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Ctrip And Elong Losing Money over Price War
Ctrip and Elong, the two Chinese OTA giants declared strings of price wars over each other to win over customers and bigger market share at the cost of profitability, the aftermath is that both of them now seemed to be extremely exhausted.
According to their Q3 reports, Ctrip declined 40% in revenue while Elong suffered a loss of RMB 30 million. However, Tang Lan, Ctrip’s VP revealed in an interview that when would the long-lasting war stop depends on its rival, Elong.
Ctrip and Elong aren’t the only ones who got caught by irrational price war while most of Chinese OTAs were forced to join the war in that they feared losing consumers. After the three-month price war, they can barely afford the heavy cash burden. Ctrip has consumed RMB 300 million in three months just for marketing.
As for consumers, they were somewhat spoiled by the low price. They get into a habit of booking discounted rooms online since the price is far cheaper than what they can usually get. Some budget hotels are nimble in reacting: JinJiang Inn, Home Inns, HanTing Inns & Hotels, 7days Inn and so forth have all discontinued partnership with OTAs in a hope to recover the price.
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