Expedia, Inc. (EXPE) Morgan Stanley Technology, Media And

corrected transcript Mark D. Okerstrom, Chief Financial Officer & Executive Vice President Vice &Executive Officer Financial Chief Okerstrom,D. Mark LLC Co. & Stanley Morgan Analyst, Devitt, W. Scott Participants Other Participants Corporate MANA PARTICIPANTS behere. to Great here. being you appreciate fr downflight the made today, us with Expedia, of CFO Okerstrom, Mark have to happy Very analyst. Internet consumer Stanley’s MorganDevitt, Scott I’mit off. kick to going We’re Devitt W. Scott OkerstromD. Mark

w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w DISCUSSION SECTION GEMENT

–

Analyst, Morgan Stanley & Co. LLCCo. & Stanley MorganAnalyst,

–

Chief Financial Officer & Executive Vice President, Expedia, Inc. Expedia, President, Vice Executive & Officer Financial Chief Expedia, Expedia, Inc.

Company▲ 1 - 877

- CSET ACTS F Ticker▲ EXPE

Event Type▲ Event 2001 om Seattle, and we and Seattle, om - 014 20

CallStreet Mar. 3, 2014 3, Mar. Date▲

1 corrected transcript QUESTION AND ANSWER SECTION QUESTION AND ANSWER the stuff th stuffthe of some to relativeplace in put been what’s of kind and relevantless just it’s where business bigger the to relativesize a it at Is now?positioned business is the HowHotwire. with issues performance Trivago, also then and Nordics; in ourselvesfor position one numbera create to did we that deala integration, acquisition Travel u finishing on focused behind, years few just they’re and travelleisure to did Expedia what travelcorporate to doing really world,the in agency travelcorporate largest fifthis the which long the towards aggressively invest to continue to going we’re us and for opportunity incredible is Ithink which China, in eLong business: a for drivers growth future key the of couple ona focused verythen We’re opjust really and mobile in aggressivelymore pushing count, hotel the expanding geographically, expandingabout really growthin really they’re business, label Bra brands, leisure globalcore our across where position a in We’re us. behind noware madewe’ve that investments bigthe of A lot 2014. in positioned

– – – – – – – ou put all those things together, and it’s a great asset for us. It is a meaningful part of our partof meaningfula is It us. forasset greata it’s and together, things those all ouput

Mark Okerstrom Mark Okerstrom Mark Okerstrom Mark Scott Devitt Scott Devitt Scott Devitt Scott w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w at Priceline has done that I think created some headwinds early in 2013? in early headwinds some created Ithink that done has Priceline at

Devitt – – – –

Morgan Stanley & Co. LLC &Co. Stanley Morgan LLC>: &Co. Stanley Morgan Morgan Stanley & Co. LLC>: &Co. Stanley Morgan LLC>: &Co. Stanley Morgan r 2014? r Expedia, Expedia, Inc. – – – rtn tepafrsta ev built. we’ve that platforms the erating

Expedia, Inc.>: Inc.>: Expedia, Inc.>: Expedia, Inc.>: Expedia, -

term Chinese opportunity; Egencia, our corporate travel business business travelcorporate our Egencia, opportunity; Chinese term Company▲

particularly in the U.S. They’re in the hotel business, which is is which business, hotel the in They’re U.S. the in particularly 1 - and - 877 Sure. Great question. Well, we feel good about how we’rehow about good feel we Well, question. GreatSure. Yeah. forchallenges biggest the mentioned, you as Well, Sure. - scale mode. So the focus for those businesses are businesses those for focus the So mode. scale - CSET ACTS F

Ticker▲

h opttv landscape. competitivethe >: >: EXPE

more aggressively into the U.S., Canada,U.S., the into aggressivelymore Thanks. We We know Thanks. The travel industry was one of the first ones first the ofone was industry travelThe broadly, companies Internetthe interesting, It’s some werethere on, earlier2013, In

Technology, Media and Media Technology, eeo ConferenceTelecom owth.

Morgan Stanley Stanley Morgan Expedia is one of the largest the of is one Expedia

Event Type▲ Event

2001

- 014 20

f Express Express f p the VIA VIA the p

CallStreet Mar. 3, 2014 3, Mar.

Date▲

corrected transcript marketing efficiency and customer acquisition cost, something that was hotly debated in 2013 in debated hotly was that something cost, acquisition customer and efficiency marketing

– – – – –

Mark Okerstrom Mark Okerstrom Mark Okerstrom Mark Devitt Scott Devitt Scott w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w ity, and there’s other things going on. How though do we think about that over the longer theover that about think dowe thoughHow on. going things other there’s and ity, --

x, into our family of business that was really built on television advertising just puts more puts just advertising ontelevision built really was that business offamily our into x, it’s so huge, over $1 trillion. We’re 3% to 4% of this industry. We have a huge amount of amount huge ahave We industry. this of 4% to 3% We’re $1trillion. overhuge, so it’s

ywheel of acquiring new customers through channels like TripAdvisor, like like like TripAdvisor, channels through customers new ofacquiring ywheel – –

Morgan Stanley & Co. LLC>: &Co. Stanley Morgan LLC>: &Co. Stanley Morgan Booking.com see you when TripAdvisor, see you When mix. ofour part key

Expedia, Expedia, Inc. – – –

Expedia, Inc.>: Inc.>: Expedia, Inc.>: Expedia, Inc.>: Expedia, –

TripAdvisor initiated an initiative offline or in traditional TV. As it’s it’s As TV. traditionalin or offlineinitiative an initiated TripAdvisor Company▲

1 - 877 ck a little bit and making room for them. forroom making and bit little a ck Well, it’s hard to draw conclusions around the overall the around conclusions to draw hard it’s Well, Well, I would say from an overall P&L perspective for us, us, forperspective P&L overallanfrom say would I Well, Yeah. the returns are less good as more dollars are being put beingare dollars more as good less are returnsthe

- hree, five years? Is it going to be something that for the for that something be to it goingIs years? hree,five CSET ACTS F Ticker▲

EXPE just create brand loyalty to create diversifiedcreate to loyalty brandcreate just o’e o mrig play emerging got You’ve A Okay.

• •

Technology, Media and Media Technology, sales and marketing. We look at this this at look We marketing. sales and eeo ConferenceTelecom e to invest aggressively in doing in aggressivelyinvest to e Morgan Stanley Stanley Morgan Event Type▲ Event op more of a direct direct a of more op 2001 ers, one of which you you which ofone ers, ng has always always has ng

- 014 20

dvertising. CallStreet Mar. 3, 2014 3, Mar. Date▲

corrected transcript very much, and I’ll leave the transactions to you. you. And to transactions the leaveI’ll and much, very you thank business, advertisingthe bein to happy veryI’m say, he’ll structure, cost ourP&L, our at c It’s greata channels. the respect We team. management that business, that respect much very we and us for channel marketing greata really they’re but relationship, historic a there’s Obviously,

Mark Okerstrom Mark Okerstrom Mark Scott Devitt Scott Devitt Scott espect to the efficiencies of particular channels, though, I would just say the big global OTAs, OTAs, global bigthe say just Iwould though, channels, ofparticular efficienciesthe to espect ber of years since we’ve really re really we’ve since years of ber w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w us.

– – nstantly improving conversion, really focused on making their consumer their making on focused really conversion,improving nstantly

Morgan Stanley & Co. LLC>: &Co. Stanley Morgan Morgan Stanley & Co. LLC>: &Co. Stanley Morgan

Expedia, Expedia, Inc. – –

Expedia, Inc.>: Inc.>: Expedia, Inc.> Expedia, iki elycmsdw t hti h ietipeetto, what implementation, direct the is to what down comes it really hink

Company▲ past year past

1 - - platformed. We’re happy with what we see in meta search. search. meta in see we whatwith happy We’re platformed. 877 : more volume. If you’re a smaller player who can’t can’t who player smaller a you’re If volume. more Well, I think we’re always interested in making consumer making in interested always we’re think IWell, ours. offriend great is a TripAdvisor say would I Well, -

and - CSET ACTS F Ticker▲ - a - af otoyas hyv be mkn nod in inroads making been they’ve years, two to half EXPE t it is. And we get great new customers from customers newgreat get weAnd is. it t I mentioned TripAdvisor. They have They TripAdvisor.mentionedI Would you have an interest in being a providera beingin aninterest have you Would it certainly, I expect, is their attention. their is expect, I it certainly,

• • gadlann adrfnn and refining and learningngand Copyright © © Copyright Technology, Media and Media Technology, eeo ConferenceTelecom Morgan Stanley Stanley Morgan Event Type▲ Event 2001 - 014 20 er comes to to ercomes

t to ensure to t

–

used to to used CallStreet

nk nk Mar. 3, 2014 3, Mar.

Date▲

corrected transcript it opens up the aperture for us. Uptick, we say globally has been very positive, and it does give us a us givedoes it and positive, verybeen has globallysay we Uptick, us. for aperturethe up it opens both them havewe and agency, book just will consumers lot aof side, agency the on Similarly that. havedon’t competitors ourof A lot advantage. biga that’s having, Us risk. currency the about worriedThey’re Miam into go to wanting travelers Argentina,in now Right merchant. book only will you, of many to surprisingly consumers, of lot A us. with business do to willing bewould that consumer the of aperturethe up opened essentially we’ve us, forAnd verthey’re So program.the in up signing after and before sequentially rategrowth theirin 1,000 a about seen haveup hadsigned that hotels the really, And up. signed choice that put really program the forup sign that hotels choice, the consumers it gives Again, product. a developedwe So suppliers. with popularvery consumers, with popularvery become for headwinda of bit little awas that something was that And markets. major the in not but markets tertiary and secondary in inventory agency had We scale. at to do ability the havewedidn’t that Something booking. historic model merchant the called advance,in us pay whether to choice the consumers the offer to us enable to welaunched that product awas this Again,

– – – – – – -

- Okerstrom Mark Okerstrom Mark Scott Devitt Scott Devitt Scott Devitt Scott all of those are essentially merchant bookings, you get to 75% merchant. 75% to get you bookings, merchant essentially are those ofall alone hotel, the mix is about 50% agency, 50% merchant in terms of room nights. When you you When nights. of roomterms in merchant 50% agency, 50% about is mix the hotel, alone w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w - year. So we do expect that shift to continue. to shift that doexpect we So year. ose hotels, our package business, the Hotwire opaque business, prepaid bookings that that bookings prepaid business, opaqueHotwire the business, package our hotels, ose

so we’re not particularly concerned about it. about concerned particularly not we’re so

– – –

Morgan Stanley & Co. LLC>: &Co. Stanley Morgan LLC>: &Co. Stanley Morgan Morgan Stanley & Co. LLC>: &Co. Stanley Morgan Expedia, Expedia, Inc. – –

Expedia, Inc.>: Inc.>: Expedia, Inc.>: Expedia, us, particularly in places like Europe where the agency model had model agency the where Europe like places in particularly us, in the hands of consumers. At our last call, we had 45,000 hotels hotels 45,000wehad call, last our At consumers. of handsthe in Company▲ 1

- 877 el er vr hpywt xei rvlr Preference. TravelerExpedia with happy very we’re Well, Well, to answer the last part first, we did see some some see did we first, partlast the answer to Well,

- CSET ACTS F Ticker▲ EXPE i, for example, they’ll only book merchant. merchant. book only they’ll example, for i, Okay. Okay. Switching gears a little bit. ETPbit. little a gears Switching Okay. Okay. Okay. And I want to leave enough time for time enoughleave to want IAnd Okay. on views Any Okay.

growth from growth in our merchant business business merchant our in growth from growth

• • rway?

Technology, Media and Media Technology, ally, or pay the hotel at the time of time at the hotel the pay or ally,

eeo ConferenceTelecom

Morgan Stanley Stanley Morgan Event Type▲ Event longer 2001 - basis -

term mix in terms of terms in mix term do, raise your hand, yourraise do, -

- 014 20 on increase point

happy. y CallStreet ng Mar. 3, 2014 3, Mar. . And . Date▲

corrected transcript Travelocity much how know don’tjust we as thirdly, then And anunknown. of website Travelocityoldthe like they as much it as love to going are gnome the loves that customers loyal those whether tell to early too still it’s And customers. Expedia Brandfor well website the of conversionthe is Two Canada.in except out rolled largely we’reagain and rolloutthe of timing the was One things. of numbera by dictated bewill business that of performance ultimate the really, that, said have We That’ optimized. fully out, rolled fully that’s Again, EBITDA. adjusted of million to $65 million $40 about contribute to deal Travelocitythe optimized, fulla on that expect We come. to is about Canada products. all U.S. the in platform Expedia the and now Travelocity with live essentially arewe is that One just let me So know. to wants everyone is what which Travelocity,from comes EBITDA2014 our of much howfor except

– – – – – –

in deal of that contribution the shared haven’t you that extent the to also then and publicly

Mark Okerstrom Mark Okerstrom Mark Okerstrom Mark Scott Devitt Scott Devitt Scott Devitt Scott w w w .Ca llStre e t.com • • t.com e llStre .Ca w w w

– – –

Morgan Stanley & Co. LLC>: &Co. Stanley Morgan LLC>: &Co. Stanley Morgan Morgan Stanley & Co. LLC>: &Co. Stanley Morgan –

let me recap some of the highlights. ofthe some recapme let Expedia, Expedia, Inc. – – – nnw. ed hn tsgigt eaceie oajse EBITDA to adjusted accretivebe to goingit’s think We do unknown. of work they can still do to optimize the mobile experience, but that team is is team that but experience, mobilethe optimize doto still can they work of

Expedia, Inc.>: Inc.>: Expedia, Inc.>: Expedia, Inc.>: Expedia, e other companies are doing?are companies other e s. The Brand Expedia website, and1 that platform converts incredibly incredibly converts platform that and1 website, Expedia Brand The s. Company▲

1 - 877 ue ow’e adabnho tf bu Travestuffaboutof bunch a said we’ve So Sure. Well, they are thinking a lot about it. They, in Q4, hit a hit Q4, in They,it. about lot a thinking are they Well, Trivago.

- CSET ACTS F Ticker▲ o h 04 number. 2014the not s EXPE

Okay, good. Thanks. We’ve got about 10 about got We’veThanks. good. Okay, enough fast movingit’s think you Do Trivago. that Trivago,And Okay.

• • as a business before they were they before business a as Copyright © © Copyright Technology, Media and Media Technology, - er u aebsswe fully basis whenrate run year eeo ConferenceTelecom r hand. And if not, I can... I if not, And hand.r - on

- ’ve been happy with the with happy been ’ve Morgan Stanley Stanley Morgan year.