Online sites hit hard by weaker local currency

If a slowing economy and intensifying competition were not putting enough pressure on Chinese travel websites, now the industry faces another potential obstacle to growth: A weaker local currency.

The government's decision to allow markets greater sway in setting the yuan's exchange rate triggered the biggest selloff in more than two decades. Trip-booking sites from Ctrip.com International Ltd to Tuniu Corp, which have profited from the nation's boom in overseas travel, slumped last week on concern consumers may be less inclined to go abroad with the currency worth less overseas.

While the number of Chinese who book trips online keeps growing, tougher competition has crimped profit margins at Ctrip, China's biggest online travel agency, to the narrowest since 2003 last year. Analysts project that Tuniu will not become profitable in at least the coming two years, and Qunar Cayman Islands Ltd, which competes with Ctrip in hotel booking, will not post a net income until 2017.