On Friday October 30, TripAdvisor, the world’s largest travel community and an operating company of Expedia Inc., announced it has signed a transaction to acquire Kuxun.cn. Closing is conditional upon the completion of certain regulatory requirements. Other terms of the deal are not being disclosed.

Who is Kuxun?

To sum it up, it took 9 months for them to secure venture funding of USD$12 million, but they haven’t been able to decide upon a core business model in more than 3 years.

Kuxun started as a metasearch engine for train tickets, it was launched as kooxoo.com at the end of 2005 and was set up as a company in March 2006, by its first CEO, Chen Hua (Formerly with Microsoft), and COO, Wu Shi Chun (Formerly with Baidu.com). In 9 months after kuxun launched, it obtained two rounds of VC investments: USD$2 million invested by Ceyuan Ventures in April 2006 and USD$10 million invested by Susquehanna Investment Group and Ceyuan Ventures together in September 2006.

After the original kooxoo.com launch, kuxun changed its search functions several times. Originally, kuxun focused on train ticket search. Later it was positioned as a ‘daily life’ search engine which included properties, cars, employment, shopping and more. Then, kuxun decided to concentrate on search of properties and travel. In June 2008, kuxun finally decided to focus on travel search as its core business and started the new domain of kuxun.cn which was purchased for RMB 500,000.

The multitude of business model changes worried their VC investors which eventually led to the resignations of kuxun’s management team. Wu Shi Chun left in July 2008 and Chen Hua left four months later. Cao Jian Li, who followed as CEO stayed for only 5 months. Vice President Zhang Haijun then took Cao’s place as the new CEO. At the same time, kuxun.cn closed its Shanghai office and initiated layoffs that reduced staff from a peak of 200 to less than 60 employees. After a series of key changes, it was reported that kuxun.cn became profitable in September 2009.

Kuxun’s Future

In contrast, Expedia has demonstrated consistency and synergy with its multi brand strategy and has built unparalleled competitive advantage over its competitors. It may take a long time to determine if Expedia’s combination of eLong+Kuxun+Daodao+Egencia will work in China, but according to PhoCusWright’s Emerging Online Travel Marketplace in China companies like Kuxun are indeed gaining traction. In a marketplace otherwise dominated by Ctrip, one area where competitors are mounting a significant challenge is in providing tools in the travel discovery phase. The media model enables intermediaries to bypass some of the challenges associated with automated online fulfillment in China and represents a great opportunity for growth and investment.

The story of kuxun continues under the banner of TripAdvisor and Expedia.

PhoCusWright’s Emerging Online Travel Marketplace in China offers a detailed examination of the Chinese travel industry with an emphasis on trends and opportunities in the online space. Learn more