Early in the morning on April 10, 2014, Elong’s staff received an email from CEO announcing the strategic cooperation with 17u.
Baidu’s recent purchase in Ctrip’s shares aroused a great disturbance in the OTA industry, after all Ctrip and Qunar’s market share accounted for 33.9% and 22.1% respectively. The joint of Ctrip and Qunar would control about half of the billion dollar market.
The actual merge of Ctrip and Qunar will take a long time, facing a lot of challenges. Therefore, the strategic cooperation between Elong and 17u will be one step ahead of Ctrip and Qunar. However, the OTA leader and the biggest vertical travel search Qunar, plus China’s biggest search engine Baidu with huge traffic resource, the merge will be invincible. The though of it quickened the cooperation of Elong and 17u.
As the second leader in OTA market, Elong chose to work with 17u backed up by Tencent. Elong’s price war with Ctrip lasted over a year cost it consecutive six quarters’ net profit loss. Data showed that in online ticket booking market, 17u remained as the number one but Ctrip rose to the third place through price war. In 2013, 17u only accounted for 2.1% hotel booking market, while cooperating with Elong which owns plenty of hotel resources seems to be a better choice.
It’s natural Elong seeks cooperation with 17u. In 2011, Tencent purchased 16% Elong’s stake with $84.4 million. 17u also accepted two investments from Tencent, the recent $500 million was the biggest financing in OTA market.