A Major Search Engine Is Shaking Up Online Travel, But It’s In China

Anyone disappointed that Google hasn’t done more with Google Flight Search or Google Hotel Finder need just look to China to point to a dominant general search engine, Baidu, that is shaking up online travel.

For now, it is happening by proxy. In July 2011, Baidu paid $306 million to take a majority stake in Qunar, a travel metasearch-like site that has been tearing it up after raising $167 million in an IPO on Nasdaq in November.

Qunar boasts the largest site traffic in online travel in China, and its stock price has been soaring of late to the detriment of chief rival Ctrip, a publicly traded online travel agency with a different business model.

Qunar says it aggregates content from “tens of thousands” of travel service providers through an SaaS platform and display advertising, using pay-for-performance and cost-per-click models.

The latest share-price spike occurred after Qunar reported that it notched a single-day record for air-ticket bookings, and its mobile hotel bookings reached 50% of total hotel bookings.

Qunar also owns a mobile-taxi booking service, Cheche, which has expanded to 42 cities in China.

Mobile hotel bookings are a strategic imperative for travel companies in China and beyond, but Qunar’s advancement in flight bookings is particularly troublesome for Ctrip because until now the competition between Qunar and Ctrip has mostly been about hotels.

Qunar has thus managed to open a new front in its competition with Ctrip.

The two companies have ongoing battles that pre-date the latest developments as Qunar alleges that Ctrip has prevented travel service providers doing business with Ctrip to also work with Qunar.

Qunar, meanwhile, is on a roll as its share price hit $29.92 at the January 3 close, and that amounted to a 99.46% increase over its November 1 debut at $15 per share.

Ctrip, which has a partnership with Booking.com, is considered the largest player in online travel in China, but Qunar is making its presence felt.

Among many other players, Qunar also competes with the travel channel of Taobao.com, and Expedia Inc.’s eLong.

Qunar says it operates independently of its controlling shareholder, Baidu.

If Qunar is changing the dynamics of online and mobile travel in China, the marketplace could be in for additional changes starting in July, when a Baidu noncompete agreement with Qunar expires.

Among the risk factors Qunar cited last September for its then-pending IPO, it stated: “Once this non-compete agreement expires and if Baidu decides to enter into the same business as ours, our competitive landscape may change, and we may face increased competition.”