Expedia 2008 Annual Report Download - page 52

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The increase in worldwide and North America revenue margin in 2008 as compared to 2007 was
primarily due to an increased mix of advertising and media revenue. The decrease in Europe revenue margin
in 2008 as compared to 2007 was primarily due to the impact of foreign exchange.
The increase in worldwide and North America revenue margin in 2007 as compared to 2006 was
primarily due to an increased mix of advertising and media revenue, partially offset by a decline in revenue
per air ticket. The decrease in Europe revenue margin in 2007 as compared to 2006 was primarily due to
lower air commissions and booking fees as well as lower revenue resulting from more competitive hotel
pricing.
Results of Operations
Revenue
2008 2007 2006 2008 vs 2007 2007 vs 2006
Year Ended December 31, % Change
($ in thousands)
North America ........... $2,047,807 $1,897,995 $1,666,804 8% 14%
Europe ................. 689,978 606,997 452,012 14% 34%
Corporate and Other ....... 199,228 160,340 118,770 24% 35%
Total revenue .......... $2,937,013 $2,665,332 $2,237,586 10% 19%
In 2008, the increase in revenue was primarily due to increases in worldwide hotel revenue and
advertising and media revenue.
Worldwide hotel revenue (including both merchant and agency) increased 6% in 2008 compared to 2007.
The increase was primarily due to a 13% increase in room nights stayed, including rooms delivered as a
component of vacation packages, partially offset by an 6% decrease in revenue per room night. Revenue per
room night decreased due to changes in foreign exchange rates and a 1% decrease in worldwide ADRs.
Worldwide air revenue increased 2% in 2008 compared to 2007 due to a 2% increase in revenue per air
ticket. Tickets sold were flat for the year as an 8% growth in the first half of the year was offset by an 8%
decline in the second half of the year due to lower passenger volumes as a result of carrier capacity cuts and
softer consumer demand.
Our remaining worldwide revenue other than hotel and air revenue discussed above, which includes
advertising and media, car rental, destination services and cruise, increased by 29% in 2008 compared to 2007
primarily due to increases in our advertising and media revenue and car rental revenue. Advertising and media
revenue increased 55% in 2008, accounting for nearly 10% of worldwide revenue.
Package revenue declined 4% in 2008 compared to the prior year primarily due to foreign exchange and
lower worldwide volumes.
In 2007, the increase in revenue was primarily due to increases in worldwide hotel revenue and, to a
lesser extent, advertising and media revenue.
Worldwide hotel revenue increased 19% in 2007 compared to 2006. The increase was primarily due to a
11% increase in room nights stayed, including rooms delivered as a component of vacation packages, as well
as a 7% increase in revenue per room night. Revenue per room night increased due to a 7% increase in
worldwide ADRs partially offset by a decline in hotel margin.
Worldwide air revenue decreased 2% in 2007 compared to 2006 due to a 12% decrease in revenue per air
ticket partially offset by an increase of 12% in air tickets sold. The decrease in revenue per air ticket primarily
reflects decreased compensation from air carriers and GDS providers, and to a lesser extent, reduced air
service fees versus the prior year period.
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