Priceline ups its stake in Ctrip taking the battle with Expedia to Chinese borders

Jing Gao

Priceline, Ctrip’s largest shareholder, has poured an additional USD 100 million into Ctrip, placing their stake in Ctrip now at 11.58%.

Documents obtained from the U.S. Securities and Exchange Commission reveal that Priceline bought Ctrip shares almost every single trading day between July 7, 2014 and September 14, 2015. The revelations have further bolstered the stock price of U.S.-listed Ctrip by 8%, Jiemian.com reported on Wednesday.

“Last year we announced a major investment in and partnership with Ctrip…This gives us increased exposure to the Chinese traveler, and allows us to work alongside a partner that has tremendous local experience in the market,” Adrian Currie, SVP, Corporate Development at Priceline Group, told Web In Travel, a Singapore-based media company focused on the travel industry.

Aside from investing in Ctrip, Priceline is also expanding its other brands and products, Agoda, Booking.com, Kayak and Rentalcars.com, while building its own presence in China.

The partnership between Priceline and Ctrip dates back to August 2012, when Chinese outbound users first began being able to book hotels on Bookings.com through Ctrip. In August 2014, Priceline invested USD 500 million into Ctrip. Since then it has been loading up on Ctrip shares, and now sees its total investment in Ctrip as high as USD 1.2 billion.

So far, China’s per capita spending on tourism is less than one tenth the U.S. figure. There is much room for growth in China’s online travel business. Among all the Chinese travel booking websites, Ctrip is the only one that is making a profit. Ctrip brought in RMB 243 million (USD 38.2 million) for 2014 while others continue to operate at a loss in exchange for user growth. Qunar suffered a net loss of RMB 1.84 billion last year. Tuniu suffered at RMB 449 million for the same period.

Qunar.com, Ctrip’s biggest rival, has announced a plan to turn a profit by the end of 2016. Last week, Qunar expanded its board of directors to give more seats to Chinese search giant Baidu – Qunar’s majority stakeholder – deepening their ties. Online travel agent, Alitrip is backed by Alibaba.  

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Meanwhile, back on home territory the battle between Priceline and nemesis Expedia has grown white hot. Expedia has surpassed Priceline to become the largest online travel agency by bookings after its USD 1.3 billion acquisition of Orbitz passed U.S. antitrust scrutiny two days ago. Priceline is still number one in terms of revenue.

At the 2015 TravelDaily Conference on September 16, Ctrip’s chief executive James Liang said he believes China’s GDP growth over the next decade will be maintained at an annual rate of 6% to 7%, whilst overall increases in travel expenditure will be anywhere between 10% to 15%.

According to statistics released by China’s Bureau of Tourism, Chinese tourists took more than two billion domestic trips in the first half of 2015, an increase of nearly 10% over the previous year.

 

Jing Gao

Jing founded her own blog Ministry of Tofu and worked with Los Angeles Times, Greenpeace and LinkAsia. She graduated with a master's degree in Journalism from the University of Illinois.

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