Alibaba’s Alitrip: Creating Travel Innovation for ... · world’s 80% online travel market in...

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processes are to be handled. Ref.: 16/009C Version: SHMBA (July 2016)

AMY YIP MINYI HUANG

ALIBABA’S ALITRIP: CREATING TRAVEL

INNOVATION FOR COMPETITIVE ADVANTAGES

Alitrip is building an online travel platform which enables more businesses to

serve users directly, and pushes the whole traditional online travel industry to

upgrade.

-Amy Deng, Deputy GM of Alitrip’s Hotel Services Department1

In October 2014, Alibaba Group (Alibaba) announced the integration of all its travel

businesses under a new brand name, Alitrip, in hopes of reaping benefits in the fast-growing

Chinese travel market. Alibaba had developed online marketplaces such as Taobao and Tmall,

and wanted to make Alitrip a success in the travel industry. Alitrip provided a business-to-

customer portal for travel business operators of all sizes, allowing them to share the same

resources as the retailers in Alibaba’s other large marketplaces, including Alipay payment

options and Aliyun cloud-computing services.

The travel industry, however, was already crowded and highly competitive. In China, Ctrip

and eLong were well-established online travel agencies. Qunar was the largest travel search

engine and wanted to “be the Taobao for travel services.”2 With additional competition from

international companies and local small- and medium-sized companies, it was a challenge for

Alitrip to beat its competitors, who were very aggressive in expanding their business. After

Alibaba announced the Alitrip launch, competitors considered it a serious threat and took

immediate action to defend their market share.

Li Shaohua, General Manager of Alitrip, was very confident that Alitrip was well positioned

to bring something new to the online tourism industry. As a latecomer to the already crowded

market, Alitrip wanted to claim a leading position by changing the rules of the industry game.

Leveraging Alibaba’s resources, Alitrip introduced a series of innovative travel products and

services to improve travelers’ experiences by giving them more flexibility and greater

1 Zhu, J. (2015) “Alitrip: New Kid on the Block, New Angle”, The LINK, vol. 2, CEIBS.

2 Xiang, Tracey (21 Dec 2014) “Qunar or Alitrip: Which Will Be China’s Travel Taobao?”, Technode,

http://technode.com/2014/12/21/who-will-be-the-taobao-for-travel-in-china/, (accessed on 20 March 2015).

http://technode.com/2014/12/21/who-will-be-the-taobao-for-travel-in-china/

Alibaba’s Alitrip: Creating Travel Innovation for Competitive Advantages (16/009C)

CENTENNIAL COLLEGE

convenience. Facing the criticism that Alitrip did not offer anything new to the travel industry,

Li saw the need to evaluate their competitive strategies. What were Alitrip’s strengths and

weaknesses? What challenges did Alitrip face? How could Alitrip build on its existing

strengths and maximize growth?

The Travel Industry

Industry Overview The travel industry was one of the largest industries around the world and a main source of

income in many countries, contributing more than US$7.1 trillion worldwide in 2015. 3 The

travel-industry value chain consisted of service suppliers, travel intermediaries and travellers.

[See Exhibit 1 for the travel-industry value chain.] According to the World Tourism

Organization,4 the industry enjoyed steady growth, and the number of international tourists

grew from 528 million in 2005 to 1.184 billion in 2015. It was expected to reach 1.8 billion

by 2030. The top three source countries with the largest international tourism expenditures

were China, the US and Germany.

Online Tourism5

The online tourism industry had enjoyed fast growth since 2008, thanks to online travel

agencies’ strong performance and traditional tour operators moving online. The trend was

expected to continue, but the competition between tour operators and online intermediaries

would intensify. In 2015, global online travel sales reached US$533.52 billion which was

expected to grow to US$762.34 billion in 2019. 6 The regional markets in Asia Pacific,

Western Europe and the U.S. were of similar size, which collectively accounted for the

world’s 80% online travel market in 2015.7

Expedia and Priceline were the top online travel agent giants after a few years of industry

consolidation [see Exhibit 2]. Their old competitors, Orbitz and Sabre’s Travelocity,

respectively experienced stagnation and a significant decline in sales. It was expected that

Expedia and Priceline could be challenged only by rapidly growing Asian companies,

including China’s Ctrip and India’s MakeMyTrip.

The general trends of the online tourism industry were: First, mobile travel bookings became

popular. Priceline, for instance, allowed travellers to make bookings on the move through

smartphones, tablets, connected credit cards and in-flight screens. Smartphones and tablets

were expected to be the fastest-growing channel for global mobile travel sales. With the

increase of the average size of smartphone screens and travel companies’ easy-to-use mobile

apps, travelers were expected to use mobile devices to search and make bookings and

payments more frequently on smaller screens.

3 Statista (2016) “Statistics and facts on the global tourism industry,” http://www.statista.com/statistics/233223/travel-and-

tourism--total-economic-contribution-worldwide/ , (accessed on 20 May 2016). 4 World Tourism Organization (2015) “Annual Report 2014,” UNWTO; World Tourism Organization (Jan 2016) “International

Tourist Arrivals Up 4% Reach A Record 1.2 Billion In 2015,”

http://media.unwto.org/press-release/2016-01-18/international-tourist-arrivals-4-reach-record-12-billion-2015, (accessed on 20 May 2016). 5 Euromonitor International (Nov 2014)“Travel and Tourism: Online Travel Intermediaries – A Fast Changing Competitive

Landscape.” 6 Statista (2016) “Digital Travel Sales Worldwide From 2014 to 2019,”

http://www.statista.com/statistics/499694/forecast-of-online-travel-sales-worldwide/, (accessed on 20 May 2016). 7 Daedal Research (April 2016) “Global Online Travel Market: Trends and Opportunities (2016-2020).”

http://www.statista.com/statistics/233223/travel-and-

http://media.unwto.org/press-release/2016-01-18/international-tourist-arrivals-4-reach-record-12-billion-2015

http://www.statista.com/statistics/499694/forecast-of-online-travel-sales-worldwide/


CENTENNIAL COLLEGE

Second, innovative technologies and business models were emerging and having significant

impact on the travel industry. With metasearch engines available, travelers were able to

compare a wide range of offers and make bookings instantly. Metasearch engine companies,

such as Google and Baidu, entered the travel market. The airline sector typically had more

bargaining power and paid much lower commissions to intermediaries because of the limited

number of carriers. The highly competitive hotel sector had now put more focus on

developing new strategies and alternative channels to facilitate direct sales such as metasearch

channels, social media, Google Hotel Ads services (such as Google Hotel Finder) and review

sites (such as TripAdvisor). 8

Third, travel companies in general were seeking innovative ways to use big data to offer

personalized services to travellers. Normally, it was difficult for travel companies to

differentiate their travel products and services from one another, because the choices of travel

destinations and means of transportation were limited, and hotel and catering-service

offerings were not remarkably different. As a result, the traveler’s experience, from searching

for to completing a trip, became important. Social media made the sharing of travel

experiences quick and easy, and this was changing consumer behavior. Many travel

companies were therefore very eager to use big data analytics to identify travel trends

systematically and offer personalized services to travellers,

Chinese Travel Industry

China’s tourism industry was growing quickly and the future was promising. The industry

employed 88.5 million people in 2014, 11% of the Chinese working population.9 The number

of domestic tourists increased from 1.102 billion in 2004 to 3.61 billion in 2014, representing

an annual growth rate of 12.6%. Revenue also increased from Rmb 471.1 billion in 2004 to

Rmb 3.3807 trillion in 2014.10

In 2014, the number of inbound tourists was 128.5 million,

generating US$56.913 billion in revenue.11

Most amazing was the growth of China’s

outbound tourists and their expenditures. The number of international trips made by Chinese

travelers jumped from 10 million in 2000 to 109 million in 2014,12

making it the fastest-

growing travel market in the world. Chinese tourists spent US$102 billion in 2012 and were,

for the first time, the top source of tourist expenditure. The average Chinese tourist spent

US$1,230 per trip.13

Since 2014, many countries had announced a relaxation of visa rules for Chinese visitors.

Validity of business and short-term visas to the US was extended from one to ten years. This

helped further boost industry development. In 2015, 109 million Chinese tourists travelled

abroad, spending more than US$299 billion.14

By 2030, around US$1.8 trillion was expected

to be spent annually by Chinese traveling overseas.15

8 Euromonitor International (Nov 2014) “Travel and Tourism: Online Travel Intermediaries – A Fast Changing Competitive

Landscape.” 9 Incitez China (31 March 2015) “China to overtake U.S. As the Biggest Business Travel Market in 2017,”

http://www.chinainternetwatch.com/12942/business-travel-market/, c(acessed on 5 April 2015). 10

China National Tourism Administration (7 July 2015) “Tourism Industry Contributes More than 10% to GDP,”

http://www.cnta.gov.cn/xxfb/wxzl/201507/t20150707_720396.shtml, (accessed on 3 September 2015). 11

TravelChinaGuide (2015) “China Inbound Tourism in 2014,”

http://www.travelchinaguide.com/tourism/2014statistics/inbound.htm, (accessed on 3 September 2015). 12

People.cn (15 Jan 2015) “Over 100 Million People Travel Abroad in 2014, 2015 Total Income Expects RMB 3.66 Trillion,”

http://travel.people.com.cn/n/2015/0115/c41570-26391640.html, (accessed on 21 Aug 2015). 13

Cripps, Karia (12 Apr 2013) “Chinese travelers the world's biggest spenders,” CNN,

http://edition.cnn.com/2013/04/05/travel/china-tourists-spend/, (accessed on 8 April 2015). 14

Incitez China (31 Mar 2016) “Chinese Outbound Tourists Spent $229 Billion Shopping in 2015,”

http://www.chinainternetwatch.com/17112/chinese-tourists-shopping-2015/, (accessed on 20 May 2016). 15

Abkowitz, Alyssa (31 Oct 2014) “China’s Internet Giants Get Online-Travel Bug: Alibaba, Tencent, Baidu Angle to Grab

More of Burgeoning Tourism Business,” Wall Street Journal, http://www.wsj.com/articles/chinas-internet-giants-get-online-travel-bug-1414604652, (accessed on 20 March 2015).

http://www.chinainternetwatch.com/12942/business-travel-market/

http://www.cnta.gov.cn/xxfb/wxzl/201507/t20150707_720396.shtml

http://www.travelchinaguide.com/tourism/2014statistics/inbound.htm

http://travel.people.com.cn/n/2015/0115/c41570-26391640.html

http://www.chinainternetwatch.com/17112/chinese-tourists-shopping-2015/

http://www.wsj.com/articles/chinas-internet-giants-get-online-travel-bug-1414604652


CENTENNIAL COLLEGE

In 2015, the travel market in China was dominated by traditional brick and mortal travel

agencies. According to a study of China’s travel industry 16 , among 120 million Chinese

outbound travellers in 2015, 80 percent made a booking offline, using one of more than

27,000 traditional travel agents. Compared with other countries, traditional travel agencies in

China had closer relationships with their customers, especially those Chinese customers who

made their first international trip preferred to speak to a travel agent in person.

Although traditional agencies still dominated the Chinese travel market, online retail sales,

especially mobile bookings, were growing fast [see Exhibit 3].17 The GMV18 of the Chinese

online travel market reached nearly US$42.88 billion in 2014, increasing 27.1% over 2013.

This was driven by the sales growth in air tickets, hotels and vacation tours. For example, the

GMV of online vacations was worth US$6.67 billion, with a yearly growth rate over 40.0%.19

In 2015, Chinese tourists booked US$11 billion worth of travel online, representing a 70%

increase over 2014.20 While the online travel market was expected to grow fast, the market

witnessed an emerging trend of online and offline market integration in 2016.21

In China, the market leaders in online tourism were Ctrip and Qunar, respectively occupying

34% and 22% of market share in 2013. 22 In 2014, the revenue of online travel agents totaled

US$2.38 billion. Ctrip received US$1.27 billion, accounting for 54.3%.23

In the extremely competitive mobile business, using mobile app downloads as an indicator of

a company’s mobile market share, Qunar, Ctrip, eLong and LY had accumulated 610 million,

350 million, 110 million and 140 million downloads respectively by the end of September

2014.24 The profitability of a company’s mobile business depended on the company's ability

to generate income from apps downloads [see Exhibit 4 for a comparison among companies].

Aside from major domestic competitors, international companies such as Expedia and

Priceline entered and competed in the Chinese market. There were also numerous relatively

smaller Chinese companies targeting niche markets. There were additional new entrants

attracted by market potential. For instance, in September 2014, Tencent Holdings, the internet

gaming and social-media conglomerate, invested heavily in Woqu.com, a site targeted at

outbound Chinese tourists travelling to the United States. In 2014, a total of US$114.94

billion was invested directly in the Chinese travel industry. 25

16

Peltier, D. (20 May 2016) “Online Travel Booking Grows in China, But Traditional Agents Still Dominate,”

https://skift.com/2016/05/20/online-travel-booking-grows-in-china-but-traditional-agents-still-dominate/, (accessed on 20 May

2016). 17


More of Burgeoning Tourism Business,” Wall Street Journal, http://www.wsj.com/articles/chinas-internet-giants-get-online-travel-bug-1414604652, (accessed on 20 March 2015). 18

GMV stands for “gross merchandise volume,” GMV is calculated using the unit price charged to customers multiplied by the

number of units sold,. This is used by online retail websites to indicate the business volume over a period of time in a

particular marketplace. See: http://en.wikipedia.org/wiki/Gross_merchandise_volume, ”accessed on 5 April 2015). 19

iResearch (26 Mar 2015) “China Online Travel Market Breaks 270 Billion Yuan,”

http://www.iresearchchina.com/views/6324.htmlhttp://www.iresearchchina.com/views/6324.html, (accessed on 4 Apr 2015). 20

Peltier, D. (20 May 2016) “Online Travel Booking Grows in China, But Traditional Agents Still Dominate,”

https://skift.com/2016/05/20/online-travel-booking-grows-in-china-but-traditional-agents-still-dominate/, (accessed on 20 May 2016). 21

Mangocity (Jan 2016) Forecast of 2016 Tourism Market Trends. 22



Ibid. 24

iResearch (4 Jan 2015) “China Major Online Travel Companies Put Extra Stress on Mobile Business in Q3 2014,”

http://www.iresearchchina.com/views/6145.html, (accessed on 5 Apr 2015). 25

China National Tourism Administration (7 July 2015) “Tourism Industry Contributes More than 10% to GDP,”

http://www.cnta.gov.cn/xxfb/wxzl/201507/t20150707_720396.shtml, (accessed on 3 September 2015).

https://skift.com/2016/05/20/online-travel-booking-grows-in-china-but-traditional-agents-still-dominate/


http://en.wikipedia.org/wiki/Gross_merchandise_volume

http://www.iresearchchina.com/views/6324.htmlhttp:/www.iresearchchina.com/views/6324.html

https://skift.com/2016/05/20/online-travel-booking-grows-in-china-but-traditional-agents-still-dominate/


http://www.iresearchchina.com/views/6145.html

http://www.cnta.gov.cn/xxfb/wxzl/201507/t20150707_720396.shtml


CENTENNIAL COLLEGE

Alibaba Group

Alibaba was first founded in 1999 by Jack Ma to provide a business-to-business portal for

small- and medium-sized merchants in China to sell their products to global buyers. Rather

than sourcing its own inventory, Alibaba created a platform to facilitate trading between

sellers and buyers. This asset-light and inventory-free business model helped generate cash

flow with no inventory expenses.26

In September 2014, Alibaba’s IPO (initial public offering)

on the New York Stock Exchange raised US$25 billion, which broke the Agriculture Bank of

China’s record of US$22.1 billion in 2010 and made Alibaba’s listing the world’s largest

IPO.27

As the world’s largest online marketplace [see Exhibit 5 for financial summary], Alibaba

Group had a “live @ Alibaba” vision of making its products and services central to customers’

daily lives [see Exhibit 6 for Alibaba’s marketplaces]. Taobao, for instance, was a successful

consumer-to-consumer portal developed in May 2003. Within two years, Taobao took the

market-leader position in China, and its market share soared from 8% in 2003 to 59% in

2005.28

By March 2013, Taobao had around 760 million products listed and was one of the

world’s top ten most visited websites.29

Taobao marketplace had China’s largest GMV in

online shopping in 2013, and was the most popular mobile commerce app with the largest

number of active users in China.30 To support its and other trading platforms, Alibaba also

developed Alipay, an online payment system, and Sesame Credit, an internet credit agency.

In 2013, with 300 million registered users and 100 million mobile users, Alipay beat PayPal

with an estimated US$150 billion transactions processed, and became the largest mobile

payment platform in the world.31 Sesame Credit gave each user a credit rating, ranging from

350 to 950, depending on the user’s credit history, purchasing behavior, ability to pay off

debts, personal information and social networks. All this enabled Alibaba to accumulate more

data than any other company regarding the online spending habits and creditworthiness of the

Chinese middle class.32

Alitrip: Alibaba’s Travel Arm

Before the Alitrip Launch Before integrating all travel services together, Alibaba’s travel businesses were scattered

among Taobao Travel, Etao and Juhuasuan. Taobao Travel, launched in May 2010, was

Alibaba’s first online travel platform, and one of the Taobao marketplaces. Taobao Travel

allowed merchants to offer flight tickets, accommodations, vacation packages, excursions and

visa services. Customers could access it via the internet or by using the Taobao mobile app.

Taobao Travel adopted a commission model, earning a small percentage of the online

booking value. Its revenue reached US$1 billion within a year.33 In 2011, Taobao travel gross

26

Alibaba (2015) “Alibaba Group Business at a Glance,” http://www.alibabagroup.com/en/ir/glance, (accessed on 5 April 2015). 27

Chen, Liyan, Ryan Mae and Brian Solomon (22 Sept 2014) “Alibaba Claims Title for Largest Global IPO Ever With Extra

Share Sales,” Forbes,

http://www.forbes.com/sites/ryanmac/2014/09/22/alibaba-claims-title-for-largest-global-ipo-ever-with-extra-share-sales/, (accessed on 7 April 2015). 28

Wikipedia (2015) “Taobao,” http://en.wikipedia.org/wiki/Taobao, (accessed on 20 March 2015). 29

Ibid. 30

Alibaba (2015) “Our business,” http://www.alibabagroup.com/en/about/businesses, (accessed on 05 Apr 2015). 31

Padilla, Richard (11 Nov 2014) “Alibaba and Apple in Talks Over China-Focused Payments Partnership,”

http://www.macrumors.com/2014/11/11/alibaba-apple-payments-solution-china/, (accessed on 06 Apr 2015_. 32

The Economist (23 Mar 2013) “The Alibaba phenomenon,”

http://www.economist.com/news/leaders/21573981-chinas-e-commerce-giant-could-generate-enormous-wealthprovided- countrys-rulers-leave-it, (accessed on 04 Apr 2015). 33

Hou, Jiyong (29 Oct 2014) "Alitrip turns into Qua, competing for online tourism",

http://houjiyong.baijia.baidu.com/article/34130, (accessed on 9 April 2015).

http://www.alibabagroup.com/en/ir/glance

http://www.forbes.com/sites/ryanmac/2014/09/22/alibaba-claims-title-for-largest-global-ipo-ever-with-extra-share-sales/

http://en.wikipedia.org/wiki/Taobao

http://www.alibabagroup.com/en/about/businesses

http://www.macrumors.com/2014/11/11/alibaba-apple-payments-solution-china/

http://www.economist.com/news/leaders/21573981-chinas-e-commerce-giant-could-generate-enormous-wealthprovided-


CENTENNIAL COLLEGE

bookings totaled US$1.73 billion, most of which came from air ticket sales.34 The sales record

was more than 80,000 tickets in one day, equaling one ticket sold every second. By the end of

2013, Taobao Travel had more than 800 IATA35 certified flight-ticket dealers, 100,000 hotels

and 2 million travel products. 36

Etao, developed by Alibaba in 2010, was a shopping metasearch engine. In July 2013, Etao

started offering a hotel search service, Hotel.etao.com, which indexed 300,000 hotel-

information entries from six online travel services, including Ctrip.37 Its business was in direct

competition with Qunar, the leading travel metasearch engine.

Juhuasuan was launched as a Taobao marketplace in March 2010, and spun off in October

2011. It grew into a top Chinese group-buying site, with a 34% market share,38 and travel

being one of its businesses. In April 2013, Juhuasuan worked with Taobao to launch the

Juhuasuan Overseas platform. It offered localized lifestyle services and travel deals, including

hotel and travel packages for major cities such as Shenzhen, Guangzhou and Zhuhai.

Customers were allowed to redeem deals by showing a QR code or transaction serial number

received via text message.

In January 2013, Alibaba carried out a group-wide restructuring and integrated all travel

businesses into an Online Travel Services Division. Later, on October 28, 2014, Alibaba

announced it was upgrading the Online Travel Services Division to an Online Travel Services

Group. Taobao Travel was rebranded as Qua. The development of enterprise groups was Jack

Ma’ first attempt to give the entity both greater operational discretion than a division and less

financial independence than a subsidiary, in hopes of facilitating co-operation inside the

group.39

To enrich its provision of travel services, Alibaba made a series of investments to acquire

advanced technologies. In May 2013, Alibaba invested US$294 million in AutoNavi,40 a

leading company listed on NASDAQ that provided digital maps, navigation and location-

based solutions in China. Alibaba and AutoNavi agreed to share AutoNavi’s map data and

merchants’ location-related information in Alibaba marketplaces, including Taobao. This

allowed travelers to search Etao’s hotel portal and book hotels directly on AutoNavi maps.

The same year, Alibaba invested in Qyer.com and 117go.com. Qyer was set up in 2004 to

provide a Chinese-language portal for travel deals sourced from such sites as Ctrip and

Juhuasuan. 117go.com was a travel journal and experience-sharing app.

In September 2014, Alibaba invested US$458 million in Beijing Shiji Information

Technology, a hotel software service provider and IT management consulting firm.41 Shiji was

34

Schaal, Dennis (2014) “Alibaba’s Mega U.S. IPO Would Mean Huge Things for China Travel Competition,”

http://skift.com/2014/03/16/alibabas-mega-u-s-ipo-would-mean-huge-things-for-china-travel-competition/, (accessed on 20 March 2015). 35

IATA stands for Ïnternational Air Transport Association, an airline trade association, which represents about 250 airlines

around the world. See: http://www.iata.org/about/Pages/index.aspx, (accessed on 9 Apr 2015). 36

Ibid. 37

Xiang, Tracey (10 Jul 2013) “Alibaba’s Shopping Search Etao Taps into Online Travel Sector,” Technode,

http://technode.com/2013/07/10/alibabas-shopping-search-etao-to-launch-a-hotel-search/, (accessed on 12 May 2015). 38

Shu, Catherine (7 April 2013) Alibaba Group Launches Daily Deals Site Juhuasuan Overseas in Hong Kong & Taiwan,

Techcrunch,

http://techcrunch.com/2013/04/07/alibaba-group-launches-daily-deals-site-juhuasuan-overseas-in-hong-kong-taiwan/,

(accessed on 12 May 2015). 39

See: : http://www.iata.org/about/Pages/index.aspx, A(accessed on 9 Apr 2015)., 40

Lee, Melanie (28 Oct 2014) “Alibaba Travel Website Gets a New Name and Upgraded Services,”

http://www.alizila.com/alibaba-travel-website-gets-new-name-and-upgraded-services, (accessed on 6 Apr 2015). 41

Business Wire (29 Sept 2014) “Alibaba Group Announces Strategic Investment in Shiji Information Technology,”

http://www.businesswire.com/news/home/20140929006721/en/Alibaba-Group-Announces-Strategic-Investment-Shiji - Information#.VR3ep-GTNrg, (accessed on 30 March 2015).

http://skift.com/2014/03/16/alibabas-mega-u-s-ipo-would-mean-huge-things-for-china-travel-competition/

http://technode.com/2013/07/10/alibabas-shopping-search-etao-to-launch-a-hotel-search/

http://techcrunch.com/2013/04/07/alibaba-group-launches-daily-deals-site-juhuasuan-overseas-in-hong-kong-taiwan/

http://www.alizila.com/alibaba-travel-website-gets-new-name-and-upgraded-services


CENTENNIAL COLLEGE

established in 1995, and provided software to over 6,000 Chinese hotels for managing room

reservations, inventory, procurement, sales, billing systems and broadband networks. The deal

allowed Alibaba to connect with Shiji’s IT systems to strengthen its provision of online travel

services.

Launch of Alitrip

Alitrip was launched on October 28, 2014 with the Chinese name “Qua” (“去啊” meaning

“let’s go!” in Chinese). It not only sounded quite similar to its competitor, Qunar (“去哪兒”

meaning “where to go?” in Chinese), but in the brand-launch press conference, Alibaba’s

slogan was, “Where to go is not important, what counts is … let’s go!”42 In fact, Alitrip

interpreted the meaning of the brand name “Qua” in a special way.

The core of Qua brand means what consumers need to do is simply to make a

“set out” decision, leaving the rest for us to do.

- Li Shaohua, General Manager of Alitrip43

The objective of developing Alitrip as an individual business unit was to provide an

integrated travel platform and consolidate Alibaba’s marketing efforts in promoting travel

products and services. As an integral part of Alibaba Group, Alitrip was able to access and be

supported by Alibaba’s other back-end services, such as the online financial service Alipay.

Instead of promising to offer the lowest prices, Alitrip emphasized ensuring a trip was

enjoyable and “value for money.” 44 Alitrip wanted to develop holiday markets, which were

not yet addressed by Taobao Travel.

Qua emphasizes more on consumers’ materialization of their dreams, more on

holiday markets. Compared to business trips, we pay more attention to the

consumers’ experiences during the holidays. Our innovations focus on this

aspect.

- Li Shaohua, General Manager of Alitrip45

Alitrip aimed to move decision-making power over travel products and services from travel-

service providers to travelers themselves. Alitrip wanted to improve travelers’ user

experiences in the online tourism industry through mobile-service enhancement, business-

model innovation and consumer-oriented service innovation.

Alitrip’s Innovative Services Alitrip not only consolidated all Alibaba’s existing domestic and international bookings for

travel, hotel accommodations, cruises, package tours and other services across Alibaba

Marketplaces, including Taobao, Tmall and the Juhuasuan daily deal site, but also introduced

an array of innovative services.

Improving service levels does not necessarily mean to put more customer-

service people on the phone. It means [changing] the traditional mode of

service by means of technology.

-Li Shaohua, General Manager of Alitrip46

42

Ibid. 43

Ibid. 44

Ibid. 45

Ibid. 46

Lee, Melanie (28 Oct 2014) “Alibaba Travel Website Gets a New Name and Upgraded Services,”

http://www.alizila.com/alibaba-travel-website-gets-new-name-and-upgraded-services, (accessed on 6 Apr 2015).

http://www.alizila.com/alibaba-travel-website-gets-new-name-and-upgraded-services


CENTENNIAL COLLEGE

Online travel companies, including Alitrip, were competing in three main battlefields: mobile

offerings as service-channel innovations; platform expansion to increase market share; and

hotel offerings as a focus of travel-product innovation.

Mobile offerings

Alitrip’s mobile services provided travelers with an “Itinerary Service Platform,”47 including

One-Button Cancellation, Auto Check-In, and other services. It aimed to provide a seamless

service to travellers throughout their journeys by linking travel suppliers with functional

services and customer support.

Alitrip was the first to offer One-Button Flight Ticket Cancellation Service, where travelers

who booked flight tickets via the platform could cancel or change their tickets with just one

click, using the mobile app. It was an industry norm that travelers could wait several weeks to

get refunds from canceled flight tickets, but Alitrip promised to credit the refunds to the

travelers’ Alipay accounts within one hour.48

Alitrip’s Auto Check-In function was different from normal self-check-in. Travelers could

pre-register their personal preferences, such as flight seat choices. When they purchased a

flight ticket through Alitrip, the system would automatically check them in based on such

preferences as a window or aisle seat. This was an industry first.

To encourage travelers to use mobile services, Alitrip made a special “one yuan” offer,

allowing travelers to buy specific flight tickets, hotel accommodation, theme-park entrance

tickets and some other travel products for one yuan each, that is, less than one US dollar. By

the end of November 2014, mobile sales accounted for 58% of Alitrip’s total sales and were

expected to grow further.49

Platform expansion

Alitrip was not only a platform for small- and medium-sized businesses, but also started

drawing major airlines, travel agents and third-party providers. Since its launch, Alitrip’s

platform had brought in Agoda.com, a Bangkok- and Singapore-based online hotel

reservation service acquired by Priceline, and Cathay Pacific Airlines, a leading Hong Kong

carrier.

Alitrip’s discounted offers not only attracted customers to its platform, but also helped

enhance customer loyalty. Alitrip introduced “Across China” air ticket packages, the first of

their kind in the travel industry. "Across China" had two products: customers could pay

US$800 to buy ten domestic air tickets for three people to use on 300 popular domestic routes

in 2015, and US$1,600 to buy twenty-five tickets for five people to use together. The target

customers were business travelers and family holiday-makers.50

Alitrip also made an effort to attract those customers who did not have the confidence to

purchase travel products and services online. With over 10,000 merchants offering travel

products and services, Alitrip wanted to convince travelers that the transactions were made on

a safe platform by setting up a US$16.3 million consumer protection fund.51 Alitrip promised

47

TravelDaily China (29 Oct 2014) “Alibaba has launched the new online travel brand ‘Alitrip,’”

http://www.chinatravelnews.com/article/85696, (accessed on 6 April 2015). 48

Supra Note 45. 49

TravelDaily China (28 Nov 2014) “Alitrip achieves RMB 500 million sales on ‘Singles Day,’”

http://www.chinatravelnews.com/article/86711, (accessed on 9 April 2015). 50


http://skift.com/2014/03/16/alibabas-mega-u-s-ipo-would-mean-huge-things-for-china-travel-competition/,

(accessed on 20 March 2015). 51

Ibid. The consumer protection fund was worth Rmb 100 million,

http://www.chinatravelnews.com/article/85696




CENTENNIAL COLLEGE

that travelers could get refunds within an hour, and this differentiated Alitrip from other all-

in-one online service providers, including Ctrip.

Hotel offerings

The new online travel booking platform not only improves hotels’ efficiency, but

also enhances the guest experience, with the Internet + hotel model holding

great potential for development.

- Zhang Ruogang, Chairman of the China Tourist Hotel Association52

Alitrip developed a “Hotel of the Future” program in order to use network and big-data

technology to help hoteliers improve operational efficiency, and attract and retain customer

loyalty. Working with China’s hotel industry, Alitrip enabled customers to select hotel rooms

online and use self-check-in systems. Alitrip also sought alliances with independent hoteliers

to integrate their loyalty programs into the system.

Alitrip launched a service called “Post Post Day” to show the kind of innovation "Hotel of the

Future" would offer. Post Post Day was different from other online booking services, which

usually require travelers to book rooms with advance cash payment or credit card details.

Working with Sesame Credit of Ant Financial Services Group, qualified travelers with high

Sesame credit scores used Alitrip to reserve hotel rooms without paying a deposit and enjoyed

fast check-out by leaving their room keys at reception. As room charges and incidental

expenses were automatically debited from the travelers’ Alipay accounts, this service enabled

them to enjoy fast check-in and check-out and protect personal privacy. Already around 5,500

hotels in China had joined the program, ranging from high-end brands such as Shangri-La,

Starwood and Jinling to budget hotel groups such as Homeinns, Yinzuo and Huazhu. 53 In

addition to enhanced convenience, travellers with a Yu’e Bao money-market account could

continue to earn interest until the transactions were completed. Dissatisfied travelers could be

reimbursed from the consumer-protection fund.

From the hotelier perspective, Sesame Credit addressed the common problem of guest no-

shows because the link with customers’ credit records allowed hoteliers to evaluate credit-

worthiness in advance. Alitrip hoped the arrangement would help hoteliers reduce the average

no-show rate to less than 30%, compared to the industry average of 40-50%. 54

Online Tourism Market Leaders in China

There is a helluva competition going on in China’s online, mobile and call

centre travel businesses, and the biggest players (Ctrip, Qunar, eLong and now

Taobao Travel) are coming to the U.S. to raise some big bucks, intensifying the

competition.

- Dennis Schaal55

52

Erickson, Jim and Susan Wang (30 Mar 2015) “In the Future, Checking into a Hotel Won’t Be Such a Pain,”

http://www.alizila.com/future-checking-hotel-wont-be-such-pain, (accessed on 06 April 2015). 53

Ibid. 54

Ibid. 55


http://skift.com/2014/03/16/alibabas-mega-u-s-ipo-would-mean-huge-things-for-china-travel-competition/, (accessed on 20 March 2015).

http://www.alizila.com/future-checking-hotel-wont-be-such-pain



CENTENNIAL COLLEGE

CTRIP56

Ctrip, established in June 1999, was a NASDAQ-listed company. It had a leading position in

China’s online travel market. In Q2 2014, for example, Ctrip had more than half the total

gross merchandise revenue of online travel agencies in China, worth US$10 billion. 57 Its call

center employed about 14,000 people.58 Their target customers were Chinese business and

leisure travellers who did not travel in groups. In August 2014, US-based Priceline Group Inc.

invested US$500 million on Ctrip. Priceline acquired 10% of Ctrip’s shares and brought

advertisements from its Booking.com, Agoda.com and rentalcars.com sites to Ctrip’s

platform. 59

The expectation of consumers is very high in China. When people call our call

center, they don’t want to wait more than five seconds to speak with a live

person.

- Jane Jie Sun, Chief Operating Office of Ctrip60

Ctrip had invested heavily in developing travel products and services in 2014, which led to an

increase in operating expenses and an operating loss in that financial year [see Exhibit 7].

Anticipating operating profits lasting for several years, James Liang, Ctrip’s Chairman and

CEO, was unworried and confident that the investment would lead to stronger year-on-year

growth.61

Mobile offerings

Ctrip launched its mobile applications in 2010. Ctrip's mobile booking software provided a

one-stop travel platform allowing customers to search for and book hotels, flights, travel

packages, and train, car and ticket products with ease. Customers could also use mobile

applications to search for travel tips and information. Travelers could also share their

experiences and micro-blogs through the Ctrip community. By the end of 2013, there had

been more than 100 million downloads of the Ctrip mobile app.62

In 2013, Ctrip developed China's first corporate travel mobile app, with extensive booking

capabilities to match personal preferences of travelers with their companies' travel policies. Its

smart itinerary and travel update functions ensured travelers were updated immediately on

any changes relevant to their journeys. In 2014, Ctrip launched Young, a mobile app offering

tailor-made services for college students.

Platform expansion

Ctrip had formed strategic partnerships to increase market exposure. It had contracts with the

leading internet search engines in China to feature its websites and promote its businesses.

Ctrip’s began co-operating with Qunar in 2003, and Ctrip’s tourism products were promoted

on Qunar’s website beginning in August 2013. Ctrip also bought keywords or directory links

to guide potential travelers to ITS websites.

56

Ctrip (2014) “Annual Report 2013.” 57

Cowen, Martin (28 Oct 2014) “Alibaba earthquake: new travel URL, signs Agoda, ApplyPay hint, Tnooz,”

http://www.tnooz.com/article/Alibaba-new-travel-site-alipay.com-Agoda-ApplePay/, (accessed on 20 March 2015). 58

Abkowitz, Alyssa (31 Oct 2014) “China’s Internet Giants Get Online-Travel Bug: Alibaba, Tencent, Baidu Angle to Grad


Ibid. 60

Ibid. 61

Elliott, M. (14 May 2015) “Ctrip revenues surge, but losses widen,”

http://www.traveldailymedia.com/221761/ctrip-revenues-surge-but-losses-widen/, (accessed on 22 May 2015). 62


More of Burgeoning Tourism Business,” Wall Street Journal, http://www.wsj.com/articles/chinas-internet-giants-get-online-travel-bug-1414604652, (accessed on 20 March 2015).

http://www.tnooz.com/article/Alibaba-new-travel-site-alipay.com-Agoda-ApplePay/


http://www.traveldailymedia.com/221761/ctrip-revenues-surge-but-losses-widen/



CENTENNIAL COLLEGE

Ctrip was making a move to international markets. It formed a global partnership with

Priceline, the world’s largest online travel group, in 2012, and the relationship was further

strengthened in 2014 when Priceline invested US$500 million in return for 10% of Ctrip’s

shares. The partnership allowed Ctrip’s customers to access to Priceline’s more than 500,000

accommodations outside the Greater China Region.63 Priceline also agreed to promote Ctrip’s

services, including flight and attraction tickets.

In December 2013, Ctrip bought cn.toursforfun.com, an online supplier, to organize US tours

for Chinese travellers. In 2014, Ctrip invested in Hua Yuan International Travel Company,

China’s largest packaged tour seller, which focused on organizing trips to Europe.

Ctrip also launched a cruise-booking platform covering worldwide cruise voyages and

acquired UK-based Travelfusion in January 2015. Travelfusion’s travel distribution platform

provided travel management systems and self-booking tools to online travel agents and to

travel search and mobile travel service providers.64

Hotel offerings

Ctrip had the largest number of rooms and nights booked in China. As an agent in the hotel

business, Ctrip had developed room-supply relationships with about 70,000 hotels in China

and 277,000 hotels overseas, covering different price ranges and geographical locations.

Travelers normally made bookings and paid hotels directly after their stay. They negotiated

with hotels based on either the "guaranteed allotment" model or the "on-request" model. The

agreements required hotels to give Ctrip a price equal to or lower than their published prices,

and also required them to notify Ctrip of any promotional sales. Ctrip was also a major

shareholder with representation on the boards of directors in Home Inns, Hotels Management

Inc. and China Lodging Group Ltd., three large budget hotel chains in China.

QUNAR Qunar, meaning “where to go” in Chinese, was launched in May 2005 in Beijing. Qunar

began by providing a travel-search service. Later, it developed a transaction-processing

system, or Total Solution (TTS), to enable travel-service providers to sell products and

services directly online. Qunar supported a wide range of online payment services, including

Alibaba’s Alipay, Tencent’s Tenpay and 99bill. As a travel information search engine, Qunar

provided Chinese travelers with a “fun and hassle-free one-stop travel information source.”65

Qunar wanted to use its technological advantages to help travelers find suitable travel

products and information. The company targeted do-it-yourself travelers comfortable with

using automated technologies. The company tried to automate the travel-buying process as

much as possible, including making refunds after cancellations. This way of working was

very similar to Taobao marketplaces. Nevertheless, Qunar was still in the red [see Exhibit 8],

although analysts estimated the company would break even in 2016.

Before Alitrip announced Qua as its Chinese brand name, Qunar already bought the Qua.com

website to offer international airline ticket booking services for English speakers. It

announced Qua as its new sub-brand, a first step to tapping into overseas markets. Qunar was

also making efforts to boost its international expansions by introducing overseas mobile

phone booking and PayPal functions.66

63

Ctrip (6 Aug 2014) “The Priceline Group and Ctrip Expand Partnership,”

http://ir.ctrip.com/phoenix.zhtml?c=148903&p=irol-newsArticle&id=1956212, (accessed on 31 March 2015). 64

Asia Cruise News (08 Jan 2015) “Ctrip to strengthen China outbound travel,”

http://www.asiacruisenews.com/News/Ctrip-to-strengthen-China-outbound-travel/3w3c575.html, (accessed on 31 March 2015”. 65

Qunar (2015) “About us,” www.qua.com/about.html, (accessed on 5 April 2015). 66

ChinaTravelNews (16 Dec 2014) “Qunar’s new English sub-brand duplicates Alitrip’s branding,”

http://www.chinatravelnews.com/article/87270, (accessed on 5 April 2015).

http://ir.ctrip.com/phoenix.zhtml?c=148903&p=irol-newsArticle&id=1956212

http://www.asiacruisenews.com/News/Ctrip-to-strengthen-China-outbound-travel/3w3c575.html

http://www.qua.com/about.html



CENTENNIAL COLLEGE

(Qua) is easy to read for non-Chinese speakers and convenient for them to

search and remember.

- Wei Yang, Vice President and ticketing division CEO of Qunar67

Mobile offerings

The consumer will not install many travel applications on the mobile phone.

The space is quite limited, so we have been developing a very comprehensive

service.

- C.C. Zhuang, CEO of Qunar68

Qunar was committed to making investments in product development and technology in order

to stand out among travel agencies. Qunar’s app, the most popular mobile travel app in China

by far, allowed customers to pay via Tencent’s WeChat, the most popular social media

service in China, and offered voice recognition for hotel searches. 69

Platform expansion

Qunar was acquired in 2011 by Baidu, the largest search engine using simplified Chinese.

This helped fulfill Baidu’s objective of developing from a search engine to a web-search box

by integrating additional functions. Baidu was able to direct travel-related business inquiries

to Qunar.70

Qunar emphasized platform expansion in order to gain bigger market share. The company

believed that the more people who accessed the website, the higher click-through prices the

company could charge. Therefore, while trying to keep its cost structure as fixed as possible,

Qunar sought to increase its market share. The company targeted bargain-hunting travelers,

and Qunar invested in sales and marketing to bring more brick-and-mortar small travel

agencies to its platform.71

Hotel offerings

Qunar’s hotel services benefited from the company’s core technological competency, search

capabilities. The system was able to extract targeted data immediately from a huge number of

online sources using different formats. Travelers could use their hotel search service to review

results, including price, availability and other information, on a website mining the individual

websites of a huge number of hotels. Qunar believed hotel seekers could benefit from its

comprehensiveness, superior search capabilities and informative user reviews. By the end of

2013, Qunar's search results had about 297,900 hotels covering 2,700 Chinese cities and over

69,460 overseas cities. In 2013, they processed about three billion web and mobile queries.72

In 2014, Qunar formed strategic partnerships with travel service suppliers to secure room

supplies during peak seasons in popular destinations.

eLONG73

eLong was partly owned by Tencent, the largest online social media website, and Ctrip. Ctrip

bought the shares from Expedia, which had for eleven years been eLong’s largest shareholder.

67

Ibid. 68


More of Burgeoning Tourism Business,” Wall Street Journal,

http://www.wsj.com/articles/chinas-internet-giants-get-online-travel-bug-1414604652, (accessed on 20 March 2015). 69

Ibid. 70

Kwong, Robin (24 Jun 2011) “Baidu sees Qunar as its ticket to travel,” Financial Times. 71

Cao, Belinda (23 Feb 2015) “Qunar Eclipses Ctrip as Revenue Growth Surges: China Overnight,” BloombergBusiness. 72

Qunar (2014) “2013 Annual Report.” 73

eLong (2015) “2014 Annual Report.”



CENTENNIAL COLLEGE

eLong placed its business focus solely on booking accommodations. The majority of their

revenue came from commissions received from nights booked through the company. This

constituted 76%, 80% and 81% of the total revenue in 2012, 2013 and 2014 respectively [see

Exhibit 9]. Other income mainly came from air ticket sales. The total number of room nights

sold by eLong jumped from 6.4 million in 2010 to 34.2 million in 2014.74

Mobile offerings

In 2010, eLong launched a mobile-optimized version of their Chinese language website at

m.eLong.com. Then, eLong mobile iPhone and Android applications were launched in 2011

and iPad and Windows phone applications in 2012. The company saw the rapid increase of

mobile hotel bookings, which became its largest hotel booking channel in 2014. The company

continued updating their mobile applications, by, for example, adding last-minute hotel

booking and location-based hotel search and other ancillary services. Besides mobile

applications, travelers could also choose to make bookings through their websites, 24-hour

customer service centers and distribution partners and resellers across the country.

Platform expansion

eLong put the focus on promoting the eLong brand, using the slogan "Book Hotel, Use

eLong," through a combination of online marketing, media advertising, co-marketing with

other companies’ established brands and direct marketing. They had contracts with search

engines and directory-link websites, and purchased related keywords and directory links to

direct users to their websites.

Hotel offerings

As a leader in mobile and online reservations, eLong's domestic hotel coverage reached

200,000 hotels by the end of 2014, compared to 70,000 at the end of 2013. They offered

travelers around-the-clock hotel booking and a wide range of booking models, price points

and payment choices. Customers could choose to pay eLong in advance or pay the hotel.

eLong settled commissions with hotel suppliers once a month. They either had an agreement

with hotels on a hotel room allotment basis or operated on an "as requested" basis. In 2014,

they began emphasizing the first option because they could provide immediate confirmation

of customer reservations and had no obligation if the allotment was not used.

Challenges Ahead for Alitrip

Alitrip was Alibaba’s attempt to integrate all its travel services and marketing efforts to reap

the benefits of the fast-growing travel industry. Moreover, since its founding, Alitrip had

introduced a series of innovative travel products and services, especially in three main

battlefields of the travel industry: mobile offerings, platform expansion and hotel offerings.

The question facing the management team of Alitrip and Alibaba was whether Alitrip could

shake up the competitive landscape and become the market leader.

Alitrip was facing a highly competitive industry. In China, the online travel industry had long

been dominated by powerful companies, such as the online travel agency Ctrip, online search

engine Qunar and online hotel specialist eLong. The competition was further intensified by

the participation of global players, including Priceline and Expedia, as well as a significant

number of small travel agencies. Alitrip’s senior management was facing the question of how

to stir up industry competition through innovation.

Was Alitrip moving in the right direction? What made Alitrip different from its competitors in

terms of service provision and value creation? What were Alitrip’s competitive advantages?

74

Ibid.


CENTENNIAL COLLEGE

How could Alitrip build on its existing strengths and overcome its weaknesses? Will Alitrip

revolutionize the online travel industry in China?


CENTENNIAL COLLEGE

EXHIBIT 1: VALUE CHAIN OF THE TRAVEL INDUSTRY

Source: Adopted from Travelport Holdings (2007) 2006 Financial Report.


CENTENNIAL COLLEGE

EXHIBIT 2: LEADING ONLINE TRAVEL AGENCIES

Source: Adopted from Euromonitor International (2014) Travel and Tourism: Online Travel

Intermediaries – A Fast Changing Competitive Landscape, November, p.9.


CENTENNIAL COLLEGE

EXHIBIT 3: CHINA ONLINE TRAVEL MARKET BETWEEN 2011 - 2018

Source: iResearch (4 Jan 2015) China Major Online Travel Companies Put Extra Stress on

Mobile Business in Q3 2014, http://www.iresearchchina.com/views/6145.html, Accessed on 5 Apr

2015.

0

20

40

60

80

100

120

2011 2012 2013 2014 2015e 2016e 2017e 2018e

China online travel GMV (in US$ bn)


CENTENNIAL COLLEGE

EXHIBIT 4: MOBILE SALES AS A PERCENTAGE OF TOTAL SALES

Source: iResearch (4 Jan 2015) China Major Online Travel Companies Put Extra Stress on

Mobile Business in Q3 2014, http://www.iresearchchina.com/views/6145.html, Accessed on 5 Apr

2015.

0%

10%

20%

30%

40%

50%

60%

Qunar LY eLong Ctrip

Mobile hotel room night sales as a percentage of the company's total hotel room night sales

Mobile air ticket sales as a percentage of the company's total air ticket sales


CENTENNIAL COLLEGE

EXHIBIT 5: ALIBABA GROUP INCOME STATEMENTS

Fiscal year April-March

2012

(USD million)

2013

(USD million)

2014

(USD million)

Sales/Revenue 3,139 5,495 8,576

Cost of Goods Sold (COGS)

Incl. D&A

1,052 1,568 2,235

COGS excluding D&A 915 1,419 1,965

Depreciation & Amortization

Expense

136 149 270

Gross Income 2,087 3,927 6,341

Source: The Wall Street Journal (2015) Alibaba Group Holding Ltd. ADS,

http://quotes.wsj.com/BABA/financials/annual/income-statement, Accessed on 5 Apr 2015.

EXHIBIT 6: ALIBABA GROUP’S MARKETPLACES

Year of Launch Business Nature

Alibaba.com 1999 Online wholesale platform for small businesses

1688.com 1999 A wholesale channel for Alibaba’s retail market

merchants to source products from Chinese

wholesalers

Taobao.com 2003 Consumer-to-consumer platform for small

businesses to open online storefronts for

Chinese speaking customers

Tmall.com 2008 Business-to-consumer platform to help global

brands to reach China’s middle class

Juhuasuan.com 2010 Online group buying platform

AliExpress.com 2010 Business-to-consumer platform between

Chinese manufacturers and customers mainly

from Russia, Brazil and the U.S.

Source: Adopted from Alibaba Group (2015) Company Overview,

http://www.alibabagroup.com/en/about/overview, Accessed on 4 April 2015.

http://www.alibabagroup.com/en/about/overview


CENTENNIAL COLLEGE

EXHIBIT 7: CTRIP INCOME STATEMENTS

(For the year ended 31 December)

2011 (RMB

thousand)

2012 (RMB

thousand)

2013 (RMB

thousand)

2014 (RMB

thousand)

2015 (RMB

thousand)

Total Revenue 3,498,085 4,158,791 5,386,746 7,346,918 10,897,568

Cost of Revenues (805,130) (1,037791) (1,386,767) (2,100,606) (3,043,440)

Gross Profit 2,692,955 3,121,000 3,999,979 5,246,312 7,854,128

Operating Expense

Product developments (601,485) (911,905) (1,245,719) (2,321,349) (3,296,693)

Sales and marketing (624,600) (984,002) (1,269,413) (2,214,210) (3,087,990)

General and

administrative

(400,876) (570,487) (646,405) (861,551) (1,088,402)

Income From

Operations

1,065,994 654,606 838,442 (150,798) 381,043

Source: CTrip’s Annual Report 2013 and 2014, and press release on 16 March 2016.

EXHIBIT 8: QUNAR INCOME STATEMENTS


2011 (RMB

thousand)

2012 (RMB

thousand)

2013 (RMB

thousand)

2014 (RMB

thousand)

2015 (RMB

thousand)

Total Revenues 262,427 501,725 850,922 1,756,755 4,171,212

Cost of Revenue (43,682) (95,787) (173,395) (454,902) (1,433,237)

Gross Profit 218,745 405,938 677,527 1,301,853 2,737,975

Operating Expense

Product developments (83,110) (187,266) (319,021) (774,511) (2,578,528)

Sales and marketing (134,246) (243,800) (382,777) (1,207,764) (2,671,637)

General and

administrative

(43,135) (50,574) (129,209) (399,914) (3,388,467)

Operating Loss (41,746) (75,702) (153,480) (1,844,804) (6,723,220)

Source: Qunar’s Annual Report 2013, 2014 and 2015.

EXHIBIT 9: ELONG INCOME STATEMENTS


2011 (RMB

thousand)

2012 (RMB

thousand)

2013 (RMB

thousand)

2014 (RMB

thousand)

2015 (RMB

thousand)

Total Revenues 586,177 744,244 1,009,705 1,086,153 970,780

Gross Profit 431,313 539,921 748,862 735,575 466,569

Total operating expenses (381,981) (606,073) (927,045) (1,081,470) (1,461,274)

Operating income/loss 49,332 (66,152) (178,183) (315,895) (1,062,540)

Source: eLong’s Annual Report 2014 and 2015.

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