Erik Blachford President and CEO, Expedia, Inc. & IAC Travel
Key Competitive Advantages Unique US travel brand portfolio Superior technology platform Unparalleled global reach Entrepreneurial management team IAC corporate resources
Mission Help everyone, everywhere plan and purchase everything in travel
Mission Everything Everywhere Everyone Air Car Cruise Destination Services Global Reach Leisure Corporation Family Small Business Seniors
The Worldwide Travel & Tourism Market $238 Billion U.S. Travel $850 Billion Travel $2.6 Trillion Travel & Tourism $78B $160B Corporate Leisure & Unmanaged Business $238B U.S. $350B Europe $262B Other $850B Travel $1,750B Destination Services Source: Data as of 2001 from WTTC,Jupiter Research & Expedia estimates
Online Penetration of U.S. Leisure and Unmanaged Business Travel Online as % of Total Market 100% 80% 60% 40% 20% 0% 15% or $24B Online in 2002 Total Market Size: 2002: $160B 2010: $209B Gross Bookings 75% - $156B IACT Expectation 50% - $104B 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2011 Source: Jupiter for historical information.
Online Penetration of International Travel Market Online as % of Total Market 100% 80% 60% 40% 20% 0% 1.5% or $6B Online in 2002 Total Market Size: 2002: $350B 2010: $450B Gross Bookings 50% - $225B IACT Expectation 30%- $135B 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2011 2012 Source: Jupiter for historical information.
Online Penetration of U.S. Corporate Travel Online as % of Total Market 100% 80% 60% 40% 20% 0% 9% or $7B Online in 2002 Total Market Size: 2002: $78B 2010: $124B Gross Bookings 60% - $74B IACT Expectation 40%- $50B 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2011 2012 Source: Jupiter for historical information.
Total Online Travel Opportunity Leisure & Unmanaged Business 2002 JUPITER 2010 IACT ESTIMATE PERCENTAGE OF CATEGORY ONLINE $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 Approach US Consumer Private Label International Corporate
Leading Travel Sellers Worldwide 2002 Gross Bookings 1 American Express + Rosenbluth $20.7B 2 TUI $13.7B 3 Carlson Wagonlit $12.5B 4 JTB $11.5B 5 IAC Travel $6.9B 6 My Travel $6.0B 7 Navigant Travel $5.3B 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 IAC Travel includes: Expedia, Inc. Hotels.com Interval International Hotwire TV Travel Store (UK) Source: Travel Weekly, Expedia Management estimates
US Market Segments
US Travel Brand Reach 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Expedia Travelocity Orbitz Hotwire Priceline Cheap Tickets Hotels.com Jan-02 Feb-02 Mar-02 Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02 Oct-02 Nov-02 Dec-02 Jan-03 Feb-03 Mar-03 Apr-03 May-03 Jun-03 Jul-03 Aug-03 Sep-03 Media Metrix/Comscore
US Travel Gross Bookings 2800 2400 IAC Travel 2000 1600 1200 800 Travelocity Orbitz 400 0 Hotwire Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 Q4 02 Q1 03 Q2 03 Q3 03 IAC Travel Gross Bookings includes gross revenue for Hotels.com.
Expedia.com Consumer Proposition The Whole Trip Unique Inventory Dynamic Packages Ticketmaster inclusions Service Quality ACSI leader, BBB winner Supplier Proposition Brand-agnostic shoppers Billboard effect Opportunities Packages only 27% rev. Destination Services Cruise just launched
Expedia.com Packages Revenue 2001: $21.7 million 2002: $107.1 million 9mos-2003: $170.3 million $80 30% $70 $60 $59 27% $66 25% $ MILLIONS $50 $40 $30 $20 $20 $25 $31 $31 $46 20% 15% 10% As % of Total Expedia Revenue $10 $4 $6 $9 $12 5% $0 Q1 '01Q2 '01Q3 '01Q4 '01Q1 '02Q2 '02Q3 '02Q4 '02Q1 '03Q2 '03Q3 '03 0%
Expedia.com Marketing TELEVISION Search & Online Advertising SEARCH ENGINE DISTRIBUTION Expedia.com URL ONLINE BANNERS & POP-UNDERS PRINT Online Partnerships & Affiliates Email PARtNERSHIPS & AFFILIATES 20,000+ AFFILIATES RADIO NEWSPAPER OUT-OF-HOME
Expedia Penetration: Online Travel Transaction Reach 100% 80% 60% 40% 20% 37.7% 3Q03 60% IACT Expectation 40% 0% Expedia % of online travel transaction reach 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Average monthly MMX/Comscore reach 6 mos data for 2000; 9 mos data for 2003
Hotels.com Consumer Proposition Save on Hotels Low Rate Guarantee Promos & Deals Supplier Proposition Affiliate network Price-sensitive customer Opportunities International expansion Traffic from other IACT WWTE packages
Hotels/Expedia Integration
Hotel Market Dynamics BRANDED vs. INDEPENDENT FIERCE COMPETITION BRANDED HOTELS 52% 48% INDEPENDENT HOTELS SOURCE: Smith Travel Research COSTLY TRADITIONAL MARKETING 30%+ ROOMS UNSOLD QUARTERLY OCCUPANCY RATES % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0 1Q00 3Q00 1Q01 3Q01 1Q02 3Q02 1Q03 3Q03
The IAC Merchant Hotel Business Hotels don t pay for listings, only for business generated Compares favorably to risking money on newspaper advertising Hotel s Potential New Customers Want Choice Travelers Hotel Direct 50% of conversion books direct 87% First Time Customers Customer books via Expedia or Hotels.com, paying in advance Expedia & Hotels.com pay hotel for room post-checkout IAC keeps margin Hotel Loyal Customers Shop Direct Direct Bookings
Merchant Hotel Proposition $0.00 ZERO UPFRONT COST 13% 87% 1:1 50% 87% FIRST TIME CUSTOMERS DIRECT vs. INDIRECT BOOKINGS $200.00 MARGIN % 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 95% of Nov 02 participating hotels participate today 8000 6000 4000 2000 0 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 IAC+HW 2001: 2002: 9.7mm 18mm 9 mos. 2003: 21.3 mm In Thousands
Hotwire.com Consumer Proposition Trade Info for Savings No Bid = No Overpay Supplier Proposition Incremental business Completely opaque Low overhead Opportunities Traffic from Expedia & Hotels.com International Expansion Supply & Demand Bigger resource base
Hotwire Trends Growing Consumer Awareness Growth Comparison Consumer Awareness 100% 80% 60% 40% 20% Index: Gross Bookings 800 700 600 500 400 300 200 100 0% Sep- 01 Apr- 03 0 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 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 Proposition High End Experience Differentiate in Destination Exclusives like Hertz Gold Supplier Proposition Target the high end Packages opacity protects supplier price points Opportunities Cut cost with agent online booking tools Increase revenue with consumer online booking
Interval International Consumer Proposition Get more from timeshare Network of big brands Added benefits from EPI Supplier Proposition Higher-end membership No channel conflict RCI buying developers Opportunities Cut cost with online exchange tools Sell distressed inventory on Expedia and Hotels Generate developer leads from Expedia and Hotels
Expedia Corporate Travel Company Proposition Savings on fees Savings on travel Control to travel manager 1-stop agency & software Employee Proposition Zero training Confidence Supplier Proposition Cut cost with online Opportunities Rapid online adoption
Expedia Corporate Travel Proposition Company with $1M annual air spend adopts ECT New spend for same travel: $782,283 Total savings: $217,717, or 21%
Current Markets Outside U.S. ($Billion) 40 35 30 25 20 15 10 5 0 Core Markets Cover 80% of Europe s population 90% (approx.) of Europe s travel sales Package Sales Air Sales DE UK FR NL CA IT ES SE BE DK 82 60 60 16 31 58 40 Population (Millions) 9 10 5
IAC Travel Europe UK France Germany
IAC Travel International Gross Bookings 2001: $236 million 2002: $467 million 9mos-2003: $792 million $350 $322 14% $300 12% $ MILLIONS $250 $200 $150 $145 $138 $215 $255 10% 8% 6% As % of Total Travel Gross Bookings $100 $88 $97 4% $50 $47 $59 $66 $63 2% $0 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '02 Q1 '03 Q2 '03 Q3 '03 0% 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 Structure Variable Spend Only Deepen Supplier Relationships Deepen Supply Pool
IAC Travel Advantages Unique US travel brand portfolio Superior technology platform Unparalleled global reach Entrepreneurial management team IAC corporate resources
Long-Term Priorities Spend marketing and innovate to grow US market share Grow Expedia.com packages to 50% of Expedia revenue Generate 50% of revenue from outside of US Continue disciplined entry to corporate travel market
Round Up
Q&A