Expedia, Inc.

Company Profile

Publication Date: 5 Aug 2010

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Expedia, Inc.

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TABLE OF CONTENTS

TABLE OF CONTENTS

Company Overview..............................................................................................4
Key Facts...............................................................................................................4
Business Description...........................................................................................5
History...................................................................................................................6
Key Employees...................................................................................................10
Key Employee Biographies................................................................................11
Major Products and Services............................................................................15
Revenue Analysis...............................................................................................16
SWOT Analysis...................................................................................................17
Top Competitors.................................................................................................22
Company View.....................................................................................................23
Locations and Subsidiaries...............................................................................26

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Expedia, Inc.
Company Overview

COMPANY OVERVIEW

Expedia (the company) is an online travel company which offers travel products and services. The
company provides, on a stand-alone and package basis, products and services provided by airlines,
lodging properties, car rental companies, destination service providers, cruise lines and other travel
product and service companies. The company primarily operates in the US. It is headquartered in
Bellevue, Washington and employs 7,960 people.

The company recorded revenues of $2,955.4 million during financial year ended December 2009
(FY2009), an increase of 0.6% over FY2008. The reason for the increase in revenues was primarily
due to strong performance in its leisure and TripAdvisor media network segments. The operating
profit of the company was $571.4 million during FY2009, as compared to operating loss of $2,428.9
million in FY2008. The net profit was $299.5 million in FY2009, as compared to net loss of $2,517.8
million in FY2008.

KEY FACTS

Head Office Expedia, Inc.

333 108th Avenue NE
Bellevue
Washington 98004
USA
Phone 1 425 679 7200
Fax 1 425 679 7240
Web Address http://www.expediainc.com
Revenue / turnover 2,955.4
(USD Mn)
Financial Year End December
Employees 7,960
NASDAQ Global EXPE
Select Market Ticker

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Business Description

BUSINESS DESCRIPTION

Expedia is the one of the leading online travel companies in the world. The company operates more
than 90 points of sale globally in over 60 countries, with sites in North and South America, Europe,
the Middle East and the Asia-Pacific region.

The company has created a global travel marketplace used by a wide range of leisure and corporate
travelers, offline retail travel agents and travel service providers. These services are made available,
on a stand-alone and package basis, including travel products and services provided by numerous
airlines, lodging properties, car rental companies, destination service providers, cruise lines and
other travel product and service companies. Additionally, it also offers travel and non-travel advertisers
access to a potential source of incremental traffic and transactions through its various media and
advertising offerings on both the TripAdvisor Media Network and on its transaction-based websites.

The company's portfolio of brands includes: Expedia.com, hotels.com, Hotwire.com, Egencia,

TripAdvisor, Expedia Local Expert, Classic Vacations, Venere and eLong. The company's brands
provide a wide selection of travel products and services, from simple, discounted travel to more
complex, luxury travel. Its travel offerings primarily consist of airline flights, hotel stays, car rentals,
destination services, cruises and package travel, which encompasses multiple travel products.

*The company operates through three reportable business segments: leisure, TripAdvisor Media
Network and Egencia.

The leisure segment offers a full range of travel and advertising services to its worldwide customers
through a variety of brands including: Expedia.com and hotels.com in the US and localized Expedia
and hotels.com websites throughout the world.

TheTripAdvisor Media Network segment provides advertising services to travel suppliers on its
websites like information about cities, hotels, restaurants and activities in a variety of destinations
through tripadvisor.com.

The Egencia segment offers managed travel services to corporate customers in North America,
Europe, and the Asia Pacific region.

* The company reorganized its business segments in FY2009 into three reportable segments: leisure,
TripAdvisor media network and Egencia from its earlier two reportable segments, North America
and Europe. The restructuring of the business segments was due to reorganization of its business
around its global brands.

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Expedia, Inc.
History

HISTORY

Expedia was initially launched by Microsoft as an online travel information service in 1994. The
company launched its online sales division in 1996. In 1999, the company offered its initial public
offering (IPO). Later in the year, the company acquired rivals Travelscape.com and VacationSpot.com.

In 2001, Expedia collaborated with ticketing giant Ticketmaster to enable consumers to access
Ticketmaster events. In the same year, Microsoft sold its 65% stake in the company to USA Interactive,
following the downturn in the US travel market.

USA Interactive (now InterActiveCorp (IAC), Expedia and Equinox Merger Corporation entered
planned to merge operations in 2003. Consequently, Expedia became a wholly owned subsidiary
of InterActiveCorp.

In 2004, the company acquired Egencia, an online corporate travel management company with
operations in France, Belgium and the UK, the acquisition further strengthened its operations in
Europe.

The company settled trademark dispute proceedings against Expedia Services, a professional
services firm in the UK in 2004. Expedia Services ceased using the Expedia name, mark and any
similar words or colorings in any future business transactions including customer dealings, financial
trading, corporate branding and advertising.

IAC completed the spin-off of Expedia in 2005. In the same year, Expedia tied up with Hilton
International in a global agreement that allowed Hilton to add over 400 of its properties to Expedia's
preferred hotel program.

In a move to strengthen its product portfolio, Expedia signed a number of agreements in 2006.
Expedia signed a three-year agreement with The Louvre Hotel Group. This agreement added more
than 600 properties across Europe to Expedia's hotel offering on all Expedia and Hotels.com branded
points of sale globally. It also signed a long-term agreement with Kimpton Hotels, which provided
greater access to Kimpton's inventory and rates. Also in 2006, Expedia announced a relationship
with BedandBreakfast.com, which brought a wide range of bed and breakfast offerings to Expedia
travelers. In the same year, Expedia expanded its marketing and distribution partnership with Hyatt
Hotels & Resorts.

Expedia formed a long-term technology partnership with Amadeus IT Group, a player in technology
solutions for the travel and tourism industry, in 2006. In the same year, Expedia and Continental
Airlines entered a five-year strategic partnership under which Continental's range of products and
services, including all fares and inventory, would be marketed through Expedia.com and its affiliate
sites.

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History

Expedia.com, the company's online travel site entered a long-term strategic relationship with Conde
Nast in 2006 to serve as the exclusive online travel and booking engine for Conde Nast's web site
Concierge.com.

Expedia entered a partnership with Sofitel, a brand of Accor hotels in 2006. Through this agreement,
Sofitel would be available on all Expedia and hotels.com sites globally.

Expedia announced a new five-year strategic partnership with United Airlines (United) in 2006, under
which all of United's published fares, schedules and inventory were made available through
Expedia.com and its affiliate sites to travelers worldwide.

AirTran Airways, a subsidiary of AirTran Holdings, and Expedia signed a new four-year strategic
partnership in 2006. The agreement was primarily focused towards marketing of AirTran Airways'
range of products and services, including all fares, schedules and inventory, through Expedia.com.
In the same year, the company launched its Japanese web site, Expedia.co.jp.

Expedia partnered with Jin Jiang International Hotel Management Company (JJIHMC), the largest
hotel owner and operator in China, in 2007. Under the agreement, JJIHMC offered its entire inventory
of hotels to Expedia customers.

The company reached a multi-year agreement with Hertz, one of the general use car rental brands,
in 2007 to continue its participation in the Expedia Preferred Rental Car Program.

Expedia signed a new long-term strategic agreement with Frontier Airlines in 2007, under which
Frontier Airlines' fares, schedules and inventory were available through Expedia's portfolio of brands.
In the same year, Expedia expanded and extended its multi-year partnership with Omni Hotels for
providing Omni with online marketing opportunities across the Expedia network of travel sites.

Expedia entered a long-term strategic partnership with CruiseShipCenters International, a cruise

vacation specialist, in 2007. The company launched its Spanish website, Expedia.es during the
same year.

Expedia announced a new agreement with American Airlines, in 2007; under this agreement all of
American Airlines published fares, schedules and inventory, were offered to travelers through
Expedia.com, Expedia.ca, and Expedia Corporate Travel.

The company entered a new multi-year strategic partnership with Alaska Airlines and Horizon Air in
2007. Under the agreement, all of the carriers' published fares, schedules and inventory were offered
through Expedia.com and Expedia.ca.

Further in 2007, the company launched its New Zealand website (www.expedia.co.nz). Expedia and
IHG (InterContinental Hotels Group) entered a multi-year agreement during the same year. The
agreement allowed consumers to book IHG hotels on Expedia sites globally.

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History

Expedia and CruiseShipCenters International, a North American cruise vacation specialist, launched
their new combined brand, Expedia CruiseShipCenters in 2007.

Expedia Corporate Travel changed its name to Egencia in 2008. In addition, Expedia acquired Italy's
Venere Net ApA from Advent International in the same year. Later in 2008, Expedia signed a long
term global agreement with Dubai's Jumeirah Group, a hospitality management company; under
the agreement Jumeirah hotels would be made available on all Expedia and hotels.com branded
points of sale globally.

Expedia signed another long term, strategic supply agreement with Red Lion Hotels, a full-service
chain of hotels providing business and leisure travelers, for supporting booking at all of Red Lion
Hotel's 50 properties on Expedia and hotels.com branded sites worldwide.

Further in 2008, Expedia announced a new organizational structure that aligned its worldwide brands
and technology functions to support more than 60 global points of sale in more than 40 countries.
Additionally, Expedia announced a new multi-year, global agreement with SAS Scandinavian Airlines,
the largest listed airline and travel group in the Nordic countries. Under the agreement, SAS products
and fares were made available worldwide on Expedia- branded sites, and through Egencia. The
deal was an extension of the existing relationship between Expedia and SAS and marks SAS's first
global agreement with an online travel company.

In July 2009, Expedia.com, an Expedia company, selected The Martin Agency as its new advertising
agency of record. The Martin Agency will be responsible for Expedia.com's advertising including
broadcast, print, radio, and digital brand marketing.

Expedia announced a global partnership agreement with Prince Hotels & Resorts, the largest
independent hotel chain in Japan in September 2009. Under the agreement, Expedia will add Prince
Hotels properties to the selection on its more than 70 Expedia- and hotels.com-branded sites in 55
countries worldwide.

In December 2009, the company launched the Egencia Global Alliance to expand its network of
strategic partnerships with leading local travel management companies (TMCs) and provide further
global support to clients around the world. With this global alliance, Expedia extended its geographical
footprint to offer its services in new regions including Argentina, Hungary, Russia, Romania, United
Arab Emirates, Singapore, Taiwan, Hong Kong and Uruguay.

Expedia signed a global partnership agreement with Top International Hotels, a Germany-based
hotel brand with more than 250 three- to five-star properties across Europe in March 2010. Under
the new agreement, all of Top International properties will be available on more than 90 Expedia
and hotels.com branded sites worldwide. In the same month, the company expanded its Egencia
Global Alliance with leading local travel management companies (TMCs) in Brazil, Mexico, Japan,
Czech Republic, Slovakia, Austria and Malaysia. Furthermore, Expedia also signed a global marketing
and distribution agreement with Air Pacific Airlines.

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History

In April 2010, the company signed an agreement with China's Motel 168 Hotel Chain, a leading
budget hotel brand with more than 300 hotels in 50 cities across China.

The company signed a global partnership agreement in June 2010, with Iberostar Hotels & Resorts,
a Spanish hotel chain with properties in 16 countries throughout the Caribbean, South America,
Europe and North Africa. Under this agreement, Iberostar’s portfolio of beachfront properties will be
available to the millions of consumers who shop and book travel on more than 90 Expedia and
Hotels.com -branded sites worldwide each month.

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Expedia, Inc.
Key Employees

KEY EMPLOYEES

Name Job Title Board Compensation

Dara Khosrowshahi President and Chief Executive Executive Board 4843696 USD
Officer
Barry Diller Chairman and Senior Executive Executive Board 4502703 USD
Victor A. Kaufman Vice Chairman Executive Board
A. George Battle Director Non Executive Board 329994 USD
Jonathan L. Dolgen Director Non Executive Board 319994 USD
William R. Fitzgerald Director Non Executive Board
Craig A. Jacobson Director Non Executive Board 314994 UGX
Peter M. Kern Director Non Executive Board 329994 USD
John C. Malone Director Non Executive Board
Jose A. Tazon Director Non Executive Board 285369 USD
Michael B. Adler Executive Vice President and Chief Senior Management 1775915 USD
Financial Officer
Pierre V. Samec Executive Vice President and Chief Senior Management
Technology Officer
Mark Okerstrom Senior Vice President, Corporate Senior Management
Development
Patricia Zucotti Senior Vice President and Chief Senior Management
Accounting Officer
Dhiren Fonseca Co-President, Expedia Partner Senior Management
Services Group
Gary Fritz Co-President, Expedia Partner Senior Management
Services Group
Eric Grosse President, Expedia Worldwide Senior Management
David Roche President, hotels.com Worldwide & Senior Management
Venere.com
Clem Bason President, Hotwire Group Senior Management
Stephen Kaufer President and Chief Executive Senior Management
Officer, TripAdvisor.com
Henrik Kjellberg President, Expedia Affiliate Network Senior Management
Rob Greyber President, Egencia Senior Management
Greg Bernd Co-President, Classic Vacations Senior Management
David Hu Co-President, Classic Vacations Senior Management
Guangfu Cui Chief Executive Officer, eLong, Inc. Senior Management

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Key Employee Biographies

KEY EMPLOYEE BIOGRAPHIES

Dara Khosrowshahi

Board: Executive Board

Job Title: President and Chief Executive Officer
Age: 40

Mr. Khosrowshahi currently serves as the President and Chief Executive Officer at Expedia. He has
been the Chief Executive Officer at Expedia since it spun off from IAC/InterActiveCorp (IAC) in
August 2005. Prior to that, he was acting Chief Executive Officer of the travel portfolio within IAC
from 2004. Previously, Mr. Khosrowshahi had served as Executive Vice President and Chief Financial
Officer at IAC/InterActiveCorp since 2002.

Barry Diller

Board: Executive Board

Job Title: Chairman and Senior Executive
Since: 2005
Age: 68

Mr. Diller has been the Chairman and Senior Executive at Expedia since 2005. He also serves as
the Chairman and Chief Executive Officer at IAC/InterActiveCorp since 1995. Since 1992, Mr. Diller
served as Chief Executive Officer for a number of predecessor companies engaged in media and
interactivity prior to the formation of IAC. He also serves on the boards of The Washington Post
Company and the Coca-Cola Company. Mr. Diller is also a trustee of New York University and serves
on the Executive Board for the Medical Sciences at UCLA.

Victor A. Kaufman

Board: Executive Board

Job Title: Vice Chairman
Since: 2005
Age: 66

Mr. Kaufman has been the Vice Chairman at Expedia since 2005. He has been a Director at
IAC/InterActiveCorp (IAC) and its predecessors, since 1996 and has been the Vice Chairman of IAC
since 1999. Previously, Mr. Kaufman served as the Chairman and Chief Financial Officer at IAC.
Prior to joining IAC, he worked in various roles with Savoy Pictures Entertainment, including that of
Chairman, Chief Executive Officer, and Director.

A. George Battle

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Key Employee Biographies

Board: Non Executive Board

Job Title: Director
Since: 2005
Age: 66

Mr. Battle has been a Director at Expedia since 2005. He served as the Executive Chairman of Ask
Jeeves from January 2004 till July 2005 and as the Chief Executive Officer from December 2000
until January 2004. Mr. Battle currently serves as Chairman of the Board at Fair Isaac Corporation,
a position he has held since 2002 and a member of the Board of OpenTable, Inc.

Jonathan L. Dolgen

Board: Non Executive Board

Job Title: Director
Since: 2005
Age: 64

Mr. Dolgen has been a Director at Expedia since 2005. He is a private investor and has served as
a senior advisor to Viacom, since 2004. Also since 2004, Mr. Dolgen has been a principal of Wood
River Ventures. Prior to joining Viacom, he held various positions at Columbia Pictures Industries,
Inc., Twentieth Century Fox and Fx, Inc., and Sony Pictures Entertainment. Mr. Dolgen holds a JD
degree from New York University and a BS degree from Cornell University.

William R. Fitzgerald

Board: Non Executive Board

Job Title: Director
Since: 2006
Age: 52

Mr. Fitzgerald has been a Director at Expedia since 2006. He has served as a Senior Vice President
of Liberty Media since 2000. In addition, he also serves as Chairman and Chief Executive Officer
at Ascent Media Corporation. Mr. Fitzgerald received his undergraduate degree from Indiana
University Kelley School of Business and a master's degree from the Kellogg School of Business at
Northwestern University.

Craig A. Jacobson

Board: Non Executive Board

Job Title: Director
Since: 2007
Age: 57

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Key Employee Biographies

Mr. Jacobson is a Director at Expedia since 2007. He was a founding partner at the law firm of
Hansen, Jacobson, Teller, Hoberman, Newman & Richman, where he practiced entertainment law
for the past 20 years. Mr. Jacobson is a member of the Board of Trustees at the USC Fine Arts
School and a member of the Board of Directors of Aver Media, a privately-held Canadian lending
institution.

Peter M. Kern

Board: Non Executive Board

Job Title: Director
Since: 2005
Age: 42

Mr. Kern has been a Director at Expedia since 2005. He also serves as a Managing Partner of
InterMedia Partners (InterMedia). Prior to working at InterMedia, Mr. Kern was Senior Managing
Director and Principal of Alpine Capital. He joined Alpine when the company merged with his own
firm, Gemini Associates (Gemini), in 2001. Prior to founding Gemini, Mr. Kern was at the Home
Shopping Network and Whittle Communications. He holds a BS from the Wharton School at the
University of Pennsylvania.

John C. Malone

Board: Non Executive Board

Job Title: Director
Since: 2005
Age: 69

Mr. Malone has been a Director at Expedia since 2005. He has served as Chairman and a Director
of Liberty Media Corporation (LMC) since 1990. Mr. Malone has also served as President and Chief
Executive Officer of the organization since 2004. Previously, Mr. Malone held the positions of
Chairman and a Director of Liberty Satellite & Technology. He also served in various roles at
Tele-Communications (TCI), first as a Director and Chief Executive Officer from 1994 to 1996, then
as Chairman of the Board from 1996 to 1999. Mr. Malone is also a Director at The Bank of New
York, Liberty Media International and UnitedGlobalCom, Inc.

Jose A. Tazon

Board: Non Executive Board

Job Title: Director
Since: 2009
Age: 66

Mr. Tazon has been a Director at Expedia since 2009. Previously, he served as the non-executive
Chairman of the Board of Directors of Amadeus IT Group SA ("Amadeus"), a leading provider of IT

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Key Employee Biographies

solutions to the travel and tourism industry. Mr. Tazon received advanced degrees in
Telecommunications Engineering and Data Processing from the Universidad Politecnica, Madrid,
Spain.

Michael B. Adler

Board: Senior Management

Job Title: Executive Vice President and Chief Financial Officer
Age: 45

Mr. Adler currently serves as the Executive Vice President and Chief Financial Officer at Expedia.
Most recently, he served as senior vice president of financial planning and analysis for
IAC/InterActiveCorp. Mr. Adler received a Bachelor's of Science Degree in Economics from The
Wharton School, University of Pennsylvania, and a Juris Doctor's Degree from The University of
Pennsylvania Law School.

Pierre V. Samec

Board: Senior Management

Job Title: Executive Vice President and Chief Technology Officer
Since: 2009
Age: 46

Mr. Samec has been the Executive Vice President and Chief Technology Officer at Expedia since
2009. He had previously served as Senior Vice President, Engineering since joining Expedia in
2006. Prior to joining Expedia, Mr. Samec had been Senior Vice President of the Product Group of
Cartesis since 2004. He holds a general engineering degree from Ecole des Mines de Paris, and a
master's of science and Doctorate's degrees in geophysics from Stanford University.

Mark Okerstrom

Board: Senior Management

Job Title: Senior Vice President, Corporate Development

Mr. Okerstrom is currently the Senior Vice President, Corporate Development at Expedia. Prior to
joining Expedia, he was with strategy consultancy Bain & Company in Boston and San Francisco.
Mr. Okerstrom holds a MBA from Harvard Business School and a law degree from the University of
British Columbia.

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Expedia, Inc.
Major Products and Services

MAJOR PRODUCTS AND SERVICES

Expedia is a provider of online travel services. The company’s key services include the following:

Services:

Online travel services

Stand-alone and packaged travel products and services provided by airlines, lodging properties, car
rental companies, destination service providers, cruise lines and other travel product and service
companies.

Media and advertising offerings for travel and non-travel advertisers

Brands:

Expedia.com
hotels.com
Hotwire.com
Egencia
TripAdvisor
Expedia Local Expert
Classic Vacations
eLong
CruiseShipCenters
Venere

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Revenue Analysis

REVENUE ANALYSIS

Expedia recorded revenues of $2,955.4 million during FY2009, an increase of 0.6% over FY2008.
For FY2009, the US, the company's largest geographic market, accounted for 63.1% of the total
revenues.

Expedia generates revenues through three business segments: leisure (89.2% of the total revenues
during FY2009), TripAdvisor Media Network (7.2%), and Egencia (3.7%).

Revenue by segment

During FY2009, the leisure segment recorded revenues of $2,635 million, an increase of 0.3% over
FY2008. The TripAdvisor Media Network segment recorded revenues of $212 million in FY2009,
an increase of 5.5% over FY2008.

The Egencia segment recorded revenues of $108 million in FY2009, a decrease of 1.8% as compared
to FY2008.

Revenue by geography

The US, Expedia's largest geographical market, accounted for 63.1% of the total revenues in FY2009.
Revenues from the US reached $1,866 million in FY2009, a decrease of 3.7% as compared to
FY2008.

All other countries accounted for 36.9% of the total revenues in FY2009. Revenues from all other
countries reached $1,089.4 million in FY2009, an increase of 8.9% over FY2008.

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SWOT Analysis

SWOT ANALYSIS

Expedia offers a wide range of product and services to its customers. Its offerings include a
comprehensive array of travel products and services to travelers. The company facilitates travel
products and services either as stand-alone products or as part of package transactions. Broad
range of product and service offering helps the company to hedge its operations against down turn
in any particular segment, which aids in sustaining revenue growth. However, challenges in domestic
and global economic conditions could adversely impact Expedia's businesses and financial
performance.

Strengths Weaknesses

Broad range of product and service Legal cases adversely affect the company's
offerings reduce business risk brand image
Growing international business presence
relieves pressure on domestic market
Strong portfolio of travel brands

Opportunities Threats

Global partnership agreements Regulation and laws

Growing demand for online travel industry
Global economic situation may continue to
have an adverse effect on business
performance
High dependence on travel suppliers and
other intermediaries

Strengths

Broad range of product and service offerings reduce business risk

Expedia offers a wide range of product and services to its customers. Its offerings include a
comprehensive array of travel products and services to travelers. The company facilitates travel
products and services either as stand-alone products or as part of package transactions. It makes
available travel products and services provided by several airlines, lodging properties, car rental
companies, destination service providers, cruise lines and other travel product and service companies.
Additionally, it also offers various media and advertising offerings to travel and non-travel advertisers
on both the TripAdvisor Media Network and on its worldwide websites such as Expedia.com and
hotels.com.

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SWOT Analysis

Broad range of product and service offering helps the company to hedge its operations against down
turn in any particular segment, which aids in sustaining revenue growth.

Growing international business presence relieves pressure on domestic market

Expedia is one of the largest online travel agency with strong international presence in 60 countries.
During FY2008–09, it launched ‘’the Egencia Global Alliance’’ to expand its network of strategic
partnerships with leading local travel management companies (TMCs) and provide further global
support to clients around the world. With this launch, Expedia expanded its geographical footprint
to offer its services in new regions including Argentina, Hungary, Russia, Romania, United Arab
Emirates, Singapore, Taiwan, Hong Kong and Uruguay.

The company's growing international presence has resulted in significant growth, in terms of increased
revenue generating capacity from the international markets. For instance, year on year (YOY) basis,
the revenues from international markets contributed 34.0% to total revenues in FY2008, 36.9% in
FY2009, against 32.0% in FY2007. Furthermore, the revenues from international markets grew at
a compounded annual growth rate (CAGR) of 13% for period spanning FY2007–09.

Expedia currently operates more than 90 global points of sale in about 60 countries, as compared
to 60 global points of sale globally in over 40 countries in FY2008. The company's international
operations are spread across North America, South America, Latin America, Europe, Middle East,
Africa and Asia-Pacific. Growing international business presence reduces the company's exposure
to country specific factors such as changes in economic conditions and most importantly, increasing
competition from other players in the market.

Strong portfolio of travel brands

Expedia owns a wide portfolio of travel brands. The company leverages its brand portfolio to target
a wide range of travelers, travel suppliers and advertisers. For instance, it targets several different
demographics, from the value-conscious traveler through Hotwire brand to luxury travelers seeking
customized vacation package through Classic Vacations brand.

Expedia brand also appeals to the wide range of travelers, with extensive service offering ranging
from single item bookings of discounted product to bundling of higher-end travel packages. Its
hotels.com site and its international versions target travelers with premium hotel content about
lodging properties, such as 360 degree tours and hotel reviews. Through Egencia, it makes travel
products and services available on a managed basis to corporate travelers in North America, Europe
and the Asia Pacific region. Further, its TripAdvisor Media Network allows it to reach a broad range
of travelers with travel opinions and user-generated content.

The portfolio of strong travel brands enables the company to appeal to a diverse range of travelers,
suppliers and advertisers, which in turn enhances its market position.

Weaknesses

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SWOT Analysis

Legal cases adversely affect the company's brand image

Expedia and its subsidiaries are subject to several legal proceedings and claims. These include
property, personal injury, contract, alleged infringement of third-party intellectual property rights and
other claims. Many of these lawsuits have been in proceedings since 2003. In addition, during June
2009, a new class action suit was filed against Expedia Canada by a consumer alleging disclosures
related to “taxes and service fees”. It seeks damages in the amount of CAD$50 million ($43.7 million)
for the class as well as interest, fees and alternate damages measures.

Any unfavorable outcome out of these legal cases will not only result in financial damages for Expedia,
but also affect the company's brand image.

Opportunities

Global partnership agreements

The company signed a global partnership agreement with Top International Hotels in March 2010,
a Germany-based hotel brand with more than 250 three- to five-star properties across Europe.
According to the new agreement, all of Top International's Hotel properties will be available on more
than 90 Expedia and hotels.com -branded sites worldwide. Furthermore, in April 2010, it also signed
an agreement with China's Motel 168 Hotel Chain, a leading budget hotel brand with more than 300
hotels in 50 cities across China.

Later in June 2010, Expedia entered an agreement with Iberostar Hotels & Resorts, a Spanish hotel
chain with properties in 16 countries throughout the Caribbean, South America, Europe and North
Africa. Under this agreement, Iberostar’s portfolio of beachfront properties will be available to the
millions of consumers who shop and book travel on more than 90 Expedia and Hotels.com -branded
sites worldwide each month.

Partnership agreements such as these is likely to help Expedia to increase its online hotel product
offering services, which could lead to more customer traffic, which in turn, augers well for the
company’s future growth.

Growing demand for online travel industry

Global travel trends are changing rapidly, especially since the advent of the Internet and the digital
era. These days more and more travelers are going online to plan, book, and even review their
holidays. In 2009, the online tourism bookings reached $153 billion from the US and Europe alone
and the average global growth rate in travel bookings made online is 34.6% per annum. This growing
trend is expected to continue even in FY2010. The growing online travel market provides good
opportunity for service providers such as Expedia to grow its business in the long term. Expedia can
further leverage its travel brand name to increase its revenues and profits.

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SWOT Analysis

Threats

Regulation and laws

The company operates in travel industry which makes it to comply with stringent laws and regulations
without fail. These laws and regulations increase the company’s compliance cost structure. As the
company operates in varied markets, it is subject to comply with both domestic and international
regulations. For instance, Expedia’s operations are subject to regulation by the U.S. Department of
Transportation and various other rules and regulations governing the provision of air transportation,
including those relating to advertising and accessibility. With the growing international presence of
the company, Expedia is also increasing its exposure to comply with the international laws and
regulations applicable to travel agents in every market they operate. For instance, the European
Economic Community Council Directive on Package Travel Package Holidays and Package Tours
imposes various obligations upon marketers of travel packages like Expedia, such as disclosure
obligations to consumers and liability to consumers for improper performance of the package,
including supplier failure. The company’s heavy exposure towards both domestic and international
regulations might increase its compliance cost structure, which in turn puts pressure on margins.

Global economic situation may continue to have an adverse effect on business performance

Travel expenditures have direct correlation with personal and business discretionary spending levels.
It tends to decline during economic downturns. In the second half of 2009, there was a rapid softening
of domestic and global economic conditions, and the outlook for 2010 is uncertain.

The slowing of the domestic and global economies has increased unemployment and reduced the
financial capacity of both corporate and leisure travelers, thereby slowing spending on the services
it provide. The worsening of domestic and global economic conditions could adversely impact
Expedia's businesses and financial performance.

High dependence on travel suppliers and other intermediaries

Expedia dependence on its travel suppliers and other intermediaries is very high which offers it a
weak bargaining power. Over the last several years, Expedia has experienced downward pressure
on remuneration from its suppliers. A substantial portion of Expedia's revenue is derived from
compensation negotiated with travel suppliers and global distribution system (GDS) partners for
bookings made through its websites. Over the last several years, air and hotel travel suppliers have
reduced or in some cases eliminated payments to travel agents and other travel intermediaries. In
addition, as the company’s hotel remuneration varies with the room rates paid by travelers (Average
Daily Rates, or “ADRs”), to the extent ADRs grow more slowly than anticipated or decline, its revenue
for each room sold will generally be proportionately lower. The company also witnessed a significant
decline in ADRs, which began in late 2008 and continued into 2009, and negatively impacted its
hotel booking revenue. Any further decline in ADRs could negatively impact its hotel booking business
further.

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SWOT Analysis

The company’s high dependence on suppliers and other intermediaries offers strong bargaining
power to its suppliers who can bargain hard and further reduce or eliminate compensation, which
could negatively impact its revenues and margins.

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Expedia, Inc.
Top Competitors

TOP COMPETITORS

The following companies are the major competitors of Expedia, Inc.

Orbitz Worldwide, Inc.

Priceline.com, Incorporated
Online Vacation Center Holdings Corp.
Sabre Holdings Corporation

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Expedia, Inc.
Company View

COMPANY VIEW

A statement by Dara Khosrowshahi, President and Chief Executive Officer at Expedia is given below.
The statement has been taken from the company's 2009 annual report.

To our stockholders:

As the global economy began to melt down in late 2008, Expedia, like many companies, experienced
one of the most uncertain times in its history. The only thing we were certain of was that 2009 would
bring unprecedented challenges. We took the opportunity to look hard at our business, evaluating
the long-term competitiveness of our products and whether we were optimally structured as a global
company. Amidst the uncertainty, we sought not to simply weather the down turn, but to better
position Expedia for long-term growth, regardless of the economic climate.

In anticipation of the challenges 2009 would bring, we reorganized the business from its previous
regional orientation to a global brand orientation, establishing worldwide organizations for the Expedia,
Hotels.com and Expedia Affiliate Network businesses. Importantly, this enabled us to institute a
global view across our business, leverage best practices across geographies, and scale platforms
and systems to achieve greater efficiency. As a result, our business teams and technology teams
are working more closely together, driving accountability and closer coordination among these
groups.

We also recognized that we needed to knock down barriers that were keeping consumers from
booking travel with us, and to attract and retain an ever increasing customer base. We reinvigorated
our intent to always put travelers first, and as a result, we eliminated or reduced fees across virtually
all of our products and in most geographies in which we operate. We also expanded our loyalty
programs, most notably the Hotels.com welcomerewards program, which is one of the simplest and
most successful loyalty programs in online travel, with members receiving one free night for every
10 room nights they book with Hotels.com. These moves, combined with substantially lower hotel
room and air ticket pricing, resulted in share gains and unit volume growth we would be proud of in
any economy.

We are certain that our products and services are now more compelling than they have ever been.
As a public demonstration of the company’s efforts to put travelers first in every thinkable way, our
flagship booking brand Expedia.com recently rebranded itself with the tagline “Where you book
matters,” an assertion we strongly believe in, and on which our employees are dedicated to delivering
every day.

At the same time, the company is committed to fiscal discipline, and in 2009 we found many
opportunities to be more efficient. We made investments in platforms and infrastructure that we
believe can save us money in the near-term and scale well over time. Investments in credit card
payment processing and air fulfillment technology have driven efficiencies in our cost of sales.
Investments in call center technology have and will continue to improve service and drive efficiencies

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Company View

in our customer service operations. In addition, we have consolidated the Hotels.com business from
two platforms onto one, which will improve our ability to more rapidly and efficiently innovate going
forward. While oriented for growth, our company is run with a discipline to leverage our cost base
so that our growth is scalable.

International growth is one of our top priorities, and we are driving for international revenue to
constitute 50% of our mix within the next five years. The global Hotels.com brand has been able to
nimbly enter and gain traction in new markets, now serving consumers in more than 70 countries.
We operate 19 Expedia-branded sites worldwide, and our corporate travel brand Egencia is now
serving 31 countries. TripAdvisor has 19 country specific sites, including several in Europe, as well
as Brazil and India. In addition, TripAdvisor has invested aggressively in China with the launch of
DaoDao.com and the acquisition of Chinese meta-search site Kuxun. Our private label EAN business
has also integrated its global functions and considerably improved its growth rate.

Key to our international expansion efforts is our ability to expand the depth, breadth and quality of
the product in our marketplace across air, hotel, car and other products. As a key example, we
launched the Expedia Easy Manage program, our agency hotel model, in Europe in the spring of
2009. With our Easy Manage agency and Expedia Special Rate merchant models, we can now
better address the varied business needs of our hotel partners and offer them the right framework
within which to take advantage of Expedia’s global scope and scale. We now have over 40,000
merchant and agency hotel properties in Europe with direct Expedia contracts, and we expect to
continue to significantly grow this supply base in 2010.

We are also focused on Asia Pacific and Latin America, where we see outsized potential for growth
in these less penetrated markets. Today, APAC and Latin America make up approximately 5% of
our business, a figure that we think we can double in the next couple of years.

Our media businesses, TripAdvisor Media Network and Expedia Media Solutions Group, continue
to grow their leadership positions. In an environment where many companies shrank year-over-year,
our advertising and media revenue grew 10% in 2009, accounting for more than 10% of our worldwide
revenues. We have continued to expand the breadth of our media product base, both geographically
and with new products such as TripAdvisor Business Listings, TripAdvisor Flights, FlipKey Vacation
Rentals and Expedia StorePoint Expandables. Our execution in travel media continues to set us
apart competitively, hedges a portion of our marketing spend and add a complementary and highly
profitable dimension to our portfolio of leading consumer travel booking brands.

Our solid performance in 2009 has confirmed that our business model is resilient and our success
isn’t dictated by one type of economic environment over another. We have a strong balance sheet,
an improved investment grade credit profile, and we generated $584 million of free cash flow for the
year. As a result, we are in a position that we can appropriately invest in our businesses, continue
to make opportunistic acquisitions, and still generate excess cash to return to our investors. To this
end, we paid our first ever quarterly cash dividend in March 2010.

Though some may say that paying a dividend is a sign of slowing growth, it is actually a reflection
of the confidence that we have in our business and especially our employee base. 2009 was a

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Company View

difficult year for our employees — we effected a huge reorganization, including a painful downsizing,
we didn’t grant broad-based raises, and we reduced bonuses following poor 2008 results, all in the
context of a deep worldwide recession. But our teams bore down and executed, and delivered a
solid year. We are not where we want to be, but we have an organization with big dreams, a team
that is passionate about our company and our industry, and the scale, global brands and technology
to continue to lead the industry into the future.

We are proud to lead this company and we thank you for your support.

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Expedia, Inc.
Locations and Subsidiaries

LOCATIONS AND SUBSIDIARIES

Head Office
Expedia, Inc.
333 108th Avenue NE
Bellevue
Washington 98004
USA
P:1 425 679 7200
F:1 425 679 7240
http://www.expediainc.com

Other Locations and Subsidiaries

Activity Information Center, Inc. Carrentals, LLC

910 Honoapiilani Highway 1202 Lexington Avenue
Suites 14 Suite 112
Lahaina New York City
Hawaii 96761 New York 10028-1439
USA USA

Classic Vacations, LLC Egencia LLC

5893 Rue Ferrari 3150 139th Avenue SE
San Jose Bellevue
California 95138 Washington 98005
USA USA

TripAdvisor LLC Travelscape, LLC

141 Needham Street 10190 Covington Cross Drive
Newton Las Vegas
Massachusetts 02464 Nevada 89144
GBR USA

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