Chinese travelers are increasingly booking online and eLong and Ctrip are battling for their hearts, minds and Renminbi.
eLong, a subsidiary of Expedia Inc., indicated when it released its second quarter results last week that its percentage of online bookings is increasing, with more than one-third now taking place online.
eLong CEO Guanfu Cui says the company's percentage of online bookings has been growing over the last several quarters and "the online growth is a lot faster than the offline."
Meanwhile, Ctrip, which has an estimated 75% online marketshare in China, says around 35% of its bookings occurred online in the second quarter.
Thus, with both Ctrip and eLong taking more than one-third of their transactions online, the two dominant online travel intermediaries in China are growing their higher-margin online bookings and are outpacing the electronic booking share for the overall $61 billion travel market in China. In PhoCusWright's Emerging Online Travel Marketplace in China, published in November 2009, the research outfit projected that 17% of all travel revenue in China would be booked online in 2010.
Over the next few years, of course, as Ctrip and its smaller rival, eLong, duke it out for online customers, they'll compete with airline websites and metasearch players, as well.
In detailing some of eLong's online strides, Cui says the company's online hotel bookings more than doubled in the second quarter of 2010 compared with the year-earlier period.
For the quarter, eLong's net income was flat at RMB9.4 million, although net revenue increased 45% to RMB118.9 million. Cui attributed eLong's performance to the push to drive online growth, strong demand in China and the Shanghai World Expo.
Because of its Expedia relationship, eLong accesses inventory from 120,000 hotels worldwide and claims to be "the largest online distributor in China in terms of hotels offered which can be directly booked."
eLong attributes its online growth spurt to a website upgrade that brought faster loading times and better availability; online marketing, and an eCoupon promotion that offers discounts on hotel bookings in conjunction with the Shanghai World Expo.
In another electronic thrust, eLong says by the end of 2010, it hopes to eradicate cash transactions as it focuses on credit card- and online- banking customers.
And, like Ctrip, eLong is trumpeting its mobile booking capabilities.
Cui says growth from eLong's mobile website, which launched in the second quarter, "is very nice, but the base is very small." He adds that customers use the mobile site more for hotel bookings than for flights because hotel-bookers don't need to provide credit cards and save a step in the process.
eLong will continue to upgrade its mobile booking platform and will focus on ensuring that its hotel offering remains competitive, Cui says.
Cui cautions that booking platforms are important, "but the core competency is about your product competitiveness and the experience of overall booking."