Expedia 2007 Annual Report Download - page 40

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Differentiation among the various website offerings has narrowed dramatically in the past several years,
and the travel landscape has grown extremely competitive, with the need for competitors to generally
differentiate their offerings on features other than price. It has also led to the development of alternative
business models and methods of payment for travelers and suppliers. Overall competition has led to aggressive
marketing spend by the travel suppliers and intermediaries, and a meaningful reduction in Expedia’s overall
marketing efficiencies.
Strategy
Expedia plays a fundamental role in facilitating travel, whether for leisure or business, by seeking to build
the world’s largest and most intelligent travel marketplace. We accomplish this by securing superior supply
quality and price competitiveness; matching supply and demand as intelligently as possible; inspiring and
empowering our travelers to find and build the right trip; expanding our global demand footprint aggressively;
and achieving excellence in our people, technology, and processes to make quality, consistency, and efficiency
the foundation of our marketplace.
A discussion of the critical assets that we leverage in achieving our business strategy follows:
Portfolio of Travel Brands. We seek to appeal to the broadest possible range of travelers and suppliers
through our collection of industry-leading brands. We target several different demographics, from the value-
conscious traveler through our Hotwire brand to luxury travelers seeking a high-touch, customized vacation
package through our Classic Vacations brand. We believe our flagship Expedia brand appeals to the broadest
range of travelers, with our extensive product offering ranging from single item bookings of discounted
product to complex bundling of higher-end travel packages. Our Hotels.com site and its international versions
target travelers with premium content about lodging properties, and generally appeal to travelers with shorter
booking windows who prefer to drive to their destinations.
Technology and Continuous Innovation. Expedia has an established tradition of innovation, from
Expedia.com’s inception as a division of Microsoft to our introduction of more recent innovations such as
Expedia.com’s TravelAds sponsored search product for hotel advertisers, Hotwires’s Airfare Savings Hub,
Hotels.com’s slider tools for improving search results and the TripAdvisor Media Network’s offering of
leading travel applications for download on Facebook.com.
We intend to continue to aggressively innovate on behalf of our travelers and suppliers, including our
current efforts to build a scaleable, service-oriented technology platform for our travelers, which will extend
across our portfolio of brands. We expect this to result in improved flexibility and allow faster innovation.
This transition should allow us to improve site merchandising, browse and search functionalities, improve
search index optimization and add significant personalization features. This transition is occurring in a phased
approach, with a portion of our worldwide points of sale continuing to migrate to the new platform in 2008.
For our suppliers, we have developed proprietary technology that streamlines the interaction between
some of our websites and hotel central reservation systems, making it easier for hotels to manage reservations
made through our brands. We began offering more streamlined application programming interfaces for certain
of our lodging partners in 2007 to enable faster and simpler integration of real-time hotel content and intend
to continue investing in tools to make supplier integration easier, more seamless and cost effective.
Global Reach. We currently operate our points of sale in both the U.S. and internationally, including
Expedia-branded sites in the United States, Australia, Austria, Canada, Denmark, France, Germany, Ireland,
Italy, Japan, the Netherlands, New Zealand, Norway, Spain, Sweden and the United Kingdom. Our Hotels.com
and TripAdvisor brands also maintain both U.S. points of sale and additional points of sale outside the United
States. We also offer Chinese travelers an array of products and services through our majority ownership in
eLong. In 2007, our European segment gross bookings and revenue accounted for approximately 21% of
worldwide gross bookings and 23% of worldwide revenue.
We intend to continue investing in and growing our existing international points of sale. We anticipate
launching points of sale in additional countries where we find large travel markets and rapid growth of online
commerce, such as India.
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