Expedia 2009 Annual Report Download - page 3

To our stockholders:
As the global economy began to melt down in late 2008, Expedia®, like many companies, experienced one
of the most uncertain times in its history. The only thing we were certain of was that 2009 would bring
unprecedented challenges. We took the opportunity to look hard at our business, evaluating the long-term
competitiveness of our products and whether we were optimally structured as a global company. Amidst the
uncertainty, we sought not to simply weather the down turn, but to better position Expedia for long-term growth,
regardless of the economic climate.
In anticipation of the challenges 2009 would bring, we reorganized the business from its previous regional
orientation to a global brand orientation, establishing worldwide organizations for the Expedia, Hotels.com®and
Expedia®Affiliate Network businesses. Importantly, this enabled us to institute a global view across our
business, leverage best practices across geographies, and scale platforms and systems to achieve greater
efficiency. As a result, our business teams and technology teams are working more closely together, driving
accountability and closer coordination among these groups.
We also recognized that we needed to knock down barriers that were keeping consumers from booking
travel with us, and to attract and retain an ever increasing customer base. We reinvigorated our intent to always
put travelers first, and as a result, we eliminated or reduced fees across virtually all of our products and in most
geographies in which we operate. We also expanded our loyalty programs, most notably the Hotels.com
welcomerewards™ program, which is one of the simplest and most successful loyalty programs in online travel,
with members receiving one free night for every 10 room nights they book with Hotels.com. These moves,
combined with substantially lower hotel room and air ticket pricing, resulted in share gains and unit volume
growth we would be proud of in any economy.
We are certain that our products and services are now more compelling than they have ever been. As a
public demonstration of the company’s efforts to put travelers first in every thinkable way, our flagship booking
brand Expedia.com®recently rebranded itself with the tagline “Where you book matters™,” an assertion we
strongly believe in, and on which our employees are dedicated to delivering every day.
At the same time, the company is committed to fiscal discipline, and in 2009 we found many opportunities
to be more efficient. We made investments in platforms and infrastructure that we believe can save us money in
the near-term and scale well over time. Investments in credit card payment processing and air fulfillment
technology have driven efficiencies in our cost of sales. Investments in call center technology have and will
continue to improve service and drive efficiencies in our customer service operations. In addition, we have
consolidated the Hotels.com business from two platforms onto one, which will improve our ability to more
rapidly and efficiently innovate going forward. While oriented for growth, our company is run with a discipline
to leverage our cost base so that our growth is scalable.
International growth is one of our top priorities, and we are driving for international revenue to constitute
50% of our mix within the next five years. The global Hotels.com brand has been able to nimbly enter and gain
traction in new markets, now serving consumers in more than 70 countries. We operate 19 Expedia-branded sites
worldwide, and our corporate travel brand Egencia™ is now serving 31 countries. TripAdvisor®has 19 country-
specific sites, including several in Europe, as well as Brazil and India. In addition, TripAdvisor has invested
aggressively in China with the launch of DaoDao.com™ and the acquisition of Chinese meta-search site
Kuxun™. Our private label EAN™ business has also integrated its global functions and considerably improved
its growth rate.
Key to our international expansion efforts is our ability to expand the depth, breadth and quality of the
product in our marketplace across air, hotel, car and other products. As a key example, we launched the Expedia
Easy Manage program, our agency hotel model, in Europe in the spring of 2009. With our Easy Manage agency
and Expedia Special Rate merchant models, we can now better address the varied business needs of our hotel
partners and offer them the right framework within which to take advantage of Expedia’s global scope and scale.
We now have over 40,000 merchant and agency hotel properties in Europe with direct Expedia contracts, and we
expect to continue to significantly grow this supply base in 2010.