The Takeoff Episode 03: Why Team and Culture Matter for Travel Startups Sponsored This content is created collaboratively with one of our sponsors.
This script is getting very familiar. There is a helluva competition going on in China’s online, mobile and call center travel businesses, and the biggest players (Ctrip, Qunar, eLong and now Taobao Travel) are coming to the U.S. to raise some big bucks, intensifying the competition.
China’s marketplace site Alibaba is vetting bankers and proceeding closer to a U.S. IPO that could net it $15 billion in proceeds, and such an injection of funds could greatly strengthen the competitive juices of Alibaba’s already formidable Taobao Travel.
As Alibaba proceeds on a path toward a U.S. IPO, published reports value the company at $140 billion, and its IPO proceeds could be gargantuan — $15 billion.
Alibaba has been investing in the travel vertical of its Taobao Marketplace and Taobao Mall, which had fiscal 2013 sales of $16 billion, and in 2013 Alibaba invested tens of millions of dollars in China outbound travel site Qyer.com and 117go.com.
As far back as 2011, Tabao disclosed that its travel gross bookings came in at $1.73 billion, according to China Internet Watch, and the majority of it was for airline ticket sales.
Taobao Travel offers flights, hotels and packages, and and in addition to its website, Taobao Travel features its Android and iPhone apps. Taobao Travel already is mentioned in the same conversation with China travel powerhouses such as Ctrip, eLong (owned by Expedia) and Qunar.
In the prelude to its 2013 IPO, Qunar stated that its “major competitors include major travel OTAs in China such as Ctrip and e-commerce websites such as the travel channel of Taobao.”
PhoCusWright projects that online travel bookings in China will double to more than $30 billion from 2012 to 2015, adding that “Qunar and other metasearch engines are inserting themselves into the booking process, while shopping mall sites like Taobao and Jingdong are increasing their profiles with consumers and suppliers.”
PhoCusWright states that one in five Chinese travelers typical use an online shopping mall such as Taobao for shopping.
Depending on market conditions, which are always a huge wildcard, the Alibaba IPO is tentatively on track for the third quarter of 2014.
Yahoo has a 24% stake in Alibaba and is looking to reduce its equity in Alibaba through the IPO.
Yahoo itself has a potentially very valuable travel asset in Yahoo Travel, currently powered through the Orbitz-owned Travelocity Partner Network. However, Yahoo Travel has been neglected in recent years.