Leading Chinese mobile and online travel service provider eLong, reported its unaudited financial results for the third quarter ended September 30, 2015.
Highlights
Net revenues for the third quarter increased 2% to RMB307.2 million (US$48.3 million), compared to RMB301.5 million in the third quarter of 2014.
Mobile bookings comprised more than 75% of eLong brand room nights4 in the third quarter, and cumulative downloads of eLong mobile apps reached approximately 390 million.
Domestic hotel coverage network expanded 94% to over 300,000 domestic hotels as of September 30, 2015, compared to 155,000 as of September 30, 2014.
More than 65,000 properties have contracted to use the free, cloud-based, multi-device hotel property management systems, Yunzhanggui and Zhuzhe, produced by our investee companies.
Accommodation reservation1 room nights stayed in the third quarter increased 19% to 11.2 million room nights compared to 9.4 million in the prior year period.
"We continue to execute our mobile accommodation-focused strategy and our mobile lodging transactions have surpassed 180,000 per day on peak days. We are glad to see our top line in the third quarter is back to growth after the continuous declines in the previous three quarters. Facing a dynamic market in China, we will continue to invest in our mobile products, technology team and marketing campaign to achieve a solid room night growth rate," eLong CEO Hao Jiang said.
Business Results
Total revenues by product for the Q3 of 2015 as compared to the same period in 2014 were as follows (in RMB million):
Q3 2015 | % | Q3 2014 | % | Y/Y | ||||||
Total | Total | Growth | ||||||||
Accommodation reservation | 298.0 | 92% | 269.8 | 84% | 10% | |||||
Transportation ticketing | 21.0 | 7% | 26.6 | 8% | (21%) | |||||
Other | 4.0 | 1% | 27.1 | 8% | (85%) | |||||
Total revenues | 323.0 | 100% | 323.5 | 100% | 0% |
Net revenues for Q3 increased 2% to RMB307.2 million (US$48.3 million), compared to RMB301.5 million in the third quarter of 2014.
Accommodation reservation revenue comprised 92% of total revenues, compared to 84% in the prior year quarter. Accommodation reservation revenue increased 10% in Q3 2015 compared to the same period in 2014, primarily due to higher volume, partially offset by lower revenue per room night. Room nights stayed in the third quarter increased 19% y-o-y to 11.2 million, and revenue per room night decreased due to the growth of its aggressive coupon program in our agency accommodation business.
Transportation ticketing revenue decreased to 7% of our total revenues from 8% in the prior year quarter. Transportation tickets increased to 1.8 million in Q3, representing an increase of 62% compared to the prior year period, primarily due to the growth of train tickets. Transportation ticketing revenue decreased 21% in Q3, primarily due to a decrease in air commission revenue per ticket. The decline in air commission revenue per ticket was primarily due to the lowering by major Chinese airlines of the base air commission rate from 2% to 1% in February 2015 and then to 0% in June 2015.
Other revenues are primarily derived from advertising business. Other revenues decreased to 1% of total revenues in the third quarter from 8% in the prior year quarter. Other revenue decreased by 85% y-o-y in Q3 2015, mainly driven by decreased advertising revenue as a result of our disposition of Nanjing Xici Information Technology Share Co., Ltd. In Q1 2015.
Recent Developments
On August 3, 2015, eLong announced that its Board of Directors had received a preliminary non-binding "going-private" proposal letter from Tencent Holdings Limited.
On August 13, 2015, the board formed a special committee consisting of three independent and disinterested directors, May Wu, Shengli Wang and Adam J. Zhao, to consider the "going-private" proposal letter. May Wu is the chair of the committee. On August 20, 2015, the committee retained Duff & Phelps as its financial advisor, and Kirkland & Ellis as its legal counsel, to assist it in this process.
On September 18, 2015, TCH Sapphire Limited, a wholly owned subsidiary of Tencent; C-Travel International Limited, a wholly-owned subsidiary of Ctrip.com International, Ltd.; and Ocean Imagination L.P. signed a Consortium Agreement to form a consortium to undertake the transaction.
No decisions have been made by the committee with respect to the response to the transaction. There can be no assurance that any definitive offer will be made by the consortium, that any agreement will be executed with the consortium or that the transaction or any comparable transaction will be approved or consummated.
