TripAdvisor CEO Steve Kaufer told analysts during a call to discuss the company's Q3 earnings that a new partnership with Trip.com, the largest OTA in China, was a "much more exciting opportunity" for TripAdvisor than continuing to operate in China on its own.
The strategic partnership between Trip.com Group, the company formerly known as Ctrip.com International, and TripAdvisor includes content agreements, a joint venture and a seat on TripAdvisor's board for Trip.com Group.
Under the partnership, Trip.com Group subsidiary Ctrip Investment Holding has entered into a joint venture with TripAdvisor Singapore Private Ltd., a TripAdvisor subsidiary. TripAdvisor will own 40% of the joint venture, dubbed TripAdvisor China. Both companies will share travel inventories, and TripAdvisor will share "a long-term exclusive brand and content license and other assets of its China business," it said. Select TripAdvisor content will be distributed on some of Trip.com Group's major brands, like Trip.com, Ctrip, Skyscanner and Qunar.
Kaufer said in a statement announcing the deal that the partnerships will help expand TripAdvisor's reach and help Chinese travelers with trip-planning needs. "China is one of the largest and fastest-growing travel markets in the world," Kaufer said in the statement. "Trip.com Group, with its established brands and travel market leadership, is the perfect partner to help us achieve our long-term goals in the region."
On the call, he elaborated on partnership's merits.
"We feel like we've done a good job in China, but when we look at the size of -- especially the outbound travel audience, where outbound is where our content excels -- we thought partnering up with Trip.com Group in this manner offered a much better, much more global and much more exciting opportunity for all parties," he said.
Kaufer said the partnership was attractive to TripAdvisor not just because of the monetary value of the joint venture but because of Trip.com Group's expertise in the market in China, especially with regard to outbound travel.
Upon regulatory authorities' approval of the partnership, Trip.com Group also will gain a nomination for one seat on TripAdvisor's board. To enable that, Trip.com Group will acquire up to 6.95 million TripAdvisor shares, valued at $317.6 million, within a year of approvals.