Baidu Inc. (BIDU:US)’s travel-booking website, China’s biggest, expects to double sales (BIDU:US) this year to about 1 billion yuan ($160 million) helped by an expanding middle class and rising use of its mobile application.
Qunar.com Inc. may generate 20 percent of bookings via wireless devices this year, compared with less than 15 percent last year, Chief Executive Officer Zhuang Chenchao said in a Jan. 31 interview in Beijing. The unit’s mobile application was downloaded more than 25 million times by the end of last year.
The travel site surpassed Ctrip.com International Ltd. (CTRP:US) as China’s largest internet retailer of airline tickets in the fourth quarter as its greater use of online bookings helped lower fares, Zhuang said. Baidu, operator of China’s largest search engine, bought Qunar in 2011 to tap the country’s growing travel market and because of competition in its main businesses.
Qunar, which generates most of its revenue through advertising, will hire “hundreds” of software engineers this year as it tries to let users do as much as possible online, Zhuang said.
“If our customers have to call us to speak in person then it means we have not done a good job,” he said. Qunar, which means “where to go” in Chinese, handled as many as 150,000 flight reservations a day last month, he said.
Ctrip, which is more reliant on call-center bookings than Qunar, said Jan. 25 it will cut about 500 employees as it overhauls operations. The company had about 9,000 call-center staff in November. Yu Heping, a Ctrip spokesman in Shanghai, declined to comment on comparisons with Qunar sales.
Qunar has room to grow as only about 15 percent of Chinese travel bookings are made online, Zhuang said. China’s air-travel market will also probably be the fastest growing worldwide through 2014, according to the International Air Transport Association, an airline trade body.
The website maintains a 40 percent profit margin at its air-ticket business because of the use of technology reduces staffing costs, Zhuang said.
The company expects hotel-related sales to generate 40 percent of revenue this year, up about 10 percentage points from last year, he said. Most of the rest will come from airline tickets, he said.
The travel site had been considering an initial public offering before Baidu bought its $306 million controlling stake. An IPO will probably still happen eventually, Zhuang said, without giving a timeframe.
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