TripAdvisor.com, part of Expedia Inc., reported Friday that it purchased Kuxun.cn, China's second-largest consumer travel site and hotel and flight search engine. Last April, TripAdvisor also launched Daodao.com in China, a travel review site similar to TripAdvisor. While TripAdvisor operates in 15 different countries, chief executive Steve Kaufer said that China's potential growth and profit make it a unique and attractive market. The company declined to say how much was paid for Kuxun.
Expedia Inc., which has been sued by 59 U.S. cities and counties for unpaid hotel taxes and is likely paying out $185 million in a consumer class-action suit, probably sees China as an easy place to do business. At least it's probably a less litigious one. Add that domestic tourism in China rose 10 percent from 2005 to 2008 and Expedia probably can't wait to get its hands on some of that easy yuan.
The crucial element for TripAdvisor is timing. Its direct competition is Ctrip.com, a company that makes money based on bookings, unlike the TripAdvisor model of charging advertisers. Right now Ctrip is Goliath, but without any new inroads into China's online travel industry, Expedia can't be expected to even get close enough to use its slingshot.