March 28, 2013

Ctrip rumored to take over Kuxun from TripAdvisor


Ctrip, China's biggest online travel service provider, is in talks to acquire Kuxun.cn, an air ticket and hotel search and price comparison site, Beijing Business News reported. Analysts say the acquisition will make up for Ctrip's disadvantage in search technology and will compromise Kuxun's impartiality.

The latest from the China tech rumor mill is that online travel giant Ctrip is in talks to acquire travel services search engine Kuxun, currently owned by TripAdvisor. These stories should always be met with a healthy dose of skepticism, but such a purchase would make sense for Ctrip, which since last year has been on a spending spree to shore-up its position in a rapidly-changing and more cutthroat market.

Last year was a turning point for Ctrip as the barrier to entry into the online travel sector became low enough for many smaller and arguably more innovative upstarts to start nipping at its heels; while large Internet players such as Baidu, Tencent, 360buy and Alibaba Group rallied to elbow in on the market.

This led to a vicious price war, with Ctrip earmarking $500 million in the middle of the year for marketing and promotions. Rumors of possible acquisitions also flew, some of which - such as its purchase of luxury travel operator Trip TM - turned out to be true. By the end of the year, Ctrip's financials had taken a bruising, with income from operations down 39 percent for 2012 to 655 million yuan ($105.45 million).

It's not surprising more entrants are jumping into the field - online travel has huge potential in China, particularly outside of first-tier cities where the middle class is beginning to spend increasingly on holidays. The market is expected to show growth of around 500 percent over the period 2008 to 2013 to reach $15 billion. Meanwhile, traffic to travel websites is growing around six times faster than overall Web traffic growth, with the former category up 40 percent year-on-year in the second quarter of 2012 compared to 7 percent growth for the latter.

Get the full story at China's Global Times

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