The news that Ctrip, China’s largest online travel agency that enjoys a near monopoly after strategic acquisitions and share swaps in the domestic market, has agreed to buy Skyscanner for £1.4 Billion Pounds should make waves around the travel industry world. It is a logical move for Ctrip that has made no secret of its global expansion ambitions while doing all it can to dominate the domestic travel market in China. They are taking an approach along the Priceline model – growing by acquisition and allowing the brands to continue running independently.
I have worked closely with Skyscanner over 2013-2014 to help them research, evaluate and grow the China businesses. By the end of the consultation period, they made a decision to purchase a local meta-search company called Youbibi and appointed the founder as Skyscanner (Tianxun in Chinese) China business head. This gave them a very good home-grown, fully localised tech platform to build upon. By 2014, the online travel sector was already heavily dominated by Ctrip and Qunar. Rivals then, until Ctrip bought Qunar. What Skyscanner excelled in, which Ctrip was missing, was a world-class flights engine with strong international coverage and global supplier relations.
Skyscanner has received a major investment in 2013 from Sequoia Capital, a US VC fund. Sequoia Capital China was co-founded by Neil Shen, one of Ctrip’s founders. It appears that this link may have helped smooth the way towards a successful deal, where Priceline was not ultimately successful in their own bid last year.
In the area of China inbound tourism, Ctrip stands to benefit from the distribution power of Skyscanner, bringing additional international bookings to Ctrip’s domestic hotel inventory. Skyscanner has been working hard for several years on growing its Chinese business and this seems like a vindication of its efforts.