Expedia 2012 Annual Report Download - page 9

vote or for the consent of Expedia’s stockholders (other than with respect to the election by the Expedia common
stockholders of 25% of the members of Expedia’s Board of Directors and certain matters as to which a separate
class vote of the holders of Expedia common stock or Expedia preferred stock is required under Delaware law).
In addition, pursuant to the Amended and Restated Governance Agreement, dated as of December 20, 2011,
among Expedia, Liberty and Mr. Diller, each of Mr. Diller and Liberty generally has the right to consent to
certain significant corporate actions in the event that Expedia or any of its subsidiaries incurs any new
obligations for borrowed money within the definition of “total debt” set forth in the Governance Agreement for
as long as Expedia’s ratio of total debt to EBITDA, as defined therein, equals or exceeds eight to one.
Market Opportunity & Business Strategy
Expedia is the largest online travel company in the world, yet our gross bookings represent only about 3% of
total worldwide travel spending. PhoCusWright estimates global travel spending at over $1 trillion, with an
increasing share booked through online channels each year. We have amassed, and continue to build, a broad and
deep supply portfolio which today includes almost 200,000 hotels, 300 airlines and numerous car rental, cruise
companies and other travel suppliers. During the year, a monthly average of approximately 50 million unique
visitors come to our sites to research, plan and book travel.
We are focused on revolutionizing travel through the power of technology. We believe the brand strength of
our portfolio as well as our enhanced product offerings and new channel penetration drives customer demand,
which when combined with our global scale and broad based supply, give us a unique advantage in addressing
the ongoing migration of travel bookings from offline to online around the world. With our unmatched global
audience of travelers, and our deep and broad selection of travel products, there is a rich interplay between
supply and demand in our global marketplace that helps us provide value to both travelers planning trips and
supply partners wanting to grow their business through a better understanding of travel retailing and consumer
demand in addition to reaching consumers in markets beyond their reach. Our primary growth drivers are
technology and product innovation, global expansion, and new channel penetration.
Portfolio of Brands
Expedia operates a strong brand portfolio with global reach, targeting a broad range of travelers, travel
suppliers and advertisers. We know that consumers typically visit multiple travel sites prior to booking travel,
and having a multi-brand strategy increases the likelihood that those consumers will visit one or more of our
sites. We also market to consumers through a variety of channels, including internet search, and having multiple
brands appear in search results also increases the likelihood of attracting visitors, particularly in international
markets, where we historically have not invested as heavily in offline brand marketing campaigns. Our brands
tailor their product offerings and websites to particular traveler demographics. For example, Hotwire finds deep
discount deals for the budget-minded travel shopper while our Classic Vacations brand targets high-end, luxury
travelers. Brand Expedia spans the widest swath of potential customers with travel options across a broad value
spectrum, while our Hotels.com brand focuses specifically on a hotel only product offering.
Brand Expedia. Our Expedia-branded websites, including Expedia.com in the United States, make a large
variety of travel products and services available directly to travelers through full-service websites in 30 countries
across the globe. Brand Expedia serves many different types of travelers, from families booking a summer
vacation to individual travelers arranging a quick weekend getaway, as well as unmanaged business travelers.
Travelers can search for, compare information about (including pricing, availability and traveler reviews) and
book travel products and services on Expedia-branded websites, including airline tickets, lodging, car rentals,
cruises and many destination services — such as airport transfers, local attractions and tours — from a large
number of suppliers, on both a stand-alone and package basis. In the Asia Pacific region, under a joint venture
which was launched on July 1, 2011, Brand Expedia exclusively partners with low-cost airline AirAsiaTM
allowing Expedia sites to be the only websites – other than AirAsia – to distribute AirAsia content. We hold a
50% ownership interest in the joint venture, which is accounted for under the equity method. The results of the
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