CTRP » Topics » 2007 compared to 2006

This excerpt taken from the CTRP 20-F filed Apr 29, 2008.

2007 compared to 2006

Revenues

Total revenues were RMB1,287 million (US$176 million) in 2007, an increase of 54% over RMB834 million in 2006. This revenue growth was principally driven by the substantial volume growth in hotel room nights booked and air tickets sold in 2007.

Hotel Reservation. Revenues from our hotel reservation business increased by 42% to RMB677 million (US$93 million) in 2007 from RMB476 million in 2006, primarily as a result of the continued rapid growth in our hotel room nights sales volume. The total number of hotel room nights booked in 2007 was approximately 9.6 million compared to over 6.8 million in 2006. In 2007, the average commission per room night was approximately RMB70, remain consistent with 2006.

Air-Ticketing. Revenues from our air-ticketing business increased by 72% to RMB503 million (US$69 million) in 2007 from RMB293 million in 2006, primarily due to strong growth of air tickets sales volume as we continued to expand our air ticketing capabilities significantly. The total number of air tickets sold in 2007 was approximately 10.7 million, compared to approximately 6.4 million in 2006. In 2007, the average commission per ticket sold increased to RMB47 from RMB46 in 2006.

Packaged-tour. Packaged-tour revenues increased by 71% from RMB42 million in 2006 to RMB71 million (US$10 million) in 2007, as we continued growing our packaged-tour business.

Other businesses. Revenues from other businesses increased by 55% from RMB23 million in 2006 to RMB36 million (US$5 million) in 2007 primarily due to increased sales of air-ticket insurance and advertising service.

Business tax and related surcharges

Our business tax and related surcharges increased by 63% from RMB54 million in 2006 to RMB88 million (US$12 million) in 2007 as a result of our increased revenues in all of our business lines.

Cost of Revenues

Cost of revenues in 2007 increased by 54% to RMB236 million (US$32 million) from RMB153 million in 2006. This increase was primarily attributable to increased costs associated with our air-ticketing and packaged-tour businesses and, to a less extent, the expansion of our hotel reservation business.

Operating Expenses

Operating expenses include product development expenses, sales and marketing expenses and general and administrative expenses.

Product Development. Product development expenses increased by 67% to RMB177 million (US$24 million) in 2007 from RMB106 million in 2006, primarily due to increase of product development personnel as we expanded our air ticketing and packaged-tour businesses and increase of RMB9 million (US$1 million) in share-based compensation expenses from 2006 to 2007.

Sales and Marketing. Sales and marketing expenses increased by 41% to RMB243 million (US$33 million) in 2007 from RMB172 million in 2006, primarily attributable to increased salary and benefit expenses for the increased number of sales and marketing staff, advertisements expenses and marketing and promotion expenses, as well as the increase of RMB5 million (US$0.7 million) in share-based compensation expenses from 2006 to 2007.

 

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Table of Contents

General and Administrative. General and administrative expenses increased by 48% to RMB138 million (US$19 million) in 2007 from RMB93 million in 2006, primarily due to the increase of RMB18 million (US$2 million) in share-based compensation charges and the hiring of general and administrative personnel in 2007.

Interest Income. Interest income increased to RMB17 million (US$2 million) in 2007 from RMB16 million in 2006 due to the increased cash generated from operations.

Other Income. Other income increased by 215% to RMB35 million (US$5 million) in 2007 from RMB11 million in 2006, primarily due to increase of subsidy income.

Income Tax Expense. Income tax expense was RMB58 million (US$8 million) in 2007, an increase of 41% over RMB41 million in 2006, primarily due to the increase of our taxable income in 2007. Our effective income tax rate in 2007 was 13%, as compared to 15% in 2006, primarily due to an increase in deferred tax benefit resulting from the application of the tax rate of 25% under the new EIT Law as of December 31, 2007, as required by applicable accounting guidelines.

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