Baidu's big play into online travel

After a yearlong negotiation, China’s biggest search engine, Baidu, announced on Friday that the company has reached a strategic agreement with Qunar.com (去哪儿), China’s biggest travel website.

The agreement means Baidu will invest a total of US$306 million in Qunar.com, thereby becoming Qunar’s biggest shareholder.

The deal represents the largest investment Baidu has made in its company history.

“We will start to have more cooperation with Baidu from now on,” Qunar’s CEO Zhuang Chenchao told China Business Network Daily.

“This will be our last round of fund-raising before [we] go public, which is estimated to be completed in three years. [Qunar] is more likely to get listed overseas, probably the Nasdaq Stock Market or New York Stock Exchange,” Zhuang added.

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According to Techcrunch, Qunar had previously raised US$25 million in funding. Prior investors include Lehman Brothers, GSR Ventures Management, Mayfield Fund and Tenaya Capital.

Closer ties and deeper cooperation will mark the deal between Qunar and Baidu, but Qunar will keep its current company structure and run independently.

Launched in May 2005, Qunar shares a similar business model with U.S.-based travel site Kayak.com. Qunar lists airline tickets, hotel deals and holiday packages from China’s major travel websites.

Qunar claims to attract 45 million unique visitors a month. Its search results list more than 100,000 hotels, 12,000 domestic and international air routes and around 40,000 holiday packages.

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Qunar currently claims 30 percent of China’s overall air-ticket-booking market. The company plans to push its train-ticket booking service in the near future. 

Industry analysis suggests Baidu is making its unprecedented investment to compensate for its lack of travel-search services and to secure a foothold in China’s booming travel market.