Yesterday, Baidu, China's largest search engine, trumpeted the astonishing growth of its travel site Qunar.
In the fourth quarter Qunar became China’s largest internet retailer of airline tickets — overtaking Ctrip, the dominant online travel agency.
Qunar says it handled "up to 150,000" flight bookings a day in December.
Hotel sales are also growing. In the fourth quarter, Qunar began selling wholesalers’ hotel inventory to boost its existing listings of 150,000 hotels. About 10% of 2012 sales were from hotel bookings, but the company aims to make that a 40% mix this year.
Qunar, which generates revenue through cost-per-click ads, says it will double sales this year to $160 million (1 billion yuan).
In 2012, the Qunar app was downloaded more than 16 million times.
Through 2012, about one out of every eight yuan earned by Qunar came courtesy of bookings by wireless devices, according to an interview with Bloomberg News, Qunar's CEO Zhuang Chenchao.
Among China's digital class, the mobile booking penetration rate is roughly 6%.
Luxury hotel push
On February 1, Qunar opened a luxury hotel section on its site, listing more than 2,000 properties in 10 cities that are run by companies such as Hyatt and Shangri-La.
The company says 21% of its bookings are for hotel rooms that cost more than $80 (500 RMB) a night.
The luxury hotel page will compete with Zanadu, a year-old online startup that sells luxury hotels to Chinese travelers, and with the website go.360.cn, which launched in November by Qihoo 360, the leading rival leading Internet platform to Baidu.
No IPO talk
There was no talk of an IPO in the earnings call, in which executives talked as if the travel vertical was a key part of Baidu's growth strategy.
"An IPO will probably still happen eventually," says Bloomberg, based on its interview with Qunar's CEO.
Baidu is the largest institutional investor in Qunar, with a stake of 62% in the company. Its 2011 majority investment in the local travel metasearch site has clearly paid off.
India is a hotspot
India is by some estimates the fastest growing travel destinations for Chinese travelers.
In November, Qunar hired Publicitas to exclusively sell the digital advertising space of Qunar.com on a domestic and international level mainly on the strength of its 10-year record of building partnerships in India.
Overall China growth
There is huge room for growth for Qunar.
Fewer than one in five Internet users in China visited a travel website in second quarter 2012, "making travel among the country's smallest online categories," according to PhoCusWright's China Online Travel Traffic Report (2nd ed.), which was released last week.
About 15% of Chinese travel bookings are made online, according to estimates. The domestic travel market is growing about 14% a year, according to iResearch China.
China is building 82 airports and expanding many of its 101 existing airports during the next five years.
Fun fact: Qunar means "Where do you want to go?" in Mandarin.