China's online tourism sector may see more integration, acquisitions

Tourists enjoy themselves at the Boracay Beach,Philippines, May 28, 2013. [Photo/dfic.cn]

China's online travel industry may see more integration and acquisitions this year, driven by the giant Internet companies.

LY.com and eLong Inc announced their cooperation on Thursday. Tencent Holdings Ltd, a shareholder in both of the online travel agencies, was seen as the guiding hand behind the agreement under which LY.com shares its allocations to scenic spots and ELong reciprocates with its hotel slots.

"The cooperation with LY.com will bring 10 to 20 percent extra hotel business growth to eLong," eLong CEO Cui Guangfu said in a statement. Separately, Ctrip.com International Inc, Chna's largest online travel agency, and Qunar.com, the main travel search engine in China, have reportedly discussed a merger that, if completed, would create an enterprise with a more than $1 billion market value. Both companies are listed in the US.

The two companies' share prices increased more than 7 percent on April 9, when it was reported they two were in negotiations. No comment was carried on either of the firms' websites. Some insiders said Baidu Inc, the largest shareholder of Qunar.com, is leading moves toward consolidation.

"Integration in the online travel agency industry is actually being pushed by the three giants in China's international industry: Tencent, Baidu and Alibaba Group Holding Ltd," said Wei Changren, general manager of Ctcnn.com Inc, an analysis company focusing on the travel industry.

The three, known as BAT, are optimistic about online travel and keep investing, Wei said.

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