Expedia 2007 Annual Report Download - page 15

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our ability to drive higher return-on-investment in our online and offline advertising efforts. We are also
adding a significant upgrade to our data aggregation, mining and segmentation capabilities across Expedia
leveraging our enterprise data warehouse.
We are continuing to invest in our re-platforming and enterprise data warehouse initiatives, and we
anticipate traveler-facing benefits beginning in late 2008 or early 2009.
Competition
Our brands compete in rapidly evolving and intensely competitive markets. We believe the relatively low
percentage of total travel sales transacted online, particularly in international markets, indicates that these
markets represent especially large opportunities for Expedia and those of its competitors that wish to expand
their brands and businesses abroad.
Our competition, which is strong and increasing, includes online and offline travel companies that target
leisure and corporate travelers including travel agencies, tour operators, travel supplier direct websites and
their call centers, consolidators and wholesalers of travel products and services and other companies offering
travel search engines including meta-search engines. We face these competitors in local, regional, national
and/or international markets. In some cases competitors are offering favorable terms and improved interfaces
to suppliers and travelers which make competition increasingly difficult.
We believe that maintaining and enhancing our brands is a critical component of our effort to compete.
We differentiate our brands from our competitors primarily based on quality and breadth of travel products,
channel features and usability, price or promotional offers, traveler service and quality of travel planning
content and advice. The emphasis on one or more of these factors varies, depending on the brand or business
and the related target demographic.
Our brands face increasing competition from travel supplier direct websites. In some cases, supplier direct
channels offer advantages to travelers, such as long standing loyalty programs, lower transaction fees and
better pricing. Our websites feature travel products and services from numerous travel suppliers (as opposed to
a single supplier), and allow travelers to combine products and services from multiple providers in one
transaction. We face competition from airlines, hotels, rental car companies, cruise operators and other travel
service providers, whether working individually or collectively, some of which are suppliers to our websites.
Our business is generally sensitive to changes in the competitive landscape, including the emergence of new
competitors, supplier consolidation or business models.
Intellectual Property Rights
We regard our intellectual property rights, including our patents, service marks, trademarks, domain
names, copyrights, trade secrets and other intellectual property, as critical to our success. For example, we rely
heavily upon the software code, informational databases and other components that make up our travel
planning service.
We rely on a combination of laws, business practices and contractual obligations with employees,
suppliers, affiliates and others to establish and protect our trade secrets. Despite these precautions, it may be
possible for a third-party to copy or otherwise obtain and use our trade secrets or our intellectual property
without authorization which, if discovered, might require the uncertainty of legal action to correct. In addition,
there can be no assurance that others will not independently and lawfully develop substantially similar
properties.
We maintain our trademark portfolio by filing trademark applications with the appropriate international
trademark offices, maintaining our current registrations, securing contractual trademark rights when appropri-
ate, and relying on common law trademark rights when appropriate. We also register domain names as we
deem appropriate. We protect our trademarks and domain names with an enforcement program and use of
trademark licenses. While we seek to protect our trademarks and domain names, effective trademark and
domain name protection may not be available or may not be sought by us for every trademark and domain
name used in every country, and contractual disputes may affect the use of trademarks and domain names
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