Ctrip.com, the mainland's leading online travel firm, announced, on Monday, its acquisition of Xiandai Yuntong Tourism Service, the largest mainland travel service provider. This move is the first acquisition by a mainland online travel firm of a traditional business.

Ctrip.com, like other large e-commerce Web sites struggling to make a profit, said it hoped that the move would place it one step ahead of competitors CTN.com and Chinaholiday.com and improve its financial outlook.

Ctrip.com, founded by Yale-educated Neil Shen and several other partners in October 1999, declined to give details on how much it paid for Xiandai Yuntong.

"The move will give Ctrip.com an edge in developing the vast untapped mainland tourism resources," said Liang Jianzhang, chief executive of Ctrip.com. According to Mr Liang, mainland hotels only have an occupancy rate of 50 per cent on average.

Mr Liang told China Business News that he still believed, as he did when he started the Web site, that the tourism industry is the best platform from which to conduct e-commerce if one uses traditional business resources.

One industry expert said that Xiandai Yuntong's powerful air transportation network would help Ctrip.com access a larger pool of updated travel information and boost its online business volume.

Beijing-based Labour News cited industry experts as saying that the acquisition demonstrated that online and offline domestic tourism operators were preparing for fierce competitions from overseas travel groups in anticipation of China's entry into the World Trade Organisation.

(South China Morning Post)