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The Wall Street Journal reports that major US travel Web sites are starting to offer more sophisticated online hotel bookings, discounted airline tickets and guided tours for China. Quick thought: With IAC's (ticker: IACI) apparent success integrating partner eLong's (ticker: LONG) wealth of offerings into its Expedia site, could a Ctrip (ticker: CTRP) combination with a foreign partner be coming soon?


Here are some recent developments:

• IAC's subsidiary, Expedia.com, recently doubled the number of discounted China hotel rooms available on its site using eLong's portfolio. It has also expanded its guided tour offerings and continues to provide negotiated airfares with China Eastern and Air China.
• Cendant (ticker: CD), which owns Orbitz.com, recently bought wholesaler Gullivers Travel Associates and travel web site OctopusTravel.com. Cendant now has large stocks of hotel rooms in Asia, and users will have access to inventory in 100 countries during the second quarter.

Encouraging travel statistics:

• In the first 9 months of 2004, air travel from the US to Asia was up 34%, according to the US Commerce Department.

Discouraging travel statistics:

• In a August 2004 survey, Forrester Research found that only 5.3% of US leisure travelers who buy airline tickets on the Internet plan to visit the region that includes China, Hong Kong and Southeast Asia.

Resistance to booking Asian travel:

• US travelers believe it takes more effort to plan and book trips to Asian destinations, and they run a significant risk of getting ripped off.
• Consumers are wary of destinations that require multiple airlines, multiple time zones and securing a visa.

Conclusion: Chinese online travel is in its infancy. A recent report claimed that Ctrip and eLong own a combined 5% of the Chinese travel market. And with the crowded US travel market offering limited growth opportunities, China is an incredibly appealing destination.

No doubt other foreign players are considering entering the market. And with China being a difficult business environment to navigate, potential entrants might consider joining with an established player like Ctrip, who could give them not only a footprint in China but also help them expand their offerings at home.

Source: Will Ctrip take on a partner?