president and ceo, expedia, inc. & iac travel
TRANSCRIPT
Erik BlachfordPresident and CEO, Expedia, Inc. & IAC Travel
Key Competitive Advantages Unique US travel
brand portfolioSuperior technology platformUnparalleled global reachEntrepreneurial management teamIAC corporate resources
Mission Help everyone, everywhere plan and purchase everythingin travel
Mission
LeisureCorporation
FamilySmall Business
Seniors
Everyone
AirCar
CruiseDestination Services
Everything
Global Reach
Everywhere
The Worldwide Travel & Tourism Market
$160B Leisure & Unmanaged Business
$78B Corporate
$238 Billion U.S. Travel
$350BEurope
$262BOther
$238BU.S.
$850 BillionTravel
$850BTravel
$1,750BDestination
Services
$2.6 TrillionTravel & Tourism
Source: Data as of 2001 from WTTC,Jupiter Research & Expedia estimates
Online Penetration of U.S. Leisure and Unmanaged Business Travel
0%
20%
40%
60%
80%
100%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2011
75% - $156B
50% - $104B
Onl
ine
as %
of T
otal
Mar
ket
IACTExpectation
Total Market Size:2002: $160B2010: $209B
15% or$24B
Onlinein 2002
Gross Bookings
Source: Jupiter for historical information.
Online Penetration of International Travel Market
0%
20%
40%
60%
80%
100%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2011
2012
Onl
ine
as %
of T
otal
Mar
ket Total Market Size:
2002: $350B2010: $450B
1.5% or$6B
Onlinein 2002
Gross Bookings
50% - $225BIACTExpectation30%- $135B
Source: Jupiter for historical information.
Online Penetration of U.S. Corporate Travel
0%
20%
40%
60%
80%
100%19
97
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2011
2012
Onl
ine
as %
of T
otal
Mar
ket Total Market Size:
2002: $78B2010: $124B
9% or$7B
Onlinein 2002
Gross Bookings
60% - $74BIACTExpectation40%- $50B
Source: Jupiter for historical information.
Total Online Travel Opportunity2002 JUPITER 2010 IACT
ESTIMATEPERCENTAGE
OF CATEGORY ONLINE
Leisure & Unmanaged Business
$24B $104 - $156B 50%-75%
Corporate $7B $50B - $74B 40%-60%
International $6B $135B - $225B 30%-50%
Total $37B $289B - $455B 37%-58%
IAC Travel Gross Bookings
$6.9B $55 – 86B
IAC Travel’s Broad Market ApproachUS Consumer Private Label International
Corporate
Leading Travel Sellers Worldwide1 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 $3.2B
12 Orbitz $2.5B
13 Kuoni $2.5B
14 TQ3 Maritz Travel $1.6B
15 Cendant Travel $1.2B
4 JTB $11.5B
5 IAC Travel $6.9B
6 My Travel $6.0B
7 Navigant Travel $5.3B
“IAC Travel” includes:
Expedia, Inc.
Hotels.com
Interval International
Hotwire
TV Travel Store (UK)
2002 Gross Bookings
Source: Travel Weekly, Expedia Management estimates
US Market Segments
US Travel Brand Reach
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
Jan-
02
Feb-
02
Mar
-02
Apr
-02
May
-02
Jun-
02
Jul-0
2
Aug
-02
Sep-
02
Oct
-02
Nov
-02
Dec
-02
Jan-
03
Feb-
03
Mar
-03
Apr
-03
May
-03
Jun-
03
Jul-0
3
Aug
-03
Sep-
03
Expedia
OrbitzTravelocity
Hotwire
Cheap TicketsPriceline
Hotels.com
Media Metrix/Comscore
US Travel Gross Bookings
0
400
800
1200
1600
2000
2400
2800
Q3
01
Q4
01
Q1
02
Q2
02
Q3
02
Q4
02
Q1
03
Q2
03
Q3
03
IAC Travel
TravelocityOrbitz
Hotwire
IAC Travel Gross Bookings includes gross revenue for Hotels.com.
Expedia.comConsumer Proposition
“The Whole Trip”Unique Inventory
Dynamic PackagesTicketmaster inclusions
Service QualityACSI leader, BBB winner
Supplier PropositionBrand-agnostic shoppers“Billboard” effect
OpportunitiesPackages only 27% rev.Destination ServicesCruise just launched
$4$6
$9$12
$20
$25
$31 $31
$46
$59$66
$0
$10
$20
$30
$40
$50
$60
$70
$80
Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03
$ M
ILLI
ON
S
0%
5%
10%
15%
20%
25%
30%
2001:$21.7 million
2002:$107.1 million
9mos-2003:$170.3 million
Expedia.com Packages Revenue
27%
As % of TotalExpedia Revenue
Expedia.com Marketing
ONLINE BANNERS & POP-UNDERS
20,000+ AFFILIATES
PARtNERSHIPS & AFFILIATES
SEARCH ENGINE DISTRIBUTION
Search &Online
Advertising
Online Partnerships &
Affiliates
Expedia.com URL
RADIONEWSPAPER
OUT-OF-HOME
TELEVISION
Expedia Penetration: Online Travel Transaction Reach
0%
20%
40%
60%
80%
100%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
Expe
dia
% o
f onl
ine
trav
el
tran
sact
ion
reac
h
60%
40%
37.7% 3Q03
Average monthly MMX/Comscore reach 6 mos data for 2000; 9 mos data for 2003
IACT Expectation
Hotels.com
Consumer PropositionSave on HotelsLow Rate GuaranteePromos & Deals
Supplier PropositionAffiliate networkPrice-sensitive customer
OpportunitiesInternational expansionTraffic from other IACTWWTE packages
Hotels/Expedia Integration
Hotel Market Dynamics
COSTLY TRADITIONAL MARKETING
FIERCE COMPETITION
30%+ ROOMS UNSOLDQUARTERLY OCCUPANCY RATES %
010 %20 %30 %40 %50 %60 %70 %80 %
1Q00
3Q00
1Q01
3Q01
1Q02
3Q02
1Q03
3Q03
BRANDED vs. INDEPENDENT
BRANDEDHOTELS
INDEPENDENT HOTELS
48%
52%
SOURCE: Smith Travel Research
The IAC Merchant Hotel Business
Travelers
50% of conversionbooks direct
Hotel’s Potential New Customers Want Choice
Hotels don’t pay for listings, only for business generated
Compares favorably to risking money on newspaper advertising
Customer books via Expedia or
Hotels.com, paying in advance
Expedia & Hotels.com pay hotel for room post-checkout
IAC keeps margin
Loyal CustomersShop Direct
Direct Bookings
Hotel Direct Hotel
87% First Time Customers
Merchant Hotel Proposition
$0.00ZERO
UPFRONT COST
87% FIRST TIME CUSTOMERS
13%
87% 1:150%
DIRECT vs. INDIRECT
BOOKINGS $200.00MARGIN % 25%= COST $50.00
BOOKINGS $400.00
COST $50.00= MARGIN% 12.5%
CREDIT CARD FEE (2%)= MARGIN% 10.5%
Sources: IAC Travel research, Phocuswright
IAC Travel +Hotwire Merchant Room Nights
0
2000
4000
6000
8000
2001: 9.7mm
IAC+HW 2002: 18mm
9 mos. 2003: 21.3 mm
Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03
95% of Nov 02 participating hotels participate today
In Thousands
Hotwire.com
Consumer PropositionTrade Info for SavingsNo Bid = No Overpay
Supplier PropositionIncremental businessCompletely opaqueLow overhead
OpportunitiesTraffic from Expedia & Hotels.comInternational Expansion
Supply & DemandBigger resource base
Hotwire Trends
0%
20%
40%
60%
80%
100%
Con
sum
er A
war
enes
s
Growing Consumer Awareness Growth Comparison
Index: Gross Bookings
0
100
200
300
400
500
600
700
800
1Q012Q013Q014Q011Q022Q023Q024Q021Q032Q033Q03Sep- 01 Apr- 03
As consumer awareness has grown, Hotwire has gained meaningful share with respect to Priceline
Source: Hotwire, lbsos-Direct Online. Awareness data as of Apr03
Classic Custom Vacations
Consumer PropositionHigh End ExperienceDifferentiate in DestinationExclusives like Hertz Gold
Supplier PropositionTarget the high endPackages opacity protects supplier price points
OpportunitiesCut cost with agent online booking toolsIncrease revenue with consumer online booking
Interval International
Consumer PropositionGet more from timeshareNetwork of big brandsAdded benefits from EPI
Supplier PropositionHigher-end membershipNo channel conflict
RCI buying developers
OpportunitiesCut cost with online exchange toolsSell distressed inventory on Expedia and HotelsGenerate developer leads from Expedia and Hotels
Expedia Corporate Travel
Company PropositionSavings on feesSavings on travelControl to travel manager1-stop agency & software
Employee PropositionZero trainingConfidence
Supplier PropositionCut cost with online
OpportunitiesRapid online adoption
Expedia Corporate Travel Proposition
Company with $1M annual air spend adopts ECTNew spend for same travel: $782,283Total savings: $217,717, or 21%
Current Markets Outside U.S.
0
5
10
15
20
25
30
35
40
DE UK FR NL CA IT ES SE BE DK
Package SalesAir Sales
Core Markets Cover80% of Europe’s population90% (approx.) of Europe’s travel sales
5109405816606082Population (Millions)
($B
illio
n)
31
IAC Travel Europe UK
France
Germany
$47$59 $66 $63
$88 $97
$145 $138
$215
$255
$322
$0
$50
$100
$150
$200
$250
$300
$350
Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03
$ M
ILLI
ON
S
0%
2%
4%
6%
8%
10%
12%
14%
2001:$236 million
2002:$467 million
As % of TotalTravel Gross Bookings
9mos-2003:$792 million
IAC Travel International Gross Bookings
Excludes TV Travel Group.
Private Label
ASP for Mid-Market#1 cumulative reach
B2B, access to IACT technology & inventory
E.G. Airlines sell our hotels/car rentals
StructureVariable Spend OnlyDeepen Supplier RelationshipsDeepen Supply Pool
IAC Travel Advantages
Unique US travel brand portfolioSuperior technology platformUnparalleled global reachEntrepreneurial management teamIAC corporate resources
Long-Term Priorities
Generate 50% of revenue from outside of
US
Grow Expedia.com packages to 50% of
Expedia revenue
Continue disciplined entry to corporate travel
market
Spend marketing and innovate to grow US
market share
Round Up
Q&A