Skift Take

With Baidu's might behind it after it took a stake, Qunar has carved out a rather large budget-yet-trusted niche for itself despite fierce competition from national heavyweight Ctrip. Inc., a Chinese online travel company part-owned by Baidu Inc., said first-half revenue doubled as consumers used its website to search for more deals on tickets and hotels, generating higher advertising sales.

Collaboration with Baidu aided growth in user traffic at Qunar, Chief Executive Officer CC Zhuang said in a phone interview yesterday. Sales and usage of Qunar’s website doubled in the first half, Zhuang said, declining to provide figures.

Qunar’s business is weathering the economic slowdown in China and increased competition from online travel rivals including International Ltd., Zhuang said. Similar to the U.S. website operator Kayak Software Corp., Qunar operates a travel search-engine for consumers and sells paid web-links to customers including airlines and hotels.

“This is one of the best years we’ve had,” Zhuang said. “Last year we more than doubled, it’s likely we will continue this very strong growth this year,” he said, referring to revenue. He declined to provide a forecast for full-year sales.

Baidu, China’s biggest search-engine company, last year paid $306 million to acquire a majority stake in Qunar for its biggest acquisition. Qunar, founded in 2005, means “Where do you want to go?” in Chinese.

Ctrip, based in Shanghai, last week said second-quarter profit fell 55 percent to 120 million yuan ($19 million), after spending on product development increased. Ctrip started “intensified marketing campaigns” to attract new users, the company said at the time.

“So far we’ve seen no impact,” Zhuang said, when asked about the effect of the Ctrip campaign on Qunar’s business.

Baidu fell 0.6 percent to $120.52 in New York trading yesterday, while Ctrip dropped 1 percent to $12.48.

Slower economic growth in China may make consumers more inclined to search for travel deals on online sites such as Qunar, according to Ben Cavender, associate principal at China Market Research Group in Shanghai.

“People are definitely going to be more cost-conscious,” Cavender said. “People are becoming more comfortable about doing online bookings, and I think we’ll see Qunar and other sources of tickets and hotels start to do really well.”

China’s economy grew 7.6 percent in the second quarter from a year earlier, the slowest expansion in three years.

Passengers flying on domestic airlines in China may increase 54 percent to 450 million by 2015, from 292 million last year, according to a projection by China Market Research Group.

Following the investment from Baidu, Qunar accelerated the rollout of a free software tool to travel service providers, to allow them to market and sell their products to Qunar users, Zhuang said. The proprietary technology has helped improve service to Qunar users, he said.

Editors: Khalid Qayum, Joshua Fellman. To contact the reporter on this story: Mark Lee in Hong Kong at [email protected]. To contact the editor responsible for this story: Michael Tighe at [email protected]


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Tags: china, ctrip, qunar

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