Expedia 2015 Annual Report Download - page 11

on the commercial relationship the two companies have had since 2002, the expanded agreement broadens Expedia’s
powering of Decolar’s hotel supply and introduces the opportunity for Decolar to provide Expedia access to its hotel
supply in Latin America. The customers of both companies will benefit from the broad, shared selection of hotels, and
hotel partners will gain increased access to travelers in Latin America and around the world.
In September 2015, we completed the acquisition of Orbitz Worldwide, a leading global portfolio of travel
brands and business-to-business offerings. The addition of Orbitz Worldwide brings Expedia an attractive set of
well-recognized brands built by a talented team that is passionate about travel.
In December 2015, we completed the acquisition of HomeAway, which operates an online marketplace for
the vacation rental industry, with sites representing over one million paid listings of vacation rental homes in
over 190 countries. With Expedia’s expertise in powering global transactional platforms and our industry-leading
technology capabilities, we look forward to partnering with HomeAway to accelerate their shift from a classified
marketplace to an online, transactional model to create even better experiences for HomeAway’s global traveler
audience and the owners and managers of its properties around the world.
In expanding our global reach, we leverage significant investments in technology, operations, brand
building, supplier relationships and other initiatives that we have made since the launch of Expedia.com in 1996.
Our scale of operations enhances the value of technology innovations we introduce on behalf of our travelers and
suppliers. We believe that our size and scale afford the company the ability to negotiate competitive rates with
our supply partners, provide breadth of choice and travel deals to our traveling customers through an expanding
supply portfolio and create opportunities for new value added offers for our customers such as our loyalty
programs. The size of Expedia’s worldwide traveler base makes our sites an increasingly appealing channel for
travel suppliers to reach customers. In addition, the sheer size of our user base and search query volume allows
us to test new technologies very quickly in order to determine which innovations are most likely to improve the
travel research and booking process, and then roll those features out to our worldwide audience in order to drive
improvements in conversion.
New Channel Penetration. Today, the majority of online travel bookings are generated through typical
desktop and laptop computers. However, technological innovations and developments are creating new
opportunities including travel bookings made through mobile devices. In the past few years, each of our brands
made significant progress creating new mobile websites and mobile/tablet applications that are receiving strong
reviews and solid download trends. We believe mobile bookings via smartphones present an opportunity for
incremental growth as they are often completed within one or two days of the travel or stay, which is a much
shorter booking window than we have historically experienced via more traditional online booking methods.
During the last few years, customers’ behaviors and preferences on tablet devices began to show differences from
trends seen on smartphones. For example, the booking window on a smartphone typically is much shorter than
the emerging trend on the tablet device and historical average on a desktop or laptop. In addition, we are seeing
increasing cross-device usage among our customers, who connect to our websites and apps across multiple
devices and platforms throughout their travel planning process. We also believe in the future mobile is likely to
represent an efficient marketing channel given the opportunity for direct traffic acquisition, increase in share of
wallet and in repeat customers, particularly through mobile applications. During the year ended December 31,
2015, one in four Expedia, Inc. transactions were booked globally on a mobile device.
Business Models
We make travel products and services available both on a stand-alone and package basis, primarily through
the following business models: the merchant model, the agency model and the advertising model. In addition,
upon our acquisition of HomeAway on December 15, 2015, we also earn revenue related to subscription-based
vacation rental listing and other ancillary services provided to property owners and managers.
Under the merchant model, we facilitate the booking of hotel rooms, airline seats, car rentals and destination
services from our travel suppliers and we are the merchant of record for such bookings. The majority of our
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