Research On The Profitability Of The Elong Limited

With the continuous improvement of per capita income and the deepening of the Internet technology,online travel penetration of China is getting higher and higher.In the online travel industry,OTA model led by Ctrip and eLong occupies the largest market share.Product homogenization is now very serious in online tourism industry,relying on low price to enhance company’s competitiveness is not a good way.The long lasting price war in online travel industry has greatly affected companies’operating performance and profitability,especially company with OTA model.Therefore,how to get out of the price war and make a profit are the problems faced by OTA companies.Firstly,this paper introduces the current situation of online travel industry in China,development of eLong and its particularity.Then,it aims at profitability,and analyzes the profit model of eLong from the following five aspects:value creation,profit source,profit point,profit leverage and profit barrier.And it summarizes the profit model of eLong and its fault.Thirdly,by using different financial analysis methods,it analyzes eLong from aspects of cost income,operating conditions,and return on assets,growth and stability.Through qualitative analysis,it analyzes factors that may affect the profitability of enterprises.At the same time,it selects appropriate indicators to represent the profitability of eLong as study object.This paper establishes an empirical model and finds the relationship between factors and profitability of eLong through multiple regression analysis.And it comes out the result:Gross margin and sales cost are key factors affecting the profitability of eLong.Finally,according to the above analysis,this paper puts forward some development suggestions on how to improve and innovate profit model,how to increase revenue and decrease sales expense.