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Print Edition> Business
UPDATED: July 11, 2011 NO. 28 JULY 14, 2011
Budgeting for Travel
Websites provide enhanced services as they look to profit from China's ballooning travel market


For her college graduation, Hu Si received an iPad, a gift from her mother. Her father gave her something not so tech-heavy: a piece of paper with a travel agent's phone number. But the paper held promise—Hu's father said the family would be going on a vacation and Hu would be in charge of planning the trip.

Overnight, the father found the omnipresent Internet helped his daughter plan the trip, from booking the flight to making reservations at a highly recommended budget hotel. Hu even found interesting attractions and restaurants at every stop of the vacation.

When asked how she'd managed to organize the trip so quickly, Hu opened a number of websites on her iPad that her father had never heard of before. Daodao.com had helped Hu gather information for hotels; Qunar.com allowed her to find discounted airfares and cheap hotel deals; Uzai.com recommended travel routes; and Lvmama.com provided information on travel destinations.

Hu's father had previously only known of two online travel agencies, Nasdaq-listed Ctrip.com and Elong.com. Those two hotel reservation and flight booking sites have dominated the market for years but have had to make room as more companies enter the arena.

China's online travel market is heating up amid a national e-commerce investment boom. But online travel services didn't receive a decisive boost until about two years ago.

From 2009 to 2010, many start-up travel websites all finished two or three rounds of fundraising, said statistics from equity investment consulting company Zero2IPO Group. And major Internet companies, such as B2B marketplace Alibaba, instant messaging platform Tencent and search engine Baidu, either launched similar services or invested in major players for future cooperation based on their complementary strengths.

Opportunities worth many billions of dollars lie ahead for Ctrip and its peers, but they have to prove their versatility in order to grab more customers.

Explosive growth

China's tourism market is burgeoning. China became the world's third largest inbound tourism destination last year, said the latest edition of the United Nations World Tourism Organization annual report. The organization predicts China will surpass France as the largest tourist destination by 2015.

China also emerged as the world's third biggest international tourism spender, with expenditures multiplying four times since 2000, said the report.

Domestically, Internet applications have continued to seep into the tourism industry. E-commerce solutions contributed to 3.3 percent of the entire Chinese travel sales last year and will reach 4.6 percent by 2012, said a report on China's travel e-commerce by entertainment and tourism consulting company Entgroup.

While some airline companies, hotels and travel agencies are reinforcing their direct sales efforts online, others are reaching more customers by opening stores at large e-commerce platforms such as Taobao.com and 360buy.com. Taobao, China's largest C2C marketplace, launched its travel channel in May 2010, allowing airline companies, hotels and travel agencies to sell tickets or hotel rooms directly from their stores.

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