Expedia, Inc. Earnings Call Nuggets: Trends and Tech Upgrade
Thomas White – Macquarie: Just a follow up on the delta between the ADR growth and the revenue per room night, again a pretty big difference. Understand the commentary about Asia Pacific. Can you just kind of remind us about the other moving pieces and any chance that that delta sort of might narrow over the next few quarters in any meaningful way? And then just a quick follow-up, can you make some color or comments on ADR environment in Europe, U.S. and Asia Pac?
Dara Khosrowshahi – President and CEO, Expedia, Inc. and President, Expedia Worldwide: So again the trends that we saw and the delta between ADR and revenue per room night is similar to what we’d seen on prior quarters. Those were the impact of our loyalty programs, primarily at the Expedia brand. This time last year Expedia did not have a loyalty program; they do this year, and so there’s really a tough comp there. In addition, the Hotels.com loyalty program expanded internationally during the last quarter and so again we got a tough comp on that front. The second impact that we mentioned on the last call which was also happening this quarter as well is competitive pricing actions, primarily that is Hotwire where Hotwire is having some pretty nice success pushing volumes through taking lower margins essentially. The third item was the impact of foreign exchange. That again was a factor this quarter and then we also continue to see just mix shift in our hotel business, (the chains) and to otherwise less margin accretive products. So those were by and large the big delta drivers between ADR and revenue per room night. If you look across those four things, on the loyalty front you will start to hit clean comps as we move throughout this year. I think the Expedia program was launched through the end of Q1 and through Q2, so Q3; that gets to be a clean comp. Hotels.com; it’s probably not going to be until Q1 of 2013 until you clean that comp. On the Hotwire actions, they’ve been doing that for a number of quarters now, so I suspect Q2, Q3, you might get a clean comp on that, and then it’s always hard to stay with FX, and the mix shift issue on hotel is just something that’s really hard to predict. I think your second was in terms of ADRs in various regions. We continue to see decent strength in ADRs. I think if you look at how our hotel partners; the once that have reported the trends that they’re seeing broadly are as consistent with what they’ve reported. There is some pockets of ADR weakness in Europe that we have seen, and the rest of the world is by and large looking fairly healthy.
Rohit Kulkarni – Citigroup: This is Rohit Kulkarni sitting in for Mark Mahaney. Can you please remind us where you are in the technology upgrade process as in particular – as far as hotels and air is concerned, are you satisfied with what results you are seeing there? And can you share any metrics or anything along the lines as to what improvements did you see over the last three months on the technology upgrade project that you were doing?
Dara Khosrowshahi – President and CEO, Expedia, Inc. and President, Expedia Worldwide: Sure, Rohit. We’re – status with the technology upgrade and our progress there, the Expedia hotel path has been on the new technology platform for the past couple of quarters, and while we won’t share specific metrics, our room night volume – standalone room night volume on Expedia, accelerated nicely in the first quarter over Q4 of last year, which was faster than Q3 of last year. So, on a sequential basis our standalone room night volume is improving. We think that we’re just getting started here and the key here is just translating the new platform into actually new product to consumers that converts better and then marketing more aggressively against that product. So, we are, I would say early in that program, but we’re already starting to see benefits of that program and we expect to see further benefits in the back half of the year, again, similar to what we saw in Hotels.com, although Expedia is somewhat disadvantaged because of its multiproduct nature. We are also right in the middle of rolling over from our old air platform to our new air platform, and are actively testing single tickets, different types of transactions on the new platform versus the old platform and we’re actively – we’re in the middle of that testing. We expect to see good results from that testing. We will then start rolling over all of our air ticketing on a worldwide basis to the new platform, which will then enable us to start really testing out new feature functionality and hopefully driving conversion. So, the platform upgrade is happening as planned and then hopefully the feature functionality will follow suit just as you’ve seen in hotels. On package, that’s going to happen really in the back half of the year. It’s going to happen sometime in the fourth quarter. All of the work being done is on schedule and you will see benefits of that hopefully next year.
Rohit Kulkarni – Citigroup: If I may add one quick follow-up about – so how that translates to your technology spend? You did see some nice leverage in Q1. And so would it – so how should we think about your technology staffing spend going forward? I would assume you are already behind the majority of what you were planning to be spending on and is that the right assumption to have?
Dara Khosrowshahi – President and CEO, Expedia, Inc. and President, Expedia Worldwide: Yes. I think on the platform type investments, we now have the kind of headcount that we need to drive through those platforms, but increases that you’re seeing are increases, year-over-year increases based on the kind of increased headcount that we brought on last year. So, from a cash spend (yield), our technology spend comps should get better as the year progresses. But then some of the capitalized numbers there are going to start coming through on the depreciation side. So, from a P&L standpoint based on what Mark said, you’re going to see pretty significant increases for the balance of the year.