Sino Express Travel has entered into a formal agreement with International Travel Systems, a wholly owned subsidiary of Wing On Travel, for Sino Express to acquire 100% of Guangzhou Travel Information Systems, a travel technology company.
Guangzhou Travel Information Systems (GZTI) is owned by International Travel Systems.
GZTI owns a Business-to-Business e-commerce software, functioning as a product distribution system allowing travel businesses in China to trade inventory online.
Sino will pay US$7.5 million worth of SXPT shares to complete the acquisition. The transaction is expected to close by the end of third fiscal quarter in 2006.
Wing On Travel is one of the largest travel companies listed on the Hong Kong stock exchange. It is principally engaged in the business of providing package tours, travel and other related services with branches in Hong Kong, Macau, Canada and the United Kingdom, and hotel operation business in Hong Kong and China.
"The Internet has produced tremendous impact and changes in the travel industry. This deal represents a major opportunity for Sino to become the service leader in China's online travel market servicing the travel agents," commented Xia Chen, CEO of Sino Express Travel.
According to China's tourism authority, in 2004, there were 14,927 registered travel agents in China (1,460 International travel agents, 13,467 domestic travel agents). Of the 14,927 agents, over 90% are small to medium sized and regional based agents. These agents offer a limited range of local products due to deficiency in marketing resources and negotiation power with product providers. Also, most importantly these agents lack a product distribution system where travel businesses can trade and take advantage of each other's products and inventory portfolio.
The company' e-commerce platform will enable all travel businesses to conveniently trade products with each other online at an affordable rate. The initial launch campaign will include marketing the platform to large travel operators with high average sales volume and high product inventory offering.