Baidu, recently started focusing more on e-commerce and online video, dominates China's search engine market. In China Baidu competes with other players such as Tencent Holdings Ltd , SINA Corp and Alibaba.com Ltd.
Baidu said on Friday it would pay $306 million to become majority shareholder in Qunar.
"Travel has long been one of the top categories on Baidu, and the number of travellers in China has been growing very rapidly, so this is a market of obvious strategic importance to us," Jennifer Li, Baidu's Chief Financial Officer, said in a statement.
"Our investment in Qunar will create an even better search experience for users planning trips," Li said.
Shares in Baidu, which has a market capitalisation of about $43.5 billion, ended 3.5 percent higher on Thursday. Its shares are up by a third since the start of the year.
China is the world's largest Internet market with more than 450 million users, but with web penetration hovering around 30 percent and lack of sophisticated users outside the big cities, the potential for growth is huge.
Chinese consumers are using the Internet more often to book hotels and air tickets via websites such as Ctrip.com International Ltd as travelling becomes more common with increasing wealth.
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