eLong starts 2015 with more supply and losses, room nights steady
OTA eLong continues to focus on growing mobile room night bookings through its apps as competition in China shows no sign of slowing down.
Chinese OTA eLong continues to focus on growing mobile room night bookings through its apps as competition in China shows no sign of slowing down.
During the Jan-March quarter eLong booked 9.3 million room nights, a 34% increase on 7 million booked in the same quarter in 2014.
However, this is slightly down on the 9.4 million booked during the last three months of 2014.
eLong also admitted that “in order to remain price competitive in the market, we increased spending on coupons and price discount.” This meant that, year-on-year, the 34% increase in room nights resulted in a 7% drop in accommodation revenues because all the discounting pushed average revenue per room down by 31%.
Another priority in the quarter has been to increase the supply of hotels. It ended the quarter with 280,000 Chinese properties compared with 180,000 at the same stage last year.
In fact, its earnings release explained that a lot of this new inventory is guesthouses, apartments and other accommodation-related services and that eLong will now talk about “accommodation” rather than hotels.
Elsewhere, it also talked up its B2B businesses Yunzhanggui and Zhuzhe which offer hotels a free cloud-based PMS/CRS system. More than 35,000 hotels have now signed up for this.
Hotels, or “accommodation” represented 84% of total revenues. Transportation – air and trains – fell to only 11% of the total and was 37% down on the same quarter last year, thanks to the reduced commission paid by Chinese airlines, which currently stands at 1%.
Mobile is now accounting for 65% of eLong branded room night bookings, up from 55% at the end of the Dec14 quarter. “Most of if not all are coming from the mobile apps,” said CEO Guangfu Cui, with the focus very much on the eLong app, which has now been downloaded 200 million times.
Cui added that mobile could get to 80% of eLong branded accommodation bookings in the near future, and that eLong will continue to spend aggressively to promote its app, including discounts and offers. Cui believes in the long run this strategy will promote more direct business, reduce customer acquisition costs and feed into its current goal which is to continue to grow room night bookings.
The business continues to operate in the red. Net loss for the first quarter of 2015 was RMB180.7 million ($29 million), compared with RMB35.4 million ($5.7 million) during the same three month last year. On a quarter by quarter basis, the loss is down from the RMB206.7 million ($33 million) racked up in the last quarter of 2014.
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