Tnooz: why the Baidu / Qunar deal is a moment in Chinese economic history

New post now live on Tnooz titled "Unhappy Fourth of July – Why summer 2011 is a big moment in Chinese online travel". In it I analyse the $306mm investment by Chinese search giant Baidu in Chinese meta-search giant Qunar. Check out the full story and analysis here.

Qunar mulling IPO in second half 2011

Quick one - check out the news report from the 26th from the Nasdaq news pages, Qunar CEO Fritz Demopoulos is contemplating an IPO for the 5 year old Chinese meta-search company. According to Crunchbase they have raised $25mm to date. News story is here

Thanks to Brett Henry for alerting me to this.

Ctrip and Qunar go to war over $150

Just last week I was sharing my thoughts with you about the China market - specifically that while it Ctrip that dominates travel sales in China it is arguable that Qunar is the biggest travel site if you measure by online traffic and share of voice.

In a (clearly) unrelated move, news out today that Ctrip is suing Qunar. In a story that looks like the recent battles between RyanAir and the meta-search players, the fight is over Ctrip's allegation that Qunar is screen scraping Ctrip and that such a thing is illegal.

The compensation being sort - a paltry RMB 1,000 ($146) according to the media reports.

Very few details out their in Web land about this legal action. My guess is (with no knowledge of the Chinese legal market) is that RMB 1,000 is the nominal damages amount in Chinese courts. Really what Ctrip is looking for is an injunction to stop Qunar from scraping to either force Qunar pay for access or to hurt the Qunar business and shut down a competitor.

Thanks to Martin from Wego who was first to send me the story (Siew Hoon at Transit Cafe was just seconds behind Martin)

WebInTravel: Ctrip has more than 50% of the Chinese online travel market. But is Qunar the bigger online business?

At the WebInTravel conference last week Siew Hoon hosted a panel with ctrip Director of Biz Dev Alfred Chang and meta-search company Qunar's CEO Fritz Demopoulos.

Chang of ctrip dropped some very impressive numbers into his presentation including:

• 8,000 employees (4,000 in call centres)
• 28,000 hotels in 134 countries
• 6,000 hotels direct contracted (90% of volume)
• 1mm room nights monthly, 1mm air reservations monthly, 30,000 passenger trips in packages monthly; and
  
• (most impressively) 54% market share of online in China (see pie chart below copied from his slide

But (and this is a comment I have made before), online in the China market does not have the same definition as we would use elsewhere. Online should mean "no touch". Where the transaction is completed without the interaction between the customer and the intermediary at a people level. In the case of ctrip - 80% of there transactions are conducted purely through the call centre. This is not even web referred (ie search online but complete by phone). This pure offline call centre stuff - where the consumer dials ctrip and completes the whole transaction via the phone. There is nothing wrong with this, ctrip is a highly profitable and growing company. It is just important to know what it means to be online in China.

Next to ctrip's Chang was Fritz Demopoulos of Qunar. They are Chinese largest travel meta-search and content company- claiming more than 20 million montly users. The qustion I posed and we dont have a clear answer for is "if Qunar is 100% online and ctrip is only 20% online, then doesn't that make Qunar the largest online travel player in China?". We don't have an answer because clearly ctrip is a bigger company and Qunar is in the less mature business of online media. But it again highlights the interesting nature of the online/offline travel market in China. The bigger website (Qunar) is the smaller business.

China News - eLong down, Ctrip up and Qunar in the money

Round of news coming out of the online travel scene in China tells and interesting story:

1. Number 2 player eLong posted its Q3 results. Good news started and ended with an reported increase in revenue. Bad news was that revenue was only up 12% and losses have widened from RMB2.7mm (USD365k) in Q3 06 to RMB 7.4mm (USD1mm) in Q3 07. Stock is almost half it was a year ago. New CEO Cui Guangfu has a big job ahead of them to catch up with...
2. Ctrip posted a great result this quarter - beating expectations - announcing an almost doubling of profits to USD15mm for the quarter on revenues of $46mm. In a clear dig at eLong, Ctrip attributed a lot of the credit for the results to rising travel demand. Shares are similarly moving the opposite direction to eLong. But any possible conflict in signals about the market from the different results between number one and number two in China did not dissuade...
3. Lehman Brothers Private Equity Partners dropped $10mm into local meta search player Qunar.com. It was Qunar's second round of funding. First round was in the $2-3mm range with Mayfield leading that round. UPDATE - here is the alarm:clock story including information that Qunar founders Douglas Khoo, CC Zhuang, and Fritz Demopoulos had previously founded and sold the CSEEK search engine to News Corporation and founded and sold the Shawei.com portal to The Tom Group.

Busy days in China.