Expedia's CEO Presents at Deutsche Bank Technology Conference (Transcript)

Sep.10.13 | About: Expedia, Inc. (EXPE)

Expedia, Inc. (NASDAQ:EXPE)

Deutsche Bank Technology Conference Call

September 10, 2013 07:50 pm ET

Executives

Dara Khosrowshahi – President and Chief Executive Officer

Analysts

Ross A. Sandler – Deutsche Bank Securities, Inc.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Okay, great. So we’re going to get started if you guys can make your way in. So my name is Ross Sandler, Head of Deutsche Bank’s Consumer Internet Research team. We’re very excited to have Expedia here today. So what we’re going to do is go through Q&A and please feel free to submit questions using yorn.com/de and then just finding Expedia page and you can submit your questions that way.

So Dara thanks for coming.

Dara Khosrowshahi

Good to be here.

Ross A. Sandler – Deutsche Bank Securities, Inc.

We’ll roll out the ground. I’ll keep it pretty quick in terms of the questions, but I thought we’d start with Travelocity and then maybe talk about the second quarter and kind of progress and so then back up and talk about the whole space. So on the recent news on Travelocity focus provider kind of industry third-party data has got some doing around $7 billion or $8 billion in bookings in 2012 I believe. So can we talk about what percentage of that will be subject to this agreement? I know there is portion that’s carved out their affiliate business and there is portion that you’re going to be managing, and then there is also supply that goes through Travelocity directly that won’t go through this agreement or will go through as a licensing. So can you just give us some color on how this deal came together and what the basic structure is?

Dara Khosrowshahi

Sure. The deal covers the Travelocity U.S. and Canadian business. Travelocity also has a part of its business in the lastminute.com business, which is primarily European business and the U.K. et cetera. So that business is not included in the marketing agreements that we announced and the Travelocity private label business is not included either. They power a number of private label sites. So really what we are talking about is the Travelocity North America Canadian sites that we are going to power. It’s in points. Keep in mind that Travelocity will be still a totally independent business. Travelocity marketing teams are going to market as they do now.

We will essentially power the supply through our supply base. So whatever does go through Travelocity their .com site post integration to Canadian site will go through our supply infrastructure and will essentially power the web site as well. And I think for Travelocity we’re hopeful that they will have a better product, it will be lower cost for them, for us it will allow us to amortize the investments that we have made in our technology infrastructure which has improved pretty significantly to amortize on investment and gain a return on it from a long-term perspective. So we think it can be a win-win and we’re looking forward to get you going.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Okay. And just in terms of timing, how heavy is the technology integration process or is there something that isn't that labor intensive so as to get set up…

Dara Khosrowshahi

Nothing is easy on the internet and scale, so we are working through that right now as we speak with the Travelocity teams and I think by the time we announce our Q3 earnings, we will have more of a integration plan and we’ll be able to talk more specifically about the timing and integration costs that may effect us, but we have more planning to do before we get the specifics.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Okay, and from what we understand around 20% to 30% of Travelocity’s bookings are on the hotel side, does that seem like a realistic ballpark number and are there any economics on the non-hotel portion of this deal because the businesses are separate and have a separate amount of data interchange between the two companies has been relatively limited.

So we look at the industry data just like you do, the industry data would suggest that the hotel portion of Travelocity’s business is smaller than the hotel portion of brand Expedia’s business for example, is that because of the Travelocity brand is known as more as an air brand than hotel brand, is that the product is supply, I think those are issues that we’ll have to answer as we get closer to the integration point. But our goal will be to grow their hotel volume, they do have air volume, the package volume as well and we think that with a good marketing agreement again it can be a win-win across the products.

Ross A. Sandler – Deutsche Bank Securities, Inc.

So without getting into specifics, are the economics rev share agreements on the hotel side, similar to what you guys would see across other large partners like a Kayak or a Groupon or something with large volume partners that you have or is this completely different.

Dara Khosrowshahi

It’s a different animal, in that let’s say, Kayak agreement, those are more called a lead-generation type businesses. We own the customer data than Expedia owns the customer data, but the Travelocity market agreement is very different and that Travelocity is controlling marketing and they own the customer data. We don’t get customer data et cetera. So it’s a different kind of marketing agreement than a Groupon and/or a Kayak.

Ross A. Sandler – Deutsche Bank Securities, Inc.

And the economics?.

Dara Khosrowshahi

We’ll have more to say later about that comment.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Try at least, how these last question on Travelocity, how is this going to impact Expedia’s ability to be more competitive or you’ve obviously picked up a lot of scale here with regard to your positioning in the U.S. and with regards to supplier relationship or supplier agreements.

Dara Khosrowshahi

Well, we think it improves our supplier position. I think that our suppliers in general look to us to generate volume for them and the more volume we generate, the greater growth that we have and the more brands that are generating that volume, I think we become more valuable for our supply partners. The marketing management team that we have is really good relationships with suppliers too. So I think some of the suppliers are happy and that they’ll expect more volume from us and also the market management teams that we have on the ground are very professional, easy to work with et cetera.

So the early take from our supply partners is that they’re pretty happy about our marketing relationship with Travelocity and they’re asking the same questions when is this going to happen, what can I expect and again once we figure out detailed integration plans we’ll have more to tell them as well.

Ross A. Sandler – Deutsche Bank Securities, Inc.

But we have one question on this slide here related to Travelocity that the question is, will Travelocity be able to market against you, for example on Trip, on Google, on supply that you bring to them through this deal where their provisions that insulate you from them marketing against you?

Dara Khosrowshahi

No. Travelocity, we expect Travelocity to market – don’t really market against the other player, but the marketing teams are going to be independent. We will see Travelocity on the marketing side as we see today, which is we see what they do on TripAdvisor, we see what they do on variable channels. That’s not going to change on a go forward basis.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Okay. If we shift the conversation to, I guess the second quarter and development sense, but there were a number of different items that you guys noted on the call. So maybe we can go through a few of these one at a time in terms of what happened in the quarter and then kind of where we are in terms of fixed earnings some of the stuff. First is TripAdvisor, our data suggest that you guys have kind of revitalized that channel to some degree on the Expedia.com site, so if that’s the case, can you talk about what your overall philosophy is on through this meta transition kind of before and after?

Dara Khosrowshahi

Sure, the general effect of the meta transition just to go through that first is that, the amount of traffic that we get from TripAdvisor as a channel has gone down substantially because you had a model which was a multiple window pop-up model that automatically send traffic over to us to a model which is a meta model since substantially less traffic.

The traffic that’s coming to us from TripAdvisor substantially more qualified one that consumers saying that they are interested in that particular hotel at that price with that specific availability on our brand, so we see conversion rates from TripAdvisor traffic on to the meta model being in excess of where they were.

What we had not seen is that increasing conversion rate wasn’t enough to offset the decrease in traffic that was coming from TripAdvisor, when TripAdvisor move from the meta model and the net was pretty significantly negative for us at that time.

We optimize against every single channel and what we try to do is maximize revenue at ROI targets for and we have ROI targets for TripAdvisor for the different channels that we have, and we are in the middle of that activity now. So we are now collecting data, what are the hotels that convert, what are the response rate as far as the volume that we receive from TripAdvisor based on if we show up number three, number two, number one or down the list, and based on that data, we are in the process of trying to maximize revenue at our ROI targets.

We have talked in Q2 that we had seen some early encouraging results that things were getting less data we want to continue along that front and hopefully in Q3, we’ll have better news to tell you than we had in Q2. But this is just an optimization process for us and anytime that you have a significant displacement, you got to throw big datasets away you got to built up data. And we’re in the middle of that testing and learning and building up that data.

The only other factor that I would give you watch on it is that the most of the observations about where we show up on TripAdvisor, one way or the other tend to cover the head volume. Most people look at the first page or the second page there will be within U.S. et cetera. Trip is a very, very strong tail business. We obviously we view them as a very important channel. We’re dedicated to that channel. We want to grow that channel, but I would necessarily come to full conclusions based on looking at a couple of pages.

Ross A. Sandler – Deutsche Bank Securities, Inc.

And if you look at the 2Q unit growth drop-off versus kind of the prior trajectory, and you kind of parse that U.S. versus international, how much of that deceleration do you think was from Trip versus some of the other factors, biggest impact on the quarter?.

Dara Khosrowshahi

Trip, I wouldn’t call the biggest impact, Trip had moved over fully to the meta model in the U.S. for about a month. So we had about a months worth of effect, we didn’t have a full quarter effect. They had moved to Europe, so the change in Europe was in advance of the change in the U.S., so we sell more of an effect in Europe.

Trip was a factor eLong, when that growth slowing down a bit was a factor, how well it was a factor, so there were now a number of factors that came together. I think the room night growth number was still a decent growth number and hopefully we will be able to grow room nights on a go-forward basis at profitability levels that we kind of set.

Ross A. Sandler – Deutsche Bank Securities, Inc.

And you mentioned that eLong issue in 2Q said, was that just the eLong dispute as that bring fully remedies at this point, so we are kind of back on track as far as eLong is concerned or is it something in addition to that?

Dara Khosrowshahi

The most significant factor were the issues between eLong and [indiscernible] that effected eLong’s growth. eLong has resolved those issues, although I’d stress that the Chinese Internet market is very volatile market, so what’s true today, may not be true a week from now.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Okay. We’ll see, okay. And then trivago, it seem like this was more of a margin impact than any kind of top line issue, but what’s your real strategy, are you guys happy with the performance to-date and you made this conscious decision to kind of double down the marketing spend in the U.S., so what’s the overall philosophy on what you want to do in trivago and I think we’d back up to last quarter for maybe just two quarters ago, given $25 million ballpark EBITDA contribution for trivago for four years, that’s still on plan or part of the plan?

Dara Khosrowshahi

We haven’t updated the consumer the other as far as trivago what we though about trivago. Talking about the shape of the P&L in trivago, trivago typically spends the majority of their marketing spend, which is substantial in the first half of the year and there is spend in Q3. In the second half of the year, the spend is typically less aggressive than the first half of the year, so the vast majority if not all of trivago’s profits are going to come in the second half versus the first half, that’s going to affect our P&L, the shape of the P&L and certainly that’s a factor in what we told investors to expect in the second half of the year.

As far as the strategy for trivago if those is, trivago is the top European travel brand in three out of the big five markets in Europe, it is gaining share very, very quickly in Europe, it is a hotel only product in a very large market and expanding quite aggressively outside of Europe in the U.S. and Canada going to the Asia Pacific markets et cetera. This is a management team that has raised I believe clients over a $1 million since it was founded. So this is not a team that’s going out spending money willingly, it’s a very, very disciplined team and they have expanded into markets in quite a disciplined manner spending brand spends seeing what the response is and then either pulling back or changing creative or spending more based on the volume response that are seen.

So what you saw in the U.S. is a formula that they have perfected over a number years. They saw an opportunity, we as a company are not a company that guides by the quarter because we don’t want to manage our business by the quarter. So if we make decisions that change our trajectory on a quarterly basis, we’ll make that decision with perfectly clear conscious and deliver on a long-term and annual basis what we tell you, we’re going to deliver. So trivago so far has been great, the team continues to execute at a high level and we are very, very happy to see the tracking in the U.S. and we hope to continue to see that tracking.

Ross A. Sandler – Deutsche Bank Securities, Inc.

And you guys also mentioned it’s kind of related to this topic but there was this crowding out issue around the amount of large travel brands now doing TV in the U.S. market, you’ve got Booking.com, you got trivago, you essentially have TripAdvisor at some point, so do you think this is going to be something that proving out to in door for the foreseeable future, how do you I guess rise above some of the noise, how do you change your creative word, do you not need to?

Dara Khosrowshahi

I think in the end of last year in Q1 we said that the U.S. is going to be quite competitive and we said it quite assertively to our investors and it’s been true, and I do think that this year when you have new brands coming and spending at the levels of Booking have spend, trivago has spend in the multiple millions of dollars, that is going to affect the share of voice of incumbents, and we have had that effect us in some of the direct traffic, some of the brands the biggest effect was Hotels.com.

So there is going to be an anniversary effect, next year you’re not going to have as much new money coming to the U.S. because there aren’t that many new entrants out there. So it’s going to be more business as usual, so we’re hoping that effect that we sell and with Hotels.com that will be new to going forward.

At the same time we are looking at our operating practices, we are certainly going to look at our brand spend the creative, and otherwise making sure that everyday business is being executed at a very high level that we know that we can execute at. The great news with Hotels.com as the core products, it is a very strong product, it is converting well, the welcome rewards, loyalty program is I think the best loyalty program out there, very simple easy to understand and quite a global product. So the core of the product even though the competitive activity has ratcheted it up, the core of the product remains quite strong and it’s something we can build on.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Last question on the 2Q topic about Hotwire, so clearly this has been a reset year for Hotwire and you’ve recently changed management, and I think and look at changing the strategy. So what’s the overall plan to get Hotwire back on track and what kind of timeline do you think we can expect to see in terms of that re-growing at some point?

Dara Khosrowshahi

I think this certainly is a reset year for Hotwire and we can say we talked about in Q1 definitely continued into Q2 it’s not going to be worse. We’re at the circumstance now where at least the news on Hotwire isn’t getting worse. I think to stabilize we think we understand the trends of the business better. There are factors that are affecting Hotwire that are macro factors in general when you’re on a recovery mode, the opaque channels pent up, the inventory in the opaque channel tend to suffer, but with some consolidation on the rental car business that’s a big piece of Hotwire and now we have seen increased competition from Priceline and Express Deals, which is essentially a copycat product.

We do have [indiscernible] who came from our EM business now working with the Hotwire team and I think you are going to see a couple of things. One is, you will see I’d say a stronger competitive response against Priceline. We haven’t had to compete directly or better ways to compete directly and I think you’ll see better tactical management there. I also think that the Hotwire product does tend to be deep discount, does tend to be more last minute I think the perfect mobile product and we think that mobile can be a very good opportunity to Hotwire, but Hotwire does need to pivot some of its best spend, some of its design to be a stronger mobile product and that’s definitely something that the Hotwire team is focused on now.

Ross A. Sandler – Deutsche Bank Securities, Inc.

So I am going to step into the section on just the whole space, we’ve got a few here that are actually related to questions I have. But one question here is any reason why you’re not moving faster to an agency model and the question I would ask on top of that is, the ETP program, how are these agreement structured compared to on the supply side compared to legacy Expedia agreements. There were agency and merchant take rates, it’s a consolidated take rate, any color on how that works?

Dara Khosrowshahi

So we’re going essentially the speed that we’re rolling out, agency is based on how many hotels we sign up and how many hotels we can convert over because there are some technology worth to get them over to the ETP platform.

As of Q2 we signed up 30,000 hotels and around 70% of them were live on ETP. You’re just going to see that increase quarter by quarter by quarter. We have a number of big brands who are participating, Marriott is participating, Hilton is participating and we think brand participation will continue to increase and going into next year.

Otherwise we’re going to love the consumer lead, the consumer we believe that the consumer patterns that we see indicate that the ETP product is a better product than just merchant products, and we’re going to leave it up to the consumer to decide whether they want to go agency or where they want to go merchant.

As far as our economics, and our deals with the hotels, I don’t want to comment on specifics other than our core is let the consumer decide. We don’t want to have an agenda to say well, we want the consumer to do merchant transaction because it’s more profitable or the other way. We think it’d be better consumer product long-term either way.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Got it, okay. And then we’ve got one here around just commission rates in general Commission royalties are relatively high. Do you expect pressure over time? I guess how would you characterize negotiations that you’re having today versus maybe two years ago given your comments on the competitive dynamics picking up the space?

Dara Khosrowshahi

I think issue with the comments – commissions are relatively high for us, but the suppliers are getting access to a global audience. We are spending, as my investors remind me, many a time hundreds of millions of dollars on technology in order to get consumers towards us. We are spending over $1 billion in marketing in order to get consumers to our sites and our hotel partners don’t need to spend a $0.05 upfront in order to have access to this incredible growing audience, which is only going to grow with mobile as well.

So we think it’s a great prospect. We think that there is one price. There aren’t little cuff along the way, a consolidator. You don’t have to pay GDS et cetera. There is one overall price and we take care of everything. So we think it’s a great deal. As far as our margins on a go-forward basis, as we rule our hotel partners from ETP, one economic value that we have to take into account is that on a agency transaction the hotel is going to have a credit card fee and on merchant transaction we take that fee as well. It’s kind of anyone’s guess as to what the balance between agency and merchant is going to be.

So there is a negotiation there. Then we say, what do we think the balance between the two is going to be, and in general we try to keep our hotel partners neutral. And anytime there is a negotiation, you are going to look where market rates are, what the size is, how much value you’re bringing into play. So on a global basis we are going to be competitive and I think these ETP renegotiations factor all of that in.

But the other factor to look at is that we have very strong participation from the large chains. Our margins with our chain partners tend to be lower than our margins with independents and to the extent that we see share go to ETP hotels, which it does, to the extent that significant number of ETP hotels are changed, you might see margin pressure, but we think overall these are all good factors and that we are building a business that’s growing. We’re building a bigger EP base and we think it’s a worth long investment.

Ross A. Sandler – Deutsche Bank Securities, Inc.

I want to shift over to the marketing efficiencies. So if we kind of backtrack the last year. Coming into 2012, you guys were on the back of the technology platform upgrade for Expedia and in the first half of 2012 you saw big unit acceleration and very little marketing growth like direct marketing dollars year-on-year and you go to back half, you kind of spend against that efficiency. So marketing spend was growing, I think 25% or so. Unit growth accelerated again. So this year it’s kind of been an inverse where you’ve had continued investment in marketing and you had a couple of these issues that have caused unit growth to decelerate in the first half. The challenge I think we have looking at the guidance is when you get to the back half, how does that trajectory kind of balance out? Is it going to be similar unit efficiency per marketing dollar kind of strip out the larger [ph] impact, is that kind of how you are managing the business and is that what gives you the confidence that mid-single digits EBITDA growth is the right number for this year?

Dara Khosrowshahi

So there are a number of factors that can be displayed there. But sales and marketing growth that you saw on the first half of last year was a more modest level because brand Expedia hand rolled over significant amount of its site on to the new platform, and so we were relatively conservative in the marketing spend, because we want our ROI in that spend and we don’t want to spend our bunch of money on a product that wasn’t the best product that we saw it could be.

Once we rolled over the more of the Expedia platform on to the new platform, we have seen the customer experience getting better, we have seen conversion in general getting better and a conversion gets better not your volume growth, but it allows you to spend more in variable channels such as Google such as TripAdvisor et cetera and we did spend more on those variable channels.

If you spent more on those variable channels, you will also get more traffic often at normal year levels. So what you had is more traffic in an expensive channel with more conversion as well. So you’ve seen the revenue acceleration that you saw and you saw pressure on sales and marketing, all great news, because the core as you got a product that’s converting better. And that story is largely planning out going to this year.

In the first half of the year, there are a couple of new factors that came in. One is especially in the second quarter, we spend much more aggressively at Trivago and eLong goes around $13 million number between on a year-on-year basis that we talked about, and we didn’t get in quarter return for that, after long-term investments we think it’s absolutely the right thing to do.

The second factor is that the businesses that we felt pressure on Hotwire and also we’ve talked about some direct traffic pressure with Hotels.com. Those channels and business tend to be quite efficient from the sales and marketing standpoint. So a decrease for slowdown in dollar growth there, affects your EBITDA more because you’re not gaining that traffic, you’re not paying Google for that traffic or you’re not paying a TripAdvisor for that traffic or another player.

So those factors really affected our first half and our first half was not something that we’re 100% pleased with it, but we think we made the right decisions there. When you look at the second half, the trivago marketing spend changes in the second half of the year, and we hope to see less surprises on operational front which will allow us to deliver both balance the top line and bottom line growth and the sales and marketing comps get easier. And that you will be copying an aggressive sales and marketing spend scenario with Expedia against the similarly aggressive scenario last year. So I think all those factors are going to combine into what we told you, as far as far as what to expect for the full year.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Got it. And then one more and please if you have a question raise your hand and we can get to there next, we will be up here with a mike. As it relates to the long-term model so if we go back to kind of the TripAdvisor spend you guys did a slide presentation this was late 2011. and you had just kind of these trajectories of leverage or deleverage with the OpEx lines and cost of revenue was levering, but everything was kind of in line to levering, except for sales and marketing, so it’s going to be the investment area and you have since acquired Trivago and VIA, but we kind of just start camping through those, is there any reason to believe that long-term trajectory with most lines levering and maybe sales and marketing kind of flat to de-levering, shouldn’t play out here.

Dara Khosrowshahi

No, I think you should separate trivago since because we’re going to optimize trivago based on that P&L but I think the story is largely intact. I think the only potential difference between what we told you then and what we see going forward is that our cash R&D spend should largely follow that pattern. But from a P&L standpoint you are going to have some depreciation that’s going to come in to the P&L. So from an accounting P&L standpoint it might be a little bit delayed, but otherwise that game plan is a game plan that we’ve been executing against and we expect it to be largely intact.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Do you feel like your U.S. OTA hotel market share there has stabilized, you can just spend that against the Priceline’s slot and even there should be a multi-share gain back, I mean what are we going to do, why are you doing this to defend the market shift?

Dara Khosrowshahi

We’ve been gaining share in the U.S. hotel market and the U.S. OTA hotel market for some period of time and our growth rate, we’re in that growth rate in the U.S. is above where it was two, three years and if you look at the U.S., the U.S. is our largest market and were less 6% share of the U.S. hotel market. So this is the beautiful thing about the travel market, this is a $1 trillion marketplace. Even in our core market, we have 6% share.

We have plenty of room to go around, lots of competitors can not only compete in, but can fly in this marketplace and just as we see booking or comp being aggressive in the U.S. markets, we’re going to be aggressive in Europe and Latin America, Asia-Pacific and I think we hope to have a combination of a strong U.S. business that continues to grow profitably and even faster growth outside of the U.S.

Ross A. Sandler – Deutsche Bank Securities, Inc.

So we got one more, if anybody has another question, raise your hand. So there is no lot of discussion about Meta and just the Meta channel in general, not just because Trip is shifting to Meta, but because Kayak has this big ascendancy and you have like a bunch of start-ups doing this, in that channel of course we’re growing faster than kind of domestic OTA in general, but do you view that these kind of front door businesses that maybe have control over their users, it’s kind of growing faster, do you view this is a risk longer term or is it just too small a channel because it will really be material to your core Expedia and Hotels.com. Meta is a big channel and growing really quickly which is why we want to partner up with the trivago founders. So we think it’s a great product, is an attractive product.

Meta in general has been getting more audience share than any other channel out there. It’s not just OTA any other channel there. There are lots of channels for us. What we want to be able to accomplish with Metasearch is to be able to grow our revenue inside the Metasearch channel at or why that we find acceptable, in other words we don’t have to loose money. We can make money on that channel and we want to have that channel to be a significant channel for new customer acquisition.

We look at our channels based on ROI but we also look at what percentage of those customer in the channel come back to rep to our various sites. If you are in a position to be able to invest at acceptable ROIs and grow in these channels with acceptable ROIs and you’re seeing those channels with new customer acquisitions, then Meta growing and be great.

And again the Meta channel can grow and thrive and we can grow and thrive with them as partners. And we think that the ecosystem that we see now could change but at this point, it’s an ecosystem that we think is healthy for the Meta player and healthy for the OTA player.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Good one last question would be on your Europe business, so from what we calculated around one fifth the size of Booking.com in terms of either units or bookings on the hotel side and it’s a growth area for you, it’s a focus area. So with trivago and with ETP, kind of what’s the roadmap for accelerating your agenda in Europe?

Dara Khosrowshahi

Well, I think number one income sites that are converting well on both the Expedia sites and the Hotels.com site are converting very well and then it’s testing and learning against the various channels there. So expect our spend in Google in Europe to go up, we expect our spend in trivago in Europe going up and Kayak and all the various channels going up and what we hope to see is that kind of refi customer coming back.

The second part of that is to improve our supply position in Europe as well where Booking.com does have an advantage over us. So I think we are kind of part one of the game of getting the front-end and the product working and I think if we will transition it to part two, which is moving forward both on the demand and supply side of the equation.

We are seeing nice growth there. We are certainly not hitting any ceilings and again we think that we can grow in Europe and Booking.com can grow in Europe as the online pie keeps increasing. When you add mobile to that it becomes an even more exciting opportunity. So we’re pretty optimistic about the future in Europe.

Ross A. Sandler – Deutsche Bank Securities, Inc.

Great. I have to wrap there. Thanks a lot, Dara.

Dara Khosrowshahi

Thank you.

Question-and-Answer Session

[No Q&A session for this event]

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