How Ctrip Buying Skyscanner Will End The Priceline-Expedia Duopoly


Online travel just changed fundamentally. The Chinese online travel firm Ctrip is buying the European (Scotland-based) metasearch site Skyscanner for $1.74 billion. It is a deal that rocked the online travel world, and its ramifications will continue to do so in the foreseeable future.


Ctrip, whose growth in years past was tied to the phenomenal rise of Chinese tourism, gains a strong foothold in Europe through the purchase of 13-year-old Skyscanner, one of the region’s larger flight ticketing services with more than 60 million monthly active users.

Skift, the online travel business publication, wrote about the deal:

Former CEO James Jipanzhang Liang, who takes over as executive chairman, put the Skyscanner acquisition in the context of Ctrip’s international expansion through investments. He said Skyscanner, which attracts more than 60 million monthly active users and is available in some 30 languages, will improve Ctrip’s global scale and strengthen Ctrip’s position throughout the world.

Liang compared the Skyscanner acquisition with Ctrip’s recent acquisitions in U.S. tour operators servicing Chinese travelers, saying they were all part of Ctrip’s strategy to expand through international investments.

Liang said he believes travel will become a much larger share of the Chinese economy as it has so much room to grow. For example, he said the number of flights per capita in China is 0.3 percent, which is only one-tenth of that in the U.S. where it is about 3 percent per capita.

Make no mistake, this is Ctrip going international in a big way. As Ben Thompson notes (subscription required), Ctrip has a working relationship with Priceline properties but the time (through a growing Chinese travel market) is on Ctrip’s side:

Ctrip has access to Priceline Group’s global portfolio of hotels. In other words, Ctrip is a metasearch engine on top of Priceline Group companies like and Agoda: Chinese tourists traveling abroad can find accommodations through Ctrip, and Ctrip and Priceline Group split the revenue. The deal runs in reverse as well — and Agoda customers have full access to Ctrip’s China inventory — but the fact money is only going in one direction speaks to who has the more powerful position. On the Internet owning the direct customer relationship is the most valuable place to be. […]

This is the first and most obvious angle where the Skyscanner acquisition comes in: Ctrip is leveraging its customer base to increasingly integrate its supply down to the hotel level — bypassing and Agoda completely, particularly in Asia — and adding in Skyscanner’s 60 million monthly active users, the vast majority of whom are not in China, will only give the company more bargaining power.

(Highlights by me)

There are parallels between what Expedia and Priceline are doing and what Ctrip is doing here:

This mirrors the course taken by both Expedia and Priceline Group with their acquisitions of Trivago and Kayak respectively: while most online travel agency money is made in hotel bookings, the biggest cost is customer acquisition, first and foremost to Google, but also to metasearch providers; owning one not only cuts marketing spend but also skims revenue from competitors (and, naturally, OTA-owned metasearch providers rank results in a way that benefits their own inventory). I would expect Ctrip to invest significantly in making Skyscanner a full-fledged alternative to Trivago and Kayak (note that Skyscanner has traditionally focused more on flights than more profitable hotels).

Expect Skyscanner to become more or less the international arm of Ctrip, as former CEO Jipanzhang Liang has implied.

From Skift:

Asked about Ctrip’s mergers and acquisition strategy, CEO Sun said the company looks to acquire travel-related businesses, the first and/or second-place leaders in each vertical, and ensures that the valuation of the company to be acquired is reasonable.

In an interview with Skift, Ctrip Ceo Jane Jie Sun talks a bit about the thinking behind the deal.

Very telling there is how she talks about the Chinese market (read what she says in the context of Alibaba and Yahoo and Didi Chuxing and Uber):

One of the more interesting perspectives Sun offers is about Ctrip’s relationship with the Priceline Group, which has about a 9 percent stake in Ctrip. While some Internet companies — she didn’t name Expedia, but we will — got involved in China by burning money and taking part in price wars, the Priceline Group invested in China in a peaceful way and was smart about it, Sun says.

“So, in a way, they [the Priceline Group] didn’t waste any money fighting price wars or as the other Internet company in China, but on the other hand they are one of the largest shareholders of the number one, number two, number three OTAs [online travel agecies] in China. So, that tells a lot about how practical and how forward-looking Darren [former Priceline Group CEO Darren Huston] and his team were. So, we have lots of respect for them.”

Priceline’s only direct stake is in Ctrip, which controls or is among the largest shareholders in online travel agencies Qunar and eLong, respectively.

In other words, while Ctrip may expand internationally -and Ctrip may be the first Chinese company to do that successfully given the unique nature of the travel business- there is no way for its competitors to do the same to Ctrips home market. This gives the company a huge advantage. Not least because of the size of the Chinese market itself of course. Hotels around the world will want to have the best possible access to Chinese travellers.

Sun on Ctrip’s plans with Skyscanner:

Sun said Ctrip plans on developing Skyscanner as a flight-booking business, a road it has already modestly undertaken, and then Ctrip will integrate its rail, car rental, and attractions inventory with Skyscanner, she added. Ctrip can integrate Skyscanner’s front-end search technology with Ctrip’s backend fulfillment tech.

“We will open all these products to them,” Sun said, referring to rail, car rentals and attractions.

Asked whether Ctrip will heavily invest in Skyscanner or invest in Skyscanner’s international growth on a more measured and profitable basis such as how the Priceline Group invests in Kayak, Sun said there will be some “some cost” involved in Skyscanner’s expansion.


  1. […] Just a few days ago, news came that Ctrip is buying Skyscanner and thus attacking the Priceline/Expedia Duopoly. […]


  2. […] How Ctrip Buying Skyscanner Will End The Priceline-Expedia Duopoly […]


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