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17
Sep
2011

Qunar IPO: 5 reasons to invest in China’s travel site

We don’t have a Qunar IPO date yet, but the company has announced plans to debut on U.S. stock exchanges next year. Here are five reasons to consider investing in Qunar.com:

1) Reach. Since Qunar.com’s launch in February of 2005, the Chinese travel site has become the 84th most popular Web site in China (per Alexa). In Q3 of 2011, it surprised traffic at competitor Ctrip.com (CTRP), and growth looks like it’s still in a powerful uptrend:

The company claims 51 million unique visitors a month. And that’s while online travel bookings are still in their nascent stages in China. Qunar expects more than half of all travel bookings will take place online within three years.

2) Thumbs up from Baidu. Baidu.com (BIDU) invested $306 million in Qunar in June. That makes China’s biggest search engine a majority shareholder in the travel site, and that’s good news. Working alongside Baidu is much better than competing with it. Currently, the companies cross-promote their services and they’re working on developing new offerings together. Getting a stamp-of-approval from Baidu practically guarantees the site will be the No. 1 travel site in China for years to come.

3) Monopoly anyone? Qunar has very little direct competition in China. Ctrip.com International, Ltd. (NASDAQ:CTRP) qualifies but only loosely. Ctrip acts more like an old-school travel agent processing a large number of offline bookings via call centers. Qunar makes 80 percent of its revenue off advertisements that pop up alongside results on its travel search engine (per the Wall Street Journal). As the company expands the ability for users to actually book travel online, revenues should climb.

4) Buying binge. Part of the reason Qunar plans to go public is to raise cash to help finance future acquisitions. That should help the company consolidate it’s position at the top of the market and immediately boost revenue for the company. While we haven’t seen any numbers, Qunar claims it’s already profitable. Growing it’s profitability without bloating its staff of 800 will be key moving forward.

5) Mobile ready. Qunar’s dumping lots of that investment capital it got from Baidu into mobile apps. Currently, the site’s got the No. 3 iPhone App in China, the No. 3 Nokia Symbian App, and the No. 15 Android app. The company has said it plans to expand its mobile offerings over the next year – particularly for the iPhone, iPad and Android. That should help as the mobile Internet market in China dwarfs that of the U.S. with more than 277 million mobile Internet users accessing the web behind the Great Firewall in 2009.

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