In an interesting move, China's leading online travel agency (OTA) Ctrip invested over $200 million in a local competitor LY.
With this investment, Ctrip will become the second biggest stakeholder in LY (known previously as 17u.cn/Tongcheng), after the existing management team.
LY's services include booking for flights, hotels, trains, attraction tickets and cruise. The company is known mostly for its local attraction ticket service.
Chairman and CEO of Ctrip, James Liang, says:
"We are very pleased to establish a strategic relationship with LY.com We are increasingly positive about the potential of the travel industry in China. LY.com is the leading player in the local attraction ticket segment and we will support the independent operation of LY."
CEO of LY, Zhi Xiang Wu, adds:
"We are thrilled to have Ctrip as our strategic investor. Ctrip is the clear leader in the online and mobile travel industry in China. This investment will enhance the strategic cooperation between the two companies and will ultimately benefit our customers and partners."
The investment comes at a intriguing juncture in the Chinese online travel sector, especially for the large brands which dominate much of the sector.
Recently, LY and the country's second largest OTA, eLong, established a strategic partnership that enabled eLong to become the exclusive supplier of agency hotel and group-buying hotel inventory for LY in mainland China, and LY to be the exclusive supplier of scenic attraction ticket inventory for eLong.
It also comes against the backdrop of continued speculation of a potential merger between Ctrip and the country's biggest travel search service Qunar. Note: Earlier this month, Ctrip announced a $600 million share repurchase plan.
Ctrip's 26% traffic comes via the country's leading search engine Baidu. But, recently, LY received $82.5 million in Series C funding from investors including Oriza, Tencent, and Boyu Capital. Needless to say, Tencent and Baidu are arch rivals in China.
Also, recently, China-based online messaging service (owned by Tencent) WeChat launched flight booking service that was powered by LY.com.
NB:Money image via Shutterstock.