1、Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,DC 20549 FORM 20-F (Mark One)ooREGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR 12(g)OF THE SECURITIES EXCHANGEACT OF 1934 OR xxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fis

2、cal year ended December 31,2018 OR ooTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934 For the transition period from to OR ooSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACTOF 1934 Date of event requiring this shell company repo

3、rt.Commission file number:001-33853 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 pr

4、incipal executive offices)Jane Jie 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)Securities registered or to be registered pu

5、rsuant to Section 12(b)of the Act:Title of each className of each exchange on which registeredAmerican depositary 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*Not for trading,b

6、ut only in connection with the listing of American depositary shares on the Nasdaq Global Select Market.Securities registered or to be registered pursuant to Section 12(g)of the Act:None(Title of Class)Table of Contents Securities for which there is a reporting obligation pursuant to Section 15(d)of

7、 the Act:None(Title of Class)Indicate 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:69,122,824 ordinary shares,par value US$0.01 per share,as of December 31,2018.Indicate by check mark if the regi

8、strant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.x Yes o 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 theSecurities Exchange Act of 1934.o Yes x No Ind

9、icate by check mark whether the registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934during 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 filingr

10、equirements for the past 90 days.x Yes o No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the

11、 registrant was required to submit such files).x Yes o 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 thedefinitions of“large accelerated filer,”“accelerated filer,”and“emerging growth compa

12、ny”in Rule 12b-2 of the Exchange Act.Large accelerated filer x Accelerated filer o Non-accelerated filer o Emerging growth company o If an emerging growth company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if the registrant has elected notto use the ext

13、ended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of theExchange Act.o The term“new or revised financial accounting standard”refers to any update issued by the Financial Accounting Standards Board to its AccountingStandards

14、 Codification after April 5,2012.Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S.GAAP x International Financial Reporting Standards as issuedby the International Accounting Standards Board o Other o If“Other”has

15、 been checked in response to the previous question,indicate by check mark which financial statement item the registrant has elected to follow.o Item 17 o Item 18 If this is an annual report,indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act)

16、.o Yes x 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 12,13 or 15(d)of the Securities ExchangeAct of 1934 subsequent to the distribution

17、of securities under a plan confirmed by a court.o Yes o No Table of Contents TABLE OF CONTENTS PageINTRODUCTION1PART I.1ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS1ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE2ITEM 3.KEY INFORMATION2ITEM 4INFORMATION ON THE COMPANY33ITEM 4.A.UNRESOL

18、VED STAFF COMMENTS49ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS49ITEM 6DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES65ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS74ITEM 8FINANCIAL INFORMATION78ITEM 9THE OFFER AND LISTING79ITEM 10.ADDITIONAL INFORMATION79ITEM 11.QUANTITATIVE AND QUALI

19、TATIVE DISCLOSURES ABOUT MARKET RISK86ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES87PART II.88ITEM 13.DEFAULTS,DIVIDEND ARREARAGES AND DELINQUENCIES88ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS88ITEM 15.CONTROLS AND PROCEDURES88ITEM 16A.AUDI

20、T COMMITTEE FINANCIAL EXPERT89ITEM 16B.CODE OF ETHICS89ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES90ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES90ITEM 16E.PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS90ITEM 16F.CHANGE IN REGISTRANTS CERTIFYING ACCOU

21、NTANT91ITEM 16G.CORPORATE GOVERNANCE91ITEM 16H.MINE SAFETY DISCLOSURE91PART III.92ITEM 17.FINANCIAL STATEMENTS92ITEM 18.FINANCIAL STATEMENTS92ITEM 19.EXHIBITS92 iTable of Contents INTRODUCTION In this annual report,unless otherwise indicated or unless the context otherwise requires:“ADSs”refers to o

22、ur American depositary 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,andMacau,and“Greater China”refers to the Peoples Republic of China,Taiwan,Hong Kong,and Macau;“

23、Qunar”refers to Qunar Cayman Islands Limited,a Cayman Islands company,and unless the context requires otherwise,includes itspredecessor entities and consolidated subsidiaries and consolidated affiliated Chinese entities;“RMB”or“Renminbi”refers to the legal currency of China;“U.S.dollars,”“dollars,”“

24、US$,”or“$”refers to the legal currency of the UnitedStates;“”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 Internat

25、ional,Ltd.,its predecessor entities and subsidiaries and,in the context ofdescribing our operations and consolidated financial information,also include its consolidated affiliated Chinese entities,unless otherwiseindicated herein.We consolidate the financial results of Qunar starting from December 3

26、1,2015.In calculating the number of hotels with whichwe have room supply relationships,downloads of and transactions through our mobile channel,outbound travel business and other operationaldata,where applicable,as well as in describing our marketing,branding and intellectual properties,we have not

27、taken into account thecomparable operating data or other information of Qunar.Any discrepancies in any table 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 state

28、ments for the years ended December 31,2016,2017 and 2018.On December 1,2015,we effected a change of the ratio of the ADSs to ordinary shares from four ADSs representing one ordinary share to eight ADSsrepresenting one ordinary share.Unless otherwise indicated,ADSs and per ADS amount in this annual r

29、eport have been retroactively adjusted to reflect thechanges in ratio for all periods presented.We have published our consolidated financial statements in Renminbi.Our business is primarily conducted in China in Renminbi.The conversionof Renminbi into U.S.dollars in this annual report is based on th

30、e certified exchange rate published by the Federal Reserve Board.For your convenience,thisannual report contains translations of some Renminbi or U.S.dollar amounts for 2018 at a rate of RMB6.8755 to US$1.00,which was the certified exchangerate in effect as of December 31,2018.The certified exchange

31、 rate on March 8,2019 was RMB6.7201 to US$1.00.We make no representation that anyRenminbi 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 ratesstated below,or at all.The PRC government imposes control over its for

32、eign currency reserves in part through direct regulation of the conversion ofRenminbi into foreign exchange.PART I.ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS Not applicable.1Table of Contents ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE Not applicable.ITEM 3.KEY INFORMATION A.Sele

33、cted Financial Data Selected Consolidated Financial Data The following table presents the selected consolidated financial information for our business.You should read the following information inconjunction with“Item 5.Operating and Financial Review and Prospects”below.The selected consolidated stat

34、ement of operations data for the years endedDecember 31,2016,2017 and 2018 and the selected consolidated balance sheet data as of December 31,2017 and 2018 have been derived from our auditedconsolidated financial statements and should be read in conjunction with those statements,which are included i

35、n this annual report beginning on page F-1.The selected consolidated statement of operations data for the years ended December 31,2014 and 2015 and the selected consolidated balance sheet data asof December 31,2014,2015 and 2016 have been derived from our audited consolidated financial statements fo

36、r these periods,which are not included in thisannual report.Our historical results do not necessarily indicate results expected for any future periods.For the Year Ended December 31,2014 2015 2016 201720182018 RMB RMB RMB RMBRMBUS$(in millions,except for share and per share data)Consolidated Stateme

37、nt of Operation DataNet revenues7,34710,89719,24526,79630,9654,504Cost of revenues(2,101)(3,043)(4,730)(4,678)(6,324)(920)Gross profit5,2467,85414,51522,11824,6413,584Operating expensesProduct development(2,321)(3,297)(7,687)(8,259)(9,620)(1,399)Sales and marketing(2,214)(3,088)(5,861)(8,294)(9,596)

38、(1,396)General and administrative(862)(1,088)(2,519)(2,622)(2,820)(410)Total operating expenses(5,397)(7,473)(16,067)(19,175)(22,036)(3,205)(Loss)/income from operations(151)381(1,552)2,9432,605379Net interest income/(expense)and other income/(expense)1862,624(192)581(684)(99)Income/(loss)before inc

39、ome tax expense,equity inincome of affiliates and non-controlling interests353,005(1,744)3,5241,921280Income tax expense(131)(470)(482)(1,285)(793)(115)Equity in income/(loss)of affiliates187(136)602(65)(32)(5)Net income/(loss)912,399(1,624)2,1741,096160Less:Net loss/(income)attributable to non-cont

40、rollinginterests151108206(19)162Net income/(loss)attributable to Ctrips shareholders2422,507(1,418)2,1551,112162Earnings/(loss)Per Ordinary Share Data:Net income/(loss)attributable to Ctrips shareholders2422,507(1,418)2,1551,112162Earnings/(loss)per ordinary share,basic7.0866.34(23.97)32.5116.252.36

41、Earnings/(loss)per ordinary share,diluted6.3556.85(23.97)30.7515.672.28Weighted average ordinary shares outstanding,basic34,289,17037,797,69859,166,58266,300,80868,403,42668,403,426Weighted average ordinary shares outstanding,diluted38,207,85847,375,24859,166,58271,775,89370,924,62370,924,623 2(1)(3

42、)(3)(3)(3)(2)(4)(4)(4)(5)(6)(6)Table of Contents As of December 31,2014 20152016 201720182018 RMB RMBRMB RMBRMBUS$(in millions)Consolidated Balance Sheet Data:Cash and cash equivalents5,30119,21618,43518,24321,5303,131Restricted cash8362,2871,7441,7494,244617Short-term investments6,4398,23614,11328,

43、13036,7535,346Accounts receivable,net1,8273,1514,6414,7495,668824Prepayments and other current assets2,4807,7126,9956,54711,1991,629Deferred tax assets,current194Non-current assets14,13378,24298,502102,822106,43615,481Total assets31,210118,844144,430162,240185,83027,028Current liabilities12,71433,66

44、630,29542,16268,78410,005Deferred tax liabilities,non-current1333,0453,6123,8953,838558Long-term debt7,98518,35534,65129,22024,1463,512Other long-term liabilities9334034832948Share capital345551Total Ctrips shareholders equity9,52944,55171,54884,83686,71512,612Non-controlling interests84919,1343,984

45、1,7792,018293Total shareholders equity10,37863,68575,53286,61588,73312,905(1)Our consolidated balance sheet data has reflected the effect of consolidation of Qunars financial statements starting from December 31,2015.Ourconsolidated statement of operation data has reflected the effect of consolidati

46、on of Qunars financial statements starting from January 1,2016.(2)Translation from Renminbi amounts into U.S.dollar amounts was made at a rate of RMB6.8755 to US$1.00.(3)Effective from January 1,2018,we adopted ASC Topic 606,a new accounting standard on the recognition of revenue issued by FASB in 2

47、014,and haveapplied such accounting standard retrospectively to the years ended December 31,2016 and 2017.The financial data for the year ended December 31,2014 and 2015 and as of December 31,2014 and 2015 have not been recast and as such are not comparable.(4)Share-based compensation was included i

48、n the related operating expense categories as follows:For the Year Ended December 31,2014 2015 2016 201720182018 RMB RMB RMB RMBRMBUS$(in millions)Product development1852922,0801,013934136Sales and marketing546639318615623General and administrative2582851,08763561790(5)In 2015,a gain of RMB2.3 billi

49、on was recognized in the other income for the deconsolidation of Tujia,which was once a subsidiary of our company.InJanuary 2018,we adopted new financial instruments accounting standard ASU No.2016-01,which requires equity investments to be measured at fairvalue with subsequent changes recognized in

50、 net income,except for those accounted for under the equity method or requiring consideration.The newstandard also changes the accounting for investments without a readily determinable fair value and that do not qualify for the practical expedient toestimate fair value.A policy election can be made

51、for these investments whereby investment will be carried at cost and adjusted in subsequent periodsfor any impairment or changes in observable prices of identical or similar investments.(6)Each ADS represents 0.125 ordinary share.(7)In 2015,we determined and elected to early adopt ASU 2015-17 to our

52、 consolidated financial statements starting December 31,2015,prospectively topresent the deferred tax assets and liabilities as non-current items.(8)In April 2015,the FASB issued new guidance which changes the presentation of debt issuance cost.Under the new guidance,debt issuance cost ispresented a

53、s a reduction of the carrying amount of the related liability,rather than as an asset.This guidance has been adopted and appliedretrospectively by us to the prior periods presented herein.B.Capitalization and Indebtedness Not applicable.C.Reasons for the Offer and Use of Proceeds Not applicable.D.Ri

54、sk Factors 3(1)(3)(3)(3)(3)(2)(7)(8)(1)(2)Table of Contents Risks Related to Our Company Our 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 and acquisitio

55、ns,and we expect to continue toexperience such growth in the future.We have significantly expanded our operations and anticipate further expansion of our operations and workforce,as aresult of the continued growth of our service offerings,customer base and geographic coverage.For example,we have inv

56、ested in,and plan to continue toinvest in,organic growth by rolling out new business initiatives focusing on a diverse range of areas including cruise lines,car services,bus tickets and traintickets.Consequentially,in 2018,we invested US$1.4 billion in product development.If such new business initia

57、tives fail to perform as expected,ourfinancial condition and results of operations could be adversely affected.Our growth to date has placed,and our anticipated future operations will continueto place,significant strain on our management,systems and resources.In addition to training and managing our

58、 workforce,we will need to continue toimprove and develop our financial and managerial controls and our reporting systems and procedures.We cannot assure you that we will be able toefficiently or effectively manage the growth of our operations,and any failure to do so may limit our future growth and

59、 hamper our business strategy.Strategic acquisition of complementary businesses and assets,and the subsequent integration of newly acquired business into our own,create significantchallenges that may have a material adverse effect on our business,reputation,results of operations and financial condit

60、ion.We have made and intend to continue to make strategic acquisitions in the travel industry in Greater China and overseas.For example,inOctober 2015,we completed a share exchange transaction with Baidu Inc.,or Baidu,whereby we obtained approximately 45%of the aggregate votinginterest of Qunar in e

61、xchange for our newly issued ordinary shares.Subsequently,we issued ordinary shares represented by ADSs to certain special purposevehicles 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 inje

62、cted these shares to a third-party investment entity dedicated to investing in business in China.From an accounting perspective,weconsolidated 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

63、 participated as a member in the buying consortium in Qunars going-private transaction and rolled our then existing equity stake intothe entity that wholly owns Qunar upon the completion of the transaction in February 2017.If we are presented with appropriate opportunities,we may continue to acquire

64、 complementary businesses and assets in the future.However,strategicacquisitions and the subsequent integration of new businesses and assets into our own would require significant attention from our management and couldresult in a diversion of resources from our existing business,which in turn could

65、 have an adverse effect on our business operations.In addition,acquisitionscould result in potential dilutive issuances of equity securities,use of substantial amounts of cash,and exposure to potential ongoing financial obligationsand unforeseen or hidden liabilities of the acquired business.The cos

66、t and duration of,and difficulties in,integrating newly acquired businesses andmanaging a larger overall business could also materially exceed our expectations.Moreover,we may not be able to achieve our intended strategic strategiesand record substantial impairment charges to goodwill,if we fail to

67、successfully integrate the newly acquired business or manage a larger business.Any suchnegative 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 esta

68、blish strategic alliances involves significant risk and uncertainties thatmay have a material 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

69、 or investments in the travelservice industries in Greater China and overseas,such as the following,in addition to our transactions relating to Qunar described elsewhere in this annualreport:In May 2015,we acquired approximately 38%share capital of eLong,Inc.In May 2016,eLong,Ipleted its going-priva

70、te transactionand merger with E-dragon Holdings Limited,or eLong.In December 2017,eLong and Tongcheng Network Technology Co.,Ltd.,or LY.com,announced an agreement to merge and form Tongcheng-Elong Holdings Limited(SEHK:0780),which was consummated in March 2018.Inexchange for our prior holdings in eL

71、ong,we received an equity method investment in the enlarged group.In January 2016,we invested US$180 million in MakeMyTrip Limited,or MakeMyTrip,Indias largest online travel company,via convertiblenotes,and subsequently appointed a director to MakeMyTrips board of directors.In October 2016,we conver

72、ted all of the outstandingprincipal amount of convertible notes into ordinary shares of MakeMyTrip.In May 2017,we further invested approximately US$33 million inMakeMyTrip by subscribing for 916,666 of its ordinary shares.4Table of Contents In April 2016,we announced strategic collaboration with Chi

73、na Eastern Airlines Corporation Limited,or China Eastern Airlines,one of Chinasthree major air transportation groups,on a broad range of products and services.In June 2016,we invested approximately RMB3.0 billion inapproximately 466 million A shares of China Eastern Airlines in a private placement.I

74、n December 2016,we consummated an acquisition transaction whereby shares held by nearly all of the shareholders of Skyscanner,a leadingglobal travel search site headquartered in Edinburgh,the United Kingdom,were acquired by Ctrip.In December 2016,in connection with our share exchange transaction wit

75、h BTG Hotels(Group)Co.,Ltd.,or BTG,a PRC joint stock companythat is listed on the Shanghai Stock Exchange and principally engaged in the management of hotels and tourism destinations,and HomeinnsHotel Group,or Homeinns,we exchanged our previously held equity interest in Homeinns for 22%equity intere

76、st of BTG.In May 2018,we acquired substantially all of the remaining equity interest of an offline travel agency company in which we previously heldapproximately 48%equity interest for the consideration of RMB198 million in cash and 1.9%non-controlling interest of one of oursubsidiaries with the fai

77、r value of RMB399 million.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 equity securities withreadily determinable fair values investments decline and become lower than our share purchase prices,as have happened histor

78、ically,we could recordchanges in fair value recorded in the income statement under U.S.GAAP,which in turn would adversely affect our financial results for the relevant periods.Inaddition,if any of our investees in which our investments are classified as equity method investments incur net losses in

79、the future,we will share their netlosses proportionate to our 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,amongothers,may have a material adverse effect on our financial condi

80、tion and results of operations:diversion of our resources 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 o

81、f its duty of care and other duties required under applicable law in connection withany 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 co

82、uld be adversely affected by uncertainties in the implementation andenforcement of the PRC Anti-Monopoly Law.Under the PRC Anti-Monopoly Law,companies undertaking acquisitions or investments in a business inChina must notify the PRC Ministry of Commerce,or MOFCOM,in advance of any transaction where

83、the parties revenues in the China market and globalmarket exceed certain thresholds and the buyer would obtain control of,or decisive influence over,the target.There are numerous factors MOFCOMconsiders in determining“control”or“decisive influence,”and,depending on certain criteria,MOFCOM will condu

84、ct anti-monopoly review of transactionsin respect of which it was notified.In light of the uncertainties relating to the interpretation,implementation and enforcement of the PRC Anti-MonopolyLaw,we cannot assure you that MOFCOM will not deem our past and future acquisitions or investments,including

85、the ones referenced herein or elsewhere inthis annual report,to have met the filing criteria under the PRC Anti-Monopoly Law and therefore demand a filing for merger review.However,there havebeen limited cases of MOFCOM anti-monopoly review of filings involving companies with a“variable interest ent

86、ity”structure,or VIE structure,similar toours.If 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 besubject to a fine of up to RMB500,000,and the parts of the transaction causing the prohibited concentration

87、 could be ordered to be unwound.Suchunwinding could affect our business and financial results,and harm our reputation.Further,if any of our business cooperation arrangements with Qunar aredetermined to have violated the PRC Anti-Monopoly Law,we could be subject to sanctions including an order to cea

88、se the relevant activities,confiscationof illegal gains and fines of 1%to 10%of our sales revenue from the previous year.5Table of Contents In addition,we establish strategic alliances with various third parties to further our business purpose from time to time.Strategic alliances with thirdparties

89、could subject us to a number of risks,including risks associated with sharing proprietary information,non-performance by the counter-party,anincrease in expenses incurred in establishing new strategic alliances,inefficiencies caused by failure to integrate strategic partners businesses with our own,

90、and unforeseen levels of diversion of our resources and management 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 andadversely af

91、fect our business and financial results and cause the trading price of our ADSs to decline.If Qunar fails to effectively implement and execute its strategies to maintain competitiveness and grow its business,or incur net loss in the future,ourbusiness,results of operations and financial condition ma

92、y be materially and adversely affected.As a result of the transactions described elsewhere in this annual report involving Qunar securities during 2015,we began to consolidate Qunarsfinancial results from December 31,2015 from an accounting perspective under U.S.GAAP.Historically,Qunar enjoyed one o

93、f the market leading positionsin Chinas travel industry with its unique business model as a search-based travel commerce platform,while it is currently transitioning into a mobile andonline commerce travel platform that focuses on providing users with one-stop solutions.Certain risks and uncertainti

94、es associated with the businessoperations 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;Failure to increase penetration into hotel business in lower-tier cities,and maintain an

95、d increase popularity among young users in China byoffering attractive features and services 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 Qunarretrieves ticket avai

96、lability information in order to generate comprehensive and accurate flight information on its platform;Failure to maintain and strengthen relationships with online travel agents that are Qunars existing customers,and establish new customerrelationships with other online travel agents and travel ser

97、vice providers to ensure that it has access to a steady supply of travel productinformation on favorable commercial terms;Failure to adequately monitor and secure service quality of travel service providers on its platform,and address user dissatisfaction with travelservice providers;Consolidation o

98、f the results of operations of Qunar.Qunar historically incurred net loss and our consolidation of Qunars financial statementshad negatively impacted our financial statements previously;Consolidation of the fragmented travel market in China,which may result in travel service providers becoming fewer

99、 but larger,comprehensivetravel 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 compelling user experien

100、ce ofonline travel searches,maintaining the quality of its services,and preserving Qunars reputation and goodwill in the event of negative mediapublicity toward its services,internet security or other issues affecting Qunar or online travel businesses in China.6Table of Contents If Qunar is unable t

101、o successfully implement and execute its strategies to maintain competitiveness and grow its business,or effectively address risksand uncertainties associated with its business operations and transitioning efforts,our business,results of operations and financial condition may bematerially and advers

102、ely affected.Our transactions involving issuance of our shares as consideration and investment or financing arrangements with selected third-party investment entitiesmay result in substantial dilution to our shareholders and may also reduce our existing cash balance and adversely affect our working

103、capital.In the long-term interest of our company,we make investments,in the form of limited partnership contributions,assets injection or other financingarrangements,into or with certain entities that are dedicated to investing businesses in China.We agreed to make certain investments,in the form of

104、 limitedpartnership contribution or other financing arrangements,in several non-U.S.investment entities,amounting to an aggregate fair value of approximatelyUS$2.9 billion and US$0.4 billion in 2016 and 2017.These entities are managed or owned by parties unaffiliated with each other and unaffiliated

105、 with usand are dedicated to investing in businesses in China.These investment entities have spent the proceeds of our investments to acquire the equity interest inQunar that were not held by us through privately negotiated transactions.Under U.S.GAAP,we consolidate the financial statements of these

106、 investmententities from an accounting perspective.These investments,capital contributions and financing arrangements together with the share exchange with Baiduand issuance of shares for the benefit of Qunar employees historically caused significant dilution to our existing shareholders and impacte

107、d our workingcapital.Transactions involving issuance of a substantial number of our ordinary shares such as the transactions contemplated hereunder may result insubstantial dilution to our shareholders.In addition,future sale of our shares by these non-U.S.investment entities and/or our other signif

108、icant shareholderssuch as Baidu may cause our share price to decline.Furthermore,if we obtain debt financings,we may be subject to restrictive covenants limiting orrestricting our ability to take specific actions,such as incurring additional debt,making capital expenditures or declaring dividends.Se

109、e“Item 4.B.Information on the CompanyBusiness OverviewStrategic Investments 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 andadverse effect on our business,and may materially and adversely

110、 affect our growth and profitability.The global macroeconomic environment is facing challenges,including the escalation of the European sovereign debt crisis since 2011,the end ofquantitative easing by the U.S.Federal Reserve,the economic slowdown in the Eurozone in 2014,and the slowdown of the Chin

111、ese economy since 2012.There have been concerns over unrest in the Middle East and Africa,which have resulted in volatility in oil and other markets,and over the expansion ofterrorist activities into Europe and other regions.In June 2016,British citizens voted in a referendum to withdraw the members

112、hip of the United Kingdomfrom the European Union.The result of the vote caused instant and significant volatility in the global financial and securities markets.The variousuncertainties in the political and economic situations of the United Kingdom and the European Union arising from the anticipated

113、 withdrawal may have anegative and prolonged impact on the global economy.Economic conditions in China are sensitive to global economic conditions.Our business and operations are primarily based in China and themajority of our revenues are derived from our operations in China.Accordingly,our financi

114、al results have been,and are expected to continue to be,affectedby the economy and travel industry in China.While the economy in China has grown significantly over the past decades,growth has been uneven,bothgeographically and among various sectors of the economy,and the rate of growth has been slow

115、ing.Recent changes in U.S.trade policies,including newtariffs on imports from China generally,and reactions by a number of markets including China in response to these U.S.actions,may have a material adverseeffect on global economic conditions and the stability of global financial markets,and they m

116、ay significantly reduce global trade and,in particular,tradebetween China and the United States.Since we derive the majority of our revenues from accommodation reservation,transportation ticketing,and packaged-tour services in China,any severe or prolonged slowdown in the global or Chinese economy o

117、r the recurrence of any financial disruptions could reduceexpenditures for travel,which in turn may adversely affect our business operating results and financial condition in a number of ways.For example,theweakness in the economy could erode consumer confidence which,in turn,could result in changes

118、 to consumer spending patterns relating to travel productsand services.If consumer demand for travel products and services we offer decreases,our revenues may decline.Furthermore,continued turbulence in theinternational markets may adversely affect our ability to access the capital markets to meet l

119、iquidity needs.7Table of Contents General declines or disruptions in the travel industry may materially and adversely affect our business and results of operations.Our business is significantly affected by the trends that occur in the travel industry in China,including the hotel,transportation ticke

120、ting andpackaged-tour sectors.As the travel industry is highly sensitive to business and personal discretionary spending levels,it tends to decline during generaleconomic downturns.The recent worldwide recession has led to a weakening in the demand for travel services.Other trends or events that ten

121、d to reducetravel and are likely to reduce our revenues include:terrorist attacks or threats of terrorist attacks or wars,particularly given the terrorist attacks in Paris and the worsening situation in Syria;an outbreak of H1N1 influenza,Ebola virus,avian flu,Middle East respiratory syndrome,or MER

122、S,severe acute respiratory syndrome,orSARS,or any other serious contagious diseases;increasing prices in the hotel,transportation ticketing,or other travel-related sectors;increasing occurrence of travel-related accidents;political unrest;natural disasters or poor weather conditions;and any travel r

123、estrictions or other security procedures implemented in connection with any major events in China.We could be severely and adversely affected by declines or disruptions in the travel industry and,in many cases,have little or no control over theoccurrence of such events.Such events could result in a

124、decrease in demand for our travel services.This decrease in demand,depending on the scope andduration,could significantly and adversely 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 co

125、nnection with our strategic acquisitions and investments,and wemay incur material impairment charges to our goodwill and indefinite lived intangible assets if the recoverability of these assets become substantiallyreduced.In connection with our strategic acquisitions over the recent years,we recorde

126、d a significant amount of goodwill and indefinite lived intangibleassets booked in our financial statements.As of December 31,2018,our goodwill was RMB58.0 billion(US$8.4 billion)and our indefinite lived intangibleassets were RMB11.8 billion(US$1.7 billion).In 2015,our acquisition of Qunar securitie

127、s resulted in a RMB43.0 billion increase in our goodwill.ASC 350“IntangiblesGoodwill and Other”provides that intangible assets that have indefinite useful lives and goodwill will not be amortized but rather will betested at least annually for impairment.ASC 350 also requires that long-lived assets b

128、e reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount of an asset may not be recoverable from its undiscounted future cash flow.For 2016,2017 and 2018,we did not recognizeany impairment charges for goodwill or intangible assets.If different judgments

129、or estimates had been utilized,however,material differences could haveresulted in the amount and timing of the impairment charge.We may potentially incur significant impairment charges if the recoverability of these assetsbecome substantially reduced in the future.Any such impairment charges would a

130、dversely affect our results of operations 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 2018,th

131、e trading prices of our ADSs on the NasdaqGlobal Select Market have ranged from US$25.00 to US$51.91 per ADS,and the last reported trading price on March 14,2019 was US$41.28 per ADS.Theprice of our ADSs may fluctuate in response to a number of events and factors,including the following:8Table of Co

132、ntents actual or anticipated fluctuations in our 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 pr

133、imarily operate inChina;changes in major business 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 capitalcommitments;negative publicity in connection with our business opera

134、tion;additions or departures of key personnel;and market and volume fluctuations in the stock market in general.In 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

135、 been unrelated to the operating performance of such companies.The securities of some China-based U.S.-listedcompanies have experienced significant volatility since their initial public offerings,including,in some cases,substantial declines in the trading prices oftheir securities.The trading perfor

136、mance of the securities of these China-based U.S.-listed companies after their offerings and the surge in the number ofChina-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 conse

137、quently may impact the trading performance of the ADSs,regardless of our actual operating performance.Furthermore,somenegative news and perceptions about inadequate corporate governance practices or fraudulent accounting,corporate structure including the use of VIEstructures or other matters of othe

138、r China-based U.S.-listed companies have negatively affected the attitudes of investors towards China-based U.S.-listedcompanies,including us,in general in the past,regardless of whether we have engaged in any inappropriate activities,and any news or perceptions with asimilar nature may continue to

139、negatively affect us in the future.In addition,the global financial crisis and the ensuing economic recessions in manycountries have contributed and may continue to contribute to extreme volatility in the global stock markets,such as the large decline in share prices in theUnited States,China and ot

140、her jurisdictions in recent years.These broad market and industry fluctuations may continue to adversely affect the trading priceof the ADSs,regardless of our operating performance.Additionally,volatility or a lack of positive performance in our ADS price may adversely affect ourability to retain ke

141、y employees,all of whom have been granted share-based awards.If we are unable to maintain existing relationships with travel suppliers and strategic alliances,or unable to establish new arrangements with travelsuppliers and strategic alliances at or on favorable terms or at terms similar to those we

142、 currently have,or at all,our business,market share and results ofoperations 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 toconsumers through us,and our business prosp

143、ects depend on our ability to maintain and expand relationships with travel suppliers.If we are unable tomaintain satisfactory relationships with our existing travel suppliers,or if our travel suppliers establish similar or more favorable relationships with ourcompetitors,or if our travel suppliers

144、increase their competition with us through their direct sales,or if any one or more of our travel suppliers significantlyreduce participation in our services for a sustained period of time or completely withdraw participation in our services,our business,market share and resultsof operations may be

145、materially and adversely affected.To the extent any of those major or popular travel suppliers ceased to participate in our services infavor of one of our competitors systems or decided to require consumers to purchase services directly from them,our business,market share and results ofoperations ma

146、y suffer.9Table of Contents Our business depends significantly upon our ability to contract with hotels in advance for the guaranteed availability of certain hotel rooms.We relyon hotel suppliers to provide us with rooms at discounted prices.However,our contracts with our hotel suppliers are not exc

147、lusive and most of the contractsmust be renewed semi-annually or annually.We cannot assure you that our hotel suppliers will renew our contracts in the future on favorable terms or termssimilar to those we currently have agreed.The hotel suppliers may reduce the commission rates on bookings made thr

148、ough us.Furthermore,in order tomaintain and grow our business and to effectively compete with many of our competitors in all potential markets,we will need to establish new arrangementswith hotels and accommodations of all ratings and categories in our existing markets and in new markets.We cannot a

149、ssure you that we will be able toidentify appropriate hotels or enter into arrangements with those hotels on favorable terms,if at all.This failure could harm the growth of our business andadversely affect our operating results and financial condition,which consequently will impact the trading price

150、 of our ADSs.We derive revenues and other significant benefits from our arrangements with major domestic airlines in China and international airlines.Our airlineticket suppliers allow us to book and sell tickets on their behalf and collect commissions on tickets booked and sold through us.Although w

151、e currently havesupply relationships with these airlines,they also compete with us for ticket bookings and have entered into similar arrangements with many of ourcompetitors 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

152、airlines,including four of the largest airlines in China,announced suspension of their respective business cooperation with Qunar without indicating the length ofsuch suspension and cited serious customer complaints in their respective announcements.Although most of these airlines have resumed coope

153、ration withQunar,if any airlines choose to take similar actions against us and additional airlines follow suit,our business,market share and results of operations may bematerially and adversely affected.We cannot assure you that any of these airlines will continue to have supplier relationships with

154、 us or pay us commissionsat the same or similar rates as what they paid us in the past.Further,on July 1,2016,the four largest airlines in China announced that third-party ticketingagents are prohibited from selling tickets for domestic flights on third-party platforms,such as ours.Additionally,on J

155、uly 1,2016,most major domesticairlines also replaced their commissions and rebate incentives completely with a reduced,fixed“admin fee”per ticket.The loss of supplier relationships orfurther adverse changes in major business terms with our travel suppliers would materially impair our operating resul

156、ts and financial condition as we wouldlose an increasingly significant source 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 ourstrategic alliances with various third parties.We cannot assu

157、re you,however,that we will be able to successfully establish and maintain strategic allianceswith 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.If we fail to fu

158、rther increase our brand recognition,we may face difficulty in maintaining existing and acquiring new customers and business partners andour 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 busine

159、sspartners.Some of our potential competitors already have well-established brands in the travel industry.The successful promotion of our brand will dependlargely on our ability to maintain a sizeable and active customer base,maintain relationships with our business partners,provide high-quality cust

160、omerservice,properly address customer needs and handle customer complaints and organize effective marketing and advertising programs.If our customer basesignificantly declines or grows more slowly than our key competitors,the quality of our customer services substantially deteriorates,or our busines

161、s partnerscease to do business with us,we may not be able to cost-effectively maintain and promote our brand,and our business may be harmed.Negative publicity with respect to us or the travel industry in general could impair our reputation,which in turn could materially and adversely affect ourbusin

162、ess,results of operations and price of ADSs.The reputation of our brands is critical to our business and competitiveness.Negative publicity with respect to us or the travel industry in general,from time to time,whether or not we are negligent or at fault,including but not limited to those relating t

163、o our business,products and services,customerexperiences,employee relationships and welfare,compliance with law,financial conditions or prospects,whether with or without merit,could impair ourreputation and adversely affect our business and operating results.Prospective customers may be prevented fr

164、om engaging in transactions with us if there isany negative publicity in connection with the use of our services or products,the operation of our business and other aspects about us.In addition,thenegative publicity of any of our brands may extend far beyond the brand involved,especially due to our

165、comprehensive presences in the travel industry ingeneral,to affect some or all of our other brands.Furthermore,negative publicity about other market players or isolated incidents,regardless of whether or notit is factually correct or whether we have engaged in any inappropriate activities,may result

166、 in negative perception of our industry as a whole and underminethe credibility we have established.Negative developments in the market may lead to tightened regulatory scrutiny and limit the scope of our permissiblebusiness activities.We could lose significant number of customers due to negative pu

167、blicity with respect to us or the travel industry in general,which maymaterially and adversely affect our business,results of operations and price of ADSs.We may incur additional costs to recover from the impact caused by thenegative publicity,which may divert managements attention and other resourc

168、es from our business and operations.If we do not compete successfully against new and existing competitors,we may lose our market share,and our business may be materially and adverselyaffected.We compete primarily with other consolidators of hotel accommodations and transportation reservation servic

169、es based in China,including theplatforms operated by other major internet companies.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 ente

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

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

172、tivelylow entry barriers.10Table of Contents In the past,certain competitors launched aggressive advertising campaigns,special promotions and engaged in other marketing activities topromote their brands,acquire new customers or to increase their market shares.In response to such competitive pressure

173、,we started to take and may continueto take similar measures and as a result will incur significant expenses,which in turn could negatively affect our operating margins in the quarters or yearswhen such promotional activities are carried out.For example,we launched a promotion program in recent year

174、s to offer certain selected transportationtickets,hotel rooms and packaged tours as well as grant of e-coupons to our customers in response to promotion campaigns that our competitors havelaunched.Primarily as a result of the enhanced marketing efforts and additional investment in product developmen

175、ts in response to the intensified marketcompetition,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

176、and strategic relationships and alliances or otherresources or name recognition,and may be able to imitate and adopt our business model.In particular,other major internet platforms may benefit from theexisting user base of their other services.These platforms can utilize the traffic they already obt

177、ain and direct the users from their other services offerings totheir travel services and further achieve synergies effects.We cannot assure you that we will be able to successfully compete against new or existingcompetitors.In the event we are not able to compete successfully,our business,results of

178、 operations and profit margins may be materially and adverselyaffected.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

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

180、ure to maintain 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 orotherwise f

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

182、s or other systems and thedisruption in our services could reduce the volume of our business and make us less attractive to customers.Most of our computer and communicationssystems are located at two of our customer service centers,one in Shanghai,China and the other one in Nantong,China.Our technol

183、ogy platform andcomputer 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 other similarev

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

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

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

187、ns.Inaddition,any such future occurrences could reduce customer satisfaction levels,damage our reputation and materially and adversely affect our business.We use an internally developed booking software system that supports nearly all aspects of our booking transactions.Our business may be harmed if

188、we are unable to upgrade our systems and infrastructure quickly enough to accommodate future traffic levels,avoid obsolescence or successfully integrateany newly developed or purchased technology with our existing system.Capacity constraints could cause unanticipated system disruptions,slower respon

189、setimes,poor customer service,impaired quality and speed of reservations and confirmations and delays in reporting accurate financial and operatinginformation.These factors could cause us to lose customers and suppliers,which would have a material adverse effect on our results of operations andfinan

190、cial condition.11Table of Contents In addition,our future success will depend on our ability to adapt our products and services to the changes in technologies and internet userbehavior.For example,the number of people accessing the internet through mobile devices,including smart devices,mobile phone

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

192、 the interoperabilityof our services with popular mobile devices and mobile operating systems that we do not control,such as Android,iOS and Windows.Any changes in suchmobile operating systems or devices that degrade the functionality of our services or give preferential treatment to competitive ser

193、vices could adverselyaffect usage of our services.Further,if the number of platforms for which we develop our services increases,which is typically seen in a dynamic andfragmented mobile services market such as China,it will result in an increase in our costs and expenses.In order to deliver high qu

194、ality services,it isimportant 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 todevelop products and technologies that are compatible with all mobile devices and operating systems,or if the products and se

195、rvices we develop are notwidely 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 could require significant expenditures

196、 to modify or integrate ourproducts 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 severely disrupted if we lose their s

197、ervices.Our future success depends heavily upon the continued services of our key executives.We rely on their expertise in business operations,finance andtravel services and on their relationships with our suppliers,shareholders and business partners.We do not maintain key-man life insurance for any

198、 of our keyexecutives.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.Inthat case,our business may be severely disrupted,we may incur additional expenses to recruit and train personnel and our financial con

199、dition and results ofoperations 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 ourexecutive officers has entered into an employment agreement with us that contains confide

200、ntiality and non-competition provisions.If any disputes arisebetween 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 theseexecutive officers reside and hold most of their assets,in light of the uncertainties w

201、ith Chinas legal system.See“Item 3.D.Key InformationRisk FactorsRisks Related to Doing Business in ChinaUncertainties with respect to the PRC legal system could adversely affect us.”If we are unable to attract,train and retain key individuals and highly skilled employees,our business may be adversel

202、y affected.If our business continues to expand,we will need to hire additional employees,including travel supplier management personnel to maintain andexpand our travel supplier network,information technology and engineering personnel to maintain and expand our mobile platform,websites,customerservi

203、ce centers and systems and customer service representatives to serve an increasing number of customers.If we are unable to identify,attract,hire,trainand retain sufficient employees in these areas,users of our mobile platform,websites and customer service centers may not have satisfactory experience

204、s andmay turn to our competitors,which may adversely affect our business and results of operations.The PRC government regulates the air-ticketing,travel agency,and internet industries.If we fail to obtain or maintain all pertinent permits and approvalsor if the PRC government imposes more restrictio

205、ns 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 approvalsfrom different regulatory authorities to conduct our business,including separate licenses for va

206、lue-added telecommunications,air-ticketing,travel agencyand internet-related 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 of operations in these regulated businesses,which could s

207、everely disrupt our business operations.As a result,our financialcondition and results of operations may be adversely affected.In particular,the Civil Aviation Administration of China,or CAAC,together with National Development and Reform Commission,or NDRC,regulates pricing of air tickets.CAAC also

208、supervises commissions payable to air-ticketing agencies together with China Air Transport Association,orCATA.If restrictive policies are adopted by CAAC,NDRC,or CATA,or any of their regional branches,our air-ticketing revenues may be adversely affected.12Table of Contents Furthermore,we provide onl

209、ine consumer finance services incidental to our core businesses.Due to the relatively short history of Chinas onlineconsumer finance industry,the PRC government is still in the process of establishing a comprehensive regulatory framework governing this industry.Therelevant rules and regulations gove

210、rning this industry are general in nature and yet to be further interpreted or supplemented.In addition,we may have tomake significant changes to our operations from time to time in order to comply with changing laws,regulations and policies governing the online consumerfinance industry,which may in

211、crease our cost of operation or limit our options of service offering,which in turn may adversely affect our results ofoperations.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,t

212、rademarks and similar intellectual property as critical to our success.We try to protect our intellectualproperty rights by relying on trademark protection and confidentiality laws and contracts.Trademark and confidentiality protection in China may not be aseffective as that in the United States.Pol

213、icing unauthorized use of proprietary technology is difficult and expensive.The steps we have taken may be inadequate to prevent the misappropriation of our proprietary technology.Any misappropriation could have anegative effect on our business and operating results.Furthermore,we may need to go to

214、court to enforce our intellectual property rights.Litigation relatingto our intellectual property might result in substantial costs and diversion of resources and management attention.See“Item 3.D.Key Information RiskFactors Risks Related to Doing Business in China Uncertainties with respect to the

215、PRC legal system could adversely affect us.”We rely on services from third parties to carry out our business and to deliver our products to customers,and if there is any interruption or deterioration inthe quality of these services,our customers may not continue using our services.We rely on third-p

216、arty computer systems to host our websites,as well as third-party licenses for some of the software underlying our technologyplatform.In addition,we rely on third-party transportation ticketing agencies to issue transportation tickets and travel insurance products,confirmations anddeliveries in some

217、 cities in Greater China.We also rely on third-party local operators to deliver on-site services to our packaged-tour customers.Anyinterruption in our ability to obtain the products or services of these or other third parties or deterioration in their performance,such as server errors orinterruption

218、s,or dishonest business conduct,could impair the timing and quality of our own service.If our service providers fail to provide high qualityservices in a timely manner to our customers or violate any applicable rules and regulations,our services will not meet the expectations of our customers andour

219、 reputation and brand will be damaged.Furthermore,if our arrangement with any of these third parties is terminated,we may not find an alternative sourceof support on a timely basis or on favorable terms to us.If our hotel suppliers or customers provide us with untrue information regarding our custom

220、ers stay,we may not be able to recognize and collect revenuesto which we are entitled.We generate majority of our accommodation reservation revenues through commissions from hotels,which depend on the room nights bookedthrough us.To confirm whether a customer adheres to the booked itinerary,we routi

221、nely 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 forcalculating the commission we are entitled to receive from the hotel.If our hot

222、el suppliers or customers provide us with untrue information with respect to ourcustomers 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 leadto inaccurate business projections and plans,which may adversely

223、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 travel service suppl

224、iers,in order tosecure adequate supplies for our customers.In merchant business relationships,we buy hotel rooms and/or transportation tickets before selling them to ourcustomers and thereby incur inventory risk.As we expanded our merchant business in 2018,partially attributable to our packaged-tour

225、 products,ourdemands also increased correspondingly.If we are unable to correctly predict demand for hotel rooms and transportation tickets that we are committed topurchase,we would be responsible for covering the cost of the hotel rooms and transportation tickets we are unable to sell,and our finan

226、cial condition andresults of operations would be adversely affected.13Table of Contents The recurrence of SARS or other similar outbreaks of contagious diseases as well as natural disasters may materially and adversely affect our business andoperating results.In early 2003,several regions in Asia,in

227、cluding Hong Kong and China,were affected by the outbreak of SARS.The travel industry in China,HongKong 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 ofChina and particularly affected southern China.T

228、he travel industry was severely and adversely affected during and after the snowstorms.Additionally,inMay 2008,a major earthquake struck Chinas populous Sichuan Province,causing great loss of life,numerous injuries,property loss and disruption to thelocal economy.The earthquake had an immediate impa

229、ct on our business as a result of the sharp decrease in travel in the relevant earthquake-affected areas inSichuan Province.In 2009,an outbreak of H1N1 influenza(swine flu)occurred in Mexico and the United States and human cases of the swine flu werediscovered in China and Hong Kong.In March 2011,a

230、powerful earthquake hit Japan,and the subsequent tsunami and nuclear accidents had far-reachingimpact on the surrounding economies.Starting from March 2013,H7N9 bird flu,a new strain of animal influenza,has been spreading in China and hasinfected more than a hundred people.In October 2013,large scal

231、e political protests began in Thailand that lasted several months and caused disruption totourism and travel.In November 2013,one of the largest typhoons ever recorded hit the Philippines,causing widespread devastation.In March 2014,theWorld Health Organization reported a major Ebola outbreak in Gui

232、nea,a western African nation.The disease then rapidly spread to the neighboring countriesof Liberia and Sierra Leone.As of February 3,2015,22,560 suspected cases and 9,019 deaths had been reported;however,the World Health Organization hassaid that these numbers may be underestimated.In June 2015,an

233、outbreak of Middle East respiratory syndrome,or MERS,affected South Korea,one of ourpopular overseas travel destinations.Any future outbreak of contagious diseases,extreme unexpected bad weather or natural disasters would adversely affect our business and operatingresults.Ongoing concerns regarding

234、contagious disease or natural disasters,particularly its effect on travel,could negatively impact our customers desire totravel.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 regardi

235、ng,or restrictions on,travel to and from these and other regions on account of an outbreak of any contagious disease or occurrenceof 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 repeal

236、ed,our results of operations could suffer.Under the PRC Enterprise Income Tax Law and the relevant implementation rules,or the EIT Law,effective on January 1,2008,foreign-investedenterprises,or FIEs,and domestic enterprises are subject to EIT at a uniform rate of 25%.Certain enterprises will benefit

237、 from a preferential tax rate of 15%under the EIT Law if they qualify as“high and new technology enterprises,”or HNTEs,or if they are located in applicable PRC regions as specified in theCatalogue of Encouraged Industries in Western Regions,or the Western Regions Catalogue,subject to certain general

238、 restrictions described in the EIT Lawand the related regulations.In December 2008 and 2009,some of our PRC subsidiaries,Ctrip Computer Technology,Ctrip Travel Information,Ctrip Travel Network and QunarSoftware,and one of our consolidated affiliated Chinese entities,Qunar Beijing,were each designate

239、d by relevant local authorities as a HNTE under the EITLaw 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 theirqualifications for HNTEs that are subject to verification by competent authorities and ren

240、ewals every three years.The qualifications of these entities asHNTEs have been renewed and will expire by the end of 2019 or 2020.We cannot assure you that our subsidiaries and the consolidated affiliated Chineseentity will continue to qualify as HNTEs when they are subject to reevaluation in the fu

241、ture.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 Western RegionsCatalogue are eligible to apply for a preferential income tax rate of 15%if their busines

242、ses fall within the“encouraged”category of the policy and therevenue derived from such“encouraged”businesses accounts for more than 70%of the total revenue.Benefiting from this policy,Chengdu Ctrip andChengdu Ctrip International obtained approval from local tax authorities to apply the 15%tax rate f

243、or their annual tax filing subject to periodic renewalsover the years since 2012.After the initial effective period expired in 2014,the two entities were approved by the relevant government authority to renewthis qualification,which will expire in 2020.In 2013,Chengdu Information Technology Co.,Ltd.

244、,or Chengdu Information,obtained approval from local taxauthorities 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 treatment for theseentities is discontinued,these entities will become subject to the standard tax rate at 2

245、5%,which would materially increase our tax obligations.14Table of Contents We have sustained losses in the past and may experience earnings declines or net losses in the future.We sustained net losses in certain past periods,and we cannot assure you that we can sustain profitability or avoid net los

246、ses in the future.We expectthat our operating expenses will increase and the degree of increase in these expenses is largely based on anticipated growth,revenue trends and competitivepressure.As a result,any decrease or delay in generating additional sales volume and revenues and increase in our ope

247、rating expenses may result insubstantial operating losses.Moreover,consolidation of Qunars financial statements starting from December 31,2015 had negatively impacted our financialstatements previously,which may happen again in the future.See“Item 3.D.Key InformationRisk FactorsRisks Relating to Our

248、 CompanyConsolidation of the results of operations of Qunar with ours may negatively impact our financial performance and results of operations.”We have incurred substantial indebtedness and may incur additional indebtedness in the future.We may not be able to generate sufficient cash to satisfyour

249、outstanding and future debt obligations.As of December 31,2018,our total short-term bank borrowings and long-term bank borrowings(current portions)were RMB25.1 billion(US$3.6billion),our total long-term borrowings(excluding current portions)were RMB8.0 billion(US$1.2 billion),the aggregate principal

250、 amount of ouroutstanding convertible notes was US$3.8 billion(RMB26.5 billion),and our securitization debt was RMB608 million(US$88 million).To the extent thatwe were to settle or redeem our convertible notes in cash,our debt obligations would become more substantial.Our substantial indebtedness co

251、uld have important consequences to you.For example,it could:increase our vulnerability to adverse general economic and industry conditions;require us to dedicate a substantial portion of our cash flow from operations to servicing and repaying our indebtedness,thereby reducing theavailability of our

252、cash flow to fund working capital,capital expenditures and other general corporate purposes;and limit,along with the financial and other restrictive covenants of our indebtedness,among other things,our ability to conduct additionalfinancing activities,or increase the cost of additional financing.We

253、may from time to time incur additional indebtedness and contingent liabilities.If we incur additional debt,the risks that we face as a result of oursubstantial indebtedness and leverage could intensify.For example,since 2018,we entered into asset backed securitization arrangements with third-partyfi

254、nancial institution and set up a securitization vehicle which issued revolving debt securities to third party investors.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 prevailin

255、g economic conditions and financial,business and other factors,many of which are beyond our control.As a result,wemay 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 administrat

256、ive proceedings regarding information provided on our online portals or other aspects of our businessoperations,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 thatif

257、 any information accessible on our online portals contains errors or false or misleading information,third parties could take action against us for lossesincurred 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 ora

258、dministrative proceedings arising in the ordinary course of our business,including actions with respect to labor and employment claims,breach of contractclaims,anti-competition claims,and other matters.Although such proceedings are inherently uncertain and their results cannot be predicted with cert

259、ainty,we believe that the resolution of our current pending matters will not have a material adverse effect on our business,consolidated financial position,results ofoperations,or cash flow.Regardless of the outcome and merit of such proceedings,however,any legal action can have an adverse impact on

260、 us because ofdefense costs,negative publicity,diversion of managements attention,and other factors.In addition,it is possible that an unfavorable resolution of one ormore legal or administrative proceedings,whether in China or in another jurisdiction,could materially and adversely affect our financ

261、ial position,results ofoperations or cash flows in a particular period or damage our reputation.15Table of Contents 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 rega

262、rding information security and privacy,including the storage,transmission and sharing ofconfidential information.In recent years,PRC government authorities have enacted legislation on internet use to protect personal information from anyunauthorized disclosure.See“Item 4.B.Information on the Company

263、Business OverviewPRC Government Regulationsinternet Privacy.”We conducta significant portion of our transactions through the internet,including our mobile platform and websites.In such transactions,secured transmission ofconfidential information(such as customers itineraries,hotel and other reservat

264、ion information,credit card information,personal information,and billingaddresses)over public networks and ensuring the confidentiality,integrity,availability,and authenticity of the information of our users,customers,hotelsuppliers,and airline partners are essential to maintaining their confidence

265、in our online products and services.Our current security measures may not beadequate and may contain deficiencies that we fail to identify,and advances in technology,increased levels of expertise of hackers,new discoveries in thefield of cryptography or others could increase our vulnerability.For ex

266、ample,a third-party website with focus on internet security information exchangereleased news in March 2014 that as a result of a temporary testing function performed by us,certain data files containing customers credit card informationhad been stored on local servers maintained by us,which may lead

267、 to potential exposure of these customers information to hackers.We removed the cause ofthe potential security concern within two hours of the release of the news report and then examined all other possible leaks and found that 93 customerscredit card information might have been downloaded by the ab

268、ove-mentioned website for the purpose of confirming potential risks.Although to ourknowledge,no customer has suffered financial loss or other damage from the incident as of the date of that report,our business,results of operations,userexperience,and reputation may be materially and adversely affect

269、ed if similar incidents related to internet security recur in the future.In August 2011,thePRC Supreme Peoples Court and the PRC Supreme Peoples Procuratorate issued judicial interpretations regarding hacking and other internet crimes.However,its effect on curbing hacking and other illegal online ac

270、tivities still remains to be seen.Significant capital,managerial and human resources are required to enhance information security and to address any issues caused by securityfailures.If we are unable to protect our systems and the information stored in our systems from unauthorized access,use,disclo

271、sure,disruption,modificationor 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.Our failure to comply with privacy

272、 and data protection laws and regulations in various jurisdictions could subject us to sanctions,damages,and litigation,and could harm our reputation and business.We collect and process certain personal data of our users,including email addresses,usage data,identification information,user passwords

273、andadditional information.We also collect and process user billing information,such as credit card numbers,full names,billing addresses and phone numbers ofour users.We are subject to the privacy and data protection laws and regulations in various jurisdictions,including China,European Union and Kor

274、ea.Privacylaws provide restrictions and guidance in connection with our storage,use,processing,disclosure,transfer and protection of personal information.We striveto comply with all applicable laws,regulations,policies relating to privacy and data protection.We are also subject to privacy and data s

275、ecurity-relatedobligations deriving from our privacy policy and terms of use with our users,and we may be liable to third parties in the event we are deemed wrongfullyprocessed personal data.European Union traditionally takes a broader view as to what is considered personal information and has impos

276、ed greater obligations under theirprivacy and data protection laws.In particular,the European Union adopted a new General Data Protection Regulation in April 2016,which became effectivein May 2018.The General Data Protection Regulation results in more stringent requirements for data processors and c

277、ontrollers,including more fulsomedisclosures about the processing of personal information,data retention limits,and deletion requirements,mandatory notification in the case of a data breach,and elevated standards regarding valid consent in some specific cases of data processing.The General Data Prot

278、ection Regulation also includes substantiallyhigher penalties for failure to comply with the requirements.For example,in the event of violations,a fine up to 20 million or up to 4%of the annualworldwide turnover,whichever is greater,may be imposed.In addition to General Data Protection Regulation,wh

279、en other future laws and regulations comeinto effect,the more stringent requirements on privacy user notifications and data handling will require us to adapt our business and incur additional costs.16 Table of Contents Privacy concerns are becoming more widely acknowledged and may cause our users to

280、 resist providing the personal data necessary to allow them touse our platform effectively.We have implemented multiple measures and security protocols to maintain and improve our privacy protection capability.However,measures we have implemented may not alleviate all potential privacy concerns and

281、threats.In addition,a failure by us or a third-party contractorproviding services to us to comply with applicable privacy and data security laws,regulations,obligations,or our terms of use with our users,may result insanctions,statutory or contractual damages or litigation.These violations or procee

282、dings may,among other things,force us to spend money in defense orsettlement,result in the imposition of monetary liability or restrict access to our services from certain territory,which could adversely affect our reputationand business.We may be the subject of detrimental conduct by third parties,

283、including complaints to regulatory agencies,negative blog postings,and the publicdissemination of malicious assessments of our business,which could have a negative impact on our reputation and cause us to lose market share,travelsuppliers,customers and revenues,and adversely affect the price of our

284、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 businessethics.Additional

285、ly,allegations,directly or indirectly against us,may be posted in internet chat-rooms or on blogs or any websites by anyone,whether or notrelated 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 berequired to spen

286、d significant time and incur substantial costs to address such third-party conduct,and we cannot assure you that we will be able toconclusively 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 publicdissemin

287、ation of anonymous allegations or malicious statements about our business,which in turn may cause us to lose market share,travel suppliers andcustomers and revenues and adversely affect the price of our ADSs.Our business is subject to the risks of international operations.We had overseas expansion o

288、f our business over the years and operate our business in many foreign jurisdictions such as European and southeastAsian countries.Compliance with foreign laws and regulations that apply to our international operations increases our cost of doing business in foreignjurisdictions.These laws and regul

289、ations include data privacy requirements,labor relations laws,tax laws,foreign currency-related regulations,anti-competition regulations,prohibitions on payments to governmental officials,market access,import,export and general trade regulations,including but notlimited to economic sanctions and emb

290、argos.Violations of these laws and regulations could result in fines and penalties,criminal sanctions against us,ourofficers or our employees,and prohibitions on the conduct of our business,including the loss of trade privileges.Any such violations could result inprohibitions on our ability to offer

291、 our products and services in one or more countries,could delay or prevent potential acquisitions and could also materiallydamage our reputation,our brand,our international expansion efforts,our ability to attract and retain employees,our business and our operating results.Compliance with these laws

292、 requires a significant amount of management attention and effort,which may divert managements attention from running ourbusiness operations and could harm our ability to grow our business,or may increase our expenses as we engage specialized or other additional resources toassist us with our compli

293、ance efforts.Our success depends,in part,on our ability to anticipate these risks and manage these difficulties.We monitor ouroperations and investigate allegations of improprieties relating to transactions and the way in which such transactions are recorded.Where circumstanceswarrant,we provide inf

294、ormation and report our findings to government authorities,but no assurance can be given that action will not be taken by suchauthorities.In addition,as our business and operation expand in international markets,we could be exposed to increased foreign exchange risks for othercurrencies.We have limi

295、ted business insurance coverage in Greater China.Insurance companies in Greater China offer limited business insurance products and generally do not,to our knowledge,offer business liabilityinsurance.Business disruption insurance is available to a limited extent in Greater China,but we have determin

296、ed that the risks of disruption,the cost of suchinsurance and the difficulties associated with acquiring such insurance make it impractical for us to have such insurance.We do not maintain insurancecoverage for any kinds of business liabilities or disruptions and would have to bear the costs and exp

297、enses associated with any such events out of our ownresources.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 produc

298、ts and services that are important to ourbusiness.However,we cannot assure you that the endorsement from our brand ambassadors or related advertisements will remain effective,that the brandambassadors will remain popular or their images will remain positive and compatible with the messages that our

299、brand and products aim to convey.Furthermore,we cannot assure you that we can successfully find suitable celebrities to replace any of our existing brand ambassadors if any of theirpopularities decline or if the existing brand ambassadors are no longer able or suitable to continue the engagement,and

300、 termination of such engagementsmay have a significant impact on our brand images and the promotion or sales of our products.If any of these situations occurs,our business,financialcondition and results of operations could be materially and adversely affected.17Table of Contents We may face greater

301、risk of doubtful accounts as our business increases in scale.We provide credit terms to our merchant customers,and also extend credit to our users by making payments on behalf of them when they book travelproducts on our platform.Our accounts receivable and other receivable have increased as our bus

302、iness grows.We cannot assure you that we will be able tocollect payment fully and in a timely manner on our outstanding receivables from our merchant customers and users.As a result,we may face a greater risk ofnon-payment of our receivables and,as our business grows in scale,we may need to make hig

303、her provisions for doubtful accounts.For the years endedDecember 31,2016,2017 and 2018,we recognized the provisions for accounts receivables of approximately RMB32 million,RMB98 million and RMB69million(US$10 million),respectively,while the provisions for other receivable were immaterial.Our operati

304、ng results and financial condition may bematerially and adversely affected if we are unable to successfully manage our receivables.Our accounting treatment for share-based compensation could continue to significantly reduce our net income.Since 2006,we have accounted for share-based compensation in

305、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 and other share-based compensation to employees based on therequisite service period of the share-based awards.We have granted share-based co

306、mpensation awards,including share options and restricted share units,toemployees,officers and directors to incentivize performance and align their interests with ours.See“Item 6.B.Directors,Senior Management and Employees Compensation Employees Share Incentive Plans.”As a result of the grants and po

307、tential future grants under our share incentive plans,we had incurredin the past and expect to continue to incur in future periods significant share-based compensation expenses.The amount of these expenses is based on the fairvalue of the share-based awards.Our board of directors has the discretion

308、to change terms of any previously issued share options and any such change may significantly increase theamount of our share-based compensation expenses for the period that the change takes effect as well as those for any future periods.In February 2009,ourboard of directors approved to reduce the e

309、xercise price of all outstanding unvested options that were granted by us in 2007 and 2008 under our 2007 Plan tothe then fair market value of our ordinary shares underlying such options and,in December 2009,our board of directors approved to extend the expirationdates of all stock options granted i

310、n 2005 and 2006 to eight years after the respective original grant dates of these options.As a result of such changes,ourshare-based compensation expense of 2009 reduced our diluted earnings per ADS by US$0.14.In February 2010,our compensation committee approved toextend the expiration dates of all

311、stock options granted in and after 2007 to eight years after the respective original grant dates of these options.As a result ofsuch changes and extensions,our share-based compensation expense of 2010 reduced our diluted earnings per ADS by US$0.06.In addition,with suchchanges and extensions,the app

312、lication of ASC 718 will continue to have a significant impact on our net income.Further,future changes to variousassumptions used to determine the fair value of awards issued or the amount and type of equity awards granted may also create uncertainty as to the amountof future share-based compensati

313、on expense.Changes in accounting standards may affect the results of our operations.We are required to adopt new accounting standards under FASB from time to time.Certain new accounting standards may impose significantdifferent accounting treatments on certain line items on our consolidated financia

314、l statements,which could result in unexpected changes to our results ofoperation.For example,in May 2014,the FASB issued a new accounting standard on the recognition of revenue generated from contracts with customers thatwas designed to create greater comparability for financial statement users acro

315、ss industries and jurisdictions.The core principle of this new standard is that an“entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entityexpects to be entitled in exchange for those goods or service

316、s.”We adopted this new standard,effective from January 1,2018,and applied the fullretrospective transition approach to all contracts,which means that the financial statements for the year ended and as of December 31,2018 were reportedunder this new standard and the financial statements for the years

317、 ended and as of December 31,2016 and 2017 were retrospectively adjusted.The newstandard did not change the presentation of our revenues,which continues to be substantially reported on a net basis.However,the timing of revenuerecognition for certain revenue streams is changed under the new standard.

318、In particular,revenue for accommodation reservation services,which used to berecognized after end-users completed their stays,is now recognized when the reservation becomes non-cancellable.Revenue for packaged-tour services,which used to be recognized when packaged tours were completed,is now recogn

319、ized on the departure date of the tours.18Table of Contents On January 1,2018,we adopted new financial instruments accounting standard ASU No.2016-01,which requires equity investments to be measuredat fair value with subsequent changes recognized in net income,except for those accounted for under th

320、e equity method or requiring consolidation.The newstandard also changes the accounting for investments without a readily determinable fair value and that do not qualify for the practical expedient to estimatefair value.A policy election can be made for these investments whereby investment will be ca

321、rried at cost and adjusted in subsequent periods for anyimpairment or changes in observable prices of identical or similar investments.With the adoption of the new standard,we recognized the changes in fairvalue for all equity investments measured at fair value through net income/(loss).For investme

322、nts in equity securities lacking of readily determinable fairvalues,we elected to use the measurement alternative defined as cost,less impairments,adjusted by observable price changes.The new standard also requiresus to reclassify the accumulated unrealized gain or loss of the equity investments mea

323、sure at fair value that were previously recognized in othercomprehensive income to retained earnings on the date of the adoption.In February 2016,the FASB issued ASU 2016-02,Leases(Topic 842),which requires that a lessee should recognize the assets and liabilities thatarise from operating leases.A l

324、essee should recognize in the balance sheet a liability to make lease payments(the lease liability)and a right-of-use assetrepresenting its right to use the underlying asset for the lease term.For leases with a term of 12 months or less,a lessee is permitted to make an accountingpolicy election by c

325、lass of underlying asset not to recognize lease assets and lease liabilities.If a lessee makes this election,it should recognize leaseexpenses for such lease generally on a straight-line basis over the lease term.The new leases standard also provides lessees with a practical expedient,byclass of und

326、erlying asset,to not separate non-lease components from the associated lease component.If a lessee makes that accounting policy election,it isrequired to account for the non-lease components together with the associated lease component as a single lease component and to provide certaindisclosures.En

327、tities were initially required to adopt the new leases standard using a modified retrospective transition method.Under that transition method,an entity initially applies the new leases standard(subject to specific transition requirements and optional practical expedients)at the beginning of theearli

328、est period presented in the financial statements.In July 2018,the FASB issued ASU 2018-11,which provides another transition method in addition tothe existing transition method by allowing entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effectadjust

329、ment to the opening balance of retained earnings in the period of adoption consistent with preparers requests.The amendments in this Update areeffective for fiscal years beginning after December 15,2018,including interim periods within those fiscal years for public entities.We will adopt this newgui

330、dance for the year ended December 31,2019 and interim periods in the year ended December 31,2019.We estimate approximately RMB800 million toRMB900 million would be recognized as total right-of-use assets and total lease liabilities on our consolidated balance sheet as of January 1,2019.Otherthan dis

331、closed,we do not expect the new standard to have a material impact on our remaining consolidated financial statements.For further details,see“Item 5.A.Operating and Financial Review and Prospects Operating Results Critical Accounting Policy.”As a result ofchanges in accounting standards,our results

332、of operations may be adversely affected.Failure to maintain effective internal control over financial reporting could result in errors in our published financial statements,which in turn could havea material adverse effect on the trading price of our ADSs.We are subject to the reporting obligations

333、under the U.S.securities laws.As required under Section 404 of the Sarbanes-Oxley Act of 2002,the SEChas adopted rules requiring public companies to include a report of management on the effectiveness of such companies internal control over financialreporting in its annual report.In addition,an independent registered public accounting firm for a public company must issue an attestation report on t