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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,DC 20549FORM 20-F(Mark One)Commission file number:001-33853Securities registered or to be registered pursuant to Section 12(b)of the Act:*Not for trading,but only in connection with the listing of American depositary shares o

2、n the Nasdaq Global Select Market.Securities registered or to be registered pursuant to Section 12(g)of the Act:?REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR 12(g)OF THE SECURITIES EXCHANGE ACT OF 1934OR?ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the

3、 fiscal year ended December 31,2016OR?TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to OR?SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934?Date of event requiring this shell company repo

4、rt.CTRIP.COM INTERNATIONAL,LTD.(Exact Name of Registrant as Specified in Its Charter)N/A(Translation of Registrants Name Into English)Cayman Islands(Jurisdiction of Incorporation or Organization)968 Jin Zhong RoadShanghai 200335Peoples Republic of China(Address of Principal Executive Offices)Jane Ji

5、e Sun,Chief Executive OfficerTelephone:+86(21)3406-4880Facsimile:+86(21)5251-0000968 Jin Zhong RoadShanghai 200335Peoples Republic of China(Name,Telephone,Email and/or Facsimile Number and Address of Company Contact Person)Title of Each ClassName of Each Exchange on Which RegisteredAmerican deposita

6、ry shares,each representing 0.125 ordinary share,par value US$0.01 per shareNasdaq Stock Market LLC(Nasdaq Global Select Market)Ordinary shares,par value US$0.01 per share*None(Title of Class)Table of ContentsSecurities for which there is a reporting obligation pursuant to Section 15(d)of the Act:In

7、dicate the number of outstanding shares of each of the Issuers classes of capital or common stock as of the close of the period covered by the annual report:64,155,412 ordinary shares,par value$0.01 per share,as of December 31,2016.Indicate by check mark if the registrant is a well-known seasoned is

8、suer,as defined in Rule 405 of the Securities Act.Yes?No?If this report is an annual or transition report,indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of the Securities Exchange Act of 1934.Yes?No?Indicate by check mark whether the registran

9、t:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes?No

10、?Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter pe

11、riod that the registrant was required to submit and post such files).Yes?No?Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”and“em

12、erging growth company”in Rule 12b-2 of the Exchange Act.The term“new or revised financial accounting standard”refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5,2012.Indicate by check mark which basis of accounting the regis

13、trant has used to prepare the financial statements included in this filing:If“Other”has been checked in response to the previous question,indicate by check mark which financial statement item the registrant has elected to follow.Item 17?Item 18?If this is an annual report,indicate by check mark whet

14、her the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).?Yes No?(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS.)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12

15、,13 or 15(d)of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.Yes?No?None(Title of Class)Large Accelerated Filer?Accelerated Filer?Non-Accelerated Filer?Emerging Growth Company?If an emerging growth company that prepares its financi

16、al statements in accordance with U.S.GAAP,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.?U.S.GAAP?International Financial Report

17、ing Standards as issuedby the International Accounting Standards Board?Other?Table of ContentsTABLE OF CONTENTS1PageINTRODUCTION2PART I2ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS2ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE2ITEM 3.KEY INFORMATION2ITEM 4.INFORMATION ON THE COMPANY3

18、0ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS44ITEM 6.DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES60ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS68ITEM 8.FINANCIAL INFORMATION72ITEM 9.THE OFFER AND LISTING73ITEM 10.ADDITIONAL INFORMATION74ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSUR

19、ES ABOUT MARKET RISK81ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES82PART II83ITEM 13.DEFAULTS,DIVIDEND ARREARAGES AND DELINQUENCIES83ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS83ITEM 15.CONTROLS AND PROCEDURES83ITEM 16A.AUDIT COMMITTEE FINAN

20、CIAL EXPERT84ITEM 16B.CODE OF ETHICS84ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES85ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES85ITEM 16E.PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS85ITEM 16F.CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT86ITEM 16G.C

21、ORPORATE GOVERNANCE86ITEM 16H.MINE SAFETY DISCLOSURE86PART III86ITEM 17.FINANCIAL STATEMENTS86ITEM 18.FINANCIAL STATEMENTS86ITEM 19.EXHIBITS87Table of ContentsINTRODUCTIONIn this annual report,unless otherwise indicated or unless the context otherwise requires:?“ADSs”refers to our American depositar

22、y shares,each of which represents 0.125 ordinary share;?“China”or“PRC”refers to the Peoples Republic of China and,solely for the purpose of this annual report,excludes Taiwan,Hong Kong and Macau,and“Greater China”refers to the Peoples Republic of China,Taiwan,Hong Kong and Macau;?“Qunar”refers to Qu

23、nar Cayman Islands Limited,a Cayman Islands company,and unless the context requires otherwise,includes its predecessor entities and consolidated subsidiaries and variable interest entities;?“RMB”or“Renminbi”refers to the legal currency of China;“U.S.dollars,”“dollars,”“US$”or“$”refers to the legal c

24、urrency of the United States;“”refers to the legal currency of the United Kingdom;“”refers to the legal currency of Eurozone;?“shares”or“ordinary shares”refers to our ordinary shares,par value of US$0.01 per share;and?“we,”“us,”“our company,”or“Ctrip”refers to C International,Ltd.,its predecessor en

25、tities and subsidiaries and,in the context of describing our operations and consolidated financial information,also include its consolidated affiliated Chinese entities,unless otherwise indicated herein.We consolidate the financial results of Qunar starting from December 31,2015.In calculating our a

26、ctive customers,cumulative customers,the number of hotels with whom we have room supply relationships,downloads of and transactions through our mobile channel and other operational data where applicable,we have not taken into account the comparable operating data of Qunar.Any discrepancies in any ta

27、ble between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.This annual report on Form 20-F includes our audited consolidated financial statements for the years ended December 31,2014,2015 and 2016.On December 1,2015,we effected a change of the r

28、atio of the ADSs to ordinary shares from four ADSs representing one ordinary share to eight ADSs representing one ordinary share.Unless otherwise indicated,ADSs and per ADS amount in this annual report have been retroactively adjusted to reflect the changes in ratio for all periods presented.PART I.

29、ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERSNot applicable.ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLENot applicable.ITEM 3.KEY INFORMATIONA.Selected Financial DataSelected Consolidated Financial DataThe following table presents the selected consolidated financial information for o

30、ur business.You should read the following information in conjunction with“Item 5.Operating and Financial Review and Prospects”below.The selected consolidated statement of operations data for the years ended December 31,2014,2015 and 2016 and the selected consolidated balance sheet data as of Decembe

31、r 31,2015 and 2016 have been derived from our audited consolidated financial statements and should be read in conjunction with those statements,which are included in this annual report beginning on page F-1.The selected consolidated statement of operations data for the years ended December 31,2012 a

32、nd 2013 and the selected consolidated balance sheet data as of December 31,2012,2013 and 2014 have been derived from our audited consolidated financial statements for these periods,which are not included in this annual report.2Table of ContentsOur historical results do not necessarily indicate resul

33、ts expected for any future periods.Share-based compensation was included in the related operating expense categories as follows:Translation from Renminbi amounts into U.S.dollar amounts was made at a rate of RMB6.9430 to US$1.00.See“Item 3.A.Key Information Selected Financial Data Exchange Rate Info

34、rmation.”Each ADS represents 0.125 ordinary share.In April 2015,the FASB issued new guidance which changes the presentation of debt issuance cost.Under the new guidance,debt issuance cost is presented as a reduction of the carrying amount of the related liability,rather than as an asset.This guidanc

35、e has been adopted and applied retrospectively by us to the prior periods presented herein.In 2015,a gain of RMB2.3 billion was recognized in the other income for the deconsolidation of Tujia,which was once a subsidiary of our company.Please refer to footnote 8 of our consolidated financial statemen

36、ts incorporated herein.3For the Year Ended December 31,2012RMB2013RMB2014RMB2015RMB2016RMB2016US$(in thousands,except for per ordinary share data)Consolidated Statement of Operation DataNet revenues4,158,7915,386,7467,346,91810,897,56819,228,4402,769,472Cost of revenues(1,037,791)(1,386,767)(2,100,6

37、06)(3,043,440)(4,729,750)(681,226)Gross profit3,121,0003,999,9795,246,3127,854,12814,498,6902,088,246Operating expensesProduct development(911,905)(1,245,719)(2,321,349)(3,296,693)(7,687,422)(1,107,219)Sales and marketing(984,002)(1,269,413)(2,214,210)(3,087,990)(5,860,927)(844,149)General and admin

38、istrative(570,487)(646,405)(861,551)(1,088,402)(2,518,819)(362,785)Total operating expenses(2,466,394)(3,161,537)(5,397,110)(7,473,085)(16,067,168)(2,314,153)Income/(loss)from operations654,606838,442(150,798)381,043(1,568,478)(225,907)Net interest income/(expense)and other income/(expense)296,08830

39、5,554186,0502,624,321(191,627)(27,600)Income/(loss)before income tax expense,equity in income of affiliates and non-controlling interest950,6941,143,99635,2523,005,364(1,760,105)(253,507)Income tax expense(294,526)(293,740)(130,821)(470,188)(478,009)(68,848)Equity in income/(loss)of affiliates34,343

40、56,147187,191(135,781)601,88386,689Net income/(loss)690,511906,40391,6222,399,395(1,636,231)(235,666)Less:Net loss attributable to non-controlling interests23,89591,917151,117108,261205,52829,602Net income/(loss)attributable to Ctrips shareholders714,406998,320242,7392,507,656(1,430,703)(206,064)Ear

41、nings Per Ordinary Share Data:Net income/(loss)attributable to Ctrips shareholders714,406998,320242,7392,507,656(1,430,703)(206,064)Earnings/(loss)per ordinary share,basic20.8730.347.0866.34(24.18)(3.48)Earnings/(loss)per ordinary share,diluted19.9226.636.3556.85(24.18)(3.48)As of December 31,2012RM

42、B2013RMB2014RMB2015RMB2016RMB2016US$(in thousands)Consolidated Balance Sheet Data:Cash and cash equivalents3,421,5337,138,3455,300,88819,215,67518,434,6812,655,146Restricted cash768,229739,544836,3952,286,8831,744,490251,259Short-term investment1,408,6643,635,0916,438,8558,235,78614,112,8622,032,675

43、Accounts receivable,net983,8041,518,2301,826,7663,150,7684,624,818666,112Prepayments and other current assets999,1491,237,5312,480,2767,711,7566,994,5911,007,431Deferred tax assets,current61,84196,980193,503Non-current assets3,994,1356,324,93814,132,84278,241,72498,502,46014,187,305Total assets11,63

44、7,35520,690,65931,209,525118,842,592144,413,90220,799,928Current liabilities3,910,1446,368,00812,714,70333,666,09530,295,0254,363,391Deferred tax liabilities,non-current53,30963,197132,5073,045,2593,607,883519,643Long-term Debt1,089,0225,529,3687,984,58818,354,60834,650,6744,990,735Other long-term L

45、iabilities91,702339,56748,908Total Ctrips shareholders equity6,489,6328,530,3969,529,17944,550,73071,536,83510,303,447Noncontrolling interests95,248199,690848,54819,134,1983,983,918573,804Total shareholders equity6,584,8808,730,08610,377,72763,684,92875,520,75310,877,251For the Year Ended December 3

46、1,2012RMB2013RMB2014RMB2015RMB2016RMB2016US$(in thousands)Product development132,583138,668184,665291,6432,079,515299,512Sales and marketing55,89249,10554,39265,574392,64256,552General and administrative243,246250,157257,587285,3791,087,563156,642(2)(1)(1)(1)(5)(3)(3)(7)(7)(2)(6)(4)(1)(2)(2)(3)(4)(5

47、)Table of ContentsIn 2015,we determined and elected to early adopt ASU 2015-17 to our consolidated financial statements starting December 31,2015,prospectively to present the deferred tax assets and liabilities as non-current items.Our consolidated balance sheet data has reflected the effect of cons

48、olidation of the financial statements of Qunar starting from December 31,2015.Exchange Rate InformationWe have published our consolidated financial statements in Renminbi.Our business is primarily conducted in China in Renminbi.The conversion of Renminbi into U.S.dollars in this annual report is bas

49、ed on the certified exchange rate published by the Federal Reserve Board.For your convenience,this annual report contains translations of some Renminbi or U.S.dollar amounts for 2016 at a rate of RMB6.9430 to US$1.00,which was the certified exchange rate in effect as of December 30,2016.The certifie

50、d exchange rate on April 7,2017 was RMB6.8978 to US$1.00.We make no representation that any Renminbi or U.S.dollar amounts could have been,or could be,converted into U.S.dollars or Renminbi,as the case may be,at any particular rate,the rates stated below,or at all.The PRC government imposes control

51、over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange.The following table sets forth information concerning exchange rates between Renminbi and U.S.dollars for the periods indicated.The exchange rates refer to the exchange rates as s

52、et forth in the H.10 statistical release of the Federal Reserve Board.These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this annual report or will use in the preparation of our periodic reports or any other information to be provided to y

53、ou.The source of these rates is the Federal Reserve Statistical Release.Annual averages are calculated using the average of month-end rates of the relevant year.Monthly averages are calculated using the average of the daily rates during the relevant month.B.Capitalization and IndebtednessNot applica

54、ble.C.Reasons for the Offer and Use of ProceedsNot applicable.D.Risk FactorsRisks Related to Our CompanyOur business could suffer if we do not successfully manage current growth and potential future growth.Our business has grown significantly as a result of both organic growth of existing operations

55、 and acquisitions,and we expect to continue to experience such growth in the future.We have significantly expanded our operations and anticipate further expansion of our operations and workforce,as a result of the continued growth of our service offerings,customer base and geographic coverage.4Noon

56、Buying RatePeriodPeriod-EndAverageLowHigh(RMB per US$)20126.23016.29906.38796.222120136.05376.14126.24386.053720146.20466.17046.25916.040220156.47786.28696.48966.187020166.94306.65496.95806.4480October6.77356.73036.78196.6685November6.88376.84026.91956.7534December6.94306.91986.95806.87712017January

57、6.87686.89076.95756.8360February6.86656.86946.88216.8517March6.88326.89406.91326.8687April(through April 7,2017)6.89786.89036.89786.8832(6)(7)(1)(1)Table of ContentsFor example,we have invested in,and plan to continue to invest in,organic growth by rolling out new business initiatives focusing in a

58、diverse range of areas including cruise lines,car services,bus tickets and train tickets.Consequentially,in 2016,we invested US$1.1 billion in product development.If such new business initiatives fail to perform as expected,our financial condition and results of operations could be adversely affecte

59、d.Our growth to date has placed,and our anticipated future operations will continue to place,a significant strain on our management,systems and resources.In addition to training and managing our workforce,we will need to continue to improve and develop our financial and managerial controls and our r

60、eporting systems and procedures.We cannot assure you that we will be able to efficiently or effectively manage the growth of our operations,and any failure to do so may limit our future growth and hamper our business strategy.Strategic acquisition of complementary businesses and assets,and the subse

61、quent integration of newly acquired business into our own,create significant challenges that may have a material adverse effect on our business,reputation,results of operations and financial condition.We have made and intend to continue to make strategic acquisitions in the travel industry in Greate

62、r China and overseas.For example,in October 2015,we completed a share exchange transaction with Baidu Inc.,or Baidu,whereby we obtained approximately 45%of the aggregate voting interest of Qunar in exchange for our newly issued ordinary shares.Subsequently,we issued ordinary shares represented by AD

63、Ss to certain special purpose vehicles holding shares solely for the benefit of certain Qunar employees and,in return,we received class B ordinary shares of Qunar from these employees.We directly injected these shares to a third-party investment entity dedicated to investing in business in China.Fro

64、m an accounting perspective,we consolidated the financial statements of these non-U.S.investment entities and started to consolidate Qunars financial statements from December 31,2015.In October 2016,we participated as a member in the buying consortium in Qunars going private transaction and rolled o

65、ur then existing equity stake into the entity that wholly owns Qunar upon completion of the transaction in February 2017.If we are presented with appropriate opportunities,we may continue to acquire complementary businesses and assets in the future.However,strategic acquisitions and the subsequent i

66、ntegration of new businesses and assets into our own would require significant attention from our management and could result in a diversion of resources from our existing business,which in turn could have an adverse effect on our business operations.In addition,acquisitions could result in potentia

67、l dilutive issuances of equity securities,use of substantial amounts of cash,and exposure to potential ongoing financial obligations and unforeseen or hidden liabilities of the acquired business.The cost and duration of,and difficulties in,integrating newly acquired businesses and managing a larger

68、overall business could also materially exceed our expectations.Moreover,we may not be able to achieve our intended strategic strategies and record substantial impairment charges to goodwill,if we fail to successfully integrate the newly acquired business or manage a larger business.Any such negative

69、 developments could have a material adverse effect on our business,reputation,results of operations and financial condition.Our strategy to acquire or invest in complementary businesses and assets and establish strategic alliances involves significant risk and uncertainties that may have a material

70、adverse effect on our business,reputation,results of operations and financial condition.As part of our plan to expand our product and service offerings,we have made and intend to make strategic acquisitions or investments in the travel service industries in Greater China and overseas,such as the fol

71、lowing,in addition to our transactions relating to Qunar described elsewhere in this annual report:?In 2014 and 2015,we invested a total of US$50 million in approximately 4%stake in Tuniu Corporation,or Tuniu,a well-known service provider in the leisure package tour market,through a private placemen

72、t transaction conducted concurrently with Tunius initial public offering and private acquisitions afterwards.?In May 2015,we acquired approximately 38%equity stake in eLong,Inc.,or eLong,from certain selling shareholders,including Expedia,Inc.,or Expedia,together with several other investors.We subs

73、equently participated as a member in the buying consortium in eLongs going private transaction and rolled our then existing equity stake into the entity that wholly owns eLong upon completion of the transaction in May 2016.?In January 2016,we invested US$180 million in MakeMyTrip Limited,or MakeMyTr

74、ip,Indias largest online travel company,via convertible notes,and subsequently appointed a director to MakeMyTrips board of directors.In October 2016,we converted all of its outstanding principal amount of convertible notes into ordinary shares of MakeMyTrip.?In April 2016,we announced strategic col

75、laboration with China Eastern Airlines Corporation Limited,or China Eastern Airlines,one of Chinas three major air transportation groups,on a broad range of products and services.In June 2016,we invested approximately RMB3 billion in approximately 466 million A shares of China Eastern Airlines in a

76、private placement.Further,we may in the future invest in up to 10%of the shares of China Eastern Airlines,and may also nominate a representative to its board.5Table of Contents?In December 2016,we consummated an acquisition transaction whereby shares held by nearly all the shareholders of Skyscanner

77、 Holdings Limited,or Skyscanner,a leading global travel search site headquartered in Edinburgh,the United Kingdom,were acquired by Ctrip.?In December 2016,we completed a share exchange transaction with BTG Hotels(Group)Co.,Ltd.,or BTG,a PRC joint stock company that is listed on the Shanghai Stock Ex

78、change and principally engaged in the management of hotels and tourism destinations,whereby Ctrip exchanged its 15%equity interest in Homeinns Hotel Group,or Homeinns,in consideration for 104,901,899 ordinary shares of BTG.We recorded a gain of RMB1.4 billion(US$203.0 million)of equity in income of

79、affiliates as a result of the transaction.If the ADS or share prices of the public companies that we have invested in or may invest in the future which are classified as available-for-sale investments decline and become lower than our share purchase prices,as have happened historically,we could incu

80、r impairment loss under U.S.GAAP,which in turn would adversely affect our financial results for the relevant periods.In addition,if any of our investees in which our investments are classified as equity method investments incur a net loss in the future,we will share their net loss proportionate to o

81、ur equity interest in them.Our strategic investments could also subject us to other uncertainties and risks,and our failure to address any of these uncertainties and risks,among others,may have a material adverse effect on our financial condition and results of operations:?diversion of our resources

82、 and management attention;?high acquisition and financing costs;?failure to achieve our intended objectives or benefits in making these investments or revenue-enhancing opportunities;?potential claims or litigation regarding our boards exercise of its duty of care and other duties required under app

83、licable law in connection with any of our significant investments approved by the board;and?failure to be in full compliance with applicable laws,rules and regulations.In particular,our strategy of acquiring or investing in a competing business could be adversely affected by uncertainties in the imp

84、lementation and enforcement of the PRC Anti-Monopoly Law.Under the PRC Anti-Monopoly Law,companies undertaking acquisitions or investments in a business in China must notify the Ministry of Commerce,or MOFCOM,in advance of any transaction where the parties revenues in the China market and global mar

85、ket exceed certain thresholds and the buyer would obtain control of,or decisive influence over,the target.There are numerous factors MOFCOM considers in determining“control”or“decisive influence,”and,depending on certain criteria,MOFCOM will conduct anti-monopoly review of transactions in respect of

86、 which it was notified.In light of the uncertainties relating to the interpretation,implementation and enforcement of the PRC Anti-Monopoly Law,we cannot assure you that MOFCOM will not deem our past and future acquisitions or investments,including the ones referenced herein or elsewhere in this ann

87、ual report,to have met the filing criteria under the PRC Anti-Monopoly Law and therefore demand a filing for merger review.However,there have been limited cases of MOFCOM anti-monopoly review of filings involving companies with a“variable interest entity”structure,or VIE structure,similar to ours.If

88、 we are found to have violated the PRC Anti-Monopoly Law for failing to file the notification of concentration and request for review,we could be subject to a fine of up to RMB500,000,and the parts of the transaction causing the prohibited concentration could be ordered to be unwound.Such unwinding

89、could affect our business and financial results,and harm our reputation.Further,if any of our business cooperation arrangements with Qunar are determined to have violated the PRC Anti-Monopoly Law,we could be subject to sanctions including an order to cease the relevant activities,confiscation of il

90、legal gains and fines of 1%to 10%of our sales revenue from the previous year.In addition,we establish strategic alliances with various third parties to further our business purpose from time to time.Strategic alliances with third parties could subject us to a number of risks,including risks associat

91、ed with sharing proprietary information,non-performance by the counter-party,an increase in expenses incurred in establishing new strategic alliances,inefficiencies caused by failure to integrate strategic partners businesses with our own,and unforeseen levels of diversion of our resources and manag

92、ement attention,any of which may materially and adversely affect our business.As a result of any of the above factors,any actual or perceived failure to realize the benefits we expected from these investments may materially and adversely affect our business and financial results and cause the tradin

93、g price of our ADSs to decline.6Table of ContentsConsolidation of the results of operations of Qunar with ours may negatively impact our financial performance and results of operations.Our acquisition of Qunar shares as a consideration for our share exchange transaction with Baidu in October 2015 an

94、d share issuance for the benefit of Qunar employees in December 2015 is accounted for as a business combination under U.S.GAAP,and as a result,we began to consolidate Qunars financial statements from an accounting perspective,starting from December 31,2015.Qunar has historically incurred net loss an

95、d a significant portion of our net loss is attributable to Qunars net loss for the year ended December 31,2016.Consolidation of Qunars financial statements has negatively impacted our financial statements in past periods and may continue to negatively impact our financial performance in the upcoming

96、 financial reporting cycles for an extended period of time.If Qunar is not able to reduce or narrow its net losses,our consolidated results of operations will continue to be materially and adversely affected by the consolidation of Qunar.Moreover,in early 2016,some PRC airlines,including four of the

97、 largest airlines in China,announced suspension of their respective business cooperation with Qunar without indicating the length of such suspension and cited serious customer complaints in their respective announcements.Although most of these PRC airlines subsequently resumed cooperation with Qunar

98、,we cannot assure you that similar suspensions will not occur again and if that happens,Qunar may suffer from losses of revenue and its results of operations may be materially and adversely affected.Similar incidences and other risks that are unique and specific to Qunars business operations,rather

99、than the travel industry as a whole,may also materially and adversely affect our consolidated results of operations.See“Item 3.D.Key Information Risk Factors Risks Relating to Our Company If Qunar fails to effectively implement and execute its strategies to maintain competitiveness and grow its busi

100、ness,our business,results of operations and financial condition may be materially and adversely affected.”If Qunar fails to effectively implement and execute its strategies to maintain competitiveness and grow its business,our business,results of operations and financial condition may be materially

101、and adversely affected.As a result of the transactions described elsewhere in this annual report involving Qunar securities during 2015,we began to consolidate Qunars financial results from December 31,2015 from an accounting perspective under U.S.GAAP.Historically,Qunar enjoyed one of the market le

102、ading positions in Chinas travel industry with its unique business model as a search-based travel commerce platform,while it is currently transitioning into a mobile and online commerce travel platform that focuses on providing users with one-stop solutions.Certain risks and uncertainties associated

103、 with the business operations of Qunar are distinct from those we have faced historically:?Failure to transition into a one-stop mobile and online commerce travel platform from a search-based platform.As part of the transitioning effort,Qunars product development and product headcount has increased

104、significantly in recent years as a result of its focus on development of its mobile platform and hotel direct business;?Failure to increase penetration into hotel business in lower-tier cities,and maintain and increase popularity among young users in China by offering attractive features and service

105、s to meet user requirements of those markets;?Failure to maintain relationships with air ticket suppliers,such as major airlines and Chinas sole global distribution systems,from which Qunar retrieves ticket availability information in order to generate comprehensive and accurate flight information o

106、n its platform;?Failure to maintain and strengthen relationships with online travel agents that are Qunars existing customers,and establish new customer relationships with other online travel agents and travel service providers to ensure that it has access to a steady supply of travel product inform

107、ation on favorable commercial terms;?Failure to adequately monitor and secure service quality of travel service providers on its platform,and address user dissatisfaction with travel service providers;?Consolidation of the fragmented travel market in China,which may result in travel service provider

108、s becoming fewer but larger,comprehensive travel information more readily available to users,and a potential loss to the value of Qunars business as a travel service platform;and?Inability to maintain or increase awareness and preference of its brand“Qunar”as a result of failure to provide a compell

109、ing user experience of online travel searches,maintaining the quality of its services,and preserving Qunars reputation and goodwill in the event of negative media publicity toward its services,internet security or other issues affecting Qunar or online travel businesses in China.If Qunar is unable t

110、o successfully implement and execute its strategies to maintain competitiveness and grow its business,or effectively address risks and uncertainties associated with its business operations and transitioning efforts,our business,results of operations and financial condition may be materially and adve

111、rsely affected.7Table of ContentsOur transactions involving issuance of our shares as consideration and investment or financing arrangements with selected third-party investment entities may result in substantial dilution to our shareholders and may also reduce our existing cash balance and adversel

112、y affect our working capital.In the long-term interest of our company,we make investments,in the form of limited partnership contributions,assets injection or other financing arrangements,into or with certain entities that are dedicated to investing businesses in China.In late 2015 and early 2016,we

113、 agreed to make investment or enter into financing arrangements with several non-U.S.investment entities,which are managed and/or owned by parties unaffiliated with each other and unaffiliated with us and are dedicated to investing in businesses in China.As of December 31,2016,we issued an aggregate

114、 of approximately 6.2 million ordinary shares,including approximately 3.1 million ordinary shares represented by ADSs,and provided capital contribution or financial support in a total amount of approximately US$1.3 billion in cash to some of these non-U.S.investment entities.These investments,capita

115、l contributions and financing arrangements together with the share exchange with Baidu and issuance of shares for the benefit of Qunar employees historically caused significant dilution to our existing shareholders and impacted our working capital.Transactions involving issuance of a substantial num

116、ber of our ordinary shares such as the transactions contemplated hereunder may result in substantial dilution to our shareholders.In addition,future sale of our shares by these non-U.S.investment entities and/or our other significant shareholders such as Baidu may cause our share price to decline.Fu

117、rthermore,if we obtain debt financings,we may be subject to restrictive covenants limiting or restricting our ability to take specific actions,such as incurring additional debt,making capital expenditures or declaring dividends.See“Item 4.B.Information on the Company Business Overview Strategic Inve

118、stments and Acquisitions.”Our business is sensitive to global economic conditions.A severe or prolonged downturn in the global or Chinese economy may have a material and adverse effect on our business,and may materially and adversely affect our growth and profitability.The global macroeconomic envir

119、onment is facing challenges,including the escalation of the European sovereign debt crisis since 2011,the end of quantitative easing by the U.S.Federal Reserve,the economic slowdown in the Eurozone in 2014,and the slowdown of the Chinese economy since 2012.There have been concerns over unrest in the

120、 Middle East and Africa,which have resulted in volatility in oil and other markets,and over the expansion of terrorist activities into Europe and other regions.In June 2016,British citizens voted in a referendum to withdraw the membership of the United Kingdom from the European Union.The result of t

121、he vote caused instant and significant volatility in the global financial and securities markets.The various uncertainties in the political and economic situations of the United Kingdom and the European Union arising from the anticipated withdrawal may have a negative and prolonged impact on the glo

122、bal economy.Economic conditions in China are sensitive to global economic conditions.Our business and operations are primarily based in China and the majority of our revenues are derived from our operations in China.Accordingly,our financial results have been,and are expected to continue to be,affec

123、ted by the economy and travel industry in China.While the economy in China has grown significantly over the past decades,growth has been uneven,both geographically and among various sectors of the economy,and the rate of growth has been slowing.Since we derive the majority of our revenues from accom

124、modation reservation,transportation ticketing and packaged-tour services in China,any severe or prolonged slowdown in the global and/or Chinese economy or the recurrence of any financial disruptions could reduce expenditures for travel,which in turn may adversely affect our business operating result

125、s and financial condition in a number of ways.For example,the weakness in the economy could erode consumer confidence which,in turn,could result in changes to consumer spending patterns relating to travel products and services.If consumer demand for travel products and services we offer decreases,ou

126、r revenues may decline.Furthermore,continued turbulence in the international markets may adversely affect our ability to access the capital markets to meet liquidity needs.General declines or disruptions in the travel industry may materially and adversely affect our business and results of operation

127、s.Our business is significantly affected by the trends that occur in the travel industry in China,including the hotel,transportation ticketing and packaged-tour sectors.As the travel industry is highly sensitive to business and personal discretionary spending levels,it tends to decline during genera

128、l economic downturns.The recent worldwide recession has led to a weakening in the demand for travel services.Other trends or events that tend to reduce travel and are likely to reduce our revenues include:?terrorist attacks or threats of terrorist attacks or wars,particularly given the terrorist att

129、acks in Paris and the worsening situation in Syria;?an outbreak of H1N1 influenza,Ebola virus,avian flu,Middle East respiratory syndrome,or MERS,severe acute respiratory syndrome,or SARS,or any other serious contagious diseases;?increasing prices in the hotel,transportation ticketing,or other travel

130、-related sectors;8Table of Contents?increasing occurrence of travel-related accidents;?political unrest;?natural disasters or poor weather conditions;and?any travel restrictions or other security procedures implemented in connection with any major events in China.We could be severely and adversely a

131、ffected by declines or disruptions in the travel industry and,in many cases,have little or no control over the occurrence of such events.Such events could result in a decrease in demand for our travel services.This decrease in demand,depending on the scope and duration,could significantly and advers

132、ely affect our business and financial performance over the short and long term.We recorded a significant amount of goodwill and indefinite lived intangible assets in connection with our strategic acquisitions and investments,and we may incur material impairment charges to our goodwill and indefinite

133、 lived intangible assets if the recoverability of these assets become substantially reduced.In connection with our strategic acquisitions over the recent years,there has been a significant increase of goodwill and indefinite lived intangible assets booked in our financial statements.As of December 3

134、1,2016,our goodwill was RMB56.0 billion(US$8.1 billion)and our indefinite lived intangible assets were RMB11.6 billion(US$1.7 billion),compared to RMB45.7 billion and RMB9.7 billion,respectively,as of December 31,2015.In 2015,our acquisition of Qunar securities resulted in an RMB43.0 billion increas

135、e in our goodwill.ASC 350“Intangibles Goodwill and Other”provides that intangible assets that have indefinite useful lives and goodwill will not be amortized but rather will be tested at least annually for impairment.ASC 350 also requires that long-lived assets be reviewed for impairment whenever ev

136、ents or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from its undiscounted future cash flow.For 2014,2015 and 2016,we did not recognize any impairment charges for goodwill or intangible assets.If different judgments or estimates had been utilized,howe

137、ver,material differences could have resulted in the amount and timing of the impairment charge.We may potentially incur significant impairment charges if the recoverability of these assets become substantially reduced in the future.Any such impairment charges would adversely affect our results of op

138、erations and financial condition.The trading price of our ADSs has been volatile historically and may continue to be volatile regardless of our operating performance.The trading price of our ADSs has been and may continue to be subject to wide fluctuations.In 2016,the trading prices of our ADSs on t

139、he Nasdaq Global Select Market have ranged from US$35.50 to US$49.62 per ADS,and the last reported trading price on April 12,2017 was US$48.59 per ADS.The price of our ADSs may fluctuate in response to a number of events and factors,including the following:?actual or anticipated fluctuations in our

140、quarterly operating results;?changes in financial estimates by securities analysts;?conditions in the Internet or travel industries;?changes in the economic performance or market valuations of other Internet or travel companies or other companies that primarily operate in China;?changes in major bus

141、iness terms between our travel suppliers and us;?announcements by us or our competitors of new products or services,significant acquisitions,strategic partnerships,joint ventures or capital commitments;?additions or departures of key personnel;and?market and volume fluctuations in the stock market i

142、n general.9Table of ContentsIn addition,the stock market in general,and the market prices for Internet-related companies and companies with operations in China in particular,have experienced volatility that often has been unrelated to the operating performance of such companies.The securities of som

143、e China-based U.S.-listed companies have experienced significant volatility since their initial public offerings,including,in some cases,substantial declines in the trading prices of their securities.The trading performance of the securities of these China-based U.S.-listed companies after their off

144、erings and the surge in the number of China-based U.S.-listed companies that commenced going private proceedings in recent years may affect the attitudes of investors toward China-based U.S.-listed companies,which consequently may impact the trading performance of the ADSs,regardless of our actual o

145、perating performance.Furthermore,some negative news and perceptions about inadequate corporate governance practices or fraudulent accounting,corporate structure including the use of VIE structures or other matters of other China-based U.S.-listed companies have negatively affected the attitudes of i

146、nvestors towards China-based U.S.-listed companies,including us,in general in the past,regardless of whether we have engaged in any inappropriate activities,and any news or perceptions with a similar nature may continue to negatively affect us in the future.In addition,the global financial crisis an

147、d the ensuing economic recessions in many countries have contributed and may continue to contribute to extreme volatility in the global stock markets,such as the large decline in share prices in the United States,China and other jurisdictions in recent years.These broad market and industry fluctuati

148、ons may continue to adversely affect the trading price of the ADSs,regardless of our operating performance.Additionally,volatility or a lack of positive performance in our ADS price may adversely affect our ability to retain key employees,all of whom have been granted share-based awards.If we are un

149、able to maintain existing relationships with travel suppliers and strategic alliances,or unable to establish new arrangements with travel suppliers and strategic alliances at or on favorable terms or at terms similar to those we currently have,or at all,our business,market share and results of opera

150、tions may be materially and adversely affected.We rely on travel suppliers(including without limitation hotels and domestic and international airlines)to make their services available to consumers through us,and our business prospects depend on our ability to maintain and expand relationships with t

151、ravel suppliers.If we are unable to maintain satisfactory relationships with our existing travel suppliers,or if our travel suppliers establish similar or more favorable relationships with our competitors,or if our travel suppliers increase their competition with us through their direct sales,or if

152、any one or more of our travel suppliers significantly reduce participation in our services for a sustained period of time or completely withdraw participation in our services,our business,market share and results of operations may be materially and adversely affected.To the extent any of those major

153、 or popular travel suppliers ceased to participate in our services in favor of one of our competitors systems or decided to require consumers to purchase services directly from them,our business,market share and results of operations may suffer.Our business depends significantly upon our ability to

154、contract with hotels in advance for the guaranteed availability of certain hotel rooms.We rely on hotel suppliers to provide us with rooms at discounted prices.However,our contracts with our hotel suppliers are not exclusive and most of the contracts must be renewed semi-annually or annually.We cann

155、ot assure you that our hotel suppliers will renew our contracts in the future on favorable terms or terms similar to those we currently have agreed.The hotel suppliers may reduce the commission rates on bookings made through us.Furthermore,in order to maintain and grow our business and to effectivel

156、y compete with many of our competitors in all potential markets,we will need to establish new arrangements with hotels and accommodations of all ratings and categories in our existing markets and in new markets.We cannot assure you that we will be able to identify appropriate hotels or enter into ar

157、rangements with those hotels on favorable terms,if at all.This failure could harm the growth of our business and adversely affect our operating results and financial condition,which consequently will impact the trading price of our ADSs.We derive revenues and other significant benefits from our arra

158、ngements with major domestic airlines in China and international airlines.Our airline ticket suppliers allow us to book and sell tickets on their behalf and collect commissions on tickets booked and sold through us.Although we currently have supply relationships with these airlines,they also compete

159、 with us for ticket bookings and have entered into similar arrangements with many of our competitors and may continue to do so in the future.Such arrangements may be on better terms than we have.Starting in early 2016,some PRC airlines,including four of the largest airlines in China,announced suspen

160、sion of their respective business cooperation with Qunar without indicating the length of such suspension and cited serious customer complaints in their respective announcements.Although most of these airlines have resumed cooperation with Qunar,if any airlines choose to take similar actions against

161、 us and additional airlines follow suit,our business,market share and results of operations may be materially and adversely affected.We cannot assure you that any of these airlines will continue to have supplier relationships with us or pay us commissions at the same or similar rates as what they pa

162、id us in the past.Further,on July 1,2016,the four largest airlines in China announced that third-party ticketing agents are prohibited from selling tickets for domestic flights on third-party platforms,such as ours.Additionally,on July 1,2016,most major domestic airlines also replaced their commissi

163、ons and rebate incentives completely with a fixed“admin fee”per ticket.The loss of supplier relationships or further adverse changes in major business terms with our travel suppliers would materially impair our operating results and financial condition as we would lose an increasingly significant so

164、urce of our revenues.Part of the revenues that we derive from our hotel suppliers,airline ticket suppliers and other travel service providers are obtained through our strategic alliances with various third parties.We cannot assure you,however,that we will be able to successfully establish and mainta

165、in strategic alliances with third parties which are effective and beneficial for our business.Our inability to do so could have a material adverse effect on our market penetration,revenue growth and profitability.10Table of ContentsIf we fail to further increase our brand recognition,we may face dif

166、ficulty in maintaining existing and acquiring new customers and business partners and our business may be harmed.We believe that maintaining and enhancing the Ctrip brand depends in part on our ability to grow our customer base and obtain new business partners.Some of our potential competitors alrea

167、dy have well-established brands in the travel industry.The successful promotion of our brand will depend largely on our ability to maintain a sizeable and active customer base,maintain relationships with our business partners,provide high-quality customer service,properly address customer needs and

168、handle customer complaints and organize effective marketing and advertising programs.If our customer base significantly declines or grows more slowly than our key competitors,the quality of our customer services substantially deteriorates,or our business partners cease to do business with us,we may

169、not be able to cost-effectively maintain and promote our brand,and our business may be harmed.If we do not compete successfully against new and existing competitors,we may lose our market share,and our business may be materially and adversely affected.We compete primarily with other consolidators of

170、 hotel accommodations and transportation reservation services based in China.We also compete with traditional travel agencies and new Internet travel search websites.In the future,we may also face competition from new players in the hotel consolidation market in China and abroad that may enter China

171、.We may face more competition from hotels and airlines as they enter the discount rate market directly or through alliances with other travel consolidators.In addition,international travelers have become an increasingly important customer base.Competitors that have formed stronger strategic alliance

172、s with overseas travel consolidators may have more effective channels to address the needs of customers in China to travel overseas.Furthermore,we do not have exclusive arrangements with our travel suppliers.The combination of these factors means that potential entrants to our industry face relative

173、ly low entry barriers.In the past,certain competitors launched aggressive advertising campaigns,special promotions and engaged in other marketing activities to promote their brands,acquire new customers or to increase their market shares.In response to such competitive pressure,we started to take an

174、d may continue to take similar measures and as a result will incur significant expenses,which in turn could negatively affect our operating margins in the quarters or years when such promotional activities are carried out.For example,we launched a promotion program in recent years to offer certain s

175、elected transportation tickets,hotel rooms and package tours as well as grant of e-coupons to our customers in response to promotion campaigns that our competitors have launched.Primarily as a result of the enhanced marketing efforts and additional investment in product developments in response to t

176、he intensified market competition,our operational margin was negatively affected.In addition,some of our existing and potential competitors may have competitive advantages,such as significantly larger active user base on mobile or other online platforms,greater financial,marketing and strategic rela

177、tionships and alliances or other resources or name recognition,and may be able to imitate and adopt our business model.We cannot assure you that we will be able to successfully compete against new or existing competitors.In the event we are not able to compete successfully,our business,results of op

178、erations and profit margins may be materially and adversely affected.Our quarterly results are likely to fluctuate because of seasonality in the travel industry in Greater China.Our business experiences fluctuations,reflecting seasonal variations in demand for travel services.For example,the first q

179、uarter of each year generally contributes the lowest portion of our annual net revenues primarily due to a slowdown in business activity around and during the Chinese New Year holiday,which occurs during the period.Consequently,our results of operations may fluctuate from quarter to quarter.Any fail

180、ure to maintain the satisfactory performance of our mobile platform,websites and systems,particularly those leading to disruptions in our services,could materially and adversely affect our business and reputation,and our business may be harmed if our infrastructure or technology is damaged or otherw

181、ise fails or becomes obsolete.The satisfactory performance,reliability and availability of our infrastructure,including our mobile platform,websites and systems,are critical to the success of our business.Any system interruptions that result in the unavailability or slowdown of our mobile platform,w

182、ebsites or other systems and the disruption in our services could reduce the volume of our business and make us less attractive to customers.Substantially all of our computer and communications systems are located at two customer service centers,one in Shanghai,China and the other one in Nantong,Chi

183、na.Our technology platform and computer and communication systems are vulnerable to damage or interruption from human error,computer viruses,fire,flood,power loss,telecommunications failure,physical or electronic break-ins,hacking or other attempts at system sabotage,vandalism,natural disasters and

184、other similar events.For example,in May 2015,we experienced a network shut-down for a few hours,leading to temporary disruptions in the operations of our mobile platform and websites and interrupted customer services;later internal investigations revealed the cause to be employee human error.No data

185、 leakage occurred as part of the May 2015 incident,and we have since implemented extensive measures to ensure prompt responses to similar future incidents of network shutdown/service disruption and to continue to update our security mechanisms to protect our systems from any human error,third-party

186、intrusions,viruses or hacker attacks,information or data theft or other similar activities;however,we cannot assure you that unexpected interruptions to our systems will not occur again in the future.We do not carry business interruption insurance to compensate us for losses that may occur as a resu

187、lt of such disruptions.In addition,any such future occurrences could reduce customer satisfaction levels,damage our reputation and materially and adversely affect our business.11Table of ContentsWe use an internally developed booking software system that supports nearly all aspects of our booking tr

188、ansactions.Our business may be harmed if we are unable to upgrade our systems and infrastructure quickly enough to accommodate future traffic levels,avoid obsolescence or successfully integrate any newly developed or purchased technology with our existing system.Capacity constraints could cause unan

189、ticipated system disruptions,slower response times,poor customer service,impaired quality and speed of reservations and confirmations and delays in reporting accurate financial and operating information.These factors could cause us to lose customers and suppliers,which would have a material adverse

190、effect on our results of operations and financial condition.In addition,our future success will depend on our ability to adapt our products and services to the changes in technologies and Internet user behavior.For example,the number of people accessing the Internet through mobile devices,including

191、smart devices,mobile phones,tablets and other hand-held devices,has increased in recent years,and we expect this trend to continue while 3G,4G and more advanced mobile communications technologies are broadly implemented.As we make our services available across a variety of mobile operating systems a

192、nd devices,we are dependent on the interoperability of our services with popular mobile devices and mobile operating systems that we do not control,such as Android,iOS and Windows.Any changes in such mobile operating systems or devices that degrade the functionality of our services or give preferent

193、ial treatment to competitive services could adversely affect usage of our services.Further,if the number of platforms for which we develop our services increases,which is typically seen in a dynamic and fragmented mobile services market such as China,it will result in an increase in our costs and ex

194、penses.In order to deliver high quality services,it is important that our services work well across a range of mobile operating systems,networks,mobile devices and standards that we do not control.If we fail to develop products and technologies that are compatible with all mobile devices and operati

195、ng systems,or if the products and services we develop are not widely accepted and used by users of various mobile devices and operating systems,we may not be able to penetrate the mobile Internet market.In addition,the widespread adoption of new Internet technologies or other technological changes c

196、ould require significant expenditures to modify or integrate our products or services.If we fail to keep up with these changes to remain competitive,our future success may be adversely affected.Our business depends substantially on the continuing efforts of our key executives,and our business may be

197、 severely disrupted if we lose their services.Our future success depends heavily upon the continued services of our key executives.We rely on their expertise in business operations,finance and travel services and on their relationships with our suppliers,shareholders,and business partners.We do not

198、maintain key-man life insurance for any of our key executives.If one or more of our key executives are unable or unwilling to continue in their present positions,we may not be able to easily replace them.In that case,our business may be severely disrupted,we may incur additional expenses to recruit

199、and train personnel and our financial condition and results of operations may be materially and adversely affected.In addition,if any of these key executives joins a competitor or forms a competing company,we may lose customers and suppliers.Each of our executive officers has entered into an employm

200、ent agreement with us that contains confidentiality and non-competition provisions.If any disputes arise between our executive officers and us,we cannot assure you of the extent to which any of these agreements would be enforced in China,where most of these executive officers reside and hold most of

201、 their assets,in light of the uncertainties with Chinas legal system.See“Item 3.D.Key Information Risk Factors Risks Related to Doing Business in China Uncertainties with respect to the PRC legal system could adversely affect us.”If we are unable to attract,train and retain key individuals and highl

202、y skilled employees,our business may be adversely affected.If our business continues to expand,we will need to hire additional employees,including travel supplier management personnel to maintain and expand our travel supplier network,information technology and engineering personnel to maintain and

203、expand our mobile platform,websites,customer service centers and systems,and customer service representatives to serve an increasing number of customers.If we are unable to identify,attract,hire,train and retain sufficient employees in these areas,users of our mobile platform,websites and customer s

204、ervice centers may not have satisfactory experiences and may turn to our competitors,which may adversely affect our business and results of operations.12Table of ContentsThe PRC government regulates the air-ticketing,travel agency and Internet industries.If we fail to obtain or maintain all pertinen

205、t permits and approvals or if the PRC government imposes more restrictions on these industries,our business may be adversely affected.The PRC government regulates the air-ticketing,travel agency and Internet industries.We are required to obtain applicable permits or approvals from different regulato

206、ry authorities to conduct our business,including separate licenses for value-added telecommunications,air-ticketing and travel agency activities.If we fail to obtain or maintain any of the required permits or approvals in the future,we may be subject to various penalties,such as fines or suspension

207、of operations in these regulated businesses,which could severely disrupt our business operations.As a result,our financial condition and results of operations may be adversely affected.In particular,the Civil Aviation Administration of China,or CAAC,together with National Development and Reform Comm

208、ission,or NDRC,regulates pricing of air tickets.CAAC also supervises commissions payable to air-ticketing agencies together with China National Aviation Transportation Association,or CNATA.If restrictive policies are adopted by CAAC,NDRC,or CNATA,or any of their regional branches,our air-ticketing r

209、evenues may be adversely affected.We may not be able to prevent others from using our intellectual property,which may harm our business and expose us to litigation.We regard our domain names,trade names,trademarks and similar intellectual property as critical to our success.We try to protect our int

210、ellectual property rights by relying on trademark protection and confidentiality laws and contracts.Trademark and confidentiality protection in China may not be as effective as that in the United States.Policing unauthorized use of proprietary technology is difficult and expensive.The steps we have

211、taken may be inadequate to prevent the misappropriation of our proprietary technology.Any misappropriation could have a negative effect on our business and operating results.Furthermore,we may need to go to court to enforce our intellectual property rights.Litigation relating to our intellectual pro

212、perty might result in substantial costs and diversion of resources and management attention.See“Item 3.D.Key Information Risk Factors Risks Related to Doing Business in China Uncertainties with respect to the PRC legal system could adversely affect us.”We rely on services from third parties to carry

213、 out our business and to deliver our products to customers,and if there is any interruption or deterioration in the quality of these services,our customers may not continue using our services.We rely on third-party computer systems to host our websites,as well as third-party licenses for some of the

214、 software underlying our technology platform.In addition,we rely on third-party transportation ticketing agencies to issue transportation tickets and travel insurance products,confirmations and deliveries in some cities in Greater China.We also rely on third-party local operators to deliver on-site

215、services to our packaged-tour customers.Any interruption in our ability to obtain the products or services of these or other third parties or deterioration in their performance,such as server errors or interruptions,or dishonest business conduct,could impair the timing and quality of our own service

216、.If our service providers fail to provide high quality services in a timely manner to our customers or violate any applicable rules and regulations,our services will not meet the expectations of our customers and our reputation and brand will be damaged.Furthermore,if our arrangement with any of the

217、se third parties is terminated,we may not find an alternative source of support on a timely basis or on favorable terms to us.If our hotel suppliers or customers provide us with untrue information regarding our customers stay,we may not be able to recognize and collect revenues to which we are entit

218、led.A substantial portion of our revenues are represented by commissions paid by hotels for room nights booked through us.Generally,we do not receive payment from our customers on behalf of our hotel suppliers,as our customers pay hotels directly.To confirm whether a customer adheres to the booked i

219、tinerary,we routinely make inquiries with the hotel and,occasionally,with the customer.We rely on the hotel and the customer to provide us truthful information regarding the customers check-in and check-out dates,which forms the basis for calculating the commission we are entitled to receive from th

220、e hotel.If our hotel suppliers or customers provide us with untrue information with respect to our customers length of stay at the hotels,we would not be able to collect revenues to which we are entitled.In addition,using such untrue information may lead to inaccurate business projections and plans,

221、which may adversely affect our business planning and strategy.We may suffer losses if we are unable to predict the amount of inventory we will need to purchase during the peak holiday seasons.During the peak holiday seasons in China,we establish limited merchant business relationships with selected

222、travel service suppliers,particularly for our packaged-tour products,in order to secure adequate supplies for our customers.In merchant business relationships,we buy hotel rooms and/or transportation tickets before selling them to our customers and thereby incur inventory risk.If we are unable to co

223、rrectly predict demand for hotel rooms and transportation tickets that we are committed to purchase,we would be responsible for covering the cost of the hotel rooms and transportation tickets we are unable to sell,and our financial condition and results of operations would be adversely affected.13Ta

224、ble of ContentsThe recurrence of SARS or other similar outbreaks of contagious diseases as well as natural disasters may materially and adversely affect our business and operating results.In early 2003,several regions in Asia,including Hong Kong and China,were affected by the outbreak of SARS.The tr

225、avel industry in China,Hong Kong and some other parts of Asia suffered tremendously as a result of the outbreak of SARS.Furthermore,in early 2008,severe snowstorms hit many areas of China and particularly affected southern China.The travel industry was severely and adversely affected during and afte

226、r the snowstorms.Additionally,in May 2008,a major earthquake struck Chinas populous Sichuan Province,causing great loss of life,numerous injuries,property loss and disruption to the local economy.The earthquake had an immediate impact on our business as a result of the sharp decrease in travel in th

227、e relevant earthquake-affected areas in Sichuan Province.In 2009,an outbreak of H1N1 influenza(swine flu)occurred in Mexico and the United States and human cases of the swine flu were discovered in China and Hong Kong.In March 2011,a powerful earthquake hit Japan,and the subsequent tsunami and nucle

228、ar accidents had far-reaching impact on the surrounding economies.Starting from March 2013,H7N9 bird flu,a new strain of animal influenza,has been spreading in China and has infected more than a hundred people.In October 2013,large scale political protests began in Thailand that lasted several month

229、s and caused disruption to tourism and travel.In November 2013,one of the largest typhoons ever recorded hit the Philippines,causing widespread devastation.In March 2014,the World Health Organization,or the WHO,reported a major Ebola outbreak in Guinea,a western African nation.The disease then rapid

230、ly spread to the neighboring countries of Liberia and Sierra Leone.As of February 3,2015,22,560 suspected cases and 9,019 deaths had been reported;however,the WHO has said that these numbers may be underestimated.In June 2015,an outbreak of Middle East respiratory syndrome,or MERS,affected South Kor

231、ea,one of our popular overseas travel destinations.Any future outbreak of contagious diseases,extreme unexpected bad weather or natural disasters would adversely affect our business and operating results.Ongoing concerns regarding contagious disease or natural disasters,particularly its effect on tr

232、avel,could negatively impact our customers desire to travel.If there is a recurrence of an outbreak of certain contagious diseases or natural disasters,travel to and from affected regions could be curtailed.Government advice regarding,or restrictions on,travel to and from these and other regions on

233、account of an outbreak of any contagious disease or occurrence of natural disasters may have a material adverse effect on our business and operating results.If tax benefits available to our subsidiaries in China are reduced or repealed,our results of operations could suffer.Under the PRC Enterprise

234、Income Tax Law and the relevant implementation rules,or the EIT Law,effective on January 1,2008,foreign-invested enterprises,or FIEs,and domestic enterprises are subject to EIT at a uniform rate of 25%.Certain enterprises will benefit from a preferential tax rate of 15%under the EIT Law if they qual

235、ify as“high and new technology enterprises,”or HNTEs,or if they are located in applicable PRC regions as specified in the Catalogue of Encouraged Industries in Western Regions(initially effective through the end of 2010 and further extended to 2020),or the Western Regions Catalogue,subject to certai

236、n general restrictions described in the EIT Law and the related regulations.In December 2008 and 2009,some of our PRC subsidiaries,Ctrip Computer Technology,Ctrip Travel Information,Ctrip Travel Network,JointWisdom,and Qunar Software,and one of our consolidated affiliated Chinese entities,Qunar Beij

237、ing,were each designated by relevant local authorities as a HNTE under the EIT Law with an effective period of three years.Therefore,these entities were entitled to enjoy a preferential tax rate of 15%,as long as they maintained their qualifications for HNTEs that are subject to verification by comp

238、etent authorities and renewals every three years.The effective periods for these entities as HNTEs expired or would expire by the end of 2016 or 2017,and we are in the process of renewing the HNTE qualifications for these entities.We cannot assure you that our subsidiaries and the consolidated affil

239、iated Chinese entity will continue to qualify as HNTEs when they are subject to reevaluation in the future.In 2002,the PRC State Administration of Taxation,or SAT,started to implement preferential tax policy in Chinas western region,and companies located in applicable jurisdictions covered by the We

240、stern Regions Catalogue are eligible to apply for a preferential income tax rate of 15%if their businesses fall within the“encouraged”category of the policy and the revenue derived from such“encouraged”businesses accounts for more than 70%of the total revenue.Benefiting from this policy,Chengdu Ctri

241、p and Chengdu Ctrip International obtained approval from local tax authorities to apply the 15%tax rate for their annual tax filing subject to periodic renewals over the years since 2012.After the initial effective period expired in 2014,the two entities were approved by the relevant government auth

242、ority to renew this qualification,which will expire in 2020.In 2013,Chengdu Information Technology Co.,Ltd.,or Chengdu Information,obtained approval from local tax authorities to apply the 15%tax rate for its 2012 tax filing and for the years from 2013 to 2020.In the event that the preferential tax

243、treatment for these entities is discontinued,these entities will become subject to the standard tax rate at 25%,which would materially increase our tax obligations.We have sustained losses in the past and may experience earnings declines or net losses in the future.We sustained net losses in certain

244、 past periods,and we cannot assure you that we can sustain profitability or avoid net losses in the future.We expect that our operating expenses will increase and the degree of increase in these expenses is largely based on anticipated growth,revenue trends and competitive pressure.As a result,any d

245、ecrease or delay in generating additional sales volume and revenues and increase in our operating expenses may result in substantial operating losses.Moreover,consolidation of Qunars financial statements starting from December 31,2015 has negatively impacted our financial statements and may continue

246、 to negatively impact our financial performance in the upcoming financial reporting cycles for an extended period of time.See“Item 3.D.Key Information Risk Factors Risks Relating to Our Company Consolidation of the results of operations of Qunar with ours may negatively impact our financial performa

247、nce and results of operations.”14Table of ContentsWe have incurred substantial indebtedness and may incur additional indebtedness in the future.We may not be able to generate sufficient cash to satisfy our outstanding and future debt obligations.As of December 31,2016,our total short-term bank borro

248、wings and long-term bank borrowings(current portions)were RMB6.7 billion(US$960.4 million),our total long-term borrowings(excluding current portions)were RMB2.6 billion(US$367.3 million),and the aggregate principal amount of our outstanding convertible notes was RMB32.5 billion(US$4.7 billion).To th

249、e extent that we were to settle or redeem our convertible notes in cash,our debt obligations would become more substantial.Our substantial indebtedness could have important consequences to you.For example,it could:?increase our vulnerability to adverse general economic and industry conditions;?requi

250、re us to dedicate a substantial portion of our cash flow from operations to servicing and repaying our indebtedness,thereby reducing the availability of our cash flow to fund working capital,capital expenditures and other general corporate purposes;and?limit,along with the financial and other restri

251、ctive covenants of our indebtedness,among other things,our ability to conduct additional financing activities,or increase the cost of additional financing.In the future,we may from time to time incur additional indebtedness and contingent liabilities.If we incur additional debt,the risks that we fac

252、e as a result of our substantial indebtedness and leverage could intensify.Our ability to generate sufficient cash to satisfy our outstanding and future debt obligations will depend upon our future operating performance,which will be affected by prevailing economic conditions and financial,business

253、and other factors,many of which are beyond our control.As a result,we may not generate or obtain sufficient cash flow to meet our anticipated operating expenses and to service our debt obligation as they become due.We may be subject to legal or administrative proceedings regarding information provid

254、ed on our online portals or other aspects of our business operations,which may be time-consuming to defend.Our online portals contain information about hotels,transportation,popular vacation destinations and other travel-related topics.It is possible that if any information accessible on our online

255、portals contains errors or false or misleading information,third parties could take action against us for losses incurred in connection with the use of such information.From time to time,we have become and may in the future become a party to various legal or administrative proceedings arising in the

256、 ordinary course of our business,including actions with respect to labor and employment claims,breach of contract claims,anti-competition claims and other matters.Although such proceedings are inherently uncertain and their results cannot be predicted with certainty,we believe that the resolution of

257、 our current pending matters will not have a material adverse effect on our business,consolidated financial position,results of operations or cash flow.Regardless of the outcome and merit of such proceedings,however,any legal action can have an adverse impact on us because of defense costs,negative

258、publicity,diversion of managements attention and other factors.In addition,it is possible that an unfavorable resolution of one or more legal or administrative proceedings,whether in China or in another jurisdiction,could materially and adversely affect our financial position,results of operations o

259、r cash flows in a particular period or damage our reputation.We could be liable for breaches of Internet security or fraudulent transactions by users of our mobile platform and our websites.Internet industry is facing significant challenges regarding information security and privacy,including the st

260、orage,transmission and sharing of confidential information.In recent years,PRC government authorities have enacted legislation on Internet use to protect personal information from any unauthorized disclosure.See“Item 4.B.Information on the Company Business Overview PRC Government Regulations Interne

261、t Privacy.”We conduct a significant portion of our transactions through the Internet,including our mobile platform and websites.In such transactions,secured transmission of confidential information(such as customers itineraries,hotel and other reservation information,credit card information,personal

262、 information and billing addresses)over public networks and ensuring the confidentiality,integrity,availability and authenticity of the information of our users,customers,hotel suppliers and airline partners are essential to maintaining their confidence in our online products and services.Our curren

263、t security measures may not be adequate and may contain deficiencies that we fail to identify,and advances in technology,increased levels of expertise of hackers,new discoveries in the field of cryptography or others could increase our vulnerability.For example,a third-party website with focus on In

264、ternet security information exchange released news in March 2014 that as a result of a temporary testing function performed by us,certain data files containing customers credit card information had been stored on local servers maintained by us,which may lead to potential exposure of these customers

265、information to hackers.We removed the cause of the potential security concern within two hours of the release of the news report and then examined all other possible leaks and found that 93 customers credit card information might have been downloaded by the above-mentioned website for the purpose of

266、 confirming potential risks.Although to our knowledge,no customer has suffered financial loss or other damage due to the incident as of the date of this report,our business,results of operations,user experience and reputation may be materially and adversely affected if similar incidents related to I

267、nternet security recur in the future.In August 2011,Chinas Supreme Peoples Court and Supreme Peoples Procuratorate issued judicial interpretations regarding hacking and other Internet crimes.However,its effect on curbing hacking and other illegal online activities still remains to be seen.15Table of

268、 ContentsSignificant capital,managerial and human resources are required to enhance information security and to address any issues caused by security failures.If we are unable to protect our systems and the information stored in our systems from unauthorized access,use,disclosure,disruption,modifica

269、tion or destruction,such problems or security breaches may cause loss,expose us to litigation and possible liability to the owners of confidential information,disrupt our operations and may harm our reputation and ability to attract customers.We may be the subject of detrimental conduct by third par

270、ties including complaints to regulatory agencies,negative blog postings,and the public dissemination of malicious assessments of our business,which could have a negative impact on our reputation and cause us to lose market share,travel suppliers and customers and revenues,and adversely affect the pr

271、ice of our ADSs.We may be the target of anti-competitive,harassing,or other detrimental conduct by third parties.Such conduct may include complaints,anonymous or otherwise,to regulatory agencies regarding our operations,accounting,revenues,business relationships,business prospects and business ethic

272、s.Additionally,allegations,directly or indirectly against us,may be posted in Internet chat-rooms or on blogs or any websites by anyone,whether or not related to us,on an anonymous basis.We may be subject to government or regulatory investigation as a result of such third-party conduct and may be re

273、quired to spend significant time and incur substantial costs to address such third-party conduct,and we cannot assure you that we will be able to conclusively refute each of the allegations within a reasonable period of time,or at all.Our reputation may also be negatively affected as a result of the

274、 public dissemination of anonymous allegations or malicious statements about our business,which in turn may cause us to lose market share,travel suppliers and customers and revenues and adversely affect the price of our ADSs.We have limited business insurance coverage in Greater China.Insurance comp

275、anies in Greater China offer limited business insurance products and generally do not,to our knowledge,offer business liability insurance.Business disruption insurance is available to a limited extent in Greater China,but we have determined that the risks of disruption,the cost of such insurance and

276、 the difficulties associated with acquiring such insurance make it impractical for us to have such insurance.We do not maintain insurance coverage for any kinds of business liabilities or disruptions and would have to bear the costs and expenses associated with any such events out of our own resourc

277、es.We hire celebrities to be our brand ambassadors to market our brands and products and this marketing initiative may not be effective.From time to time,we hire celebrities to be our brand ambassadors to market our“Ctrip”brand or our products and services that are important to our business.However,

278、we cannot assure you that the endorsement from our brand ambassadors or related advertisements will remain effective,that the brand ambassadors will remain popular or their images will remain positive and compatible with the messages that our brand and products aim to convey.Furthermore,we cannot as

279、sure you that we can successfully find suitable celebrities to replace any of our existing brand ambassadors if any of their popularities decline or if the existing brand ambassadors are no longer able or suitable to continue the engagement,and termination of such engagements may have a significant

280、impact on our brand images and the promotion or sales of our products.If any of these situations occurs,our business,financial condition and results of operations could be materially and adversely affected.We may face greater risks of doubtful accounts as our corporate travel business increases in s

281、cale.Since we began providing travel booking services to corporate customers who generally request credit terms,our accounts receivable have increased.We cannot assure you that we will be able to collect payment fully and in a timely manner on our outstanding accounts receivable from our corporate t

282、ravel service customers.As a result,we may face a greater risk of non-payment of our accounts receivable and,as our corporate travel business grows in scale,we may need to make higher provisions for doubtful accounts.For the years ended December 31,2014,2015 and 2016,we recognized the provisions of

283、doubtful accounts of RMB11.7 million,RMB32.1 million and RMB32.3 million(US$4.7 million)respectively.Our operating results and financial condition may be materially and adversely affected if we are unable to successfully manage our accounts receivable.16Table of ContentsOur accounting treatment for

284、share-based compensation could continue to significantly reduce our net income.Since 2006,we have accounted for share-based compensation in accordance with ASC 718“Compensation Stock Compensation,”or ASC 718,which requires a public company to recognize,as an expense,the fair value of share options a

285、nd other share-based compensation to employees based on the requisite service period of the share-based awards.We have granted share-based compensation awards,including share options and restricted share units,to employees,officers and directors to incentivize performance and align their interests w

286、ith ours.See“Item 6.B.Directors,Senior Management and Employees Compensation Employees Share Incentive Plans.”As a result of the grants and potential future grants under our share incentive plans,we had incurred in the past and expect to continue to incur in future periods significant share-based co

287、mpensation expenses.The amount of these expenses is based on the fair value of the share-based awards.Our board of directors has the discretion to change terms of any previously issued share options and any such change may significantly increase the amount of our share-based compensation expenses fo

288、r the period that the change takes effect as well as those for any future periods.In February 2009,our board of directors approved to reduce the exercise price of all outstanding unvested options that were granted by us in 2007 and 2008 under our 2007 Plan to the then fair market value of our ordina

289、ry shares underlying such options and,in December 2009,our board of directors approved to extend the expiration dates of all stock options granted in 2005 and 2006 to eight years after the respective original grant dates of these options.As a result of such changes,our share-based compensation expen

290、se of 2009 reduced our diluted earnings per ADS by US$0.14.In February 2010,our compensation committee approved to extend the expiration dates of all stock options granted in and after 2007 to eight years after the respective original grant dates of these options.As a result of such changes and exte

291、nsions,our share-based compensation expense of 2010 reduced our diluted earnings per ADS by US$0.06.In addition,with such changes and extensions,the application of ASC 718 will continue to have a significant impact on our net income.Further,future changes to various assumptions used to determine the

292、 fair value of awards issued or the amount and type of equity awards granted may also create uncertainty as to the amount of future share-based compensation expense.Failure to maintain effective internal control over financial reporting could result in errors in our published financial statements,wh

293、ich in turn could have a material adverse effect on the trading price of our ADSs.We are subject to the reporting obligations under the U.S.securities laws.As required under Section 404 of the Sarbanes-Oxley Act of 2002,the SEC has adopted rules requiring public companies to include a report of mana

294、gement on the effectiveness of such companies internal control over financial reporting in its annual report.In addition,an independent registered public accounting firm for a public company must issue an attestation report on the effectiveness of the companys internal control over financial reporti

295、ng.Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31,2016.In addition,our independent registered public accounting firm attested the effectivene

296、ss of our internal control and reported that our internal control over financial reporting was effective as of December 31,2016.If we fail to maintain the effectiveness of our internal control over financial reporting,we may not be able to conclude on an ongoing basis that we have effective internal

297、 control over financial reporting in accordance with the Sarbanes-Oxley Act.Moreover,effective internal control over financial reporting is necessary for us to produce reliable financial reports.As a result,any failure to maintain effective internal control over financial reporting could result in t

298、he loss of investor confidence in the reliability of our financial statements,which in turn could negatively impact the trading price of our ADSs.Furthermore,we may need to incur additional costs and use additional management and other resources in an effort to comply with Section 404 of the Sarbane

299、s-Oxley Act and other requirements going forward.We may need additional capital and we may not be able to obtain it.We believe that our current cash and cash equivalents,short-term investments,cash flow from operations and proceeds from our financing activities will be sufficient to meet our anticip

300、ated cash needs for the foreseeable future.We may,however,require additional cash resources due to changed business conditions or other future developments,including any investments or acquisitions we may decide to pursue.If these resources are insufficient to satisfy our cash requirements,we may se

301、ek to sell additional equity or debt securities or obtain a credit facility.The sale of additional equity securities could result in additional dilution to our shareholders.The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing c

302、ovenants that would restrict our operations.We cannot assure you that financing will be available in amounts or on terms acceptable to us,if at all.In particular,the recent financial turmoil affecting the financial markets and banking system may significantly restrict our ability to obtain financing

303、 in the capital markets or from financial institutions on commercially reasonable terms,or at all.17Table of ContentsRisks Related to Our Corporate StructurePRC laws and regulations restrict foreign investment in the air-ticketing,travel agency and value-added telecommunications businesses,and subst

304、antial uncertainties exist with respect to the application and implementation of PRC laws and regulations.We are a Cayman Islands incorporated company and a foreign person under PRC law.Due to foreign ownership restrictions in the air-ticketing,travel agency and value-added telecommunications indust

305、ries,we conduct part of our business through contractual arrangements with our consolidated affiliated Chinese entities.These entities hold the licenses and approvals that are essential for our business operations.In the opinion of our PRC counsel,Commerce&Finance Law Offices,our current ownership s

306、tructure,the ownership structure of our subsidiaries and our consolidated affiliated Chinese entities,the contractual arrangements among us,our subsidiaries,our consolidated affiliated Chinese entities and their shareholders,as described in this annual report,are in compliance with existing PRC laws

307、,rules and regulations.There are,however,substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations.Accordingly,we cannot assure you that PRC government authorities will not ultimately take a view contrary to the opinion of our PRC legal coun

308、sel due to the lack of official interpretation and clear guidance.If we and our consolidated affiliated Chinese entities are found to be in violation of any existing or future PRC laws or regulations,the relevant governmental authorities would have broad discretion in dealing with such violation,inc

309、luding,without limitation,levying fines,confiscating our income or the income of our consolidated affiliated Chinese entities,revoking our business licenses or the business licenses of our consolidated affiliated Chinese entities,requiring us and our consolidated affiliated Chinese entities to restr

310、ucture our ownership structure or operations and requiring us or our consolidated affiliated Chinese entities to discontinue any portion or all of our value-added telecommunications,air-ticketing or travel agency businesses.In particular,if the PRC government authorities impose penalties which cause

311、 us to lose our rights to direct the activities of and receive economic benefits from our consolidated affiliated Chinese entities,we may lose the ability to consolidate and reflect in our financial statements the operation results of our consolidated affiliated Chinese entities.Any of these actions

312、 could cause significant disruption to our business operations,and may materially and adversely affect our business,financial condition and results of operations.Under the equity pledge agreements between our subsidiaries and the shareholders of our consolidated affiliated Chinese entities,the share

313、holders of our consolidated affiliated Chinese entities pledged their respective equity interests in these entities to our subsidiaries.According to the PRC Property Rights Law,effective as of October 1,2007,and the Measures for the Registration of Equity Pledge with the Administration for Industry

314、and Commerce(2016 Revision),effective as of April 29,2016,the effectiveness of the pledges will be denied if the pledges are not registered with the Administration for Industry and Commerce.The effectiveness of the pledges upon registration will be recognized by PRC courts if disputes arise on certa

315、in pledged equity interests and that our subsidiaries interests as pledgees will prevail over those of third parties.Furthermore,we were aware that a China-based U.S.-listed company announced in 2012 that it was subject to SECs investigation,which it believed was related to the consolidation of its

316、consolidated affiliated Chinese entities.Following the announcement,that issuers stock price declined significantly.Although we are not aware of any actual or threatened investigation,inquiry or other action by SEC,Nasdaq or any other regulatory authority with respect to consolidation of our consoli

317、dated affiliated Chinese entities,we cannot assure you that we will not be subject to any such investigation or inquiry in the future.In the event we are subject to any regulatory investigation or inquiry relating to our consolidated affiliated Chinese entities,including the consolidation of such en

318、tities into our financial statements,or any other matters,we may need to spend significant amount of time and expenses in connection with the investigation or inquiry,our reputation may be harmed regardless of the outcome,and the trading price of our ADS may materially decline or fluctuate.If our co

319、nsolidated affiliated Chinese entities violate our contractual arrangements with them,our business could be disrupted,our reputation may be harmed and we may have to resort to litigation to enforce our rights,which may be time-consuming and expensive.As the PRC government restricts foreign ownership

320、 of value-added telecommunications,air-ticketing and travel agency businesses in China,we depend on our consolidated affiliated Chinese entities,in which we have no ownership interest,to conduct part of our non-accommodation reservation business activities through a series of contractual arrangement

321、s,which are intended to provide us with effective control over these entities and allow us to obtain economic benefits from them.Although we have been advised by our PRC counsel,Commerce&Finance Law Offices,that the contractual arrangements as described in this annual report are valid,binding and en

322、forceable under current PRC laws,these arrangements are not as effective in providing control as direct ownership of these businesses.For example,our consolidated affiliated Chinese entities could violate our contractual arrangements with them by,among other things,failing to operate our air-ticketi

323、ng or packaged-tour business in an acceptable manner or pay us for our consulting or other services.In any such event,we would have to rely on the PRC legal system for the enforcement of those agreements,which could have uncertain results.Any legal proceeding could result in the disruption of our bu

324、siness,damage to our reputation,diversion of our resources and incurrence of substantial costs.See“Item 3.D.Key Information Risk Factors Risks Related to Doing Business in China Uncertainties with respect to the PRC legal system could adversely affect us.”18Table of ContentsThe principal shareholder

325、s of our consolidated affiliated Chinese entities have potential conflict of interest with us,which may adversely affect our business.Some of our directors and officers were also the principal shareholders of our consolidated affiliated Chinese entities as of the date of this annual report.Thus,conf

326、lict of interest between their duties to our company and their interests in our consolidated affiliated Chinese entities may arise.We cannot assure you that when conflict of interest arises,these persons will act entirely in our interests or that the conflict of interest will be resolved in our favo

327、r.In addition,these persons could violate their non-competition or employment agreements with us or their legal duties by diverting business opportunities from us to others,resulting in our loss of corporate opportunities.In any such event,we would have to rely on the PRC legal system for the enforc

328、ement of these agreements,which could have uncertain results.Any legal proceeding could result in the disruption of our business,diversion of our resources and incurrence of substantial costs.See“Item 3.D.Key Information Risk Factors Risks Related to Doing Business in China Uncertainties with respec

329、t to the PRC legal system could adversely affect us.”Substantial uncertainties exist with respect to the enactment timetable,interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure,corporate governance and business

330、operations.MOFCOM published a discussion draft of the proposed Foreign Investment Law in January 2015 aiming to,upon its enactment,replace the trio of existing laws regulating foreign investment in China,namely,the Sino-Foreign Equity Joint Venture Enterprise Law,the Sino-Foreign Cooperative Joint V

331、enture Enterprise Law and the Foreign-Invested Enterprise Law,together with their implementation rules and ancillary regulations.The draft Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international pr

332、actice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments.MOFCOM solicited comments on this draft and substantial uncertainties exist with respect to its enactment timetable,interpretation and implementation.On September 3,2016,the Standin

333、g Committee of Chinas National Peoples Congress,or NPC,passed a decision in connection with the revision of four laws,including the trio of laws regulating foreign investment in China,which was implemented starting on October 1,2016.According to this decision,formation of an FIE in a sector not subject to special entry administrative measures will be simplified by going through government filing i