Expedia 2005 Annual Report Download - page 15

Download and view the complete annual report

Please find page 15 of the 2005 Expedia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 98

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98

suppliers and online and offline travel agencies, allowing agents to reserve and book flights, rooms or other
travel products.
While we have historically used Worldspan as our primary GDS, in light of the deregulated GDS
environment and our desire to ensure the widest possible supply of air content for our travelers, we also
have distribution agreements with both Amadeus and Sabre.
Fulfillment Partners. We outsource our airline ticket fulfillment function to third-party suppliers.
This function includes the issuance of airline tickets and related customer services.
Marketing and Promotions
Our marketing programs are intended to build and maintain the value of our various brands, drive
traffic and conversion through our various brands and businesses, lower ongoing traveler acquisition costs
and strategically position our brands in relation to one another. Our long-term success depends on our
continued ability to increase the overall number of traveler transactions in a cost-effective manner.
Our marketing channels primarily include direct and/or personalized traveler communications, search
engine marketing and online and offline advertising. In addition, our Expedia-branded websites provide
content and services to the travel channel on the MSN.com website in the U.S. and MSN websites in
Canada, the United Kingdom, Italy, France and Germany. Our marketing programs and initiatives include
promotional offers such as coupons and gift cards. In addition, we anticipate launching a significant loyalty
effort for our travelers.
We also make use of affiliate marketing. The Expedia.com and Hotels.com-branded websites receive
bookings from consumers who have clicked-through to the respective websites through links posted on
affiliate partner websites, including the IAN, or www.IAN.com, and WWTE, or www.wwte.com. We have
agreements with thousands of third party affiliate partners, including a number of leading travel companies,
pursuant to which we pay a commission for bookings originated from their websites. Affiliate partners can
make travel products and services available through an Expedia-branded website, a co-branded website or
their own private label website. We also provide our affiliates with technology and access to a wide range
of products and services.
Operations and Technology
We provide 24-hour-a-day, seven-day-a-week traveler support by telephone or via e-mail. For
purposes of operational flexibility, we provide this support infrastructure with a combination of in-house
and outsourced call centers which are located in various locations throughout the world.
Our systems infrastructure and web and database servers are hosted by third-party web hosting
suppliers in various locations, mainly in the United States, which provide communication links, as well as
24-hour monitoring and engineering support. The web hosting facilities have their own generators and
multiple back-up systems. Significant amounts of our computer hardware for operating the websites are
also located at these facilities.
We have developed innovative technology to power our global travel marketplace. For example, our
Expert Searching and Pricing Platform (""ESP Platform''), which our Expedia-branded websites use, is an
industry leading platform that includes two components: (1) a fare-searching engine that enables broad
and deep airline fare and schedule searches and (2) a common database platform that allows our Expedia-
branded websites and our travelers to bundle diverse types of travel services together dynamically, which
further enables our Expedia-branded websites to cross-market and package travel inventory. The ESP
Platform has been historically an important contributor to our growth in the online travel industry.
Another core technology advantage is our best fare search technology. This technology essentially
deconstructs the segment feeds from GDS partners for air flight searches and recommends the best way to
re-assemble multi-leg itineraries so that they are less expensive and more flexible for the traveler.
8