How will Google vs Baidu affect China's travel industry?
Tuesday 10, August 2010
China has nearly 400 million Internet users, and they are increasingly planning and purchasing their travel online. According to PhoCusWright's Emerging Online Travel Marketplace in China, online travel channels will drive US$13 billion in bookings in 2011.
The nation's leading search engine, Baidu, has reportedly been accepting payments for search placement from unlicensed medical companies selling counterfeit pharmaceuticals, according to recent reports on CCTV (Chinese Central Television).
Baidu commands about 70% of China's search market, far more than its top challenger, Google, which has had well-documented troubles of its own lately. The Mountain View, California-based company made headlines late last year for its decision to stop censoring search results on the mainland, falling out of favor with the central authorities and casting doubt on the company's future in China. With its Web services license recently renewed by the central government, Google appears to be back on track in the country, but it still does not have approval for its mapping technology in China. This prevents China's online travel agencies from integrating Google's most up-to-date mapping capabilities into their sites.
Just as the overall Chinese search market experiences some important changes, travel metasearch is in a period of transition as well. China's leading travel metasearch provider, Qunar.com, turned away potential buyers in 2009. Its competitor, Kuxun.com, was bought out last year by TripAdvisor, which had first made an offer for Qunar.
Qunar recently shifted its business model to reduce its dependence on flight bookings, since consolidation in the Chinese airline industry has made the company's top revenue stream less lucrative. Qunar now has dedicated phone numbers for its hotel clients, so that it receives revenue on a cost-per-call model when travelers make reservations by phone after researching hotel deals on Qunar.com.
As travel providers and foreign investors eye China, understanding and projecting the future of search in the country-what players will dominate, how they will do business, and how they will interact with travelers-is a key to navigating this dynamic market. On September 15-16 in Beijing, industry leaders gather to examine fundamental trends in the region at the China Travel Distribution Summit, hosted by China Travel Daily in partnership with PhoCusWright. Key speakers including Fritz Demopoulous, CEO, Qunar.com; Ivan Zhang, CEO, Kuxun.com; Wei Li, general manager, key account sales, Baidu; and Brett Henry, vice president, marketing, Abacus, shed light on the role they hope to play in the Chinese travel industry.
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