TravelSky reports strong profit growth, despite China's rumored slowdownNewsBy Sean O'Neil | August 29, 2013Share This article was originally published on TravelSky Technology, China's government-backed company, reported today that it booked $322.9 million in revenue for the first six months of the year -- representing an increase of 8.5% over the same period in 2012.The company says it is profitable, according to the unaudited results.The growth and profits came despite some signs of a mixed economic performance by China so far in 2013.Balanced businessApproximately 60% of TravelSky's revenue was derived from its aviation information technology business, which grew at a 6% year-over-year clip. Its passenger reservation and departure information systems power all of the airlines and major airports in China.About 10% of its revenue came from its division that handles accounting, settlement, and clearing services for airlines. Its data network and distribution business accounted for much of the rest of its business -- experiencing growth of 11% year-over-year.Growing initiativesEarlier this week, the 4,000-employee company announced that it was opening its first office in the US: a 50-person R&D center in Duluth, Georgia, which would aim to develop "more effective IT solutions to meet new operational, customer service and high-standing industry requirements."In China, it is pushing the adoption of its self-service kiosk systems and mobile check-in and booking systems at Beijing Capital Airport and Shenzhen Airport. Last month, it signed a strategic agreement with Sugon Information Industry Company (frequently listed by FastCompany as one of the world's "most innovative" companies) to do joint research and big data analysis.In May, OpenJaw Technologies secured a deal with TravelSky to bring its retailing platform to China’s 30 domestic airlines.TravelSky announced in April that it had hired HP to develop its next generation Passenger Services System (PSS) for hosting airline reservations. Previously, the largest Chinese-language OTA, CTrip, signed an exclusive agreement to exclusively use TravelSky's distribution system for several years.Some weaknesses in hotelsTravelSky had hoped to expand more into hotel distribution.In June, Travelport, the US-based global distribution system (GDS), announced the integration of its Galileo RoomMaster into TravelSky. As Tnooz has reported, the Chinese state-owned GDS will feature around 90,000 properties via RoomMaster on its system, allowing its connected agencies to search and book any of the hotels globally.In other words, as of this summer, TravelSky's 7,000 ticketing agents can access Travelport's GDS and non-GDS hotel content, with real-time pricing and availability from over 250,000 hotel properties worldwide.Similarly, it was one year ago when Sabre, the US-based GDS, has joined forces with TravelSky in a deal for sharing hotel content with travel agents connected to the respective systems.But TravelSky's plan to grow into the hotel vertical is being hampered by what appears to be an overall slowdown in Chinese economic growth, a tightening of government and business spending, and an excess of capacity due to overbuilding -- which has decreased the booking of Chinese luxury hotels.Says TravelSky in today's statement: During the first six months of 2013, the Group distributed 386,500 hotel’s room nights through its hotel distribution platform-Sohoto.com, representing a decrease of 12.8% as compared with the corresponding period in 2012.Share this quote Overall growthOne striking aspect of TravelSky's announcement is that the company has managed to avoid a slowdown due to the deregulation process put into place last autumn to remove its monopoly power and allow Chinese ticket agencies working on behalf of foreign airlines to sell their fares via the global GDS into China.