Gross bookings increased 7% for the third quarter of 2008 compared with the third quarter of 2007. North America bookings increased 1%, Europe bookings increased 18% (13% excluding the net benefit from foreign exchange) and Other bookings (primarily Egencia(TM) and our Asia Pacific operations) increased 25%.

Revenue increased 10% for the third quarter, primarily driven by increased worldwide merchant hotel revenue and advertising and media revenue. North America revenue increased 7%, Europe revenue increased 16% (10% excluding foreign exchange) and Other revenue increased 24%.

Worldwide merchant hotel revenue increased 7% for the third quarter due to a 15% increase in room nights stayed, including rooms delivered as a component of packages, partially offset by a 6% decrease in revenue per room night.

Worldwide air revenue decreased 7% for the third quarter due to a 5% decrease in air tickets sold and a 2% decrease in revenue per air ticket.

Worldwide revenue from products and services other than merchant hotel and air (including advertising and media, car rentals, destination services, agency hotel and cruises) increased 27% for the third quarter due primarily to increased revenue from our advertising and media and agency hotel businesses. Package revenue decreased 5% for the quarter primarily due to weakness in key North American package markets such as Las Vegas and Hawaii.

Revenue as a percentage of gross bookings ("revenue margin") was 15.40% for the third quarter, an increase of 38 basis points. North America revenue margin increased 80 basis points to 15.99%, Europe revenue margin decreased 40 basis points to 16.64%, and Other revenue margin decreased 7 basis points to 9.01%. Worldwide and North America revenue margins increased primarily from growth of advertising and media revenue. The decrease in the Europe revenue margin was primarily driven by the impact on revenue from currency depreciation in the British pound during the quarter. In addition, revenue margins were higher due to slower bookings growth late in the third quarter of 2008 compared to the prior year period.


Gross profit for the third quarter of 2008 was $656 million, an increase of 8% compared with the third quarter of 2007 primarily due to increased revenue, partially offset by a lower gross margin primarily related to our gas card promotion.

OIBA for the third quarter increased 8% to $231 million, driven primarily by higher revenue. OIBA as a percentage of revenue decreased 32 basis points to 27.69%, primarily reflecting higher growth in technology and content expenses excluding stock-based compensation as a percentage of revenue. Operating income increased 11% to $200 million primarily due to the same factors driving OIBA, as well as lower intangible amortization as a percentage of revenue.

Adjusted net income for the third quarter decreased $6 million and net income decreased $5 million compared to the prior year period due primarily to a $21 million foreign exchange loss from holding Euros in order to economically hedge the purchase price of an acquisition and higher net interest expense resulting from $400 million of new notes issued in June 2008. These were partially offset by higher OIBA and operating income. Third quarter adjusted EPS and diluted EPS were $0.39 and $0.33, compared to $0.39 and $0.32, respectively, in the prior year. The EPS impact from decreases in adjusted net income and net income were offset by declines in weighted average shares outstanding.