Priceline has invested USD500M in Ctrip, China’s market leading travel website, while the companies have entered into a wide-ranging (and game changing) inventory sharing agreement that cuts both ways.

And as part of the deal, Priceline  has negotiated the right to take its share of the company up to 10% through open market share acquisitions over the next 12 months.

The investment came through a convertible bond but goes well beyond money.

It will “significantly promote tourism to and from China by allowing Ctrip’s customers to reach The Priceline Group’s global portfolio of over 500,000 accommodations outside of the Greater China Region, and The Priceline Group’s customers to reach Ctrip’s over 100,000 accommodations in the Greater China Region,” Priceline said in a statement.

“The Priceline Group and Ctrip will offer their respective hotel inventory to each other on an enlarged scale with more favorable partnership terms, including an agreement to enhance promotional efforts.

“Ctrip agrees to offer additional  Priceline Group brand services to its customers, including inventory from rentalcars.com and OpenTable, and The Priceline Group also agrees to promote Ctrip’s other travel services to its customers, including air ticketing and attraction ticketing services.”

On the financial side: “The Priceline Group agreed to invest $500 million through a convertible bond and Ctrip has granted The Priceline Group permission to acquire Ctrip shares in the open market over the next twelve months, so that combined with shares convertible under the bond, The Priceline Group may hold up to 10% of Ctrip’s outstanding shares.

“Upon purchase of the convertible bond, The Priceline Group will acquire the right to appoint an observer to the Ctrip board of directors.”

Big news.

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