Priceline Group Inc (NASDAQ:PCLN) has plans to spend an extra $250 million in China’s travel firm, Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP).
Priceline’s decision to spend the extra cash is in line with the company’s aim to capitalize on the rapidly growing Chinese market. The two firms recently made reports with regards to the extended agreements. Priceline will receive convertible bonds from Ctrip to cater for the investment.
Following the release of the news, share listings for Ctrip went up by 4.5% to settle at $88.5 per share. Priceline shares on the other had were not affected. A week ago, Ctrip announced that it had purchased 37.6% share ownership in a rival company, eLong Inc. Ctrip bought the stake from Expedia Inc for $400 million.
Priceline’s first investment in Ctrip was in 2014 where the company invested $500 million. The company has now announced that its investment in the Chinese firm will grow to roughly 15% one the total bonds from the two investments are converted.
Both companies have been complementing each other by promoting hotel packages on their websites. Priceline is hopeful that its efforts will be successful regardless of the Chinese situation. The Country has been experiencing allowed economic growth, and this has particularly affected the foreign companies that have set up shop in the Asian country.
The economy has not been favorable but on the other hand it is good to note that most Chinese citizens have adopted tourism. It is therefore still lucrative especially because the numbers are attractive.
Recently Intercontinental Hotels initiated a program where they planned to take advantage of this hobby that the Chinese people have adopted and promote it on their home grounds. The group of hotel figured that most people go for external touring because their local industry is not that rich, thus the need to exploit that gap.
Collaborations between Priceline Group Inc (NASDAQ:PCLN) and Ctrip stand a high chance of success especially once the Chinese economy starts to recover. Additionally travel is becoming cheaper as better technology takes root to make the experience safer and more enjoyable.