China’s TravelSky Joins Global Travel 信天游与美国同业Sabre结盟Rush

By newsdoug on June 15, 2012

Sabre in new China travel tie-up I don’t usually like to commend myself, but I have to say that it appears I was correct with my recent prediction that something was happening in the normally low-profile travel sector, as we’ve seen a nonstop stream of new initiatives from the sector since then, nearly all involving new international tie-ups. (previous post) Barely a day seems to go by now without the announcement of a new tie-up between a Chinese company with a foreign counterpart in the travel space, including the latest announcement from US air and hotel ticketing giant Sabre Holdings that it is forming a new alliance with China’s TravelSky. (company announcement) The tie-up looks quite interesting, as it will instantly make the 30,000 Chinese hotels on TravelSky’s network available for booking by users of Sabre’s system, while making Sabre’s 100,000 properties available to TravelSky users. This kind of a tie-up is clearly designed to cater to both the growing number of Chinese traveling to the West, as well as the big numbers of western tourists who travel to China. The alliance also appears more aimed at bookings made by travel agencies, rather than do-it-yourself travel booking sites that cater mostly to individual consumers. As such, it won’t compete very directly with more consumer-oriented online travel booking sites like Ctrip (Nasdaq: CTRP), eLong (Nasdaq: LONG) and Qunar, which tend to focus on individual travelers in the domestic market. But if TravelSky does eventually get into the consumer market, it could instantly have a very attractive product with this new Sabre tie-up, allowing it to quickly gain share on Ctrip and the other major domestic players. The move also seems to be part of a broader one that has Chinese airlines and hotel booking firms trying to become more international. I previously wrote that this new globalization drive, which seems to have gained recent momentum, is probably being driven by Beijing, which wants all of its sectors to become more globally competitive rather than simply relying on their protected home market. Regardless of the reason for this sudden surge in global tie-ups, the recent momentum means we will probably see many more similar announcements in the months ahead, shaking up the relatively small, protected field of players, most of whom have largely relied up to now on their home China market. The looming shake-up and industry shift was apparent in another form overnight on Wall Street, where Ctrip itself announced a $300 million share repurchase program to bolster its sagging stock. (company announcement) Ctrip shares rallied about 4 percent after the announcement, but they are still at just about a third of their levels from just a year ago, amid a broader depressed market for US-listed Chinese shares following a series of accounting scandals last year. I’ve always been quite positive on Ctrip due to its industry-leading position and strong ability to focus on its core travel services business. But the company may need to follow the recent trend and look for more expansion opportunities outside China — including possible tie-ups with foreign partners — or risk losing both share and relevance to more aggressive rivals.

Bottom line: A new tie-up between a top China hotel booking service and a US counterpart is part of a growing globalization trend for Chinese providers of travel services.

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