Qunar in spat with Ctrip

Qunar, an online provider of travel bookings, said it will appeal for a case rejected by Haidian District Court in Beijing, in which Qunar sued online travel agency Ctrip for defamation, indicating an intensified competition in China's online travel industry.

Qunar said in its July 4 announcement that the Nasdaq-listed Ctrip sent press releases to several news agencies last year claiming that Qunar was acting fraudulently in its group-buying business.

It sued Ctrip of defamation on May 11, but the case was rejected by Haidian District Court in Beijing last week due to inadequacy of evidence.

Qunar said in the announcement that it will bring another lawsuit against Ctrip, as it “had sufficient evidence” that Ctrip worked with a travel news website to conduct and publish a research report to defame Qunar's flight ticket business.

The conflict between Ctrip and Qunar stems from the intense competition between two different business models in China's thriving online travel industry, according to the International Financial News report.

As an online travel agency, Ctrip makes money by charging commission fees from their deals. Qunar, which is majority-owned by search giant Baidu Inc, gives users real-time results of the latest Chinese travel deals, and makes profit from clicks and advertisements on its website, the report said

China's online travel industry saw annual sales of 9.05 billion yuan ($1.4 billion) in 2011, an increase of nearly 34 percent from the previous year, according to Shanghai-based iResearch Consulting Group.

Major online travel players are in fierce competition to get their share of the market.

Ctrip is to invest $500 million to wave a year-long promotion campaign, according to the International Financial News report.

Qunar said on Tuesday it will spend $30 million to build a travel-service platform in its latest attempt to win an ongoing price war among the nation's top online booking websites, according to a China Daily report.