Expedia 2011 Annual Report Download - page 57

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In addition to the above segment and product revenue discussion, our revenue by business model is as follows:
Year ended December 31, % Change
2011 2010 2009 2011 vs 2010 2010 vs 2009
($ in millions)
Revenue by Business Model
Merchant $2,572 $2,220 $2,005 16% 11%
Agency 764 705 639 8% 10%
Advertising and media 113 109 99 4% 10%
Total revenue $3,449 $3,034 $2,743 14% 11%
The increase in merchant revenue in 2011 and 2010 was due to an increase in hotel revenue primarily driven
by an increase in room nights stayed.
Agency revenue increased for 2011 compared to 2010 due to growth in our agency hotel business and, to a
lesser extent, higher fees related to our corporate travel business, partially offset by lower air revenue. Agency
revenue increased for 2010 compared to 2009 due to an increase in air revenue as well as increases in hotel, fees
related to our corporate travel business, cruise and destination service revenue.
Cost of Revenue
Year ended December 31, % Change
2011 2010 2009 2011 vs 2010 2010 vs 2009
($ in millions)
Customer operations $ 363 $ 322 $ 291 13% 11%
Credit card processing 241 221 178 9% 24%
Data center and other 157 142 134 11% 7%
Total cost of revenue $ 761 $ 685 $ 603 11% 14%
% of revenue 22.1% 22.6% 22.0%
Cost of revenue primarily consists of (1) customer operations, including our customer support and telesales
as well as fees to air ticket fulfillment vendors, (2) credit card processing, including merchant fees, charge backs
and fraud, and (3) other costs, primarily including data center costs to support our websites, certain promotions,
destination supply, and stock-based compensation.
In 2011, the primary drivers of the increase in cost of revenue expense were higher call and data center costs
as well as higher credit card processing costs related to our merchant transaction growth, partially offset by credit
card rebates.
In 2010, the primary drivers of the increase in cost of revenue expense were higher costs related to credit
card processing, customer service and telesales to support the growth in our transaction volumes.
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