China, a changing travel market

China’s $232 billion travel market is mainly domestic and hugely under-developed. Chinese people often spend as much as 8% of their annual discretionary income on a single trip, far more than people in other emerging markets, according to the Boston Consulting Group (BCG).

On September 15th Baidu, China’s largest search engine, announced plans to list the shares of Qunar, a popular Chinese travel search aggregator, in which it purchased a controlling stake in June. In May Tencent, another online giant, snapped up 16% of eLong, a Chinese online travel company that is part-owned by Expedia. Together, Baidu and Tencent threaten Ctrip, China’s biggest travel firm. 

BCG expects the number of Chinese who have ever rented a hotel room to triple in the next decade. Home Inns, a budget hotel chain which caters to the new army of travelling businessmen as well as to domestic tourists, has grown from one hotel in 2004 to nearly 1,000 today. It plans thousands more.

For now, most travellers use local bricks-and-mortar travel agents. According to The Economist, only 14% of China’s 500m internet users have visited a travel website, according to Douglas Quinby of PhoCusWright, a travel consultancy.