ELong, Ctrip engage in promotional ‘price war’

Leading Chinese travel booking website eLong Inc has waged a price war in the past week with major competitor Ctrip.com International, another leading online travel service provider, but industry watchers said Sunday it turned out to be more like a trick meant to attract more customers than a real war.

Cui Guangfu, CEO of eLong, started the "war" by claiming on his verified Weibo account on December 12 that if ctrip.com offers a 10 percent discount like eLong, eLong will offer rewards worth 240,000 yuan ($39,528) to its customers, and he also invited Ctrip CEO Liang Jianzhang to join in a price war.

After his initial salvo, Cui aggressively published around 10 posts within four days, including a claim that the "prices of two-thirds of the hotels on eLong would be 10 percent lower than those at ctrip.com."

Senior executives of ctrip.com accepted the challenge, media reports said last week.

"Ctrip.com is preparing to sell all its products on mobile apps at low prices with zero profit to fight the price war," Sun Maohua, CEO of hotels for ctrip.com, was quoted as saying in a statement e-mailed to the Global Times Sunday.

Cui of eLong told the Global Times Sunday that he "suspects ctrip.com of cheating consumers, as it has actually not offered such a large discount or prices lower than eLong's which it had promised to consumers."

As of Sunday, the executives' promises hadn't resulted in any obvious plunge in prices, according to an online search by the Global Times Sunday.

Most of the hotels listed by the two online travel service providers are not the same, while even for the hotels that were listed on both sites, it was difficult to compare whose are cheaper, as some of eLong's were cheaper, while sometimes ctrip.com's were cheaper, according to the Global Times' research.

"It (the price war) was more like a business promotion rather than a real price war," Wang Tingting, an industry analyst from Internet service consultancy iResearch, said Sunday.

Despite this, there is still no sign of a clear end which has caused concern for some foreign investment institutions, according to a Xinhua News Agency report Sunday.

Xinhua cited research reports by Goldman Sachs and Morgan Stanley as saying that the two NASDAQ-listed companies may get into profit trouble because of the price war.

Other online travel service players have showed little interest in joining this price war.

"We will have some promotional activities at the end of this year, but will not join in this kind of competition, which is a trick meant for promotion," Jiang Yun, public relation manager of Qunar.com Inc, told the Global Times Sunday.