Qunar, the leading travel search engine in China, and Baidu, Inc, the leading Chinese language Internet search provider, jointly announced today a definitive agreement under which Baidu has committed to make a US$306 million strategic investment in Qunar. The investment will make Baidu the majority shareholder of Qunar.
Founded in 2005, Qunar offers Chinese consumers real-time searches for air and rail tickets, hotels, and tour packages. Qunar also provides travel-related resources such as group-buying deals and user discussion forums. According to iResearch, a China-based independent research firm, Qunar ranked number one among travel websites in China as measured by daily unique visitors in March 2011. Qunar has the widest coverage of any travel search engine in China, with more than 11,000 air routes and 102,000 hotels worldwide.
The closing of the definitive agreement is subject to customary conditions. The parties currently expect that the transaction will close in the third quarter of 2011. After the investment, Qunar will continue to operate as an independent company, while both companies will cooperate in certain areas of online travel search. Baidu plans to finance the investment through obtaining a third-party loan facility.
“Travel has long been one of the top categories on Baidu, and the number of travelers in China has been growing very rapidly, so this is a market of obvious strategic importance to us,” said Jennifer Li, Chief Financial Officer of Baidu. “Our investment in Qunar will create an even better search experience for users planning trips,” she said.
“Qunar provides Chinese travelers with the most comprehensive and accurate travel information online,” said Qunar’s newly appointed Chief Executive Officer, Mr. Chenchao Zhuang. Mr. Zhuang co-founded the company with Fritz Demopoulos, who will step down as Chief Executive Officer to pursue entrepreneurial business opportunities, while continuing to serve as strategy advisor to Qunar. “By working with Baidu, we can focus on enhancing our search technology and the quality of our products and services,” said Mr. Zhuang. “Together, we can enhance the user experience of hundreds of millions of Chinese travelers, whether they’re searching with their computers or their mobile devices. We believe that Baidu’s strategic investment in us will allow both companies to better capture exciting growth opportunities in our industry.”
According to CNNIC’s 27th China Internet Report issued in January 2011, among China’s 457 million Internet users, search ranked as the most popular application, used by 81.9% of Internet users in China. However, only 7.9% of Internet users in China reported having used online travel booking services. By contrast, in the United States, 66% of Internet users have booked travel services online. As a result, growth opportunities in China’s online travel industry remain largely untapped.
“Qunar has developed top-notch travel search technology over the last five years and has built a leading brand name in the industry,” said Baidu’s Ms. Li. “Under Mr. Zhuang’s leadership, I have full confidence that the highly talented and experienced Qunar team will bring the company to a new level of success in collaboration with Baidu.”