Expedia 2014 Annual Report Download - page 62

Download and view the complete annual report

Please find page 62 of the 2014 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 137

  • 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

Revenue margin decreased in 2014 compared to 2013 primarily due to lower revenue per room night,
partially offset by the growth in advertising and media revenue. Revenue margin increased in 2013 compared to
2012 due to a favorable mix shift to our higher margin products, including hotel revenue as well as advertising
and media revenue, partially offset by lower revenue per room night on our hotel product. The increase in
revenue margin related to advertising and media revenue is primarily due to the 2013 acquisition of trivago, a
metasearch company, which does not have associated gross bookings. However, trivago is included in revenue
used to calculate total revenue margin.
Results of Operations
Revenue
Year ended December 31, % Change
2014 2013 2012 2014 vs 2013 2013 vs 2012
($ in millions)
Revenue by Segment
Leisure $5,363 $4,406 $3,739 22% 18%
Egencia 400 365 291 10% 25%
Total revenue $5,763 $4,771 $4,030 21% 18%
In 2014, revenue increased primarily due to growth in hotel and advertising and media revenue. In 2013,
revenue increased primarily due to an increase in worldwide hotel revenue as well as advertising and media
revenue within our Leisure segment. Acquisitions added approximately 1% and 5% to the year-over-year growth
rates in total revenue for 2014 and 2013.
Worldwide hotel revenue increased 18% in 2014 primarily due to a 26% increase in room nights stayed
driven by Brand Expedia and Hotels.com, partially offset by a 6% decrease in revenue per room night. Revenue
per room night decreased primarily due to efforts to expand the size and availability of the global hotel supply
portfolio as well as promotional activities such as growing loyalty programs. This decline was partially offset by
a 2% increase in ADRs in 2014 compared to 2013. Revenue per room night is expected to continue to decline in
2015. In addition, ADRs are expected to be negative year-over-year in 2015 primarily due to foreign exchange.
Worldwide hotel revenue increased 15% in 2013 primarily due to a 23% increase in room nights stayed driven by
eLong, Brand Expedia and Hotels.com, partially offset by a 7% decrease in revenue per room night. Revenue per
room night decreased primarily due to efforts to expand inventory availability as well as our global supply
portfolio, including contracts signed as part of our ETP program, continued hotel mix shift to Asia-Pacific and
promotional activities, such as couponing and growing our loyalty programs’ membership.
Worldwide air revenue increased 22% in 2014 primarily due to a 28% increase in air tickets sold, partially
offset by a 5% decrease in revenue per air ticket. Air tickets sold growth was primarily driven by Brand Expedia,
including the Travelocity-branded websites. 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.
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 29% in 2014
as compared to 2013 primarily due to strong growth in advertising and media revenue as well as growth in our
travel insurance and car rental products. The remaining worldwide revenue 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.
58