China’s Qunar and Baidu Work Like Hand and Glove with $300 Million Credit Line

China’s hybrid travel site Qunar and its controlling shareholder, Baidu, the country’s largest search engine, are cooperating deeply to build Qunar’s already large travel business.

Qunar announced yesterday that it signed a three-year $300 million revolving credit agreement with Baidu, which enables Qunar to bolster its investments in mobile, flights and hotels, and aids its liquidity.

Qunar says it operates independently of Baidu, but consider that Qunar and Baidu recently co-developed voice recognition software for Qunar’s air and hotel search, and during its fourth quarter earnings call February 27 Qunar CEO Chenchao Zhuang said Qunar has a team working out of Baidu’s offices on undisclosed integration efforts.

Qunar’s CEO said the company works with “Baidu extensively.”

“As a matter of fact, we have a team sitting at the Baidu office looking for all sorts of the product integration opportunity with Baidu,” he said. “If any significant deal is signed, we will announce that publicly.”

Qunar previously disclosed that it gets about half of its traffic volume through Baidu.

Having completed a U.S. IPO last year, Qunar is focused on expansion, and its losses widened in the fourth quarter.

It notched an RMB12.16 million (around $19.8 million) net loss in the fourth quarter of 2013, compared with a loss of RMB18.6 million ($3 million) a year earlier. Revenue in the fourth quarter rose around 70% year over year to RMB53.4 million ($8.69 million).

A lot of Qunar’s investment is in mobile.

In fact, Qunar saw its mobile revenue in the fourth quarter increase a whopping 390.6% to RMB49.6 million
(US$8.2 million), and it counted 53.8 million mobile users in 2013. Its native app boasts 65.8 million activations through the end of 2013.

The competitiveness of the Chinese travel market, which finds Qunar competing with Ctrip, Expedia’s eLong, and TripAdvisor’s Kuxun, among many others, can be seen through the fact that in the fourth quarter Qunar’s revenue per room declined 7.8% year over year because of its couponing efforts.

Qunar offers access through search and quasi-direct booking to around 450,000 hotels, including direct sales for 84,000 of them.