Why Did Ctrip Acquire SkyScanner?

Shortly after making strategic investments in three tour operators based in the U.S.  and after entering into a strategic alliance with Travelling Bestone, a travel agency based in China with over 5,000 outlets, Chinese OTA giant Ctrip announced its decision to acquire the UK-based flight-metasearch engine Skyscanner for $1.74 billion. What were the possible reasons for Ctrip’s interest in Skyscanner?

• Ctrip’s two major areas of interest right now are penetration to the lower tiered cities in China and providing more services to its outbound travelers which are the fastest growing in the world right now. Towards that end, Ctrip also formed an alliance with the U.S. based tour operators. Along with the growth in China’s per capita income, the relaxed visa restrictions in foreign countries, and the expansion of new routes the outbound travelers from China are expected to rise even further. Skyscanner can further help Ctrip in gaining more outbound travelers. Skyscanner is one of the largest metasearch companies in the world and with its strong metasearch technology it will help outbound travelers to compare airline prices even better.
• Though Ctrip offers metasearch options in China, Skyscanner being one of the global leaders in this field, will help significantly increase Ctrip’s international reach. Along with metasearch, Ctrip also offers booking capability, hence if the metasearch capability of Skyscanner is provided with Ctrip’s booking functionality the synergy can increase bookings for Ctrip significantly.
• In January 2015, Ctrip acquired a majority stake in Travelfusion, a U.K. based travel distribution system that operates from London and Shanghai.  Travelfusion’s client base mostly comprises low-cost airlines and Ctrip wanted to utilize the fact that low-cost airlines generally witness higher volumes of sales. Ctrip’s strategy was to gain a significant share of the international travel market through low-cost, and a high volume of travel transactions. The Travelfusion and Skyscanner team are both based in the U.K. and the two teams will be working out on the synergy to improve the customer experience and provide a greater array of services to both businesses and customers. Ctrip’s global reach in the airline booking market might significantly increase due to this synergy.

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Have more questions about Ctrip? See the links below.

• What Is Ctrip’s Revenue And EBITDA Breakdown?
• How Has Ctrip’s Revenue And EBITDA Composition Changed Over 2012-2016E?
• Ctrip Q4 2015 Pre-Earnings Report
• What Drove Ctrip’s Revenue Growth And Led To Its EBITDA Decline Over The Last Five Years?
• Ctrip: Year 2015 In Review
• Ctrip Q1 2016 Earnings Preview
• Where Can Ctrip’s Growth Come From In The Next 5 Years?
• Which Two Segments Are The Biggest Contributors To Ctrip’s Growth?
• How Fast Is Ctrip’s Hotel Revenue Growing?
• How Can Ctrip’s Expansion In Geographies Like The U.S. Impact Its Share Price?
• How Did The Brexit Decision Impact Ctrip So Far?
• Ctrip Q2 2016 Earnings Preview
• Ctrip Continues Growing Though Its Bottom Line Remained Dampened Due To Investments
• What Drove Ctrip’s Packaged Tour Business In Q2 2016?
• Reasons Why We Upgraded Ctrip’s Stock Price By Almost 20%

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