Expedia 2010 Annual Report Download - page 53

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Operating Metrics
Our operating results are affected by certain metrics, such as gross bookings and revenue margin, which we
believe are necessary for understanding and evaluating Expedia. Gross bookings represent the total retail value of
transactions booked for both agency and merchant transactions, recorded at the time of booking reflecting the
total price due for travel by travelers, including taxes, fees and other charges, and are generally reduced for
cancellations and refunds. As travelers have increased their use of the internet to book travel arrangements, we
have seen our gross bookings increase, reflecting the growth in the online travel industry and our business
acquisitions. Revenue margin is defined as revenue as a percentage of gross bookings.
Gross Bookings and Revenue Margin
Year ended December 31, % Change
2010 2009 2008 2010 vs 2009 2009 vs 2008
($ in millions)
Gross Bookings
Leisure ......................... $24,018 $20,428 $19,749 18% 3%
TripAdvisor Media Network(1) ......———N/AN/A
Egencia ......................... 1,944 1,383 1,520 41% (9%)
Total gross bookings ............ $25,962 $21,811 $21,269 19% 3%
Revenue Margin
Leisure ......................... 12.0% 12.9% 13.3%
TripAdvisor Media Network(1) ...... N/A N/A N/A
Egencia ......................... 7.4% 7.8% 7.2%
Total revenue margin(1) ......... 12.9% 13.6% 13.8%
(1) The TripAdvisor Media Network, which is comprised of media businesses that differ from our transaction-
based websites and our Egencia business, does not have associated gross bookings or revenue margin.
However, third-party revenue from the TripAdvisor Media Network is included in revenue used to calculate
total revenue margin.
The increase in worldwide gross bookings in 2010 as compared to 2009 was primarily due to a 14% growth
in transactions, a 10% increase in average airfares and a 1% increase in hotel ADRs. The increase in worldwide
gross bookings in 2009 as compared to 2008 was primarily due to an 18% growth in transactions, substantially
offset by lower prices for airline tickets and hotel room nights.
The decrease in revenue margin in 2010 as compared to 2009 was primarily due to higher average air ticket
prices, partially offset by growth in advertising and media revenue. The decrease in revenue margin in 2009 as
compared to 2008 was primarily due to the reduction in traveler fees, the impact of our loyalty programs and a
greater mix of lower margin hotels, partially offset by lower air ticket prices and a reduction in the mix of lower
margin air product.
Results of Operations
Revenue
Year ended December 31, % Change
2010 2009 2008 2010 vs 2009 2009 vs 2008
($ in millions)
Revenue by Segment
Leisure ............................ $2,891 $2,635 $2,626 10% 0%
TripAdvisor Media Network (Third-party
revenue) ......................... 314 212 201 48% 6%
Egencia ............................ 143 108 110 32% (1%)
Total revenue ..................... $3,348 $2,955 $2,937 13% 1%
In 2010, the increase in revenue was primarily due to an increase in worldwide hotel revenue within our
Leisure segment as well as an increase in advertising and media revenue within TripAdvisor Media Network.
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