"We're on track to being profitable by the end of 2016," said Chief Executive Chenchao Zhuang in an interview with The Wall Street Journal. He said a new marketing alliance announced Thursday with more than 20 hotel groups, including Club Med, Banyan Tree, Howard Johnson, Millennium and Wyndham, was part of the company's profitability plan.
U.S.-traded Qunar, which was founded in 2005, runs the Qunar.com website and has been unprofitable. The company's third-quarter 2014 net loss totaled about $92 million. Qunar has acted as a search platform that allows customers to make bookings on the websites of travel providers or agencies, with much of its business generated from airline tickets. The firm is now looking to form more direct business partnerships with hotel chains.
More Chinese are traveling abroad and many want to stay in high-end hotels. That market, Mr. Zhuang said, has "huge potential."
Such bookings could be more profitable than airline tickets because they generate a larger commission. An airline ticket purchase gives an agency a commission of 30 to 50 yuan per night (about $4.90 to $8.10), while a hotel booking can bring in 100 to 150 yuan a night, said Bryan Wang of Forrester Research.
Mr. Zhuang said that for the foreseeable future Qunar would earn more from flight bookings. Its market share for hotel bookings currently is a low single digit, and Qunar's net commission averaged about 4% because it offers discounts. "We're not greedy," he said.
Mr. Zhuang said the company recently established a beachhead in Singapore, where it will add local travel providers in Qunar.com. The goal is to offer services to travelers from China, many of whom are traveling for the first time.
The company has made a strategic investment in Grab Taxi, a smartphone app for booking taxis that operates in Southeast Asia, he said. Qunar is on the lookout for other investment opportunities in the region, though he didn't elaborate.
China tourism revenue rose 14% to 2.95 trillion yuan in 2013 from the prior year, according to the China National Tourism Administration. International travel from China jumped 18% to 98.2 million tourists.
Gauging online-travel market share in China is difficult because travel companies work in different ways, but experts say Qunar is No. 2 in market share to Ctrip International Ltd. In 2013, the government-affiliated China Internet Network Information Center estimated market share of about
34% for Ctrip and 22% for Qunar.
Search company Baidu Inc. has a controlling stake in Qunar.
Source: Wall Street Journal by Colum Murphy and Alyssa Abkowitz
from China Travel & Tourism News http://ift.tt/1iB6EFm
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