Qunar is the fastest growing online travel company by far among the Big Three in China, although it is less than half the size of industry leader Ctrip. Can Qunar keep it up? Ctrip is feeling the pressure and is having to dial back on profits to ensure it will stay on top.
In the cutthroat China online travel competition, red ink doesn’t count for much, and Qunar, which is piling up losses, is the fastest growing company among the Big Three.
Qunar, which reported its third quarter results today, saw its total revenue jump 107.8% year over year to $81.6 million.
The much-larger Ctrip, which indeed turned a profit in the third quarter, grew its total revenue at a much more measured pace, 37.3%, to $368.1 million. Ctrip’s stock price tumbled after announcing its results last week because investors were concerned that competitive pressures will constrict Ctrip’s profit margins.
In terms of market cap, though, Qunar ($3.13 billion) is just 40.7% of Ctrip’s ($7.68 billion). Qunar has a powerful controlling partner in Baidu, China’s largest search engine.
Expedia Diverting Profits into eLong Investments
Bringing up the rear in terms of revenue growth among the Big Three in China is Expedia Inc.’s eLong unit, which saw its total revenue in the third quarter increase just 2% year over year to $52.7 million. eLong’s market cap is just $594.3 million.
Expedia Inc. CEO Dara Khosrowshahi said recently that the company will invest heavily in eLong for the long term.
Of the Big Three China online travel companies, Ctrip is the only one making any money. In the third quarter of 2014, Ctrip notched $35 million in net income, but that was a 42% decline compared with the year-earlier period.
On the red ink front, Qunar posted a net loss of $92.2 million in the third quarter and eLong was $9.6 million in arrears.
Ctrip and Priceline
Commenting on Ctrip’s recently bulked-up partnership with the Priceline Group, Qunar CEO Chenchao “CC” Zhuang told Skift last month that he believes Qunar can out-execute the competition.
“I don’t think the world will change by money and stretching your partnership,” he said. “They do have a straight partnership, but at the end of day, it has to convert into results, and the results will appear in their quarterly results.”
It remains to be seen if the smaller Qunar can maintain its torrid pace of growth as it gets larger, and whether its current strides will show up in its quarterly results in coming years.
Meanwhile, Qunar reported that it increased it increased its mobile revenue a whopping 445.1% in the third quarter and mobile revenue now accounts for an impressive 40.4% of Qunar’s total revenue.
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Photo Credit: Qunar's mobile revenue now account for 40.4% of total revenue. Pictured is Qunar's iPhone app. Qunar
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