eLong, Inc. (LONG) Q2 2010 Earnings Call Transcript August 16, 2010 8:00 pm ET Executives Guangfu Cui – CEO Mike Doyle – CFO Analysts Eddie Leung – Banc of America/Merrill Lynch Fawne Jiang – Brean Murray Nan Li [ph] – SIG Question-and-Answer Session Operator
Previous Statements by LONG
» eLong, Inc. Q1 2010 Earnings Call Transcript
» eLong, Inc. Q4 2009 and FY2009 Earnings Call Transcript
» eLong, Inc. Q3 2009 Earnings Call Transcript
There are several factors impacting our current commission level. Number one, in periods of peak demand such as in the summer, the airlines needs slight assistance to distribute our inventory and reduce the incentive component of our commission. Number two, en routes originating from Beijing and Shanghai airlines have the promotion incentive component of our commission due to the Shanghai World Expo. Number three, some international carriers have reduced base commissions and other incentive commissions.As a reminder, less than 12% of our business comes from international routes and the airlines that have taken recent actions made up the minority of our international volume. We don't know yet the duration of the air commission cuts. But we are continuing to simply our air operations to improve efficiency and margins and meet the needs of our target customers. We believe that this is the best way to ensure against any impact of potential reduced commissions. But (inaudible), we are eliminating cash transactions in most cities in China and we expect by the end of the year we will complete eliminating cash transactions at eLong. And we want to focus on serving the credit card customers or other online banking customers and reduce the labor-intensive cash handling, express delivery of itinerary, that type of business. As has always been the case, the supply and demand situation is constantly changing. Delivery of new planes and the World Expo, and launching of new routes and expansion of high-speed rail are just a few of the factors that can impact the market. However, it is clear that the airlines are attempting to drive more direct business. It is our objective to maintain fair pricing parity with our online partners and continue to demonstrate our value as a meaningful and cooperative decision partner. Thank you, Eddie. And Mike, do you have anything to add?
Mike DoyleNo. Just as it pertains to our outlook, I think, as others in the industry have seen, a lot of the air growth in the last quarter did come in the back of package tours and group tours. We have just only been in the package tour business for a short time, so the volume for us is immaterial. We didn't actually see a lot of volume improvement from package volumes during this peak booking period and we don't offer group packages. And we have seen the increased aggressive actions of airlines trying to drive direct business to their websites. And as Guangfu mentioned, we did have some impact of eliminating cash as a payment option in some of our cities. Eddie Leung – Banc of America/Merrill Lynch Got that. I will go back to the queue. Thanks. Operator Thank you. Next question will be coming from the line of Fawne Jiang from Brean Murray. Please go ahead. Fawne Jiang – Brean Murray Good morning, Guangfu and Mike, and congrats on a very good quarter. A follow-up question regarding the airline commission rate. You mentioned that you are trying to push the users to use credit cards to complete the transaction. I just wonder, what's the percentage of credit card transaction for the air tickets for the second quarter? Mike Doyle Yes. We have a number of non-cash options that we offer our customers that we look at the mix of cash payment transactions and non-cash, and our non-cash is about 85% of total transactions. Non-cash would include credit cards, debit cards, and alternative payment methods such as mobile payment platform, Alipay, Tenpay, and the like. Fawne Jiang – Brean Murray Got you. And what's your percentage for online booking in Q2 approximately? Mike Doyle Our online transactions are now more than one-third.
Fawne Jiang – Brean MurrayOkay. I want to understand your hotel business a little bit better. Just want to – can you give us some color on your eCoupon program, like how effective you see the program so far and how long you are planning to keep that program? Read the rest of this transcript for free on seekingalpha.com