Priceline and Ctrip Are Almost Second Cousins Now, Priceline CEO Says

Priceline Group CEO Darren Huston says his company and Ctrip now have a much-closer relationship than a typical “arms-length relationship.”

“We are almost second cousins,” Huston said somewhat whimsically, adding that the two companies are definitely not married. He was speaking during the Priceline Group’s second quarter earnings call August 11.

Priceline agreed to invest $500 million in the Chinese booking giant, the largest online travel agency in the country, to take a 10% stake and will get “observer” status on the Ctrip board.

Huston said the minority stake is appropriate “in the North Asian context,” and is likely the latest of a series of moves that the Priceline Group envisions taking in China over the next few years.

“Five or ten years down the road it will be hard to say you are global if you are not big in China,” Huston says.

Chinese bookers are one of the fastest-growing customers as a group on Priceline’s Booking.com and Agoda businesses, Huston said.

With the ratcheting up of the Priceline-Ctrip partnership, which began a couple of years ago, Booking.com and Agoda will get increased branding when Ctrip customers book hotels from Booking.com and Agoda.

Huston said another new wrinkle will be that Priceline Group customers traveling to China will get access to Ctrip’s domestic China hotel inventory.

This will all add to the Priceline Group’s current access to 525,000 hotels, vacation rentals and other lodging options, a 58% increase year over year. Some 190,000 of those properties are vacation rentals and other non-hotel choices.

In other news, the Priceline Group announced that its OpenTable unit launched its Pay With OpenTable mobile payment solution in New York, supplementing a recent launch in San Francisco, and will add 20 additional new U.S. market throughout the rest of 2014.

With the OpenTable mobile payments solution, users can pay their restaurant check through the OpenTable app.

Priceline CFO Dan Finnegan said the company will invest in OpenTable in the third quarter and subsequent quarters to spur international expansion, and that those investments plus offline advertising will be a foundation for future growth.

The Priceline Group completed its $2.6 billion acquisition of dining reservations platform OpenTable on July 24.

On the financial front, the Priceline Group’s room nights sold in the second quarter increased 29% to 90 million. That was a dead heat with Expedia Inc., which saw its room nights jump 28%.

In the past few years, Expedia had a tough time keeping up with the pace of the Priceline Group’s room night growth, but that seems to be changing.

The Priceline Group also just edged out Expedia Inc. in gross bookings for the quarter, $13.5 billion versus $13.04 billion for Expedia Inc.

The Priceline Group increased its net income for the second quarter increase year over year 31.8%% to $576 million. Revenue was up 12% to $1.88 billion.

In the U.S., while Priceline.com saw a 21% year over year increase in gross bookings, its opaque offerings, Express Deals and Name Your Own Price, were down because of the tight availability of inventory from supplier partners.