Ctrip, the acquisition of eLong is defense

Rumors of Ctrip buying a 65% stake in eLong from the US Expedia intensified as a result of the conversion. Ctrip closed at 64.91 U.S. dollars yesterday (July 3), reaching a record market capitalization of 8.4 billion U.S. dollars.

I do not hold eLong or Ctrip shares, there is no any inside information, April 30, published "embarrassed eLong: not from the" beam ", where to go? ", Derived purely from the industrial point of view Ctrip will acquire eLong's corollary. As for the acquisition method and eLong's valuation is also estimated, see "eLong, guess who will eat dinner" (July 1)

Ctrip and eLong's business structure similar to the two mergers is difficult to receive the effect of 1 +1> 2, equal to 2 even fortunate. Liang Jianzhang acquired eLong, 30% based on the annexation of competitors, to expand, reduce friction, reduce costs and improve efficiency of these considerations, 70% is to prevent eLong directly or via Baidu where to go.

In 2013, where to go from Ctrip won the ticket booking first, if the annexation of eLong (2013 hotel scheduled 25.8 million), in turn will receive the hotel's first title. Air tickets, hotel reservations are lagging behind "to art", Ctrip will lose China's leading position in online travel. Therefore, Liang Jianzhang will try to stop this kind of thing from happening.

Even immediately after the purchase closed, but also lost 8 to 1 billion US dollars; so that eLong was where to buy, Ctrip market value of more than 200 million U.S. dollars loss.

As for why Expedia chose Ctrip instead of Ali or Baidu, the main reason is that the U.S. online travel company did not want to give up the concept of "China" and raised the possibility of a swap request to the acquirer. BAT will not move its own shareholding structure for a dry son. And with the Chinese exchange rate than zero a few percentage points Baidu shares, support for the market value of Expedia more direct and effective.

If Ctrip really acquired eLong, and can really 1 + 1 = 2, is what effect?

Hotel reservations, the combined consortium will be the absolute overlord. In 2013, both hotels booked a combined total of 67 million nights.

As can be seen from the figure above, eLong has been planning to grow much faster than Ctrip because of its focus on hotel business. In 2011, eLong Hotel booked only 9 million nights in mid-night, reaching 26 million in 2013, an increase of nearly twice as much. The same period Ctrip grew less than doubled. In terms of 2013 data, the planned number of eLong Hotels in the Consortium accounted for 38.8%.

Elong Hotel revenue growth lagged behind the planned size of growth. In the consortium accounted for 27.9%.

As you can see from the graph below, the average nightly average income of both houses is declining, which is obviously the result of competition. In addition, eLong's unit price has been a large cut by Ctrip. The reason is that Ctrip in the high-end users, high-end hotels have a profound accumulation, and eLong in recent years, the main force in the field of economic hotel. This situation is actually conducive to mutual complementarity.

As eLong focuses on the hotel reservation, airlines laissez-faire business, after the merger contribution to the Commonwealth minimal. According to the data of 2013, the merger of the two air ticket businesses still can not keep up. However, Ctrip less elf in the hotel booking field this rival can invest more resources in the airline business, where to regain the first is not impossible.

In mid-April, Ctrip, where gossip is when Chi, eLong, announced the same high-profile cooperation. At the media meeting, Cui Guangfu lured the media to question the "marriage" marriage from an antitrust perspective and turn "art into the arts." Will produce a monopoly? OTA will not "break things"? Ctrip, eLong, Expedia only convertible capital market in the United States, the domestic organizational structure unchanged, the Chinese authorities need approval? These questions should be explained when Ctrip announced the acquisition of eLong.