April 13, 2012

A slimmer, more successful eLong


In the ubiquitous one-stop shop model of online travel agencies, ELong.com, the Chinese division of US online travel giant Expedia.com, has proven that it can succeed by paring down. The company stopped offering a palette of services to focus on one aspect that it believes can bring in a higher stream of revenue: hotel bookings.

"Who says one cannot trump four? The more focused we are, the more professional we will be. We do not want to be the second Ctrip, but the first eLong," Cui Guangfu, CEO of eLong, says.

The Nasdaq-listed company ranks second in the Chinese online travel market with a 6.8-percent market share (based on sales revenue) behind Ctrip.com, China's largest online travel service provider and at 41.1 percent market share, according to iResearch. Mangocity.com, which puts more value on booking flights, ranks third.

As soon as Cui took over five years ago, he cut vacation and business travel packages from the company business model and targeted hotel bookings. "With limited resources, we need to put all the energy and money on the right place," Cui says.

He says eLong was in the red for three years prior to his arrival. It has now posted profits of 19.9 million yuan in 2009, 20.9 million yuan in 2010 and 39.7 million yuan last year. It made 481.9 million yuan in sales revenue in 2010; and 625 million yuan last year.

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