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eLong, Inc. (LONG)
Q3 2011 Earnings Call
November 14, 2011 7:00 PM ET
Guangfu Cui – CEO
Mike Doyle – CFO
Philip Yang - IR
James Li – CLSA
Eddie Leung – Merrill Lynch
Ming Zhao – SIG
Fawne Jiang – Brean Murray
Muzhi Li – Mizuho Securities
Alicia Yap – Barclays Capital
Wendy Huang – RBS
Catherine Leung – Goldman Sachs
Previous Statements by LONG
» eLong's CEO Discusses Q2 2011 Results - Question & Answer Session Transcript
» eLong's CEO Discusses Q1 2011 Results - Earnings Call Transcript
» eLong CEO Discusses Q4 2010 Results - Earnings Call Transcript
Hello everyone, thank you for joining eLong’s third quarter 2011 conference call.
Today, Guangfu Cui, our CEO, will make some remarks about the company’s performance in the third quarter 2011 followed by Mike Doyle, our CFO, who will provide additional detail on our financial results. Following their prepared remarks, Guangfu and Mike will be available to take your questions.
Before the management presentations, please allow me to read our Safe Harbor Statement. During this call representatives of the company will make certain forward-looking statements within the meaning of the U.S. Securities Act and the Securities Exchange Act. These statements are based upon management’s current views and expectations with respect to future events and are not a guarantee of future performance. Furthermore, these statements are, by their nature, subject to a large number of risks and uncertainties that could cause actual performance and results to differ materially from those discussed in the forward-looking statements as a result of a wide variety of factors. eLong undertakes no obligation to publicly update any forward-looking statements whether as a result of new information, future events or otherwise. Please refer to the risk factors described in our Annual Report on Form 20-F, as well as the full text of the Safe Harbor Statement in our Form 6-K, which will be furnished to the SEC in connection with our press release and this call, for discussion of some of the important factors that could affect future results.
I will now turn the call over to our CEO, Guangfu Cui.
Thank you, Philip. Hello everyone, thank you for being on this call.
In the third quarter, we continued to see our customers respond strongly to our market leading hotel network, easy-to-use hotel website, online eCoupon and new initiatives such as hotel Group Buying and hotel Last-Minute booking. Approximately sixty percent of our customers now book online at eLong.com and through our mobile applications.
We recorded a 42% year over year growth in hotel room nights to 2.7 million compared to 1.9 million in the third quarter of 2010. In addition, our net revenue year over year growth rate increased to 19% to RMB164 million during a quarter of difficult year on year comparison due to World Expo.
Our domestic hotel coverage network expanded 61% to over 23,000 domestic hotels as of September 30, 2011, compared to 14,300 as of September 30, 2010. In addition, eLong.com offers customers 145,000 hotels worldwide through our interface with Expedia. eLong.com continues to offer the largest number of domestic and international hotels for direct online booking in China. During the quarter, we launched a last-minute hotel booking model and upgraded our mobile phone offering with Hong Kong and Macao hotel inventory and train schedule information. In addition, we continued to promote group buying hotel products and our coupon program. To compete and win, we must provide customers with a broad variety of hotel products at competitive prices coupled with an outstanding user experience.
And, we have been improving our customer experience both online and offline. In the third quarter, we continued to upgrade our website and our call center continued its high quality service including receiving the China Best Contact Center award for the fifth consecutive year.
Four years ago, when I became eLong CEO, my leadership team refocused the company on hotel business and shifted marketing online. It involved into what we now call online hotel strategy. Over the past four years, we stick to this strategy and turn around the company.
As we think about our plans for 2012, we will continue to execute our online hotel strategy. We will continue to focus on hotel business, and continue to focus online marketing. Specifically, we plan to:
offer more competitively priced hotel products via innovative selling methods;
offer more domestic hotels;
aggressively attract online customers while striving to improve marketing efficiency; and finally
improve the online booking experience and overall customer service quality.
We remain confident and committed to our plans, and focused on achieving online hotel booking leadership in China.
Now, I would like to hand the call over to Mike for a review of our financial results.
Thank you, Guangfu. In the third quarter, strong online hotel performance drove an acceleration in our year-on-year net revenue growth to 19%.
Our hotel business benefitted from our continued investment in adding new hotel inventory, launching new booking models such as group buying, mobile and last minute and ongoing website improvements. Room nights booked through eLong increased 42% year-on-year to 2.7 million.
Hotel volume growth drove a 25% year on year increase in hotel revenue, partially offset by lower average commission per room night. Commission per room night decreased 12% year-on-year primarily due to lower hotel average daily rates as prices fell compared to higher ADRs achieved during Shanghai World Expo a year ago, the impact of continued mix shift to lower average daily rate hotels and the growth of our coupon program. Hotel revenue now represents 72% of our total revenues, which is an increase from 69% in the third quarter of 2010.