The big news coming out of China today is the $15 billion merger between group buying business Meituan and reviews giant Dianping.
The announcement did not place a value on the deal, but the Chinese and international business press is valuing the combined business at $15 billion.
The implications for the online travel sector in China will play out over time as the finer details of the merger are worked out. Meituan is more directly active in the sector, having recently acquired Kuxun from Tripadvisor.
"Hotel Tourism and Home Delivery Service" is one of Meituan's three business units and is China's second largest hotel distribution platform when measured by room nights sold.
And thinking about leisure rather than travel, its Maoyan Movie unit has been the market leader when it comes to reserving cinema tickets online since 2012.
Dianping's focus is more leisure than travel, with some coverage describing it as a restaurant review app. This is only a small part of its footprint - it is the country's largest consumer reviews business and says that its restaurant booking business is also the market leader.
The customer numbers users give an idea of how big the combined business is already - Dianping talks in terms of 200 million accumulated users while Meituan has 120 million active users.
The statement said that the two brands will "retain their respective brands and management structure" but they will form a new business which reads as if it will become a portal for their combined online-to-offline operations.
Online-to-offline is a phrase which has emerged recently as a convenient shorthand for consumers using their smartphone to book an offline experience. It is thought that this trend will grow as a result not only of increased smartphone penetration but also as people become more comfortable using their smartphone for small, easy transactions such as reserving a table in a restaurant or booking a movie ticket.
However, 020 also has a role to play in bigger-ticket items, and this includes travel. Qunar is one of China's leading OTAs and it made its move into 020 at the end of last year, taking a stake in Bestone, a bricks-and-mortar travel agency with 3,500 outlets across China.
Qunar is majority-owned by Chinese search engine Baidu and the pair have a close working relationship as well as a financial one. A month or so ago they announced "a strengthening of [their] strategic alliance" and O2O was very much at the heart of the strengthening.
“Qunar users will be able to access Baidu’s extensive online-to-offline (O2O) supply chain in restaurant booking and food delivery,” the release said as an example.
O2O is very much part of Baidu's future. In August it announced it would invest more than $3 billion in its own dedicated O2O business, Baidu Nuomi, over the next three years.
And Liang Zeng, general manager of Baidu’s Nuomi unit, joined the Qunar board in the summer.
Baidu has issued a statement about the merger of Meituan and Dianping, saying:
"We believe that this merger is an extreme measure that shows just how seriously Meituan and Dianping view the threat from Baidu Nuomi."
Baidu has gone on the offensive in response to some early reporting of the merger which positioned it as another "BAT" battle. BAT is the accepted acronym for China's big three e-commerce giants - Baidu, Alibaba and Tencent. Alibaba and Tencent have minority stakes in Meituan and Dianping respectively.
Baidu said:
"Alibaba and Tencent hold minority stakes in Meituan and Dianping: If that’s all the skin Alibaba and Tencent have in the game, it’s not a BAT fight."
And it not the first time that Baidu has been forced to respond to an Alibaba/Tencent link-up. Didi Kuaidi, China's biggest taxi app business, was formed by the merger of the Alibaba-backed Kuaidi Dache and the Tencent-backed Didi Dache.
In that case, Baidu responded by announcing an "investment and strategic co-operation agreement" with Uber. But in the case of Meituan and Dianping, it looks as if Alibaba and Tencent are responding to the Baidu Nuomi investment.
Related coverage on Tnooz:
Interview: Sherri Wu on Alitrip, Alibaba’s travel site, and Chinese outbound travel
Online travel growth in China shows no sign of slowing down
Chinese tourism – a case study in tech as a disruptor
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