Ctrip and JD invest $148M in Chinese tourism booking site Tuniu

Tuniu, a Chinese vacation and tourism booking site, has secured a US$148 million investment led by ecommerce company JD and Hony Capital, according to Reuters. JD and Hony each contributed US$50 million, while Ctrip, one of Tuniu’s rivals in China’s travel market, pitched in US$15 million. The remainding US$33 million was split between Tuniu’s own CEO and COO.

The money will extend Tuniu’s reach into China’s lower-tier cities and fund further development of its tech.

Tuniu listed on the US stock exchange in May with a lackluster market debut. It had planned to raise more in a follow-on public offering, but instead decided to take the private funding from Hony, JD, and Ctrip.

Since its IPO, Tuniu has never made a profit, and its losses are growing. It lost US$17 million last quarter compared to US$2 million one year earlier.

According to a November 2013 report from China Internet Watch, Tuniu sits in fifth place when it comes to tickets sold on travel websites, behind 17U, Yikuaiqu, Ctrip, and Lvmama.

See: Chinese tourism booking site Lvmama gets $49M funding to stay competitive in ongoing price war

An entangled market

JD and Ctrip are rivals of both each other and Tuniu, so it seems this is a step toward consolidation of the heavily fragmented Chinese online travel market.

JD revamped its travel site this year, aiming to take a bigger slice of the country’s growing online travel market and keep pace with Alibaba’s rival marketplaces, Taobao and Tmall. In January it acquired hotel booking app Hotelvp for an undisclosed sum.

Ctrip, which is backed by US-based Priceline, also invested US$200 million into Tuniu’s most direct rival, LY.com. Tuniu is engaged in a price war with LY, demanding that all of its partner agencies give give it lower prices. LY has since fired back, saying it would completely surpass Tuniu within 12 months. It will be interesting to see how the two companies handle their differences and if Ctrip will play the role of mediator.

Meanwhile, Ctrip is also engaged in a price war with Baidu-backed Qunar.

Even though some of China’s online travel companies look to be setting up alliances on paper, they still all compete for essentially the same customers. China’s domestic tourism sector earned US$469 billion from 3.25 billion tourists, both online and offline, according to government stats. Chinese tourists spent another US$155 billion on overseas trips, says the China Tourism Academy, and that figure is expected to triple by 2020.

See: International tourism: China’s next multibillion-dollar ecommerce industry

(Source: Reuters)