Mark Mahaney (Citigroup): Is there any way to know the European deceleration you saw?
Dara Khosrowshahi: The deceleration is significantly attributable to the UK, and if you look at our growth rate, certainly in the continent, the growth rates are significantly in excess of market growth rate in Europe.
Seeing Bookings.com growth rates last quarter, unless there has been significant deceleration there, they are unlikely to be growing faster than we are in Europe, but as far as the other competitors go, we are doing just fine in Europe and we continue to share overall in Europe.
Mark Mahaney (Citigroup): Were there major hotels that fell off?
Dara Khosrowshahi: As far as the hotel supply in Europe goes, we are in good shape there. There are net additions. We do not see hotels dropping off in any kind of significant manner at all.
We have IHG coming back towards the back half of the year, so on an inventory basis, we actually expect our hotel inventory in Europe to be significantly stronger by the end of this year than it is not.
Mark Mahaney (Citigroup): Any comments on the international element of advertising revenue?
Michael Adler: International advertising makes up approximately 20% to 25% of our total advertising revenue. It is an accelerating growth rate within Trip-Advisor, and then our European advertising business is starting to scale very quickly as well, so we expect that number to increase.
Dara Khosrowshahi: And it is significantly lower than the amount of traffic that comes from the international sites, so we think that as you have the advertising dollars catch up to the traffic, you are going to have goodness there.
Brian Fitzgerald (Bank of America Securities): On the impact of mergers in the airline business, can we expect bookings to be impacted?
Dara Khosrowshahi: Ultimately the most relevant factor that we see affecting our air bookings is ticket prices, and that depends on what the airlines do as a result of consolidation.
If they do take out capacity, that will drive up prices, and if they do drive up prices, along with lower capacity, that is going to have a negative effect on our air ticket volumes.
After the follow-on effect that it has on hotel bookings, travel, etc., we would not expect that effect to be positive, but it is too soon to tell what that effect would be, so it might have some kind of negative effect on downstream spend
We would also expect to see a higher percentage of travelers traveling to drive markets, so more driving on vacation, so markets where you have got drive-to markets are going to be less affected as far as downstream impact.
Justin Post (Merrill Lynch): When might we start seeing the effects of your tax spend?
Dara Khosrowshahi: You are seeing some returns on that spend, but certainly we are not in the final innings there as far as the returns go. In general, if you look at conversion rates across our businesses, these have been stable to going up. If you compare that to three years ago, conversion rates were dropping.
Part of the reason now is that there is more competition now than there was two to three years ago. Everyone is getting better at the game. Part of the reason for the stability of conversion is the technology investments that we are making.
Those are not the full returns that we expect, and by end of the year, especially on Expedia.com point of sale and eventually in Europe, you want to go in to see different UIs. You will see our ability to move much faster and test and learn much more quickly as far as user interfaces, and that is going to start this year towards the end of the year.
Justin Post (Merrill Lynch): Does the deceleration in Europe bookings level off at some point or is it some trend that we can expect to continue to see as we go through the year?
Dara Khosrowshahi: The UK on a year on year basis for the balance of the year should be better. We have made some adjustments there, and so I think that will see better performance from the UK in the back half of the year versus the front half of the year.
On the negative side, as we comp over a no booking period to no booking fee, or low booking fee to low booking fee, some of the year on year growth is going to naturally decrease because of just the laughing effect.
|
