Expedia reverses course and sells eLong stake, Priceline snubbed
In a major about-face, Expedia Inc., which previously emphasized that it was committed to China for the long haul through its majority stake in money-losing online travel agency eLong, sold its 62.4% stake to Ctrip and other investors.
Ctrip, which competes with eLong and Qunar among other players in the take-no-prisoners Chinese travel market, acquired a 37.6 percent stake in eLong for $400 million.
As part of the transaction, Ctrip and Expedia “agreed to cooperate with each other to allow their respective customers to benefit from certain travel product offerings for specified geographic markets.”
Expedia didn’t immediately respond to a request for comment on how and where this Ctrip-Expedia partnership will manifest itself.
But the agreement appears to be a Ctrip snub of the Priceline Group, which in August 2014 agreed to invest up to $500 million in Ctrip and has a deal where it can hold up to 10% equity in Ctrip.
Priceline Group CEO Darren Huston said at the time that Priceline and Ctrip were “almost second cousins,” although in Priceline’s first quarter of 2015 earnings call Huston said the expected hotel integration between the two companies has been taking longer than envisioned.
Priceline doesn’t see the new Ctrip-Expedia relationship as a snub.
“Ctrip is a market leader in China, and has been a key partner for the Priceline Group since 2012,” says Leslie Cafferty, a spokesperson for the Priceline Group. “That partnership continues as Ctrip strategically aligns itself for further success in China.”
As part of Expedia selling its stake in eLong to Ctrip, eLong CEO Guangfu Cui resigned from the eLong board of directors as did six members of eLong’s board who have Expedia ties.
Subject to eLong shareholder approval, they will be replaced on the board by May Wu, Shengli Wang, Maohua Sun, Nanyan Zheng and Liqun Wang.
Expedia CEO Darren Khosrowshahi couldn’t have been more vehement in recent months about his company’s long-term investment in and commitment to eLong despite heavy losses.
In the first quarter of 2015, eLong’s net income losses increased 408 percent to $40.1 million.