Ctrip acquired eLong? The bitter price war

There is no eternal enemy, only permanent interests.

A few days ago, a source from Marbrige Consulting said it learned from relevant parties that Ctrip plans to acquire 65% of Elong's shareholding in Expedia through a stock swap agreement, Estimated at about 800 million to 1 billion US dollars, a premium of about 33%.

However, Xie Zhen, vice president Xie Zhen in an interview with 21st Century Business Herald reporter said the company has not yet received the acquisition of information, July 7, Ctrip also kept silent at the same time.

However, this does not stop the capital market movements. Since mid-June, the shares of eLong and Ctrip have been rising continuously, and the ever-prosperous eLong has risen 64% while Ctrip set a record high.

The bitter price war

Compared to the same way or other cattle investment Ctrip and other online travel sites, eLong and Ctrip "hatred" to come deeper.

Since 2010, the price war between the two sides has been escalating. Elong has the "challenger" posture and Ctrip has its own advantage in various fields. As a result, both sides have increased their share of Rush and their performance has declined.

An insider told 21st Century Business Herald reporter that the biggest benefit of the merger between the two sides is to avoid vicious competition. Long since the price war has so severely damaged eLong, while Ctrip's net profit has also been harmed. "In fact, this is the industry's internal friction, which is not good for the healthy development of the industry. The boss of the industry fights. Other smaller OTAs can only see the shares being taken away. So if there is really amalgamation, it is good for the industry."

When interviewed by 21st Century Business Herald, chief executive of the brigade consulting firm Wei Changren said: "At present, the development prospect of the eLong is not clear. For eLong, this is a node. On this node, Where there is movement between Ctrip are normal. "

Wei Changren analysis of this building based on eLong price war for many years "record" above.

According to eLong's first quarter 2014 results, hotel bookings increased 43% YoY in the first quarter, while hotel revenue increased only 14% YoY in 2Q10. ELong also admitted that nightly commissions decreased by 21% from the same period of last year due to the expansion of coupon promotion and lower nightly room rate for hotel rooms. ELong had a net loss of RMB34.5 million in the first quarter of 2014, which is also the seventh consecutive quarterly operating loss of eLong.

In addition, eLong spent 35% of its sales and marketing expenses on net revenues in 2010 compared with 39% in 2011, 55% in 2012 and 65% in 2013.

However, this also did not make Elon idea of ​​a truce, after its CEO Cui Guangfu in an interview with 21st Century Business Herald said that the board of directors approved the eLong use of profits for market share practices, as long as the market share growth, loss should Fight it. Ctrip also said earlier, would rather not make money but also insisted that the price war in the end.

Earlier Ctrip internal sources have said that Ctrip has started for the price war and market share has not only done business and high-end hotels, and instead set foot in the low-end market, and gradually squeeze the artillery has occupied the low-end market; and where to network and the United States Regiment and other groups also increased efforts to buy, which makes eLong's buy business has also been hit.

For Ctrip, the price war also let it harder.

In 2011, Ctrip annual sales and marketing expenses were 625 million yuan, an increase of 38%; in 2012 amounted to 984 million yuan, an increase of 58%; while in 2013 this figure was 1.3 billion yuan, up 29% %.

Where to go to the threat

This "one killer 1000, since the damage eight hundred" price war so that the two big brothers in the industry are under attack, the other hand, Ctrip's investment values, eLong may really be its goal.

Ctrip in April with the same course of lightning alliance so that the industry greatly shaken, because before this, with the same process just with eLong enemy eh said that the joint fight against Ctrip.

According to Wei Changren's analysis, eLong's profit determines that eLong must make changes. Making allies and attracting investment are all the way to go in the future.

"If Ctrip acquired eLong, then the online travel industry in the short term is still a big influence." Wei Changren said, "eLong and Ctrip will have an absolute market share of the online travel industry hotel business. Ctrip and eLong will Reduce pressure on the network, but there is a threat to where to go, where to go from eLong's market share is still close to the possibility, if the two sides together, where to catch Ctrip in the hotel business sector is completely hopeless.

According to a Ctrip internal source said that if the rumor is true that Ctrip currently account for about 40% of the online travel industry hotel business plate, eLong about 20%, the proportion of direct sales of the economy hotels is about 20% to 25% About once, hand in hand, can account for about 60% market share.

The share also makes some industry insiders think there will be a monopoly situation. But Wei Changren said: "The hotel industry has a total industry share of 300 billion, the entire online travel industry hotel performance together less than 20%, or even less than 10%, simply can not talk about the monopoly. If it is where to go and merge with Ctrip, It is possible to monopolize the business. "

It is noteworthy that the major eLong elite announced July 6 A $ 703 million (equivalent to 658 million US dollars) to acquire the Australian online travel company Wotif Group, whether to sell eLong redemption is also debatable.