Chinese online travel website eLong.com (LONG) says its revenues continued to increase for the third quarter ended September 30, 2006.

"We are extremely pleased that eLong has delivered another record quarter with healthy growth in both hotel booking and air ticketing, which resulted from our relentless focus on execution and improving customer experience. Given the strong long-term growth prospects of the China travel market, we will continue to invest in our business and our brand to build a solid foundation for long-term sustainable growth and profitability," said Tom SooHoo, Chief Executive Officer of eLong.

Total revenues for the third quarter of 2006 were US$9.4 million, an increase of 40% from US$6.6 million reported in the same period in 2005, and an increase of 12% from US$8.4 million reported in the second quarter of 2006.

Revenue from hotel commissions for the third quarter of 2006 totaled US$7.3 million, an increase of 38% from US$5.1 million year-over-year, and an increase of 7% from US$6.7 million sequentially.

The year-over-year increase in revenue from hotel commissions was primarily due to higher room volumes accompanied by higher hotel commissions per room night. Hotel commissions per room night were CNY64 in the third quarter of 2006, up 5% from CNY61 in the corresponding period a year ago, and down 2% from CNY65 in the second quarter.

Hotel room nights booked through eLong increased 31% to 893,000 in the third quarter from 684,000 room nights in the corresponding period a year ago which included bookings made through FortuneTrip, a company we acquired in July 2005, and were up 7% sequentially from 832,000 in the second quarter of 2006.

As of September 30, 2006, eLong offered customers a choice of hotel rooms at discounted rates at 3,666 hotels in 291 cities across China as compared to slightly fewer than 3,000 hotels in 280 cities at the end of the third quarter of 2005.

"eLong has built one of the most extensive networks with hotel partners in this region. And our consistently strong hotel revenue growth reflects the increasing leverage that we have with suppliers as we drive more business to them," said Frank Zheng, Vice President of Travel Services.

Revenue from air ticketing commissions during the third quarter of 2006 totaled US$1.4 million, an increase of 47% from US$927,000 year-over-year, and an increase of 15% from US$1.2 million sequentially. Volume in air segment sales continued to grow with 273,000 air segments sold in the third quarter of 2006, an increase of 38% from 198,000 in the corresponding period a year ago and 11% higher than the 247,000 sold in the second quarter. Revenue per air ticket was CNY41 in the third quarter of 2006 as compared to CNY38 in the corresponding period a year ago and CNY39 in the second quarter. The sequential increase of revenue per air ticket was primarily due to an increase in the average air ticket price.

Gross margins in the third quarter of 2006 were 77%, as compared to 81% in the corresponding period a year ago and were consistent with the second quarter. The year-over-year reduction in gross margin was a result of reduction in higher-margin non-travel revenue, additional compensation and benefit for call center employees and slightly increased proportion of revenue contributed by the air ticketing business.

Operating income in the third quarter of 2006 was US$215,000, as compared to an operating loss of US$857,000 in the corresponding period of 2005 and US$143,000 in the second quarter.

As of September 30, 2006, the company's cash and cash equivalents balance was US$142.1 million.

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