Tuniu has obtained US$15 million investment from Ctrip for its current round of financing aiming to raise a total of US$100 million. The investment source of the balance remains unclear but a recent visit by Tuniu COO Haifeng Yan to JD.com has raised speculation that JD.com might also be an investor. If true, this move will further complicate the relationship among Tencent, LY.com, JD.com and Tuniu and will make the rivalry of Tuniu and LY.com on outbound travel all the more unpredictable.
Ctrip’s US$15 million boost
Tuniu and Ctrip jointly announced on December 10 the signing of a strategic partnership to expand their shared travel resources and strengthen ties. Prior to Tuniu’s IPO in April, Ctrip had already committed US$15 million to Tunui in exchange for a board seat.
Tuniu expands product line
Tuniu CEO Donald Yu said before that Tuniu’s focus would be on leisure travel retail rather than air ticket and hotel wholesale. But an industry observer points out that as Tuniu and LY.com are locked in a fierce competition, the addition of any new product categories will help increase traffic for Tuniu.
Tuniu can leverage Ctrip’s ticket booking and car rental service from Ctrip-invested eHi Car and Yongche.com to fill the gaps in its own service range while Ctrip also gets another distribution channel for its products.
JD.com eager to enter new market
A picture posted on Mr Yan’s Wechat moments triggered rumors in the capital market that JD.com was the other investor for Tunui’s current round of financing, but a Tuniu executive was ambivalent about the speculation, saying only “you can expect more definitive actions in the future”. JD.com declined to comment.
Jinglu Consulting CEO Changren Wei said that Tuniu is keen to leverage JD.com’s customer traffic and travel resources with its competitor LY.com closing in.
JD.com has built a comprehensive business scope covering accommodation, transportation and sight-seeing products, having acquired Hotelvp.com and Youlunhai.com and has also ventured into international air ticketing. However it needs to find a travel industry partner to make up for its lack of experience and enhance its operation.
Effect on the stock market
An industry source pointed out that the investment deal between Tunui and JD.com should have been conducted quietly. But since market rumors of the deal surfaced on Decmeber 9, Tuniu’s share price has already been driven upward and JD.com’s share price has been up 9.38%.(Translation by David)