Chinese online travel agency eLong reported its financial results for Q3 2013, with mobile now having significant impact on the business.
In Q3 2013, net revenue increased by 51% to $48.7 million. As of September 30, 2013, eLong customers can book over 240,000 hotels worldwide, including China and international.
Net loss for Q3 was $8.2 million, compared to net loss of $5.43 million in Q3 2012.
Key observations from the call are presented below.
Focus on mobile becomes intense
Cumulative downloads of eLong mobile apps have reached more than 35 million.
Mobile bookings - through eLong apps and mobile websites - comprise more than 25% of total hotel room nights in Q3. Mobile and PC bookings comprised more than 80% of eLong's total hotel bookings.
In the last call (Q2 2013), eLong announced a $100 million fund to back mobile tech projects.
eLong said it will continue its aggressive investment in mobile marketing, sales and marketing, product development, technology, and people to strengthen its market position and to drive long-term growth.
When asked about eLong's existing PC users moving on to become mobile users vs new mobile users, the company says:
"There are existing customers that are shifting to mobile and there are new customers. We don't disclose the percentage of new users/old users, but currently we expect a new group of consumer into our app. This group of users are mainly from third-tier cities, and fourth-tier cities. In the past we can't reach them via PC."
Ctrip, an arch rival of eLong announced in its Q3 2013 earnings call that it expects mobile to become the most important booking platform in near future.
Hotel bookings soar
In Q3 2013, hotel revenue grew by 63% YOY, commission per room night decreased 3% YOY, this is primarily due to lower average daily rate.
Hotel revenue constitutes a massive 81% of eLong's total revenue, an increase from 74% in Q3 2012.
Air bookings increase, but commission revenue remains the same
In Q3 2013, the air ticket business grew 30% YOY, this is the highest growth rate in the past three years. However, air revenue decreased to 11% of total revenues from 17% in Q3 2012.
Total air commission revenue in Q3 2013 was consistent with Q3 2012 as customers responded to eLong's air coupon program, as well as a decrease in average ticket price. The company is planning to continue its aggressive coupon promotion for air tickets in Q4.
The company said air ticketing business is very small compared to other line of business, and it averages 9,000 tickets a day.
Sales and marketing
Sales and marketing expenses for Q3 2013 increased 46% or $11 million compared to Q3 2012. This is primarily due to the investments in online and mobile marketing channels, advertising expenses for brand marketing campaign, and increased hotel commission payments to affiliates.
Qunar - a frenemy for eLong
The company says Qunar contributed approximately 10% of its hotel room nights in Q1 2013. This contribution has reduced in Q2 and Q3 2013.
eLong said it will continue to cooperate with Qunar in the CPC space, at the same time, eLong sees Qunar as a competitor when it comes to bookings fulfilled in Qunar.
eLong is hopeful to renew its CPC price contract with Qunar.
Investment strategy
When asked about the heavy investment in mobile, and how long this will continue to happen, the company says:
"eLong has been growing in the past with the strategy to focus on booking hotels online. Now there is a shift in the industry - mobile is coming along and we project that mobile may be over 50% of our business next year. So there is a huge potential of mobile for everyone in the industry.
"Everybody has to compete and try to win the mobile space to win future competition. So there is a certain kind of market opportunity.
"We as a company has to tend, adapt to the new market - new technology, new market dynamic, to survive and to compete effectively."
NB: Mobile China image via Shutterstock.