About "Ctrip will acquire eLong" rumors

Text / Chen Min

A few months ago began to ferment on the "Ctrip will acquire eLong" rumors, and now intensified. Last week, eLong did not support the case was obviously good news, the stock suddenly rose 22%, two days later, there are foreign media reports that Ctrip plans to convert the way to acquire the United States held Expedia 65% ELong shares.

For this industry is not surprising rumors, Ctrip and eLong are silent, did not respond.

The acquisition rumors will come true, is still unknown, but we can see the capital market attitude on the matter - After this rumor is reported, eLong stock prices continue to rise, while Ctrip's stock prices are also rising, Its market capitalization reached a record 8.8 billion U.S. dollars.

The prevailing view of the capital markets is that once the acquisition is rumored to be on the wane, Expedia in the Chinese market can alleviate the troubles caused by the loss of Elong's performance; Elong suffered a price war and loses money in the quagmire and can finally cease operations with Ctrip , Continue to make the hotel reservation business; and Ctrip will also quickly strengthen the hotel reservation market monopoly. This will be tripartite profit.

More crucially, if the transaction is reached, Ctrip can prevent eLong directly fall where to go, or through where Baidu fall into the hands. There is a view that at present, Expidia holds a 65% stake in eLong, where Baidu holds a 62% stake, does not rule out the existence of the possibility of replacement of the two sides. Regardless of whether the eLong is directly or indirectly, where to go, Ctrip will lose a solid leading position in the industry - because where to go from Ctrip won the ticket booking first place, once won the eLong, and In the hotel reservation to win.

Who will make a living

Expedia, the online travel company of the United States, initially chose to buy eLong, largely to lay off a piece of chess in the potentially huge Chinese market to expand its international business. Unfortunately for Expedia, the performance of this piece is not very optimistic.

In 2013, due to the price war and marketing, eLong has greatly increased its business volume, but it has also caused eLong to plunge into the performance quagmire, with a loss of up to 168 million yuan for the whole year. Into 2014, eLong's focus on the performance of the hotel business is not satisfactory, there are eLong internal staff, said the hotel reservation business where the impact of competitors, room nights, turnover and some other important indicators There has been a decrease in growth rate.

Who will make a living? The first way is self-help. In April of this year, Ctrip and Ctrip announced a strategic alliance when Ctrip and Ctrip went into mergers and acquisitions. But soon, as Ctrip announced a 2.2 billion shares in the same way, eLong and the same way the cooperation ended, embarrassed eLong received the same way to pay 30 million yuan cancellation fee. Subsequently, the market had rumors that eLong will likely be acquired by Ctrip, eLong and allies to seek cooperation in self-help attempt come to an end.

As a result, the market began to speculate on the second way to live art dragon: Ctrip, or where to be incorporated by Baidu Department.

Some analysts believe that where to go to the market share of airline ticket business has done the industry leader in the hotel business is currently a high investment, if eLong and where to reach a cooperation, the two sides of the hotel resources will be able to form a complementary, "air + hotel" Will be where to fight enemies Ctrip two trump card. And, if this happens, as to where the major shareholders of Baidu, will be sitting on the domestic online travel market, the most advantageous weapon.

Ctrip is bound to be unwilling to see the presence of a stronger competitor than himself. With the intricacies of the relationship, Ctrip acquired eLong rumors are intensified.

Chen Bo, a veteran of the domestic online travel industry for many years, believes that if Ctrip acquired eLong successfully, it will be in the absolute leading position in the hotel reservation field, and the number of nights will be four times that of where. After the acquisition, reducing the price war with eLong can also increase the profit margin of hotel reservations, and in addition, it can prevent eLong from being acquired by Baidu and stabilize its market position. "In all aspects of analysis, both eLong or Ctrip, the acquisition is a good choice." Chen Bo said.

Ctrip offensive defense

In fact, after the return of founder Liang Jianzhang, Ctrip began pushing two major things: First, the move to the mobile terminal, and second, investment expansion. Some analysts said that once Ctrip won the eLong, together with the previous shares in the same way, the three will account for about 70% of the domestic online travel market share.

For the current domestic online travel boss Ctrip, a series of investment activities, both an expansion, but also face the industry challenge of competitors, the industry outside the BAT giant invasion of an offensive defense - in the past year More time, where to go growing, all kinds of online travel APP flocked to, BAT these three Internet giants have also joined the battlefield of online travel, which are Ctrip's position as the industry leader precarious.

Ctrip offensive defense is a series of investments, including a 40% -50% acquisition of a car Hi-20% of the shares to 23 million US dollars to get 20% of easy-to-use car shares, access to $ 6 million Hotel Manager Fast 33% of the shares, with 220 million US dollars to get the same way about 30% of the shares; to 36.7 million US dollars to achieve the control of Tujia home network, 230,900,000 yuan holding Tuotewang and so on.

In addition, Ctrip also holds 15.39% shares of Home Inns, a 9% stake in Huazhan (Hanting) and a 4% stake in Keystone Lodging, which has acquired 7-day chain hotels, becoming an investor in the three major budget hotel chains in China.

In Ctrip's management view, this series of investment actions, not only to change the impression Ctrip left to the outside world, to cultivate ways of investment, but also to prevent potential risks in the competition, Is a necessary move to stabilize the location of the boss.

Suning Ctrip COO recently told Netease Technology that those who are good business model, or Ctrip has strong complementary businesses, Ctrip will play an important role in the future. "Ctrip can not do all the things, so the choice of investment to expand, and investment can save a lot of human and financial investment for Ctrip." Sun Jie said.

According to Sun Jie introduction, Ctrip's investment is generally associated with the core business of the investment, for example, to strengthen and expand the investment in the original product line in Ctrip, to strengthen the investment in regional expansion, as well as those in the long-term optimistic about the business and model investment.

In the issue of controlling interest, Ctrip is using different ways to invest. Sun Jie said that if Ctrip is necessary to enter the new area, need to focus more on the development, we will consider the use of holding the way; if it is the choice of those already large-scale enterprises, complementary cooperation, Ctrip generally choose Investment in the way of small stocks.