Expedia sells its Majority Stake in eLong
On Friday, travel and hotel booking major Expedia announced that it has sold its stake in Chinese travel venture. Expedia was left with no other option, but to sell its stake its eLong Inc, as the losses in the latter company was proving taxing for Expedia’s profit.
A group of buyers purchased Expedia’s majority stake of 62.4% for $671 million. Ctrip.com International Ltd., Keystone Lodging Holdings Ltd., Plateno Group Ltd. and Luxuriant Holdings Ltd were among the group of buyers who bought the stake.
Ctrip, a Shanghai-based Company, said that it has purchased a 37.6% equity stake in eLong for around $400 million. Owing to the deal, Ctrip said that it and Expedia have agreed to help each other on ‘certain travel product offerings for specified geographic markets’.
Expedia has link with eLong since 2005, as at that time Expedia’s then-parent company, IAC/InterActiveCorp., took controlling interest in eLong.
In the last 10 years, Expedia has increased its stake to the 62.4%. From last July, it was being said that Expedia was planning to sell its stake in eLong to Ctrip. But at that time, such rumours were denied by the companies.
In the most recent quarter, Expedia said that losses at eLong has increased as the website is spending more money on sales staff, marketing and offering discounts to attract more travellers. Expedia’s first profit declined 31% and one of the reasons for the fall is considered to be eLong.
On the other hand, the acquisitive company has been coming up with new brands, so that it can add more customers in its kitty. In February, Expedia and rival Orbitz Worldwide Inc. to enter into a deal worth $1.3 billion to bring top US travel-booking sites under one roof. Not only this, Expedia has lately bought smaller rival Travelocity for $280 million.
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