Merger could be ticket to success for Ctrip, Qunar

"I will work at Qunar until we become the definite winner in the online travel market," Zhuang wrote, responding to reports that he would leave the company after a merger.

Whatever actually happens, other companies in the industry have already criticized any deal, which they said would increase industrial consolidation.

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"The authorities need to examine any deal, as both companies are already large and a merged company may have too large a market share," said Cui Guangfu, CEO of eLong Inc, one of the largest online travel agencies in China, which focuses on hotel bookings.

But Cui said any such merger wouldn't lead to any change in his company's strategy, because eLong has already devised ways to compete. The strategy involves taking advantage of a segmented market and cooperating with other companies.

Fortunately for eLong, Cui already has an ally that's eager to expand.

Tongcheng Network Technology Co Ltd, an online travel agency based in Suzhou, Jiangsu province, signed a cooperation agreement with eLong on March 10. Under that deal, eLong will share its 10,000-plus domestic hotel listings and Tongcheng will share its scenic attraction ticket-booking services, which cover more than 8,000 domestic sites.

"It's an easy method of cooperation, but it is significant for both of us," Cui said, "We'll each continue to concentrate on our main businesses, which is hotel booking for eLong and scenic attraction ticketing for Tongcheng."

Strategic targeting of segmented markets is the only way for smaller players to challenge the industry giant, he added.

"None of us can compete with Ctrip in the full-service market. It is too big," said Cui.

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