Jeffrey Boyd - President and CEO Robert Mylod - CFO

Aaron McCann – Goldman Sachs Imran Khan – JP Morgan Aaron Kessler - Piper Jaffray Miresh for Paul Keung - World Markets Michael Millman - Soleil Securities Chris Gutek - Morgan Stanley Mark Mahaney - Citigroup Investments Scott Barry - CSFB

Welcome to Priceline.com’s second quarter 2006 conference call. Priceline.com would like to remind everyone that this call may contain forward-looking statements which are made pursuant to the Safe Harbor provisions of the Private Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially from those expressed, implied or forecasted in any such forward-looking statements. Expressions of future goals and similar expressions reflecting something other than historical fact are intended to identify forward-looking statements. For a list of factors that could cause Priceline.com’s actual results to differ materially from those described in the forward-looking statements, please refer to the Safe Harbor statement at the end of Priceline.com’s earnings press release as well as Priceline.com’s most recent filings with the Securities and Exchange Commission. Unless required by law, Priceline.com undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. A copy of Priceline.com’s earnings press release, together with an accompanying financial and statistical supplement, is available in the Investor Relations section of Priceline.com’s website, located at www.Priceline.com. Now I would like to introduce Priceline speakers for this afternoon, Jeff Boyd and Bob Mylod. Go ahead, gentlemen.

Thank you very much and welcome to Priceline’s second quarter conference call. I’m here with Priceline CFO, Bob Mylod. Priceline's gross bookings growth continued to improve in the second quarter with accelerating organic growth rates for both our domestic and European operations. Gross bookings of $927 million were up 63% year-over-year. Pro forma gross profit of $106 million was up 62%, and pro forma net income was $23 million, or $0.55 per share, which surpassed the high end of our previous guidance and exceeded First Call consensus estimates of $0.51 per share. Second quarter results include results from Bookings B.V. acquired in July of 2005. Priceline's organic gross bookings growth rate, assuming acquired businesses were owned for the full period in question and excluding the retail hotel business on Orbitz, for the second quarter was 43%, a sequential increase from 33% in Q1. Priceline Europe had an excellent quarter, with $357 million of gross bookings and an organic growth rate of 117%, accelerating from 102% in Q1 and significantly in excess of that reported by our competitors. Priceline's domestic organic growth rate was 17% in the second quarter, an increase from 10% in Q1. Merchant gross bookings were up 5% in the second quarter, an improvement from negative 1% in the first quarter. While we experienced a continued year-over-year decrease in opaque airline ticket sales, total unit sales of airline tickets grew 4%, an improvement from Q1 when sales were down 3%. Domestic results were also helped by improving results in hotel room night and rental car unit sales. We believe our U.S. business continues to benefit from the redesign of our website and the new “More Ways To Save” advertising campaign, an increased contribution from online channels, including Orbitz, where our opaque service is offered as a discount option. Domestic online travel trends appear robust so far this summer, despite geopolitical uncertainty, high fuel prices and higher airfares. While these macro trends may at some point impact consumer demand, airline loads and hotel occupancy rates are at high levels and are expected to remain high throughout the summer. We believe our business has, on the whole, benefited from Priceline's value positioning in these market conditions. While airline ticket sales were up in Q2, it bears mentioning that gross profit contribution from sales of airline tickets continues to trail that of last year's second quarter, due to pressure on margins on the sale of retail airline tickets. A principal factor contributing to this margin pressure is reduced GDS incentive income. As many of you know, mainline U.S. carriers have negotiated significant reductions in the segment fees they pay for bookings made through new GDS programs and are forcing agencies to book through these programs by charging high fees and potentially withholding leisure or other fares from existing higher cost programs. We believe agencies will absorb a significant amount of these segment fee reductions in the form of reduced incentives. Priceline has taken a number of steps to address our airline partners' desire for lower distribution costs. For several quarters, we have provided lower retail GDS cost to carriers under agreements that broadly address our retail, opaque and packages business. We have established contracts with Sabre and G2 to allow us to participate in lower-cost programs that our partners support. We have also developed the technology to search and book through Sabre, which is in production today. As a footnote, I think it is demonstrative of the skill and hard work of Priceline's technology and business teams that we were able to get this functionality up and running in a relatively compressed timeframe. Finally, we continue to work with the airlines and the GDS/GNE community to find the right balance of access to full content for our customers, low cost to the airline and reasonable compensation to the GDS and the agency for the value being provided in selling airline tickets and processing ticket sales for airlines. I expect that discussions on these fronts will continue during the third quarter and potentially beyond. Our strong growth in Europe comes from the continuing success of our European management in penetrating the faster growing Continental markets, as well as solid results in the competitive UK market, which is still our largest market in terms of sales. The faster growing continental markets now represent a larger proportion of the business and are contributing to accelerating growth rates. We are also seeing benefits in the second quarter from integration activities, including combining the hotel inventory of Bookings and Active -- although a full combination of inventory has not yet been achieved -- and creating European demand for U.S. hotels and U.S. demand for European inventory. Each one of these efforts is producing meaningful reservations, but each also has plenty of running room ahead, in our opinion. Consequently, the outlook for growth in Europe seems promising. We are also starting to benefit from scale in Europe as our supplier-friendly model and significant demand flow is giving us what we believe is a favorable position on rates and availability in a network of over 24,000 European hotels. With $357 million in European gross bookings and 5 million room nights booked worldwide, we believe we are number one in Europe and number two globally in online hotel room night sales. Priceline's objective domestically is to be the leading online destination for value-conscious leisure travelers. We believe our improving domestic growth is helping us consolidate that positioning. Negative year-over-year trends in margin on retail airline tickets and increases in online marketing costs have had a negative impact on domestic operating margins. Our goal is to stabilize air margins in the coming months through our GDS and airline negotiations. On the marketing front, we have succeeded in building significant online demand for both the retail and opaque products. Going forward, we will focus on achieving greater efficiencies and returns from this channel in an effort to achieve the appropriate balance of growth and profitability. Our objective in Europe is to be the leading online hotel reservation service. Thanks to the hard work of the management and employees in Europe we continue to show superior growth and profitability and are building a formidable competitive advantage in product, supply and distribution. Our integration successes are adding to the strength of the business. Priceline's combined financial performance has allowed us to make significant investments for the future in technology, marketing, supply, service and product improvements, while delivering solid pro forma earnings growth to our shareholders. I will now turn the call over to Bob for the financial review.

Thanks, Jeff. I am going to give a brief review of our Q2 results, and then I will finish with some forward-looking guidance. I’ll start with a brief discussion of gross bookings trends. As Jeff just mentioned, we have been very pleased with the gross bookings trends of both our domestic and international operations, which led to total year-over-year gross bookings growth of 62.8% in the quarter, up from 46.5% in Q1. On an organic basis, gross bookings grew 42.8% on a year-over-year basis, up from 32.6% in Q1. Domestically, we were pleased to see our annualized gross bookings growth increase on a quarterly sequential basis for the second straight quarter, and in Europe we continue to perform at levels that have surpassed our most optimistic expectations. In our last earnings call, we projected that Priceline Europe would generate approximately $300 million to $320 million of gross bookings in Q2. This was based upon an assumption that the Q1 annualized organic growth rate of 102% would represent the peak growth rate for our European business, and that the law of large numbers and difficult comps would start to work against us, thereby causing this growth rate to decline in Q2. In fact, this did not happen. Instead, Priceline Europe's annualized organic growth rates actually accelerated in the quarter to 117%, which drove total European gross bookings of $356.6 million. I should note that we believe it is likely that this growth number was favorably impacted by the World Cup Soccer Tournament which began in mid-June, as we saw a step function increase in German bookings around the time of the World Cup. Having said that, we don't think the impact was material, and as you will hear when I get to earnings guidance, the strong bookings trends have continued in the four-week period following the World Cup. The strong gross bookings performance allowed us to deliver gross profit dollars that came in substantially ahead of the high end of our guidance. Again, the upside was driven primarily by our strong results in Europe, which in addition to continued exceptionally strong organic growth, also benefited from positive seasonal factors, the inclusion of the Easter holiday in the second quarter and the aforementioned World Cup Soccer Tournament in Germany. As for our Q2 operating expenses, our Q2 advertising expense of $39.4 million came in at the very high end of our prior guidance. This was substantially driven by an increase in online advertising as a result of our strong gross bookings performance, particularly in Europe. Personnel costs of $15 million came in approximately $750,000 higher than the midpoint of our prior guidance, due primarily to higher than expected accruals for employee performance bonuses that are accrued throughout the year and paid at year-end, based upon full-year profit results. Our Q2 general and administrative results of $7.1 million came in substantially higher than our prior guidance. This was caused by approximately $900,000 of professional fees that we incurred for advisory services associated with acquisition activity that was pursued during the quarter. None of the activity in question came to fruition. In the absence of these extraordinary expenses, our G&A expenses would have come in below our prior forecast, and our pro forma EPS would have been $0.02 per share better than the reported number. All of our other operating expenses came in within or below our prior guidance. Pro forma income tax expense came in higher than expected, due to the strong pre-tax income performance of our European operations. We reported pro forma net income of $0.55 per share which, as just Jeff just mentioned, came in above the high end of our previous range of guidance and was also in excess of First Call consensus estimates of $0.51 per share. We reported GAAP net income of $0.28 per share for the quarter, which also came in above the high end of our prior range of guidance. GAAP results were negatively impacted primarily by approximately $5.8 million of acquisition-related amortization expenses primarily associated with our acquisitions of Travelweb, Active Hotels and Bookings B.V.; and $3.7 million of stock-based compensation expense, which reflected the impact of the adoption of FAS 123 R earlier in the year. All of these expenses were non-cash in nature. GAAP results were also negatively impacted by the inclusion of 5.76 million shares of un-issued common stock associated with our two convertible note offerings that we are required to use in the calculation of GAAP EPS. These shares are not issuable unless our stock reaches a level of approximately $40 per share. As for cash and cash flow, we generated approximately $25.1 million in operating cash flow during the quarter, thereby bringing our operating cash flow for the first six months of 2006 to approximately $45.4 million. We began the quarter with $188.4 million of cash and marketable securities, and we closed the quarter with $212.8 million of cash and marketable securities, representing an increase in cash of $24.4 million in the quarter. Total capital expenditures in the quarter were approximately $4.2 million. Now for a few comments on guidance. We're looking for third quarter gross bookings to grow by approximately 44% to 48% on a year-over-year basis. We expect Q3 gross bookings from Priceline Europe of approximately $360 million to $390 million. We expect revenue to grow by approximately 13% to 17% on a year-over-year basis. We expect pro forma gross profit dollars to grow by approximately 44% to 48% on a year-over-year basis. As for Q3 operating expenses, we are targeting consolidated advertising expenses of approximately $40 million to $44 million with approximately 80% to 85% of that amount being spent on online advertising. We expect sales and marketing expenses of between $12 million and $13 million. We expect personnel costs to come in between $15.5 million and $16 million. We expect G&A expenses of approximately $6.5 million to $7 million. Information technology costs of approximately $2.6 million to $2.8 million, and depreciation and amortization expense, excluding acquisition-related amortization, of approximately $2.7 million. We are targeting pro forma EPS of approximately $0.60 to $0.65 per share. Our pro forma EPS forecast includes an estimated cash income tax expense of approximately $7 million, comprised of alternative minimum tax in the United States and income taxes in Europe. As for expected GAAP results, we expect to report GAAP net income of approximately $0.29 to $0.34 per share. The difference between our GAAP and pro forma results will be driven primarily by the inclusion of acquisition-related amortization, stock-based compensation and certain income tax expenses, all of which are non-cash in nature. GAAP results will also be negatively impacted by the aforementioned inclusion of 5.76 million shares of un-issued common stock associated with our two convertible note offerings that we are required to use in the calculation of GAAP EPS. These shares are not issuable unless our stock reaches a level of approximately $40 per share. While we're not going to give detailed line item guidance for Q4 2006, we are comfortable providing an update to the full year guidance that we gave on our last earnings call. To recap where we were before today's update, we had been forecasting total gross bookings of $2.9 billion to $3.1 billion for full year 2006 with approximately $1.1 billion of that amount coming from Priceline Europe. We also had forecasted a pro forma EPS range of between $1.60 and $1.70 per share. Because of our strong Q2 results and the visibility that those results give us with respect to the remainder of the year, we are now expecting to achieve full year gross bookings of approximately $3.2 billion to $3.3 billion, of which approximately $1.3 billion is expected to be generated by our European operations. Finally, we are now targeting pro forma EPS of approximately $1.66 to $1.74 per share. GAAP EPS is expected to be approximately $0.70 to $0.80 per share as a result of the same non-cash items that will impact Q3 and the inclusion of the additional 5.76 million shares of un-issued common stock associated with our two convertible note offerings. Before we take your questions, I wanted to make a couple of additional points about the forecasted numbers that I just gave. The first point has to do with GDS incentives. As Jeff mentioned in his remarks, we are in the midst of multi-party discussions and negotiations regarding the whole topic of distribution costs and GDS incentives. We have tried to the best of our ability to provide forecasts that take into account our best thinking as to where we will end up with respect to GDS incentive income on a go-forward basis. So far to date, I think we've done a pretty good job of doing so. Nevertheless, the topic of GDS incentive income remains among the most often questioned when we speak to analysts and investors. Because the GDS discussions and negotiations are ongoing and there remains uncertainty as to where our economics will ultimately settle at the end of these negotiations, we thought we would provide a little more numerical data to help investors evaluate the materiality of the topic in question. Specifically, the forecast that I just gave assumes that approximately 2.5% to 3.5% of our total second half gross profit dollars will come from GDS incentive fees. I will also point out that the gross profit dollars represented by this estimated range represents a material decrease from prior year levels, consistent with Jeff's remarks about agencies such as Priceline absorbing a significant amount of the reduction in incentive fees. Because gross profit from GDS fees essentially flow directly to the bottom line, any performance above or below this range of guidance will directly impact the forecasted earnings that I just provided dollar for dollar. We hope this additional disclosure helps to better frame the potential dollars in play, and we also hope that it allays some of the concern about the level of exposure that we have with respect to this issue. The last three points pertain to Priceline Europe. First, as I said on both our last earnings call as well as just a moment ago, the gross bookings performance that Priceline Europe has delivered so far in 2006 has been substantially ahead of our most optimistic expectations. Specifically, we have grown our European gross bookings by 110% on an organic annualized basis for the first half of 2006. However, our forward guidance for Priceline Europe, especially as it relates to Q4, implies a deterioration in our annualized gross bookings and net revenue growth rates. But in fact, actual results through July indicate that Priceline Europe has continued to experience organic annualized growth rates that are well in excess of 100%. If we continue to run at this clip through the remainder of the year, then the gross bookings, revenue and EPS guidance that we are giving today will end up looking conservative in retrospect. However, with annualized run rate gross bookings substantially in excess of $1 billion as of today, and annualized run rate room night sales in excess of $10 million, it is a mathematical certainty that the law of big numbers will dictate that the growth rates in Europe will slow, and we have factored that into our forecasts. The second point has to do with the profitability of our European operations. I mentioned on our last earnings call that we expect to incur significant current year expenses to build our business in order to grow our top line and bottom line in 2007 and beyond, and we are doing just that. Nevertheless, Priceline Europe is demonstrating strong operating leverage this year. At current course and speed it is likely that Priceline Europe will generate approximately two-thirds of our second half operating income. Moreover, Priceline Europe's annualized organic growth rate and operating income for the full year 2006 is expected to be in excess of 100%. Given this growth rate and given the very significant relative contribution that Priceline Europe is already making to our overall operating profits, we are increasingly optimistic about our ability to achieve strong growth in our consolidated pro forma EPS in 2007. The third and final point with respect to our European operations has to do with foreign currency exchange rates. The forecast that I just gave for Priceline Europe and for our consolidated earnings per share assumes a Euro to U.S. dollar exchange rate of approximately 1.275. Finally, I want to point out as I have done on previous calls, that all the forecasts are based upon an assumption that we will continue operating in a consumer travel market that is roughly similar to the current one, and any geopolitical instability or terrorist event, particularly within the United States or Europe, would in all likelihood have a negative impact on the travel market in general and our operating results in particular. With that, we would be happy to answer your questions.

(Operator Instructions) Your first question comes from Anthony Noto - Goldman Sachs. Aaron McCann – Goldman Sachs: This is actually Aaron McCann for Anthony. Just a couple of quick questions. Great quarter. As it relates to the hotel bookings in Europe, clearly you outperformed or outpaced our expectations; and the World Cup had an impact. Can you quantify what that impact was? Second question regarding GDS negotiations, are those negotiations better or worse than your expectations? When will we start to see an impact? I think you mentioned that you expect it to represent 2.5% to 3% of gross profit dollars, but I was wondering if you could give us a little more detail. Thank you.

Maybe I will take the first one, and Jeff, you can take the second one. It is very hard to quantify. As I said in my remarks, we think the World Cup did have a positive impact. Specifically, we saw our German bookings, as I said, experience a step function increase that we did not necessarily see in some of the other countries. Having said that, even before the World Cup, Germany was one of, if not the fastest growth market for us. So it is very, very hard to quantify what our bookings growth would have otherwise been, other than we think it did have a small positive impact. As I said in my remarks, obviously post-World Cup the growth rates in Europe have generally maintained themselves. So again, if anything we think it was positive, but not necessarily all that material.

With respect to the GDS negotiations, it is difficult to get into a lot of detail when you are talking about live discussions that are going on currently. I think in terms of how we are doing relative to our expectations, as we mentioned and Bob mentioned in his remarks, I think we have done a reasonable job of projecting the impact to date of reductions in incentives. In terms of how the negotiations are going, I think you can see from our recent press releases we have announced deals with G2, deals with Sabre and we just announced today signing up under their EAS program. We're happy with the terms of those programs. That is why we signed the contracts. We think they provide -- EAS in particular -- a nice balance between reducing costs for the airlines and fair compensation for the GDS and the agency. So I think that these contracts are starting to come into place, but there are still dialogues yet to come. I don't think we really could get any more specific in quantifying what the future impact might be, other than to say, as Bob mentioned, we have considered it in our forecast, and we have given you a parameter of what the amount is so you can assess its materiality. Aaron McCann – Goldman Sachs: Great. Thank you, guys.

Our next question comes from Imran Khan – JP Morgan. Imran Khan – JP Morgan: Congratulations, guys, good quarter. Two questions. One, I think in the last quarter call you talked about you were opening up offices in Ireland, Austria and Portugal. I was wondering if you can give us an update. If you opened up the office, what kind of growth are you seeing from there? Secondly, it seems like at the end of the last quarter call you talked about in April your international gross bookings was up 50% on a sequential basis. I was wondering if you see further acceleration and the revenue growth is accelerating, actually growing 100% year-over-year this month, why are you giving conservative guidance for the last two months of this quarter?

As to the first question, the offices in Ireland and Vienna are up and running, and staff is there signing up hotels and attending to distribution. Those markets are doing well. We don't break out market by market how much business we are doing in each market. With respect to Vienna, that is an office that looks after markets in some Eastern European countries as well, which is a forward-looking growth initiative for us. So we are pleased with the rollout of the supply and distribution function across Europe, and that is one of the significant investments we are making in building the business.

Imran, as it relates to your second question, I think what I said on the last call was that revenues had seen that sort of growth, and that was driven principally by a dramatic increase in stays in April versus March; one of the reasons being the placement of the Easter holiday in April. As it relates to the forecast, again I guess I just reiterate what I said, which is admittedly there is an inherent assumption in here about an assumed decline in the growth rates, given that we are dealing with fairly significant numbers, and the comps presumably we expect to get tougher and tougher as we comp against some of these triple-digit growth rates that we have seen historically. It is not the easiest thing in the world to necessarily forecast numbers when they are growing this rapidly. Imran Khan – JP Morgan: Great. Thank you.

Our next question comes from Aaron Kessler - Piper Jaffray. Aaron Kessler - Piper Jaffray: Hi, guys. Good quarter. A couple of questions. First, can you give us a sense for what the international revenues were in the quarter? Also, what percentage international represented for the operating profit? Secondly, can you give us a sense for the Eastern European expansion how that is going? I have one follow-up question.

Sure, I could give you the revenue number. The revenue in the second quarter was approximately $47.1 million for international, and then the gross profit dollars were $46.4 million. Again, we have just been giving relative percentages. We are not breaking out specifically operating profit by geographic region. Aaron Kessler - Piper Jaffray: I think last quarter you said it was over 50% in Q1. Does that still relate?

No, what we said in the last quarter was that we expected Priceline Europe to represent more than half of our operating income for full year 2006. That, as you might imagine, certainly remains the case given what I said about the second half. Aaron Kessler - Piper Jaffray: Great. Any update on the Eastern European expansion?

I think the comment I would make there, Aaron, is that the supply and distribution folks are working there. We are developing good supply. If you go to the booking.com website, you will see that we have got inventory in Czech Republic, Poland, a number of the Eastern European countries. In terms of the size of the business in those markets though, it is still small compared to the major Western European markets. So it really is more of an investment in future business than something that is driving really high consolidated growth rates now. Aaron Kessler - Piper Jaffray: Finally, is the high inventory level in the U.S. hotel market having any negative impact, or is your inventory at less risk if we are seeing a contraction there?

I think I would answer that question in two different ways. One is for the published business, the merchant business we have here in the United States, the prices are high as a result of high occupancy rates; you will see prices get significantly higher as you get very strong demand periods. So you have inventory, but the prices are pretty high. On the opaque side, the hotels still generally are using Priceline as an effective revenue management tool. It allows them to move those published prices up, and they can be confident that they have got a channel to sell any inventory that remains unsold. I think when you look at the results in terms of reported yields and RevPARs for the hotel companies, it seems that they are using all of their distribution channels and pricing very effectively because they are getting great results. Aaron Kessler - Piper Jaffray: Great. Thank you and good quarter.

Our next question comes from Paul Keung - CIBC World Markets. Miresh for Paul Keung - World Markets: This is Miresh on behalf of Paul Keung. Congratulations on a very strong quarter. Our question is about Europe. Given the significant amount of partner sales that you are having through your affiliate network in Europe, how important is it for you to develop a specific brand in Europe?

I think it is important, and the way that we are going about it is really through online channels. The Bookings brand in Continental Europe and the Active Reservations, Active Hotels brand in the UK and in France, in particular, have all developed very significant repeat customer flows and brand awareness through their online marketing. E-mail and other retention efforts, as well as site branding and advertising specifically through online channels will be the principal ways that we support those brands. Miresh for Paul Keung - World Markets: Thank you.

Our next question comes from Michael Millman - Soleil Securities. Michael Millman - Soleil Securities: Thank you. First on the GDS, the 2.5% to 3.5% of gross profit, was that in the second half or was that for the full year?

Second half. Michael Millman - Soleil Securities: Could you tell us what it was in the first half?

We're not disclosing that right now. Michael Millman - Soleil Securities: Following up on that last question, can you give us an idea of in Europe with affiliates, how much of the business goes to affiliates, how much goes to Priceline.com? What kind of deals or agreements do you have with the affiliates? What kind of agreements with the hotels in terms of exclusive/not exclusive? Just more color on that business.

Sure. With respect to on the distribution side, Priceline Europe has a number of different brands that it distributes through directly to consumers, including the Bookings brand and the Active brand and the Priceline.co.uk brand and some others. We also have affiliate channels, which are agreements that we have with specific websites. Most of them are branded affiliates where we offer our hotel inventory through their website, and that represents a significant piece of our distribution. Then we have just normal online advertising and search marketing, which also represents a significant piece of the distribution. So you really have three legs to the stool, a direct business to a number of owned brands, affiliates and online marketing. With respect to hotel supply, we don't typically have exclusives with the hotels with which we deal in Europe. We have arrangements that generally result in us receiving favorable treatment in so far as price and availability are concerned, and we receive that treatment because our product is very friendly to the hotel. We charge reasonable -- and in most cases, a lower rate for our services than the large merchant sellers do, and we also have very significant demand. It is a big business now, and so the hotels very much value those customer flows, and they want to make sure that their properties convert well on our websites. So while it is not an exclusive, the hotels, I think, are choosing in large numbers to treat us as a preferred partner for supply purposes. Michael Millman - Soleil Securities: Regarding the affiliates, do you have exclusives with the affiliates? Can the affiliates decide to switch and go directly to the hotels?

Well, there is no one form of agreement that we have with affiliates. Some of our affiliates -- and this is true both in the United States as well as in Europe -- some happen to be exclusive relationships, and others are shared with other companies. Ultimately all agreements have a term and affiliates would be free to do business with another vendor if they wanted to. But again, we have a very customer-friendly product that converts very well for the affiliates, and they find the compensation they receive from the totality of the arrangement to be very attractive. Michael Millman - Soleil Securities: Can you give us some idea of what the growth trends are between the three channels of the brand, the affiliates and search engines?

We don't break that out. Michael Millman - Soleil Securities: Okay. Thank you.

Our next question comes from Chris Gutek - Morgan Stanley. Chris Gutek - Morgan Stanley: A couple of questions. First, I would appreciate it if you guys could elaborate a little bit on the overall travel demand environment? In the context of what we have seen for the last couple of months, as modestly declining domestic environment, as hotel rooms, airfares becomes more expensive, and on the margin, the price sensitive type customer might decide not to travel. Could you talk about the negative effective of that decreasing travel demand overall relative to the Company's position? Being well known for price sensitive travelers and offering very good deals, how do the net of those two shake out? You guys obviously said that you think it is a net positive, but if you could elaborate there, that would be appreciated.

As I mentioned in the prepared text, I think the travel market is still generally very strong. I think with respect to any airlines that are reporting reductions in flown miles that that is as a result of taking down capacity. I think the hotels' high occupancy rates are also evidence of strong demand. If you look at the top line results that we reported as well as what Sabre Group reported for Travelocity last week, it seems like there is still some solid growth going on at least in terms of domestic online travel. We certainly have tried to make the point in our marketing that as gas prices and airfares go up, it makes Priceline as a choice for customers even more compelling since they can save a significant amount of money on their travel plans and maybe still have as nice a vacation as the one they took last summer. I think the benefits of that business for us are more evident to consumers in our “Name Your Own Price” hotel and rental car products and as a result, it is possible that some of the trends that you may be starting to see them in airline tickets, particularly high prices and limited capacity, ultimately could affect demand. I said as much in my prepared text. It just turns out that that part of the business is relatively less important to Priceline than the hotel and rental car business, where we are still able to provide a significant savings to our customer. Chris Gutek - Morgan Stanley: Great. Switching gears towards the marketing spending, you guys have talked about the expectations in the short-term going forward. I'm curious if you could put your comments in the broader context of what you think your competitors are doing, the competitive landscape for marketing spending, and assuming you don't want to quantify it, if you could talk about qualitatively if the Company is in an investment mode for marketing currently in the short term, do you think that would likely persist into 2007 as well?

I think we will consistently be investing in marketing. Nothing that I have said is intended to suggest that we don't believe that we have got a great product that merits that investment. With respect to online channels in particular, having over the last couple of years, basically built a whole new suite of products for Priceline and had a very strong imperative to get people into the website to experience those products, and particularly this year to see more ways to save and the retail hotel display and all of the great content we have there, I think we have succeeded in driving significant demand for those products, good growth in the domestic business and I think it will put us in a position to be a little bit more focused on efficiencies and ROI as we look at our online marketing spend next year, domestically here in the U.S. Chris Gutek - Morgan Stanley: Great. One more if I could. At the risk of beating a dead horse on the GDS incentives, but again not to quantify but talking qualitatively about Sabre’s efficient access solution, presumably you guys have gained two things: increasingly full content, as well as protection from extra booking fees from airlines. On the full content, I guess it is debatable what full content means, but if you could talk qualitatively about what you think you are gaining there with this agreement in terms of access to broader content? Also on the protection from extra airline booking fees, certainly some airlines have announced such fees, and I am curious for your take on whether you think that would likely spread to all the major airlines, and therefore, you would get protection from that?

I think that most of the mainline carriers will assess booking fees to the higher cost GDS channels, and most of the big online travel agencies will arrange their connectivity and switch relationships so that their customers are not assessed those fees. It is certainly our objective to accomplish that. There are still some open pieces to be played on the board here. American Airlines has not yet signed with Sabre, and it is not 100% clear what the arrangement will be vis-à-vis other GDS. Those are discussions that are ongoing for us. But, as I said before, our goal is to get low cost for the airline, to make sure that our customers have access to all of their published content without the assessment of a booking fee and for there to be reasonable compensation for Priceline and for our technology providers in the middle. Chris Gutek - Morgan Stanley: Great, thanks.

Our next question comes from Mark Mahaney - Citigroup Investments. Mark Mahaney - Citigroup Investments: Great, thank you. Just one question. Are there specific things you have been trying to do to date to encourage what you talked about as part of the European growth initiative, that is the European bookings to U.S. travelers, U.S. travel bookings to European travelers? Is that something very early stage for you? How do you go around actually doing that? Thanks a lot.

Yes, I will take that, Mark. We are making a concerted effort here domestically to drive traffic to Europe, and actually a lot of those numbers, obviously, when I talk about the gross bookings that are showing up in Europe, it is fairly small numbers now. But as Jeff said, we think we have a lot of running room left in terms of the marketing efforts that we are expending here within the U.S. to help drive U.S. travel to Europe. So we hope that that is an important part of the 2007 growth story. Mark Mahaney - Citigroup Investments: Thank you.

Our final question comes from Scott Barry - CSFB. Scott Barry - CSFB: You guys mentioned that you're building a moat around your European business in the form of product supply and distribution advantages. Just two questions around that. Could you comment on whether you have seen any material change in the competitive landscape in Europe? Secondly, maybe you could comment qualitatively on the importance of the first mover advantage that you have in the FIT segment in Europe? Thanks.

Scott, I think the market there is sufficiently large, diverse and attractive that in terms of the competitive landscape our businesses are growing rapidly and doing extremely well, but my best information tells me that others are doing well with different kinds of models and with different kinds of focuses. For example, some of the competition may be doing extremely well in a strategy that emphasizes Capitol City type travel, whereas we have a particular strength in secondary and tertiary markets. There are just a lot of different opportunities there. So the competitive landscape to me seems like there's some running room for a number of different players. What we are pleased about in terms of our building scale is that in those markets where there is competition for supply, we seem to be doing reasonably well and holding up our availability and access to rates. Over time should that become more of a serious issue, I think having a very significant size to our distribution and a very supplier-friendly business model should benefit us if the supply market tightens up in future quarters. Scott Barry - CSFB: Great, that is helpful. Just one follow-up if I might. Bob, did you mention that your gross bookings from the continent now are larger in size than your gross bookings from the UK?

Yes, absolutely. Scott Barry – CSFB: Great. Thanks, guys.

Gentlemen, I'm not showing any further questions at this time. Would you like to proceed with any further remarks?

Thank you all very much for attending our call.

Thank you. Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect. Everyone have a great day.