02 September 2008

China Special: Insight from eLong's CEO Guangfu Cui

BEIJING - In the run-up to the Olympic Games in Beijing, the travel industry including online travel players had projected a rosy picture for the industry.

But, in the last couple of months, several stakeholders including travel suppliers and intermediaries have acknowledged that the Olympics and other events in 2008 have served to constrict the growth in tourism flows to and from China.

Assessing the situation from online travel sector's perspective, Guangfu Cui, chief executive officer, eLong told eyefortravel.com's Ritesh Gupta: "Yes, it has been a tough year for the travel industry due to many one time but significant events - the snowstorm, the Sichuan earthquake, the shortened May holiday, Olympic GamesÃ¢â¬~¦ Without these one time but significant events, the market would have been better."

Cui, who is scheduled to speak during EyeforTravel's Travel Distribution and Sales China 2008 conference, scheduled to take place in Beijing on 24-25 September, added, "There might also be some other factors which impact the travel industry in the short term, i.e. the difficulties that the small and medium enterprises face right now.

Ã¢â¬ÅâœDespite these short-term challenges, we are very optimistic about the long-term prospect of the travel market in China. One of the key drivers is the ever increased consumption power of Chinese consumers."

From operations' perspective, eLong's total gross revenues has increased 10% year-on-year to RMB86.0 million and net revenues increased 9 % year-on-year to RMB80.8 million in the second quarter.

However, operating loss increased year-on-year by RMB5.7 million to RMB7.9 million, driven primarily by increased revenue offset by greater service development, and sales and marketing expenses, according to the company.

Its net loss from continuing operations increased year-on-year by RMB18.4 million to RMB20.3 million, driven primarily by a RMB 9.6 million increase in sales and marketing expenses, a RMB4.5 million increase in foreign currency exchange losses and a RMB7.3 million decrease in interest income compared to the prior year quarter, due to the appreciation of the Renminbi and lower US interest rates.

According to Cui, eLong has made significant improvements to its products and services and considers the ongoing phase as an ideal one to invest in brand awareness and to aggressively promote its product offerings.

"We are doing the right things and believe that our hard work will pay off as we develop our brand and the market rebounds," said Cui.