7 years ago

Expedia increases its stake in China online travel agency eLong

elongExpedia Inc., which already exercised majority control of Chinese online travel agency eLong, has gone ahead and increased its stake.

In a regulatory filing May 28, on the eve of the long holiday weekend, Expedia revealed that it purchased 16.9% of eLong’s ordinary shares.

Expedia states that the purpose of the transaction was to increase its investment in eLong.

Spokeswoman Katie Deines Fourcin adds: “The increased investment reflects Expedia’s continued confidence in eLong and signals Expedia’s continued belief in the importance of the Chinese travel market and its long-term growth potential.”

Soleil Securities analyst Jake Fuller says Expedia already owned 100% of eLong’s high-vote ordinary shares, and thus controlled 96% of the vote at eLong.

eLong has two types of stock: high-vote ordinary shares and ordinary shares.

“Each high-vote ordinary share is entitled to 15 votes versus one vote for each ordinary share,” Fuller explains.

eLong, which trades on the Nasdaq, soared on the news of Expedia’s increased investment.

Expedia has vowed to sink $50 million into its China investments over the next few years, so this eLong transaction can be seen as part of that broader move.

Expedia’s strategy in China is to work through local, Chinese brands rather to engender any “Expedia” brand loyalty.

In addition to Expedia’s majority control of eLong, an OTA, Expedia’s TripAdvisor unit operates two media brands in China, daodao.com and kuxun.cn.

In 2009, about 37% of Expedia’s revenue came from outside of the U.S.

Expedia’s aim is to get its U.S. domestic and international revenue on equal footing.

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Dennis Schaal

About the Writer :: Dennis Schaal

Dennis Schaal was North American editor for Tnooz.



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  3. Jonathan Alford

    Interesting. When evaluating several potential China acquistions as a private investment group not too long ago, it became pretty clear the challenges any foreign ownership faced even if it was well behind the scenes.

    So even if Expedia says, after trying several other models, the strategy is to work through local Chinese brands, I’d be surprised, though not unpleasantly, if they actually gain any share.

    That’s not necessarily bad, of course. $50 Million is not a lot if they really want to gain share, but could certainly help maintain share, invest in transitioning to mobile, and increase profitability as the market continues to grow.

    Just some thoughts…


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