Booking CEO Gillian Tans Gets a Ctrip Board Seat

In the highly competitive online travel market, where partners routinely battle for customers,  Ctrip announced that Booking.com CEO Gillian Tans will take an observer seat on the Chinese company's board.

The announcement pairs the two highest-profile and most-influential female executives, Ctrip CEO Jane Jie Sun and Tans, in online travel. In terms of market cap, Booking Holdings ($102.2 billion) and Ctrip ($26.7 billion) are the two largest companies in online travel.

Actually, Tans and Sun are arguably among the most influential executives — male or female — in online travel.

Tans has been CEO of Booking.com, which generates the majority of the parent company Booking Holdings' revenue and profits, since 2016. Sun became the Ctrip CEO the same year. Both had long been executives at their respective companies.

Oliver Hua, who formerly headed Asia Pacific for Booking Holdings, previously held the Ctrip board observer seat that Tans will assume. So Booking Holdings is upgrading its presence on the Ctrip board in a sense with Tans' representation.

Ctrip's announcement characterized its company and Booking Holdings as strengthening their relationship, noting that the two will continue to share hotel inventory, as they've done since 2012. Ctrip also cited its OpenTable partnership, which enables Ctrip customers to make restaurant reservations in North America through the Booking Holdings subsidiary, as evidence of their close ties.

Under terms of their 2012 partnership agreement, Booking Holdings has the right to own up to 15 percent of Ctrip's equity, and in the first quarter this year Booking realized a $54.5 million net income gain on its Ctrip investment. Booking Holdings notes, however, that even with its Ctrip investment and observer board seat, it does not have a significant influence over Ctrip's operations.

Partnering and Competing

The two companies compete internationally and in China, although Ctrip dominates its domestic market.

In Ctrip's first quarter earnings call last month, an analyst asked Sun how Ctrip will compete outside China against Booking Holdings. Sun mostly dodged the question.

"Yes, regarding Booking, historically, we always have very good partnership with Booking," Sun told analysts. "Booking has developed a tremendous footprint in the global places, and we have the highest respect for them. For Ctrip, our strength is the coverage associated with our China customers.

"So in China, we open our inventory to our partner and in the global places, Booking opened inventory to us. And so far, I think it worked out very well. There are lots of things we can explore together."

Competitive Dynamics

One factor that may have contributed to the Ctrip announcement about closer ties with Booking Holdings is the changing competitive landscape.

Up-and-coming Ctrip rival Meituan-Dianping, which is backed by Tencent, is mulling an initial public offering in Hong Kong. In 2017, Booking Holdings drew questions when it hedged its bets a bit in China by making a $450 million investment in Meituan-Dianping, although Booking characterized the purchase as giving it a small minority interest in the emerging e-commerce player.

In addition to nominally competing against Ctrip inside China, Booking.com butts heads with China's Tujia in alternative accommodations, which is an intensified focus for Booking. Both Ctrip and Expedia have stakes in Tujia. Airbnb has a presence in China, as well.