The Shanghai-based company has easily outdistanced its principal competitor eLong, established the same year, in market share, profitability and, now that both are listed on Nasdaq, market capitalization.

If nothing else had changed, Ctrip's management would probably be feeling complacent. Instead, they have a fight on their hands, and one of the most aggressive Internet companies in the United States is supplying their rival with ammunition.

Late last year, Barry Diller, the former studio head turned Internet mogul, and his InterActive Corp acquired 52percent of eLong.

Where the story line had been Ctrip versus eLong, it suddenly became Ctrip versus Expedia, InterActive's prize asset, which is billed as the world's largest online travel site.

Financial results for the fourth quarter confirmed Ctrip's continuing domination of the Chinese market. It posted a profit of 41.6 million yuan (HK$39.2 million) on revenue of 98.5 million yuan. For the same period, eLong suffered a loss of 10.9 million yuan on revenue of 40.3 million yuan.

But the new US owner is already making its influence felt on eLong.

Justin Tang, chief executive of eLong, says his company has begun supplying some of the Chinese hotel inventory in Expedia. It has also entered into an alliance with Visa, becoming the first Chinese online travel site to accept payment by credit card.

And to challenge Ctrip's lead in the number of guaranteed rooms on offer to customers, it has begun to function as a hotel ``consolidator,'' buying up room-nights that hotels would otherwise have a hard time selling and flogging them at reduced rates to travel agents and consumers.

Tang acknowledges that the Western ``best practices'' borrowed from IAC were long overdue.

``We have learned how to design a more user-friendly Web site, how to optimize our search engine and how to build a flexible technology platform, which are the keys to a successful online operation. We have also improved our internal processes, such as planning and control,'' he said.

Still, eLong has a long way to go to catch up to Ctrip. Though their business models are similar, Ctrip seems to have done the better job of execution so far.

``Ctrip is the faster, more aggressive player of the two,'' said TR Harrington, a consultant at Mithras Group who studies the industry.

Part of the reason is that Ctrip from the outset focused its energies on online travel, whereas eLong dabbled in various businesses before finally settling on its travel vocation in 2001. In fact, eLong still owns unrelated portals such as Xici.net and love.elong.com.

Even Tang acknowledges that Ctrip was better capitalized than eLong in the early days.

Ctrip raised US$16.5 million (HK$128.7 million) of venture capital shortly after its inception, while eLong had to wait until May 2001 to get its first US$4.5 million injection.

This allowed Ctrip to develop better marketing channels, service platforms and supplier relationships, and make strategic acquisitions early in the game. The purchase in October 2000 of China's largest hotel reservation call center, Xiandai Yuntong Tourism Service, made Ctrip an instant market leader.

Despite the looming presence on the horizon of Diller and IAC/Expedia, Neil Shen, chief financial officer of Ctrip, is taking the competitive threat in stride.

``Before IAC's acquisition of eLong, we led eLong by 20-30 percent,'' Shen said. ``Since then, we've grown to double their size.''

Ctrip controls 50 percent of the hotel consolidator market in China, double eLong's share, he added.

An area where Ctrip is acknowledged to enjoy a big lead over eLong is guaranteed rooms, which allow customers to receive instant confirmation of their reservations.

This is crucial ahead of peak travel seasons such as the Golden Week holidays in May and October.

Ctrip claims it has guaranteed rooms in a third of the 2,900 mainland hotels in its inventory. eLong declined to reveal how many guaranteed rooms it can count on in the 2,600 hotels it lists.

Still, no matter how secure Ctrip feels now, analysts say that sooner or later it will have to rise to the challenge of globalization.

``In the short run, the domestic market will still be the focus of online travel in China,'' said Harrington of Mithras Group. ``But in the long term, international travel will play an increasingly important role in the competition.''

Thanks to its corporate parentage, eLong has ready-made foreign partners in Expedia and Hotels.com, another subsidiary of IAC. Both are powerful players in North America and Europe.

Ctrip's focus, though, remains fixed on the mainland market. ``For the international market, we are developing supplier networks, but we have no plans at the moment to market our site in other countries,'' said Shen.

Ctrip may also find itself challenged some day by IAC's deep pockets and Diller's reputation as a relentless pursuer of takeover targets.

Opportunities could emerge soon. China Southern Airlines, China Travel Service (Holdings) HK and Cendant Corp are just a few of the companies that have announced plans to get involved in the sale of travel services online.

``The industry is attracting a number of new entrants. Some will succeed, others will fail and this will naturally be followed by a period of consolidation. While Ctrip has some experience at mergers and acquisitions, IAC has not only experience but more capital and a track record of being quite aggressive when they identify the right opportunity,'' said Harrington. ``China clearly has IAC's eye at the moment.''

Moreover, eLong has more cash on hand to finance a spending spree. ``We have US$130 million, while Ctrip has US$65 million,'' said Tang.

Central government restrictions could act as a brake on eLong's ambitions, however. Though it managed to acquire Ray Time, which operates a hotel VIP card business in China, its attempts to buy air ticketing companies failed because of limitations on foreign ownership of travel agencies.

Shen also said foreign business strategies do not always work in China. The Chinese online market is unique - 70 to 80 percent of online travel reservations originate on the telephone, he says, and not on the Internet.

Nevertheless, the market is young and expansion appears inevitable. Currently, only 5 percent of all hotel bookings and 1 or 2 percent of airline reservations are done online.

Survey firm iResearch forecasts the online travel market will grow to 2.8 billion yuan by 2007, nearly five times' last year's 610 million yuan.

Shen expects Ctrip to maintain a growth rate of 30 to 40 percent over the next two years. eLong's Tang said that as the market expands both it and Ctrip will be able to grow rapidly without necessarily stealing market share from one another.