Ctrip, China's biggest travel Site, goes abroad for its latest expansion

China’s Ctrip.com has been helping Chinese tourists explore foreign lands for more than 15 years.

Now Ctrip itself is going overseas.

Ctrip.com International Ltd., China’s largest travel website, said Wednesday thatit is buying British counterpartSkyscanner Ltd. for £1.4 billion ($1.74 billion). It is the latest in a series of expansion moves by Ctrip, whose growth has paralleled that of China’s middle class and its appetite for travel.

The acquisition will allow Ctrip and Skyscanner to share technology and know-how, newly appointed chief executive Jie Sun told analysts on an earnings call Wednesday. For example, Skyscanner’s front-end search functions could be paired with Ctrip’s back-end booking software, Ms. Sun said.

“It will extend our air-ticketing business to a much bigger footprint in a global marketplace,” said Ms. Sun.

Scotland-based Skyscanner’s main site,skyscanner.net, had about 22 million visits in October, more than half of which were from the U.K., according to analytics firm SimilarWeb.

That compared with 32.2 million visits for popular U.S. travel websitekayak.com, which is owned by Priceline Group Inc., and 38.2 million visits forctrip.comfor that month.

Under the terms of the deal, which is expected to be completed by the end of the year, Ctrip said it would keep Skyscanner’s management team and continue running the British website independently.

Daiwa securities analyst John Choi sees many opportunities for the deal to be mutually beneficial. He said Ctrip sees synergies between itself and the so-called “meta-search” technology that Skyscanner uses for comparing flights and other travel deals across different websites. For example, booking systems and inventory could be shared, he said.

In addition, Skyscanner doesn’t do as good a job as Ctrip in maximizing revenue from each customer interaction, Mr. Choi said. Ctrip will likely aim to boost that, he said, for example by getting customers booking air travel to also buy travel insurance and make additional purchases like rental cars and travel insurance.

“It’s not just a simple acquisition [to grow customers] from my perspective,” he said.

Ctrip was founded in Shanghai in 1999 and quickly became China’s travel agency of choice for trips both abroad and within China. Four years later,the company went public in the U.S., with its shares closing 88.5% higher than their debut. At the time, Ctrip’s initial public offering was the best first day for an IPO in three years.

The Skyscanner deal was announced after the close of trading in New York, where Ctrip is traded on the Nasdaq. Shares of the company, which had closed down 2% to $40.99, soared about 7% in after-hours trading.

In 2014, Ctrip’s growth attracted the attention of Priceline Group, which made a $500 million investment after an earlier partnership that gave Ctrip access to Priceline’s database of world-wide hotels. Pricelinehas since raised its staketwice and now has the right to buy as much as 15% of Ctrip’s outstanding shares.

Last year, Ctrip effectively became the largest shareholder of its biggest Chinese competitor, Qunar Cayman Islands Ltd.,in a share swap worth about $5.9 billion. This year, U.S.-listed Qunaragreed to be taken privateby the affiliate of a private-equity firm focused on travel.

Ctrip also holdsa small stake in China Eastern Airlines. Last month, Ctrip agreed to partnerwith three U.S. tour operatorsthat cater to Chinese travelers without disclosing deal terms.

On the call Wednesday, Ms. Sun said she was optimistic that Chinese outbound travel would be supported by the growing number of Chinese citizens who can afford to go abroad, the relaxing of visa restrictions in foreign countries and the establishment of new international routes between Chinese and overseas cities.

China had 120 million outbound visitors last year, according to the China Tourism Research Institute, up 12% from 2014. At the same time, Chinese consumers are spending more on travel at home and abroad. Goldman Sachs Group Inc. expects Chinese tourists to spend $450 billion on travel overseas by 2025, nearly double the $250 billion they spent in 2015.

Ctrip’s acquisition of Skyscanner comes as the Chinese company grows at a fast clip. Ctrip’s total revenues surged by about 70% to 5.67 billion yuan ($819 million), in the quarter ending Sept. 30 versus the same period last year, and that pace is expected to continue until the year’s end, the company said Wednesday.

The company booked a third-quarter net profit of 24 million yuan versus 2.42 billion yuan in the year-earlier period. The company said the decline was partly because it consolidated Qunar’s financial statements with its own.

（APD）