Digital Booking Sites

Qunar CEO on Cash Burn: ‘I Don’t Care About Short-Term Losses’

@denschaal

Aug 22, 2014 7:30 am

Skift Take

Qunar is executing on its mission and is notching remarkable gains in mobile and total revenue. Profits are not on the agenda, and that’s OK. At least right now.

— Dennis Schaal

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Qunar CEO Chenchao "CC" Zhuang is unapologetic about the company's red ink, and says if the company pulled back on spending it would "lose." Dennis Schaal / Skift


Chinese booking site Qunar saw its losses widen in the second quarter while generating phenomenal growth in mobile revenue — and that’s all part of the game plan.

Asked about Qunar’s net loss, which widened tenfold to $68 million in the second quarter from around $6.7 million a year earlier, co-founder and CEO Chenchao “CC” Zhuang said: “Either you wait or you lose. I don’t care about short-term losses.”

Chenchao, speaking during Qunar’s second quarter earnings call August 22 from Beijing, said Qunar’s goal is to be the biggest travel site in China, adding: “It doesn’t matter in the short term how much cash you burn.”

Qunar, which is diverting money from its desktop marketing efforts and pouring it into mobile, saw mobile revenue increase a whopping 511.8% to $22.9 million in the second quarter.

Mobile Is Very Material to Financial Results

Unlike many travel companies in the U.S. and Europe, where the percentage of mobile revenue is increasing but remains paltry in size, Qunar’s mobile revenue now accounts for 35.5% of total revenue.

Mobile is Qunar’s fastest-growing channel, officials said, and the company is shifting marketing dollars in that direction.

The company’s total revenue in the second quarter came in at $64.5 million, a 127.3% increase year over year — and it was Qunar’s largest percentage increase in 10 quarters.

Domestic Hotels

Qunar also boosted its portfolio of domestic hotels to 165,000 as it added 72,000 properties in the second quarter alone.

The company focuses its hotel efforts on three-star hotels and below, and is picking up market share.

The girth of the Chinese market and the opportunity is so humongous that Chenchao said Qunar is gaining the majority of its market share in hotels not from other online travel agencies such as Ctrip and eLong, but from the offline sector, including when travelers walk up to hotel front desks and book.

Qunar eventually will take market share from the other online travel agencies, too, Chenchao opined.

The discounting and couponing craze in China led to a 12.5% drop in revenue per room night in the second quarter, officials said, although the company exerted “price leverage” in airline tickets and raised its airline commissions in the seasonally slow second quarter both year over year and sequentially.

On the Priceline Group’s $500 million investment in Ctrip, and Expedia’s long-standing control of eLong, Qunar chief strategy officer Yilu Zhao repeated Qunar’s previously stated views that it partners with these rival online travel agencies and others in the international arena, where it offers a metasearch service, and that these competitive dynamics won’t impact Qunar’s operations.

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