the strong quarter, and thanks for taking my question. My first question is about your hotel business. Hi, Cindy. Now we can see more and more hotel franchise are promoting their own brand and encouraging direct booking on their websites. At the same time, we can see Ctrip is also expanding your own branded low-star hotels in lower tier cities. We just want to understand your overall strategies in hotel business. A quick follow-up about your outbound travel. Would you please give us an update of your outbound travel, the destinations by revenue contribution, like the top five or top 10? Thank you.
Sure. For hotel chain, I think each business has their own strengths and different product to offer. For OTA, I think our strength is the comprehensive offering of products. Not only the customers can find hotel product on our platform, they can also find air ticket product, high-speed railway tickets, transportations, rental cars, and scene information, et cetera. It's very convenient. If your customer looking for different products and book it with us, I think OTA provides a very good offering to the customers. We are very strong in technology information, service, and product. That's our strength. Hotels, obviously, they have their strengths that they will demonstrate their value to the customers. In the long run, I think it will co-existent and collaborate in the long run. That is a better strategy. Secondly, for outbound business.
Outbound business will become a very good uplift for our products because more and more customers can not only offer travel domestically, but they also will be able to travel in international space. Ctrip has lots of advantages. First of all, our air ticket is the largest in the whole world. We're able to work with different airlines, utilize their products to take our customers anywhere, any place in the whole world. Secondly, once the customer has informed us where they want to go, we can also provide the information within the cities, within the areas, providing local transportations, providing the local attraction tickets to them. For our customers, outbound travel, when they book with Ctrip, they have peace of mind that everything will be taken care of. Right now, the outbound plus international travel accounts for 35% of our revenue contribution.
If we work continuously to improve our coverage and price and product offering in the future, that number can continuously improve to 50% in the next 5-10 years.
Thank you.
Thank you. Thanks.
Thank you. Our next question, Tian Hou from TH Capital. Please go ahead.
Good morning. Thanks for taking my question. The question is, yesterday, the railroads officials in China, they had announcements on their website, which is they added one function. The function is really convenient for the customers to replace their tickets or to select tickets. I do believe this is one of the strengths of Ctrip in the past. I wonder what could be the impact for Ctrip in this front, in the future? Thank you.
We are closely monitor the market. As always, we will make sure that Ctrip has the best product in place to serve our customers. More importantly, train tickets have become our traffic engine by helping customers to solve their pain points in the past couple years. We will continue on that track, we are seeing improving cross-sell performance from train to all other product lines within Ctrip platform. Thank you.
Thank you.
Thank you. Our next question, Juan Lin from 86 Research.
Hi. Good morning, James, Jane, Cindy, and Michelle. Congrats on the solid set of results, and thank you for taking my questions. I have two questions.
Thank you.
The first one is on international business. Could you please break down the contribution of international business for each business line? The second question is for hotel, lower tier city hotels. I wonder, what are the volume GMV and revenue contribution by the lower tier city to our hotel business, and what is the margin trend for business in lower tier cities? Thank you.
Thank you. In general, our international business contribute about 35% of our total revenue, in which outbound travel actually contribute the vast majority within the international bucket. Across different business line items, accommodation reservation international hotel contribute about 20%-25% of our total accommodation revenue. Air ticket, actually, international air ticket has already become the key growth drivers for our air ticket business. For package tour business, international outbound travel contribute about half of our total revenues. For the comparatively lower tier cities, of course, the ADR is lower, we intentionally set very competitive pricings, because people in those lower tier cities, at least from the very beginning, they tend to be more price sensitive. We intentionally have the best price to attract those users.
Thanks to the very automatic platform we built, even in the lower end or lower tier cities, we have profits generating from that segment.
Thank you, Cindy.
Thank you. Due to time constraint, I will now hand the session over to Michelle Qi for closing remarks. Please go ahead.
Thank you. Thanks to everyone for joining us today. You can find the transcript and webcast for today's call on ir.Ctrip.com. We look forward to speaking with you on our second quarter 2019 earnings call. Thank you, and have a good day.
Thank you very much.
Thank you.
Thank you. Bye.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.