Diego J. LofeudoRegional Manager MMEA

Expedia Lodging & Destinations

Rhodes Tourism Forum 2005

Trends and Innovation in the Tourism Industry

Agenda of today

1. The shift within distribution channels2. Expedia Travel and mission 3. Opportunities ahead4. Becoming a virtual Tour Operator

Hotel Room Bookings by Distribution Channel (2002)

Distribution Channel % Share

Hotel Direct 65% - 70%

In Person 5% - 10%

Travel Agent 10% - 15%

On Line 5% - 10%

Source : Bear Stearns, 2002Source : Bear Stearns, 2002

Shift in Distribution channels

Hotel Room Bookings by Distribution Channel (2002 vs. 2005)

Source : Bear Stearns, 2002Source : Bear Stearns, 2002

Shift in Distribution channels

% ShareDistribution Channel

2002 Projected 2005

Hotel Direct 65% - 70% 60 - 65%In Person 5% - 10% 5% - 10%

Travel Agent 10% - 15% 5% - 10%On Line 5% - 10% 10% - 20%

Hotel Rooms Sold Online

Source 1999 2000 2001 2002 2003*

Hotel Websites 56% 55% 54% 54% 54%

Online Agencies 44% 45% 46% 46% 46%Source : PhoCus Wright 2001Source : PhoCus Wright 2001

Agenda of today

Expedia Travel and its mission

Be the Largest Seller of Travel in the World

CustomersCustomers

Expedia GlobalTravel Marketplace

AirlinesAirlines

SuppliersSuppliers

Car Car RentalRental

LodgingLodging

Cruise Cruise LinesLines

Destination Destination ServicesServices

Vacation Vacation PackagersPackagersWhere everyone Where everyone

everywhere everywhere researches and buys researches and buys everything in traveleverything in travel

IAC Travel’s Broad Market Approach

US Consumer

Corporate

Private Label International

KEY FACTS18 million consumers every month

70.000 air tickets / day

Y2004Gross bookings over $13.2billion - #1 online TT OO.

Number 5th TT OO online and offline (Travel Weekly’s agency survey 2003)

54,000 hotel properties, more than 18,000 of which participate in the Expedia® Special Rate (ESR) program

WWTE & IAN white label program

No 1 seller of rooms nights online, over 35 millionbooked Y2004

Leading Travel Sellers Worldwide

1 American Express + Rosenbluth

$20.7B

2 TUI $13.7B

3 Carlson Wagonlit $12.5B

8 WorldTravel BTI $5.3B

9 First Choice $3.7B

10 Travelocity $3.5B

11 AAA Travel $3.16B

12 Orbitz $2.5B

13 Kuoni $2.47B

14 TQ3 Maritz Travel $1.6B

15 Cendant Travel $1.2B

4 JTB $11.5B

5 IAC Travel $8.2B

6 My Travel $6.0B

7 Navigant Travel $5.34B

Jan 2004Jan 2004

Jan 2005 Jan 2005

$13.2bn$13.2bn

Agenda of today

Opportunities ahead

The Worldwide Travel Market

Source: Data as of 2003 from WTTC, Jupiter Research & Expedia estimates

$2.6 Trillion Travel and $2.6 Trillion Travel and TourismTourism $850B$850B

TravelTravel

$1,750B$1,750BDestination ServicesDestination Services

$350B$350BEuropeEurope

$850 Billion $850 Billion TravelTravel

$281B$281BOtherOther

$219B$219BU.S.U.S.

0%

20%

40%

60%

80%

100%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2011

2012

Online Penetration of International Travel Market

50% - $225B

30%- $135B

Onl

ine

as %

of T

otal

Mar

ket Total Market Size:

2002: $350B2010: $450B

1% or$4B

Onlinein 2002

IACTExpectation

GrossBookings

European Growth Projections

European online travel projections

57%

65%

37%

27%

0

10

20

30

40

50

60

70

2002 2003 2004 2005 2006 2007 2008

($bn)

UK

FR

DE

Other

CAGR

CAGR42%

Source: PhoCusWright Inc, IACT Analysis

Agenda of today

Becoming THE Virtual Tour Operator

Bringing them all together

CarsCars

HotelsHotelsAirAir

VacationVacationPackagesPackages

CruisesCruises

4 ways to address this Opportunity

Source: Data as of 2001 from WTTC, Jupiter Research & Expedia estimates

1. Secure an array of services1. Secure an array of services

Flights, Cars, HotelsFlights, Cars, Hotels

Cruises and GuidebooksCruises and Guidebooks

Merchant HotelsMerchant Hotels

Jan 2001

ESP and Basic PackagingESP and Basic Packaging+

1996May 2002

Destination ServicesDestination Services

Dynamic PackagingDynamic Packaging+

Growing our product variety19982000Sept 2001

Win – Win supplier relationships

• TO Flex– TO Merchant model– Flexible: hotel controls its rate and inventory at all times– Transparency– Massive but tailor made marketing and merchandising

opportunities – No Fix Cost– Result driven scenario– Last minute, early birds– State of the art technology

4 ways to address this Opportunity

Source: Data as of 2001 from WTTC, Jupiter Research & Expedia estimates

1. Secure an array of services1. Secure an array of services

2. Securing demand2. Securing demand

Television

An Array of Distribution Channels

Corporate Site and Agency

Traditional Agents (Classic)

International Websites

Consumer Website

4 ways to address this Opportunity

Source: Data as of 2001 from WTTC, Jupiter Research & Expedia estimates

1. Secure an array of services1. Secure an array of services

2.2. Capture demandCapture demand

3.3. MerchandiseMerchandise ! ! MerchandiseMerchandise !!

Different Markets Require Different Messages…

Canada: Empowers Canadians to get the holiday

that’s right for them

UK: The perfect trip

Hotels.com UK: value for moneyFrance: Wide choice,

good value

Outdoor Campaigns – on the buses

On the tube…

Heathrow

In the mediaExpedia Ads

The Queen

On TV…

More TV…

Expedia.co.uk – Amsterdam City Page

Dynamic Rate Rules – An example

Weekly Newsletter• E-mail sent out on a

weekly basis

• Compelling price offers that fit with the theme of the mail can be featured –specific hotels can be featured

• E-mail has opening rate of 40%

NewsletterNewsletter

4 ways to address this Opportunity

Source: Data as of 2001 from WTTC, Jupiter Research & Expedia estimates

1. 1. SecureSecure an an arrayarray ofof servicesservices

2.2. Capture Capture demanddemand

3.3. MerchandiseMerchandise ! ! MerchandiseMerchandise !!

4.4. ConvertConvert throughthrough technologytechnology

Latest news about technology

• Introduced new options for hoteliers to showcase and promote their properties, including intricate neighborhood maps to pinpoint hotel locations, 360-degree virtual tours of hotel rooms and common areas, expanded photo displays and multiple-room booking option.

• Acquired Newtrade Technologies Inc. to provide enhanced connectivity to hotels and improve Expedia’s efficiency and reliability as a seller of hotel rooms

Conversion driven by ESP PlatformExpert Searching and Pricing

• PC/NT architecture– Fully scaleable– Lower cost– Flexible

• Proprietary code & algorithms

• Every product is a component

• Turns the lights on in the shop

• Higher conversion

TravelersTravelers

Browser, Phone, PDABrowser, Phone, PDA

SQLDatabase

DataWarehouse

ESP ESP -- The Expert Searching & Pricing Platform The Expert Searching & Pricing Platform

Fare Server Fare Server FarmFarm LodgingLodging

ViatorViator(Destination (Destination

Services)Services)

Fares Rules Schedules Availability Pegasus Worldspan TravelscapeVacationSpot Tours Transportation Events

SQLDatabase

TravelServers

TravelServers

TravelTravelServersServers

WebServers

WebServers

WebServers

TravelersTravelers

Browser, Phone, PDABrowser, Phone, PDA

SQLDatabase

DataWarehouse

ESP ESP -- The Expert Searching & Pricing Platform The Expert Searching & Pricing Platform

Fare Server Fare Server FarmFarm LodgingLodging

ViatorViator(Destination (Destination

Services)Services)

Fare Server Fare Server FarmFarm LodgingLodging

ViatorViator(Destination (Destination

Services)Services)

Fares Rules Schedules Availability Pegasus Worldspan TravelscapeVacationSpot Tours Transportation Events

SQLDatabase

TravelServers

TravelServers

TravelTravelServersServers

TravelServers

TravelServers

TravelTravelServersServers

WebServers

WebServers

WebServers

WebServers

WebServers

WebServers

Destination Services

Packages

Unbundling the Package

Retail LodgingDemand

LodgingSupply

• Unprecedented choice and product combinations

• Powerful tools for building a personalised package

• No hidden costs or surcharges

• Great deals

Customer Benefits

• Another sales and distribution tool

• Increased merchandising opportunities

• Tactical opportunity for moving inventory

• Business model avoids incremental costs – i.e. Brochures

Supplier Benefits

• Extension of current merchant business

• Higher Margin• Technically

complex to execute

• Key point of differentiation

Expedia Benefits

New Homepage

New BundleWizard

Packaging Technology:The Search Engine

www.expedia.co.uk

www.virgin-express.com

Packaging Technology:The Search Engine

drop down menupre loaded

with 50 destinations

user has a choice of 400destinationsworldwide

Package Technology: Results Page

user can changeitinerary

sort function enables theuser to slice

and dice resultsaccording to

personalpreference

Package Technology: Flight Options

flight resultscan be listed

based onIndividual

criteria

option to choosecarrier

Package Technology: Flight and Hotel Details

user is ableto upgrade

room ifapplicable

Package Technology: Car & Insurance Cross Sell

both ancillariesare optional

extras

6.7%

Everything changed !!

Nothing changed !!

Customer Care+900 people 24/7 !

Brian TerryBrian TerryLysefjordLysefjord , Norway, Norway

Thank youdiegol@expedia.com

Questions ?