Research On M&A Performance Of China's Online Tourism Industry

With the rapid development of mobile technology and supportive national policy;the mobile internet ecology has given the traditional tourism industry a thriving new environment to develop and grow.Moreover,while this new found space has brought many new business opportunities,it has also given birth to a fiercely competitive online travel industry.In an attempt to beat the competition,some online travel companies have even adopted a loss-based business model to seize a larger market share.However,operating under these conditions is tantamount to drinking poison to quench thirst;putting many online travel companies in dire situations and urgently looking for capital investment or M&A opportunities.This phenomenon has added an entirely new dimension to the online travel industry in order to survive,“the ability to promote a successful M&A.”In 2015,the capital market saw a wave of M&A activity as well as cross-industry integration,with the online travel industry being no exception.The M&A of Ctrip and Qunar was one of the many cases within the industry and received extensive attention from both the market and the public.These M&As can help refocus companies to work on optimizing customer service and improving innovation and abandon previous loss-based business models,which in turn promotes healthy competition and a more sustainable industry.Based on previous scholarship regarding M&A and performance,this paper aims to explore the effects of M&A on performance through literature review,case study and event research.First,a set of evaluation indexes is constructed to measure M&A performance,including the event analysis method,financial index method and non-financial index method.The event analysis method is used to establish the measurement model to analyze the impact of M&A events on stock price fluctuations;The financial index method gauges financial indicators such as solvency,operational capacity,profitability and development capability and uses the DuPont comprehensive analysis system to compared and analyze the financial performance before and after the merger.Finally,the non-financial perspective of website traffic,brand effect and market share is studied.Through these findings,we will be able to draw conclusions and propose rational assumptions regarding M&A effects on performance.Based on the in-depth Ctrip M&A case study conducted in this paper on the motivations and performance of Ctrip the conclusions are as follows: First,the Ctrip and Qunar M&A have significantly increased Ctrip's share price.Second,from a long-term financing perspective,Ctrip's financial capability declined the year of the M&A to the point where Ctrip faced the possibility of seeing increasing revenues without increasing profits.However,through subsequent integration,Ctrip's operating income has increased significantly,and synergies and scaling effects have gradually emerged one year after the M&A.From the current point of view,the positive effects of this synergy and scaling effect will continue to rise.Third,the Ctrip and Qunar M&A can significantly improve China's online travel industry,promoting healthy competition and a sustainable market environment while also increasing Ctrip's brand recognition and overall website traffic.Finally,based on the conclusions obtained from the research,the following suggestions are given on M&A performance within the online travel industry.First,before any M&A event,the relevant particulars of anti-monopoly law must be adhered to,to avoid any risks,including but not limited to things like clarity of property rights and compliance management.Second,financial risk capabilities need to be improved from a multitude of perspectives.For any M&A activity,the target company should be carefully selected.Regarding a share swap,both parties need to establish an effective financial integration mechanism and adjust the proportion of shares held by each party accordingly in order to strengthen cost control.Third,is to capitalize on the opportunities offered by “Internet +” and look to explore new profit growth points while integrating cross-business.