Qunar CEO: We Aimed At 1% of China GDP

by -
1

Qunar, Chinese online travel booking service seems to be growing to a ‘super’ company, even on a par with Ctrip in just a few years. The local magazine The Founder interviewed the team and this was the summary of the report.

Overall, Mr. Zhuang Chenchao, CEO of Qunar was seemingly confident of the future as he once said, Qunar had far surpassed Ctrip in traffic, and we’re on track to to overtake Ctrip in revenue in the coming years.

The first wave of Internet revolution in Chinese tourism industry has nourished Ctrip, but soon the King of OTA was challenged by the up-and-comer metasearch Qunar with two weapons, the metasearch engine with price comparison feature and Software-as-a-Service booking engine aggregating search results gathered from traditional offline SEM agencies. That’s enough to threaten Ctrip. What’s more, Qunar even attracted Baidu’s support via investment and traffic. Qunar claimed to surpass Ctrip by traffic last year.

 

Wars against Ctrip

  • International Startup Team

The entrepreneurship-infused Fritz Demopoulos from America, Douglas Khoo from Malaysia and Chinese Zhuang Chenchao established Qunar. Back in 1998, as CEO of an IT news site, Fritz recognized Zhuang Chenchao’s talent in technology. Afterwards, Fritz started a sports forum site and invited Zhuang to be the CTO. The site was so successful that was bought by TOM.com, a portal site owned by HongKong billionaire Li Ka-shing. The site afterwards became today’s sports.tom.com. After Google got listed in 2004, Fritz found words concerning tourism, finance, etc constituted 80% of Google’s Adwords, and came up with the idea of establishing a Chinese vertical-search site, and hence, the founding of Qunar. Being experienced and mature, Fritz was the spiritual leader of the team while Mr.Zhuang just focused on technology with much passion and boldness. Such complementary skillset and partnership built the solid base for Qunar’s future development. In 2006, the former DangDang’s MD, Sina UI’s director, China Interactive Media Group’s VP, Mr. Dai Zheng joined Qunar team as vice-president of marketing. Familiar with market and media, Mr. Dai was the driving force in the subsequent Qunar’s public relation wars with Ctrip.

  • Software-as-a-Service booking engine

Ctrip and Elong are like 360buy in OTA market while other medium- and small-sized OTAs are too scattered and weak to contend with the two giants, but they have to survive the era. Qunar provided a good solution. After gathering information from 3rd party SME offline agencies, Qunar is able to provide a travel-centered price engine to users. Tasting the benefit of cheap price, users were quite satisfied. But the system did have its own problem – varied service quality. Qunar then received many complaints claiming that after being directed to the site with cheap ticket, they had to waste time registering, logging in, and what’s next? The scarce cheap tickets had all gone. Qunar’s had to make tremendous efforts in persuading flight agencies to adopt its unified booking solution to solve the problem. 

  • Ctrip & Qunar

Thanks to a string of wars between Ctrip and Qunar, Qunar gradually gained publicity, known for cheap price. Ctrip found Qunar put Ctrip’s flight price on the promotional page and drew conspicuous strokes on the price, indicating Qunar had cheaper tickets, which annoyed Ctrip. Qunar was sued. Mr. Dai described the feeling on hearing the bad news as a surprise because it was a great opportunity to make them well-known. In the end, Ctrip won the case but Qunar gained publicity. From then on, Qunar has been targeting Ctrip as their biggest rival, and launched public relation wars against Ctrip sometimes actively, and sometimes passively. Actually the two companies differ in business mindset. Zhuang Chenchao said, Ctrip aims to provide the best service with the highest profit while Qunar is dedicated to offer the lowest price and the most reasonable service. Despite the Ctrip’s pitfalls in public relation wars, Ctrip actually failed in taking down its enemy and gave Qunar too many opportunities to grow bigger.

 

Alliance with Baidu

  • Behind Baidu’s Purchase

One month after Qunar’s team discussion with Baidu’s, acquisition agreement was soon signed. Baidu bought Qunar for several reasons. Baidu is a universal search while users preferred vertical research in doing certain things, travel search is one case in point, so Baidu is devoted to investing vertical sites in video, auto, property and so on to cover its untapped area. Examples are iQiyi (video site), anjuke (real estate portal), leho.com (life information site). Qunar had the data, the competitive technology in integrating agencies and established user experience, which Baidu all highly valued. Qunar aspired to be the No.1 in OTA, and Baidu could support the team perfectly with more cash, traffic and technology.

Baidu acquired 62% of Qunar’s stock for US $ 360 million. Qunar began to grow in blistering pace with Baidu’s support.

  • The Change Inside Qunar

When Qunar and Baidu affirmed publicly the strategic investment, it was Mr. Zhuang instead of Mr. Fritz that facing the media, marked the transtition from the era of Fritz to the era of Zhuang inside the team. Mr.Fritz also appreciated Zhuang’s ability to run the routine business and said he was qualified to succeed CEO. Rumor is whirling that Qunar would be the first patch of Chinese Internet companies got listed in the US stock market in 2013, but Zhuang told the the magazine that Qunar’s primary goal was surpassing Ctrip in revenue. Whether Qunar can get listed and develop independently all depends on performance. In terms of traffic rather than revenue, Qunar has already surpassed Ctrip in flight booking, ranking No.1 in China. But if the team wants to attract more capital, Qunar had to set foot in hotel booking. After the acquisition, Qunar expanded: from a team of 600 to a team of 1300 and 400 of them take in charge of hotel booking business. Source revealed that in 2012 Qunar’s revenue from hotel booking comprised 30% of its total revenue, with an increasing rate of 100%. In Nov. 2012, Qunar restructured into flight division, hotel division, wireless division and new business division to better reflect on future driving engine.

 

Look Ahead

Mr. Fritz told the magazine that Zhuang had an ambitious expectation. Tourism accounts for 10% of GDP, and if Qunar could hold 10% of the tourism market, literally 1% of GDP, it would be a great deal. Baidu did bring Qunar many benefits, the biggest one being huge traffic. Mr. Zhuang had his own way of management. Mr. Zhang was a programmer in the past and did well in organizing and quantifying things. Zhang turned vague concept like good service into solid numbers, which made investors and shareholders feel assured.

Image credit: Qunar