China's second-largest online travel service provider, eLong
Inc, is focusing on its Internet sales and marketing in order to
compete with market leader Ctrip.com International Ltd, executives
at the firm told China Daily.
The NASDAQ-listed Chinese firm said it is working closely with
US-based giant Expedia, which holds more than half of eLong's
shares, to boost the number of transactions made on its website.
This, eLong said, will help it reduce the costs of running its
800-person call center.
In the United States, 30 percent of users of online services
book hotels and rooms on the Web, but in China, only 5 percent do
so. Both eLong and Ctrip need to employ hundreds of operators at
call centers to handle orders or answer inquiries, which pushes up
costs.
"Internationalization should be the one thing that
differentiates us from anyone else in this market," said Richard
Xu, chief marketing officer of eLong.
ELong, unlike its rival Ctrip, allows English-language users to
book international flights online, rather than having to call.
While Ctrip focuses on high profit margin services such as
package tours and business travellers, eLong hopes to take
advantage of the Internet to serve a large volume of customers at a
small cost, the firm said.
The Beijing-based firm just made it into the black for the first
time in seven years in the second quarter, but its profitability
was still small.
In the third quarter, its operating income was just 1.7 million
yuan (US$215,000) on revenues of 74.60 million yuan (US$9.4
million). Its rival, Shanghai-based Ctrip, had operating income of
64 million yuan (US$8 million) in the same period on revenues of
208 million yuan (US$26 million).
At the end of November, the company revamped its website to make
services easier to access for users, along with allowing them to
ask questions on the website so they do not have to call.
It also decided to give online customers reward points worth 200
yuan (US$26) to 300 yuan (US$38) per order to encourage travellers
to use the Internet rather than the phone.
In May, both eLong and Ctrip launched 360-degree room view
services in China, where users are able to see hotel rooms before
making bookings.
Besides utilizing the Internet platform, eLong's other goal is
to expand its customer base through marketing.
In the third quarter, Ctrip sold 1.82 million hotel rooms and
1.72 million air tickets, but eLong sold just 893,000 and 273,000
respectively. Bigger scale is key to more profitability, the firm
said.
Marketing officer Xu said eLong planned to boost its presence in
the country with an aggressive marketing campaign. In the past
quarter, sales and marketing accounted for almost half of eLong's
operating expenses at 25.33 million yuan (US$3.17 million).
Xu expects the growth of marketing expenses will be faster than
the company's annual growth, which is about 40 percent. In the past
quarter, its sales and marketing expenses grew by less than 10
percent year-on-year.
ELong has marketing people at some 50 airports, but that number
will grow by 20 percent next year to promote its services among
frequent business travellers, Xu said.
(China Daily December 12, 2006)