eLong (ticker: LONG), a Chinese online travel service provider reported Q1 2005 results today. Here are key points from Chairman and CEO Justin Tang and CFO Derek Palaschuk:


Q1 Highlights

  • E-tickets were 6% of total air ticket bookings.
  • 103,000 air tickets sold versus 83,000 in Q4.
  • Decrease in hotel bookings due to seasonality.
  • No seasonality for air ticketing business.
  • Added 58,000 new customers.
  • Bookings from first time consumers were 25% of total revenue.
  • 20% of transactions online; 80% through call center.
  • % of sales using credit cards is increasing rapidly.
  • Strong balance sheet with lots of cash.
  • Continues not to charge fees to online consumers.
  • Improved functionality of web site - mapping.
  • Implemented credit card payment platform on site.
  • English web site eLong.net started selling Expedia's international inventory.

Q2 Guidance

  • 120,000 air tickets.
  • 615,000 room nights.

Long-Term Outlook

  • Investing in organic growth.
  • Focused on growing market share and not necessarily on improving margins.
  • Expanding sales and marketing and product inventory.
  • Improving technology infrastructure.
  • Supported by shareholder base focused on the long-term.

Industry Outlook

  • Travel market in China - trend similar to last quarter - growing rapidly.
  • E-ticketing will grow.

Business Breakdown

  • Business travel: 65-70%.
  • Leisure travel: 30-35%.
  • Domestic travel business 95%+

Strategic Agreements:

  • eLong signed long-term exclusive strategic agreements with Yahoo! China and Sohu.com (ticker: SOHU).
  • eLong will operate travel channels on both of their web sites and has exclusivity in providing own travel content.
  • Already has strategic partnerships with China Telecom (ticker:
    CHA) and China Netcom (ticker: CN) to provide hotel booking services to
    their customers.
  • New partnerships with Industrial and Commerce Bank and China
    Construction Bank to provide travel booking services to their credit card base.

Relationship with IAC's Expedia

  • Assisting Expedia to secure China hotel inventory.
  • Adopting Expedia technology.
  • Integrating to link eLong booking platform with IAC's booking system.

On Re-valuation of the Yuan

  • Don't see any effects from possible re-valuation of Yuan.

Comment: The same comment we made relating to eLong's Q4 results applies today. The Company remains on a long road to profitability.

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