Booking Holdings, formerly named Priceline Group, has expanded it’s footing in the Chinese market with yet another investment and partnership. This time, Booking has invested $500 million in Chinese ride-hailing app company Didi Chuxing. For Booking, this investment is simply another avenue to strengthen its foothold in China. Booking has already invested in the likes of Ctrip, China’s largest online travel agency (OTA); Meituan Dianping, a group buying website that also sells travel products; and partnered with Xiaozhu, one of China’s largest home-sharing companies.
The investment is another opportunity for Booking to solidify its presence in China as a provider of travel products
Often labelled “China’s Uber,” Didi Chuxing is China’s largest ride-hailing app. However, the app is primarily used to hail taxis, as opposed to peer-to-peer ride shares.
This partnership will allow Booking to drive hotel bookings through the Didi app, giving the American company yet another avenue to advertise its offerings within the domestic Chinese market. For Booking, the hope is that developing a substantial base of customers within China will result in their various platforms, which include Agoda.com and Booking.com, being used by Chinese tourists for booking accommodation when they’re outside of China as well, where their offerings are substantially more robust than many (if not all) of their Chinese competitors.
However, the partnership does not offer the option to book flights through Booking platforms like Kayak and Priceline via Didi.
The main draw of the deal for Didi is the strategic opportunities it provides for global expansion to cater to both Chinese tourists and non-Chinese consumers
While the extra money certainly does not hurt Didi, it’s also part of the company’s larger strategy to gain increased access to global markets. The ride-hailing company largely has the Chinese domestic market locked down, but has made moves to expand to Mexico, Australia, Japan, and Taiwan. This is an effort to make sure its platform is available to both Chinese tourists and non-Chinese consumers. Although not all expansions have been direct ones, with the company often operating franchise models and working through partners.
The most important part of this latest development is the fact that Didi will be able to sell its ride-hailing services through Booking’s platforms. This is especially important given the popularity of Uber and Lyft in markets outside of China, where the Chinese app is largely unheard of. The partnership will hopefully aid with marketing the brand. Moreover, if the deal helps Didi gain a sizable enough foothold in a foreign market, it increases the chances that Chinese tourists can utilize the app when they are abroad as well.
In a larger sense, the move further establishes Didi as a “place for travel” for its consumers. With the ability to book hotels and transportation, the app could be the key means for a consumer to facilitate travel after they leave the airport. In a way, the partnership makes Didi an OTA, albeit one with limited functionality. Then again, the majority of OTAs don’t provide any kind of ride-hailing services. This gives Booking and Didi a leg up on their competition.