Tuesday, January 6, 2015

Ctrip.com Bought Israeli UK Based Travelfusion.com

The widely-tipped Chinese OTA global land-grab of 2015 has begun, with news that Ctrip has bought a majority stake in the Israeli UK-based content aggregator Travelfusion.

Themarker reported that Ctrip paid $160 million in cash.

Ctrip.com International, Ltd. is a leading travel service provider of accommodation reservation, transportation ticketing, packaged tours, and corporate travel management in China. It is the largest online consolidator of accommodations and transportation tickets in China in terms of transaction volume. Ctrip aggregates comprehensive travel related information and offers its services through an advanced transaction and service platform consisting of its mobile apps, Internet websites and centralized, toll-free, 24-hour customer service center.

Since its inception in 1999, Ctrip has experienced substantial growth and become one of the best-known travel brands in China.

Travelfusion CEO Moshi Rafiah told Tnooz that the deal was “technology driven.”

The pair have had a commercial relationship since 2013 which will be strengthened by the deal. But Travelfusion will also continue to grow as a standalone business. “Ctrip are the biggest user of our technology and we power the low cost carrier content on the site. Over time we will see more of our products and inventory distributed on Ctrip. “But there will be some reciprocity – and we will be making some of Ctrip’s inventory available to our customers.”

Travelfusion describes itself as a global distribution system for low cost carriers, and has direct connect relationships with more than 250 airlines worldwide (and some with whom it works on a screenscraping basis).

It claims to have access to more LCC content than the established GDSs. It also works with some airline consolidators and is looking to add more scheduled airline content “using NDC as it becomes available,” Rafiah said. The air content is then made available to made online and offline agents in the business and leisure sectors through an API.

Travelfusion also distributes some 700,000 hotel properties in the same way, sourcing the content through a direct connect with wholesalers and some major chains. It also connects to the booking engines of most of the major rail companies in Europe and North America.

Rafiah added that Travelfusion was working to secure rail content from India, China and Japan. “This is proving difficult to secure. Regulatory issues are the problem because we have the technology in place. But we have the same approach to rail as we do to LCCs and that it is to make sure we deal directly with the supplier to get the content.”

From Ctrip’s perspective, the deal is very much focused on making international inventory available to Ctrip’s Chinese customer base.

2014 is widely tipped as the year in which China becomes the world’s biggest outbound market (and the world’s biggest domestic market in 2017) Travelfusion also brings an innovative international payments product to the Ctrip party, combining a payments engine directly into its distribution product.

“Settlement is as much a part of what we do as distribution. We think we have a unique offer in that we settle directly with the airlines who operate outside BSP in their local currency, while allowing the payment to be made in RMBs.”

As a standalone business Rafiah is confident that its existing arrangements with Ctrip’s competitors – including Qunar – will remain in place. “We work with most online travel agents in some capacity. Ctrip will look to leverage our technology but it also wants us to continue to grow as a standalone independent technology business with a truly global footprint.”

Rafiah couldn’t comment on Ctrip’s strategy for international markets, although it will be interesting to see whether having a stake in Travelfusion will ease Ctrip into becoming a global OTA. Qunar, for example, has quietly launched qua.com to test the waters for the international markets, and it is possible that Alibaba’s global aspirations will see its alitrip.com brand operate in a number of territories.

A Ctrip.com global OTA, powered by Travelfusion, with a bit of help from minority stakeholder Priceline Group, could be an interesting start-up in the mature markets of North America and Europe.

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