Expedia lets go of Chinese Partner eLong

Expedia is very busy this year. It also turns out to be a pretty expensive year after buying Travelcity in February for $280 million and investing $1.6 billion in Orbitz a week after. And now, the online travel booking firm is divesting a major asset after selling its majority share in eLong, its loss-making subsidiary in China, for $672 million.

Expedia's 62.4 percent share in eLong was quickly bought by a large group of travel companies in China like travel heavyweight and eLong's fierce competitor Ctrip, hospitality companies Platen Group and Keystone Lodging, and investment firm Luxuriant Holdings. Ctrip independently clarified that it paid $400 million in sum for a 37.6 percent stake.

While it did not explain its decision to sell eLong, Expedia clearly is doing this for financial reasons as eLong fought hard but failed to turn in gains, resulting to a whopping $33 million loss (EBITDA) in the first quarter. A quick turnaround is far in the horizon.

The market reacted positively on the sale as Expedia's stocks went up to 7 percent on Friday when news on the deal broke out.

The deal however now leaves Expedia without a Chinese investor. To counter that, it has partnered with Ctrip, although it is not yet clear at this time how the two companies will collaborate. In what looks like a cryptic statement, Expedia said it "agreed to cooperate with Ctrip to allow their respective customers to benefit from certain travel product offerings for specified geographic markets".

Expedia first invested in the travel industry in the early part of 2011, followed by a joint $126 million contract deal with Tencent in May 2011.