China’s Trip.com Ties Up With U.S. Giant TripAdvisor
Trip.com Group, the leading Chinese travel agent formerly known as Ctrip, has formed a major new tie-up with U.S. travel ratings giant TripAdvisor Inc., in the latest step to expand its global influence beyond its home China market.
In a symbolic move underscoring its global ambitions, Trip.com took on its current name just a week ago, dropping the Ctrip name that it was previously known by for two decades among non-Chinese speakers. The company still operates Ctrip as its main Chinese-language platform. But it is now offering services to non-Chinese travelers in more than 20 markets using the Trip.com site, going head-to-head with the likes of U.S. giant Expedia and Dutch firm Booking.com.
The new tie-up will see Trip.com and TripAdvisor form a joint venture, TripAdvisor China, according to an announcement from the pair on Wednesday. Trip.com will hold a majority of the venture and provide cash and expertise, while TripAdvisor will hold 40% and provide exclusive brand and content licenses and other assets of its China business. The partners will “share inventories in travel categories at the joint venture level,” they said in the announcement.
Additionally, the tie-up will see TripAdvisor provide content for distribution across many of Trip.com’s brands, including foreign-traveler focused Trip.com and Skyscanner, and the China-focused Ctrip and Qunar services. Lastly, Trip.com will get the right to nominate one person to TripAdvisor’s board, and will maintain that right through the purchase of up to 6.95 million TripAdvisor shares on the open market, now valued at more than $300 million, within a year.
“The broad strategic partnership pairs Trip.com Group’s market leadership in travel booking capabilities and China travel market expertise with TripAdvisor’s unique brand strength, rich global user-generated content, and points-of-interest database, as well as best-in-class in-destination supply,” the pair said. “The strategic partnership marks an important step for Trip.com Group to realize its globalization vision with greater quality services, and for TripAdvisor to further strengthen its position as a global travel leader.”
Trip.com, one of China’s oldest listed internet companies, first disclosed its name-changing plan about two months ago when it reported quarterly results that showed slowing revenue growth as its core China-based business faced growing competition from strongly-backed rivals including Meituan Dianping, China’s leading online-to-offline services provider, and Fliggy, which is owned by e-commerce giant Alibaba.
Trip.com’s international revenue, which includes purchases from both outbound Chinese tourists and overseas-based tourists using the Trip.com and Skyscanner sites, now accounts for over 35% of the company’s total revenue. Chinese outbound travel accounts for the majority of that, between 20% and 25%, while Trip.com and Skyscanner provide the remainder.
Despite Trip.com’s big hopes for the international market, its international sales are still a highly money-losing operation. The company lost about 2.7 billion yuan ($386 million) before income tax expenses from its foreign components in 2018, which includes its interests in overseas entities, according to its latest annual report. By comparison its older domestic business posted a pre-tax profit of about 4.7 billion yuan last year.
Contact reporter Yang Ge (firstname.lastname@example.org; twitter: @youngchinabiz)
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