Expedia 2013 Annual Report Download - page 63

Download and view the complete annual report

Please find page 63 of the 2013 Expedia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

Worldwide air revenue increased 14% in 2013 primarily due to a 9% increase in air tickets sold and 4%
increase in revenue per air ticket. The increase in air tickets sold primarily relates to growth at Brand Expedia
and Egencia. Worldwide air revenue decreased 8% in 2012 due to a 14% decrease in revenue per air ticket,
partially offset by a 7% increase in air tickets sold. The increase in air tickets sold primarily relates to the VIA
Travel acquisition and was partially offset by volume pressure associated with a 4% increase in average ticket
prices. Revenue per air ticket declined in 2012 primarily due to lower net supplier economics, partially offset by
consumer and interline booking fees.
The remaining worldwide revenue, other than hotel and air discussed above, which includes advertising and
media, car rental, destination services and fees related to our corporate travel business, increased by 37% in 2013
as compared to 2012 primarily through strong growth in advertising and media revenue generated by the trivago
acquisition, growth in fees related to our corporate travel business as a result of the VIA Travel acquisition as
well as an increase in insurance revenue. The remaining worldwide revenue increased by 20% in 2012 as
compared to 2011 primarily through strong growth in corporate travel fees primarily due to the VIA Travel
acquisition as well as an increase in advertising and media and insurance revenue.
In addition to the above segment and product revenue discussion, our revenue by business model is as
follows:
Year ended December 31, % Change
2013 2012 2011 2013 vs 2012 2012 vs 2011
($ in millions)
Revenue by Business Model
Merchant $3,325 $3,049 $2,572 9% 19%
Agency 1,127 850 764 33% 11%
Advertising and media 319 131 113 144% 16%
Total revenue $4,771 $4,030 $3,449 18% 17%
The increase in merchant revenue in 2013 and 2012 was due to an increase in hotel revenue primarily driven
by an increase in room nights stayed.
The increase in agency revenue in 2013 was primarily due to growth in our agency hotel business, corporate
travel business as well as an increase in agency air revenue. The increase in agency revenue in 2012 was
primarily due to growth in our corporate travel business and agency hotel business, partially offset by a decline in
agency air revenue.
The increase in advertising and media revenue in 2013 was primarily due to revenue generated by trivago.
Cost of Revenue
Year ended December 31, % Change
2013 2012 2011 2013 vs 2012 2012 vs 2011
($ in millions)
Customer operations $ 479 $ 441 $ 363 9% 21%
Credit card processing 358 281 241 27% 17%
Data center and other 201 177 157 14% 14%
Total cost of revenue $1,038 $ 899 $ 761 16% 18%
% of revenue 21.8% 22.3% 22.1%
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, destination supply,
and stock-based compensation.
57