Chinese travel giant Trip.com Group, formerly known as Ctrip.com, has entered into a partnership with TripAdvisor, as part of efforts to expand its presence in the global market.
Why it matters: Trip.com, one of the largest travel agency platforms in China, is pushing for globalization as its core China-based business faces growing competition from local rivals like Tencent-backed Meituan Dianping and Alibaba-backed Fliggy.
- “The broad strategic partnership pairs Trip.com Group’s market leadership in travel booking capabilities and China travel market expertise with TripAdvisor’s unique brand strength, rich global user-generated content, and points-of-interest database, as well as best-in-class in-destination supply,” the company said in an emailed statement.
- More than 149 million Chinese took outbound trips in 2018, up 14.7% compared with 2017, according to a report from the China Tourism Academy. Chinese tourists spent more than $130 billion during these trips in 2018, up 13% year on year.
“As we expand our footprint overseas, it is important that we offer not only seamless access to global travel inventory, but also quality reviews, opinions and pictures generated by other fellow travelers. We are very excited about this strategic partnership, which will undoubtedly further enhance the travel experience for our customers worldwide.”
—Jane Sun, CEO of Trip.com Group
Details: The tie-up will pool the companies’ resources together for initiatives including a joint venture, global content agreements, and a governance agreement, said the firm.
- The new joint venture will be set up through their subsidiaries—Ctrip Investment Holding Ltd. and TripAdvisor Singapore Private Limited.
- Trip.com will be the majority shareholder of the new JV and will contribute cash and market expertise. TripAdvisor will take a 40% share and provide a long-term exclusive brand and content license, as well as other assets of its China business.
- The companies have entered into global content agreements for the distribution of selected TripAdvisor content on major Trip.com Group brands, including Trip.com, Ctrip, Skyscanner, and Qunar.
- As part of the deal, Trip.com will gain a nomination right for one TripAdvisor board seat as long as the Chinese company acquires up to 6.95 million TripAdvisor shares, worth $317.6 million, within one year of regulatory approvals.
Context: Trip.com dropped the previous name Ctrip.com one week ago to help the firm become more memorable for global users, reflecting the company’s ambition to expand internationally.
- Trip.com’s Q2 earnings show the company’s international business already accounts for more than 35% of total revenue. Company CEO Jane Sun expects to further increase that proportion to between 40% and 50% within three to five years.
- Baidu, a leading shareholder in Trip.com, announced plans in September to sell $1 billion of its stake as competition for advertising revenue intensifies during the economic downturn.