Michael Adler - Chief Financial Officer and Executive Vice President Stu Haas - Vice President of Investor Relations Alan Pickerill - Director, Investor Relations Dara Khosrowshahi - Chief Executive Officer, President, Director, Member of Preferred Stock Subcommittee and Member of Executive Committee

Kevin Crissey - UBS Investment Bank Imran Khan - JP Morgan Chase & Co James Cakmak - Sidoti & Company, LLC Ross Sandler - RBC Capital Markets Corporation Ingrid Chung - Goldman Sachs Group Inc. Justin Post - BofA Merrill Lynch Douglas Anmuth - Barclays Capital Herman Leung - Deutsche Bank AG Michael Millman - Millman Research Associates Mark Mahaney - Citigroup Inc

Ladies and gentlemen, thank you for standing by, and welcome to the Expedia Inc. First Quarter Earnings Conference Call. [Operator Instructions] And I would now like to turn the conference over to Stu Haas, Senior Vice President of Investor Relations and Treasurer. Please go ahead, sir.

Good afternoon and welcome to Expedia Inc.'s financial results conference call for the first quarter ended March 31, 2010. Believe it or not, today's earnings call is Expedia's 20th since our spin off from AIC in 2005. And it's going to be the last one for me personally because I'm going to turn my full my attention to running Expedia's Treasury Group. I want to thank our investors and those who follow Expedia for your support and interest over the past five years. And with that, I'm now going to turn the call over to Expedia's new Vice President and Head of Investor Relations, Alan Pickerel.

Thanks, Stu. We are pleased to be joined on the call today by Dara Khosrowshahi, Expedia's CEO and President; and Mike Adler, our CFO. The following discussion, including responses to your questions, reflects management's views as of today, April 29, 2010, only. We do not undertake any obligation to update or revise this information. As always, some of the statements made on today's call are forward looking, typically preceded by words such as we expect, we believe, we anticipate or similar statements. Please refer to today's press release and the company's filings with the SEC for information about factors which could cause our actual results to differ materially from these forward-looking statements. You will find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today on our earnings release, which is posted on the company's IR website at expediainc.com/ir. I encourage you to periodically visit our IR site for important content, including today's earnings release and our updated investor presentation. Finally, unless otherwise stated, all references to cost of revenue, selling and marketing expense, general and administrative expense, and technology and content expense, excludes stock-based compensation. And all comparisons in this call will be against our results for the comparable period of 2009. With that, let me turn the call over to Dara.

Thanks, Allan and thanks to everyone for taking time to join us this afternoon. 2010 is off to a good start for Expedia, as Q1 operating income before amortization grew 10% on a 13% increase in revenue, with expected deleverage in selling and marketing offsetting leverage in some of our other expense areas. Our adjusted earnings per share grew at a healthy 24% due to our OIBA growth, combined with the lower tax rate. We expect earnings per share to continue increasing faster than OIBA in 2010. On capital structures, as part of Expedia's long-standing discipline of returning excess cash to shareholders, we completed the distribution of our inaugural dividend of $20 million in March and we also repurchased $188 million worth of our stock. Over the long term, we plan to continue both programmatic and opportunistic returns of shareholder capital, all consistent with Expedia's commitment to maintaining an investment-grade credit rating. Now diving in a bit more on our results, our advertising and media businesses had a strong quarter, with top line growth accelerating to 34% for the business, which now contributes 14% of our revenue, and generating run rate revenues of nearly $400 million. TripAdvisor delivered 33% of revenue growth on very strong traffic and click growth across its global media network. TripAdvisor signed over 12,000 subscribers for its new service listings products so we are encouraged by the early adoption on that front. Our transaction-based sites generated a solid 18% and 22% growth in room nights and air tickets despite tougher comps and less favorable pricing environments. And our international businesses delivered their highest rate of FX neutral revenue growth in over two years, with our APAC region exceeding the $1 billion trailing four-quarter bookings threshold for the first time in Expedia's history. A significant driver of international strength continues to be our Hotels business. We saw an acceleration in room night growth from 24% to 27%. On the other hand, U.S. room night growth deaccelerated in Q1 due to lower growth of Hotwire and Hotels.com on tougher comps. Hotels.com is comping the ramp of our very successful Welcome Rewards program last year, which we believe significantly accelerated volume growth. We also completed the integration of our Hotels.com U.S. and international platforms into one global platform, which we do think cost us some volume in Q1 and here early in Q2. For the balance of the year, growth on Hotels.com will largely depend on driving conversion increases through site optimizations, which will require strong execution going forward, but we have a very solid product plan in place and that's exactly what the common platform is suited for. Now we told you last year that we expected Egencia to show both top and bottom line growth in 2010. And we're off to a solid start on that accord with Q1 bookings growth of 47% and OIBA of $6 million. Some of that profitability was driven by timing of investments that we're making to benefit our clients in support of their needs. So we don't expect that level of OIBA going forward for Egencia, but we do expect a nicely profitable year in 2010. All in all, a solid start to the year amidst an improving travel environment. And with that, over to Mike.

Thanks, Dara. I'll briefly step through some Q1 analytics before updating our 2010 expectations. Starting with transaction growth, we continued to benefit for most of Q1 from the various fee actions we took last year. We just started comping over the e.com air fee elimination the last few weeks of the quarter and comps since then have been muddied a bit by the volcano, year-on-year differences in Easter timing and rising airfares. And we have even less data on hotel as we reduced fees last April 21, but as expected air ticket and room night growth rates are moderate. That said, we believe we are still taking meaningful share in the travel market as a whole. Revenue margin was down 134 basis points year-on-year in Q1, due largely to our various fee cuts. This is a modest improvement from Q4, but was approximately 40 bps below our forecast due largely to the 9% increase in airfares compared with the low single digit increases we had expected. We continue to expect an easier comp on rev margin in Q3 and beyond as we fully anniversary our larger fee cuts. Turning to expenses. As expected, Q1 selling and marketing was closer to our more typical seasonal pattern, with spend up nearly 20% sequentially. And we anticipate a similar sequential uptick here in Q2. As a reminder, Q2 selling and marketing will include roughly half the $20 million in relocation and other costs we'll incur in 2010 related to the opening of our lodging supply headquarters in Geneva, Switzerland. On taxes, our 34% ANI rate reflects changes to our business operations we mentioned last call, as well as relative growth in our international businesses. We believe 34% is an appropriate tax rate for modeling purposes for the remainder of 2010, and we anticipate our ANI tax rate in 2011 will be a few additional points lower. I know many of you are interested in the impact of the volcanic ash episode which recently disrupted European travel patterns. Keep in mind that Expedia's business is fairly sensitive to events impacting air travel on the continent since we tend to have a disproportionate share of airlift-driven travel within Europe compared to some travel companies in the region. In short, we clearly saw a meaningful increase in cancellations and a decrease in bookings related to Europe for a good two-week period, some of which we may call back later in Q2 and some we may not. But our best estimate is that Q2 OIBA growth will be several percentage points lower than it would've been otherwise. So overall, we're now expecting roughly flat Q2 OIBA growth due to our currently assumed volcano impact, COGS deleverage and Geneva-related expenses. Even with Q2, we expect full-year 2010 OIBA will grow in the low double digits compared with 2009. As always, this assumes FX rates don't vary markedly from what we see today. Given our outlook for single-digit OIBA growth in the front half of the year, it's a fair question as to why we think we can deliver higher growth for the full year. Fundamentally, we believe we can continue driving healthy room-night growth, with a more favorable revenue for room night profile as we anniversary our fee cuts and enjoy some tailwind from rising ADRs. And while air ticket growth may be harder to come by in light of higher ticket prices, we will enjoy more stable revenue per ticket economics as we progress through the year. In addition, we're looking for continued strong growth from our highly accretive Advertising businesses, which are showing nice acceleration against some favorable comps given the CPM and CPC deflation we experienced in 2009. On the cost side, we're looking for COGS leverage in the back half from several areas, including improved contract rates negotiated with third-party providers, consolidation of our call center footprint and some operational improvements, including intelligent call routing. We'll also have much more normalized marketing comps as we get into the back half. And finally, we expect to see meaningful leverage in G&A in the second half, particularly in Q4 when we lap some nonrecurring legal and professional expenses and we'll likely experience a more typical year-on-year bonus pattern. With that, let's turn to questions. Operator, would you please remind listeners how to ask a question?

[Operator Instructions] Our first question comes from the line of Doug Anmuth with Barclays Capital. Douglas Anmuth - Barclays Capital: First, just on tech and content spending. I think in the release you talked about it being up on an absolute basis, but did not comment on as a percentage of revenues so I was hoping you could elaborate there a little bit. And then secondly, can you talk about your appetite potentially to buy in Liberty Media shares just given the fact that you did buy back $200 million worth of stock in 1Q and also in context given the commitments to the limited investment grade rating?

Sure, I'll start with the second question and then Mike can talk about the first question. As far as Liberty Media share buying prospect, Liberty has been a great shareholder, long-term shareholder of ours. They continue to be supporters of ours and they're very value-add board members for us and everything that we've heard from them is that they want to be long-term shareholders. So at this point, we have not had any kind of discussions with them about buying in their shares one way or the other. We hope to have them as shareholders for a long time and make them lots of money on a go-forward basis. I'd say that our view on buying shares to some extent, we don't care who we buy the shares from. This quarter, we felt that there was delta between what we thought the economic value of the shares was and what they were trading for in the market. And we went into the market and we took advantage of what we thought was that delta and hopefully will prove to be a good investment on a go-forward basis. So what I'd focus on in is the desire for us to buy in shares which we did in this quarter and kind of add value over a long term for shareholders in addition to dividend payments, et cetera. So with that, I'll have -- Mike, you want to talk about tech and content?

Yes. On tech and content, I guess the first thing I'd point out is our spend in Q1 was actually very similar to Q4 in absolute dollars. We do think that that will increase during the year and for the full year, we will have absolute dollar increases. Over the long run, it is absolutely our intent that we leverage tech and content spending. Along the way, there may be periods where we leverage more or less as it looks like now. For this year, given some of the investments we're making in TripAdvisor, it'll be close. So we're not sure exactly where it will end up.

And our next question comes from the line of Ingrid Chung with Goldman Sachs. Ingrid Chung - Goldman Sachs Group Inc.: Dara, I was wondering if you can talk about the acceleration in hotel room nights growth that you talked about earlier in Europe. Was that coming more from new hotels, new properties or was that from just more rooms booked for existing properties? And should we continue to see good trends there outside of the volcano ash issue?

Sure, Ingrid. The acceleration that we saw was actually primarily due to the Asia Pacific business getting larger as a percentage of our overall business. The APAC growth has been quite healthy. We've got a really good team. And at that business, it's kind of mapped. As that business gets to be a larger part of our portfolio, you should see acceleration there assuming that the growth in Asia Pacific doesn't slow down and it has not. We're also seeing nice success at hotels.com in the Latin American region. In Mexico, Brazil, we're seeing very encouraging results there off of a small base. And then Canada's doing really well for Expedia and hotels.com. The team up there is executing really, really well. So most of the acceleration, the growth that you're seeing is APAC, LatAm, Canada and some of these regions that we feel have huge potential for us and are really strong emerging markets. Europe, as a whole, is stable and doing well. And we think that there's frankly more potential in Europe on a go-forward basis, which hopefully we'll execute on.

And your next question comes from the line of Mark Mahaney with Citi. Mark Mahaney - Citigroup Inc: Could you update your thoughts on the free cash flow outlook for the year? Or should that also be roughly in line with that low double digit OIBA growth? And then secondly, Dara, any updated comments on of course access to promotional inventory in the U.S. hotel market?

Mike, you want to start on free cash flow?

Sure. On free cash flow, we're not updating our expectations today. I would call out that we're off to a good start here in Q1. Working capital from our Merchant Hotel business maybe a bit lower than we had originally expected due to the pace of growth. Also, keep in mind on our working capital, we will have a tougher comp as we head through the year just based upon booking patterns last year. We do expect CapEx to be a bit higher than we had expected, probably using our Q1 rate on an annualized basis, we'll get you close to where we think we will end up. We have decided to do further build outs in our data center and as TripAdvisor continues to grow, we're increasing CapEx spend there both in terms of product development as well as just real estate. I'd also call out that we are pleased with the improvements that we've seen in our tax rate, which helped us on a year-on-year basis, and I'd remind you that there's always puts and takes on our free cash flow and we are very sensitive to timing as well.

And Mark on your second question on the access to promotional inventory in the U.S. We're actually seeing good promotional inventory out there. If you look at hotel occupancies in Q1, for example, I think the average occupancy based on the Smith Travel data that we saw was 52%, which is significantly lower than called the historical average occupancy that we've seen. So the hoteliers still need help. The environment is getting a lot better, but I think hoteliers are still looking to move volume and are still putting promotional inventory out there, and we'll continue to on a go-forward basis. Now I don't think that the promotional inventory is going to be quite as deep discounts as it was last year. Last year, you had a once-in-a-lifetime, hopefully, event last year where business travel just disappeared. Group travel was nonexistent and really, the hoteliers have to lean very heavily on leisure inventory and leisure discounted inventory in order to drive volume. To expect that to happen again this year, I think, would be foolish. But what we are seeing is that hoteliers are in the market. They are pushing promotions and the nature of those promotions might change. Instead of buy two nights get one free, it might be buy three nights get one free. Instead of a 40% off, it might be 30% off. Some hoteliers we're seeing who were driving aggressive retail promotions are dipping more into the opaque channel into, for example, package inventory and to our Hotwire opaque channels, et cetera. So the nature of the promotion, the promotional activity is going to change, but we absolutely think that lots of promotional activity will remain, will go on a go-forward basis. And we think that hoteliers who are smart about using our marketplace can have real upside as well as far as room night growth and RevPAR growth, which is something that both ourselves and the hoteliers are aiming for.

Our next question comes from the line of Imran Khan with JPMorgan. Imran Khan - JP Morgan Chase & Co: First question, it seems like you're OIBA for your leisure segment, which is core business, OIBA was down 9% year-over-year. I think this is the first time I'm seeing that OIBA was down for the Leisure segment. Can you help us understand that? And the second question was can you give us some sense about your booking impact from this volcanic in Hotel and the Air segment of the business, how much booking you lost for Hotel segment and also in Air segment?

Sure, Imran. I'll answer the first one then Mike can answer the second. On Q1 the leisure business OIBA being down, that frankly was something that was not a surprise and was also driven by the year-on-year increases in marketing that we talked about coming out of Q4. If you remember in Q1 of '09, really, none of us had any idea what was going on or what was going to happen so we essentially put a stop on almost all nonessential, especially off-line marketing. So in Q1 of '10, we've started marketing again on a sequential basis and call it a more normal seasonal pattern that what we typically see from going Q4 into Q1 of next year. So sales and marketing, there was a significant amount of sales and marketing deleverage for our leisure businesses. It was something that was planned. Typically that kind of sales and marketing specially when you come back in off-line media, you don't get immediate call it bookings benefit, et cetera. You can't put a dollar of marketing and expect x dollars in return. So we thought there was going to be some deleverage. We saw it. Q2 is going to be mixed because of Geneva, volcano, et cetera. But then Q3, Q4, we think that you'll see the leisure business growing as we expect it to do. Imran Khan - JP Morgan Chase & Co: Mike, on volcano?

I'll just remind folks on the first question, on the leisure OIBA that there was the negative impact from the Geneva expenses were in there, as well as some of the call center investments that we made as well. On the second question, we saw an impact, really, across Air and Hotel. Obviously, specifically on gross bookings, we expect to be more impacted on the Air side. In terms of whether or not we will recover some of that in the quarter, that remains to be seen and is a bit difficult to predict. As I called out in my comments, we do expect several points of OIBA degradation as a result of volcano, but it's a short-term thing for us and, obviously, it doesn't impact the long run of the business.

Our next question comes from the line of Justin Post with Bank of America Merrill Lynch. Justin Post - BofA Merrill Lynch: You said you're going to increase marketing 20% sequentially, is that normal for you? And what are you going to be spending it on? Is that CPC increases or are you working more on off-line? And then the second question, can you give us any thoughts on what your transaction growth rates could look like as we get past the volcano, but we get out to the middle of, say, the summer, much tougher comps on hotel nights and air? Could it be single digits or can you give us any help on that?

I think, Mike, correct me if I'm wrong, we didn't talk about a 20% increase in marketing. I think all we said, Justin, was that the amount from Q4 of last year to Q1 of this year looks more like the sequential increase that we typically have seen in other years, aside from last year. So similar amount, but we didn't talk about a specific about. As far as the transaction growth rates, the future state, we're not going to give you a specific number because, frankly, we don't know. But we think that we are pretty well positioned on a go forward basis. If you think about the quality of our service, as far as taking away air booking fees, lowering hotel booking fees, no change/cancel fees, in general, the marketing out there, et cetera, we feel much more confident about the value that we are bringing consumers now, than I'd say we have in the last five years. And if you look in the last five years, if you look '05, '06, '07 periods in which the economy was in a strong recovery, I think we are able to deliver very solid unit growth. Typically, revenue per units was growing as well, and we showed nice revenue growth. And my expectation is to see that on a go-forward basis as well. So we might see some pressure, Q3, Q4, because we're not getting the unit benefit of booking cuts, but our revenue per unit should be in much, much better shape. And as Mike said, we are pretty confident that in the second half, we're going to be delivering pretty good growth, in order to get a full year at low double digits. So I think that's kind of the best I can do for you. Anything to add, Mike, to that?

Yes. So on the sales and marketing question, we did say that Q2 would have a similar sequential increase in spend from Q1. And that is in keeping with our normal seasonality. And last year was just kind of an odd year. And I'd also point out that we feel like we're in modestly improving travel environment as well, and so we think the spend will make sense. Justin Post - BofA Merrill Lynch: Just to clarify, what did you exactly say about the ramp in 2Q? Can you clarify that?

Yes, I think our words were, similar rate of sequential increase in Q2 that we saw in Q1.

And our next question comes from the line of Herman Leung from Deutsche Bank. Herman Leung - Deutsche Bank AG: First, on the domestic inventory for hotel rooms, I guess, whether your large partners in the U.S. is expecting the pipeline to be sort of tampered a bit, and ADR and RevPAR rates to be up 3% to 6%. Is this a case where hotels are employing a airline strategy, where kind of putting less inventory out there and kind of control pricing for the OTAs? Wondering if that has any impact and what your view is on that inventory side. And then second, there's been a lot of speculation about Google and ITA Software deal tying up. Wondering how this transaction like this could potentially impact the OTA landscape, if any.

Sure. I think on the inventory side, one thing to keep in mind is that we have very strong relationships and contracts with our hotel partners. And I'd say, in general, to the extent that they're selling inventory on the Web, they're making that inventory, that pricing, et cetera, available to us as well. So it's not an issue of quality, of inventory or our getting access to inventory. I do think that if you look at where we were last year versus this year, some of those hotel partners are not going to, call it, go in with promotional inventory as aggressively as they were last year, because the market's improving, because the consumer's coming back to some extent. That said, again, because of where occupancies are now, we do think that there is going to be plenty of promotional inventory. There are going to be good deals on a go-forward basis. And we do think that hoteliers, to the extent that they are too aggressive on the ADR side, will be leaving money on the table, as far as RevPAR goes. So we think we're going to have to work hard on getting the promotional inventory. But we're confident this year now, when we look at the summer, on a go-forward basis, that we'll have nice access to promotional inventory. I think the one area that I am a bit worried about is actually on the air side. Then if you look at the air ticket prices out there and the growth in air ticket prices, our average ticket price, I think, was up around 9%, and we see those numbers only going up for the summer. So to the extent that I worry about inventory, it's the effect that air ticket prices are going to have on the summer traveler and the leisure traveler. I'd say, in general, we don't see a direct effect on air ticket prices and room night growth, but we do see an effect on air ticket prices and air ticket growth. And also, air ticket prices could have an effect on the pricing in our packages and the attractiveness of our package inventory in general. So on an inventory basis or on a price basis, I'm actually quite confident of our hotel inventory. It's on the air side that I'd be a little bit more worried. As far as ITA and Google, that rumor has been going around for a while. And so we're not particularly inclined to speculate on what could happen or what could not happen there. ITA is a very strong technology company in the travel business. Most of the major part of the technology that they have is an air search engine or an air pricing engine called QPX. And we are fortunate enough to have built similar technology in-house. We have our own technology, BFS, which we call Best Fare Search, and we've got a group of brilliant engineers, a couple floors down from here, working on that. So we actually -- from our standpoint, we don't feel too exposed. I think if I were another OTA and there are others out there, for example, Orbitz, who depends on ITA for their pricing, you become awfully dependent on Google, not only for your, let's say, your leads, but also for the pricing of those leads. Your dependency on Google is pretty high. Now Google has been a great company. They've been fair with their partners, et cetera, but I think we're lucky enough where we don't have a dependency there. So we don't think it's going to have a particular effect on us, one way or the other. We will watch with interest and we will read the article like everyone else. Herman Leung - Deutsche Bank AG: I think you've talked about Hotwire kind of decelerated in the first quarter on the domestic hotel side, wondering if you can kind of comment on that? Whether or not some of the -- are you seeing some impact from competitive opaque offerings kind of trying to go after inventory on that side of the business?

I honestly don't think that it's a result of competitive opaque inventory. I think it's just because Hotwire was growing so darn fast. And the rates of growth were in the 30% range, et cetera. And you can only grow that fast for so long. And the Hotwire team did an incredibly good job of finding kind of, every year, new avenues of profitable marketing spend. And they would drive that profitable marketing spend, drive conversion rates. And together, when you have kind of more UVs, more conversion, you kind of get the magic of unit growth there. And at some point, it's going to slow down. And I think the team right now is very focused on kind of on conversion and on finding more profitable spend out there. And it's a little bit harder to come by. The growth is still quite healthy. It's just coming off a number that was very, very high.

Our next question comes from the line of Michael Millman with Millman Research Associates. Michael Millman - Millman Research Associates: Kind of following up a little bit on the last -- can you talk about what trends you're seeing regarding conversion, regarding retention of existing -- I'm not sure if you call them clients, but these customers? And the second question, regards rental cars, I was wondering if you could give us the change that you're seeing in price and availability, both generally, on your sites and for your opaque sites?

Sure. I think on conversion and customer retention, it's difficult to be general with all the various sites that we have out there. I'd say, in general, we are happy with conversion trends. Conversion trends tend to be positive. They are certainly positive on the Expedia side, and we expect kind of healthy conversion on a go-forward basis. Hotels.com conversion in the first quarter took a little bit of a hit because of the platform, kind of the platform merging that I talked about in my prepared remarks. So on that basis, Hotels.com took a bit of a hit on conversion. But we're already seeing the team kind of move their way back there. And actually, conversion on Hotels.com is moving in the right direction, on a daily basis, or more recently, which gives us nice confidence for that team in kind of Q3, Q4. And Hotwire conversion, I'd say, is flat to down a bit on decent growth. And again, that conversion, we think, can be moved up as well. So overall, I'd say, conversion is stable to up, if I put everything together. Certainly, on TripAdvisor, to some extent, conversion is the number of clicks they get. And that team continues to execute very, very well on the conversion front there. As far as rental cars go, I think it's a tale of two cities. The retail part of our Rental Car business continues to do very, very well. We're seeing transaction growth. We're seeing nice revenue growth there. But we are selling a higher portion of our rental car sales, retail versus opaque. So as our mix goes more to retail versus opaque, our revenue per transaction comes down a bit. So overall, transactions are doing nicely, opaque transaction mix coming down, which hurts our revenue per transaction a bit. And I wouldn't expect to see that change unless, to the extent that, call it, fleet strategies change, going forward. And that's not something that we anticipate, at least, call it, in the near and the midterm.

Our next question comes the line of Kevin Crissey with UBS Financial Services. Kevin Crissey - UBS Investment Bank: Can you talk about the cross-selling of hotel, and more particularly, hotel, as it relates to air? So I'm in agreement with you on the rising fares and the air being a difficult environment, the capacity is not there. And last year, you had the advantage of growth, due to the booking fee cuts. How many of your hotel rooms, or what percentage of your hotel rooms get sold, as a result of people looking and buying air tickets as well?

That for, I'd say, competitive reason, is not a question that I will directly answer. Obviously, our Package business is one in which the consumer decides to buy air and hotel together and get a discount for it. And we think that in these kinds of environments, it's a great opportunity to push packages. And if you see some of our off-line advertising for Expedia, the ad that we have on is a package ad, which appeals to that kind of leisure traveler, looking for a deal. And I think the deals on packages are terrific, but that is somewhat modified by air ticket prices. And as far as the number of consumers who come in, buying air ticket, and then come back and buy a hotel, that's actually a fairly small percentage. And that's an area where e-mail marketing teams were building kind of much more sophisticated e-mail technology, et cetera. So that when we know that you're going to a particular destination, we will try to upsell you a hotel card, et cetera. We have some success there, but I have to tell you, it's not a lot of success. And moving that up by a couple of percentages points can be very significant money. But that is, again, that's very kind of confidential information. So I'm not going to give you kind of specifics on that. I think one of the questions, going forward, on consumer behavior, with air ticket pricing going up is, are consumers going to drive more? Are they going to take the train more, et cetera? We haven't seen any kind of, call it, hard statistics that would suggest that they are at this point, but it is something that we'll be looking for, going forward. Kevin Crissey - UBS Investment Bank: And have you seen the airlines adjust to try to get the consumer back to their website direct through mileage offerings or other strategies? But they are commenting about seeing higher distribution costs, and mostly, they're talking about, on the credit card side, due to the higher fares, but also, on the distribution to the OTAs.

Yes, I think we hear similar comments. I think, we haven't seen any kind of retaliation, whatsoever. But I do think that the airlines are more focused on credit card fees, et cetera. But in general, they're focused on costs, going forward. Now we think that we bring great value for our price, so to speak. As air ticket pricing moves up, our distribution costs, as a percentage of their revenue, tends to go down. So we think that this environment is more friendly to the airlines, as far as our distribution costs as a percentage of total revenue. And the way that we look at it is that it's in the interest of the airlines to build up their load factors any way they can. And we've been able to demonstrate, historically, that to the extent that they use our channel, buy specialty packages, et cetera, they can kind of revenue manage up the rest of the plane, so to speak. And there's no one who's better revenue managing than the airlines. So we think, right now, there's a nice balance. But every time you get in a discussion with airlines, it's a negotiation and you try to do the best that you can.

And our next question comes from the line of Ross Sandler with RBC Capital Markets. Ross Sandler - RBC Capital Markets Corporation: Just had a quick follow-up question on the full year OIBA growth comment. So you're seeing 10% growth in the first quarter, flat in the second quarter from the volcano, and the increased marketing and the COGS, what are you seeing that gives you the confidence for the low double digit for full year? You're running at 12% growth in hotel revenue in the current quarter. Your comps are getting a little harder. And like what kind of a hotel room night growth and ADR do you need to see to get there? Or is the OIBA growth going to come in the back half from cost cutting and the G&A leverage that you mentioned? Just a little more color there.

Yes, overall, I think we've mentioned we see the travel environment improving a bit, and we do have another quarter's visibilities into trends. And I think, as Dara elaborated on a bit, we expect to continue to grow our hotel room nights and our air tickets. And not only will we be lapping the fee reductions, which have been hurting revenue in the last several quarters, but we also expect a continued benefit from ADR on the Hotel side of the business. And we also expect our Advertising business to really continue to perform well, which will help us in the second half of the year. As I mentioned, we'll get much more normalized comps on sales and marketing, our cost of goods, cost of sales investments that we're making in the first half, which are deleveraging us a bit, will begin to bear fruit in the second half of the year. So we feel confident that we can deliver the low double-digit growth. ATPs are a headwind. As Dara mentioned, higher ticket prices, we'll have to deal with whatever that brings. And FX certainly hasn't been our friend of late, but taking it all into account, as of today, we feel good about our ability to accelerate growth in the second half of the year.

And Ross, if it's the best that you're translating that into, it is the best that we are going to be able to keep growing volumes on a go-forward basis. And history tells us, we're able to do it. Again, we think that our services without fees, et cetera, are much stronger. And we have a number of technology projects, et cetera, which, if they do what's promised, should be more tailwind. So we are absolutely making a bet that, that volume and unit growth will continue. And obviously, it's up to us to deliver on that bet.

[Operator Instructions] And our next question comes from the line of James Cakmak with Sidoti & Company. James Cakmak - Sidoti & Company, LLC: With regards to your Partner Services Group, you had begun to make significant investments to maintain that strong supply inventory. Can you talk a little bit about the progress you've made to ensure long-term relationships on both the merchant and agency side, and specifically, as it relates to the degree of flexibility you're offering with commission structures? And secondly, any update you can provide on potential M&A opportunities?

Sure, James. As far as the PSG goes, the biggest investment that we make in PSG is in people. And that is to get our folks in front of other hoteliers, to get to know them, to understand them, to teach them how they can use our marketplace in order to maximize their RevPAR in their local market. So if you look at the investments that we're making, it's really getting a significant amount of kind of more feet on the streets, both in the U.S., in Europe, and especially, in some of the emerging markets. So I talked about our international room night growth accelerating because of the Asia-Pacific region, because of Latin America, because of Canada, et cetera. We are getting people out there, and we are seeing benefits for us. If you look at our rooms, kind of hotels available, we've got 123,000 hotels now available in the marketplace. That's up 24%, on a year-on-year basis, and again, we wouldn't be able to sign up this many hotels without the help of our kind of market managers and our market coordinators, et cetera. Another area that we haven't focused on is the agency kind of Easy Manage business. And on a worldwide basis, we've got over 20,000 Easy Manage properties. And we are starting to see volume move through Easy Manage as well, and that's encouraging, especially in secondary, tertiary markets, smaller hotels that we had a difficult time getting to. So it's feet on the street, getting more hotels on. And I'd say, the third area that we're focused on is technology, connectivity, et cetera. We are trying to actively lower the cost of hotels doing business with us, lower the cost of our doing business with hoteliers, getting them their cash faster, et cetera. And for example, one area that we're pretty interested in and pretty excited about is kind of matching up supply and demand, working on short order and making sure that when a consumer comes to our site, we show them and does a search, let's say, in New York or L.A., we show them the appropriate hotel at the right time. You should -- a person who comes to our site and does a weekday search should see a different list of hotels, because that's probably a business person than a person doing a weekend search. So those kinds of technologies are also being worked through on the PSG front, which we think are great for hoteliers, and we think can be additive for us on a kind of revenue-per-unique [ph] (1:06:01) basis. James Cakmak - Sidoti & Company, LLC: And the potential M&A opportunities?

We're looking. I'd say, we've been very interested in the media area. The last acquisition that you saw for us was in China, in Medisearch, Cushion [ph], which we think is an incredibly promising opportunity. So we're looking out there in the media areas, and I'd say, more in the international areas. We are tending, I'd say, to look at smaller targets, and we will be opportunistic. But I tell you, right now, there aren't any kind of huge, huge targets out there, although that could change short term.

And at this time, there are no further questions in my queue. Please continue.

Okay. Well, thanks, everybody, for joining us today. Dara, any final words you'd like to say?

Yes, just finally, I just wanted to say a special thank you to Stu Haas. He has run our IR group for -- and by group, I mean two people, probably, for five years now. And he's been, I would say, more than an Investor Relations person. I don't think there's anyone who knows more about our company than Stu. He jumps in very, very deeply, and I think he set up our investor relations practice the way that you want to set it up, and that giving you all the information, not trying to sell people and encouraging our company all the time whenever he speaks with us to bet on the long term. And that's exactly how you want to run a company. So thank you, Stu. And Alan, God help you. Thank you very much for joining us.

Okay, thanks, everybody. A replay will be on the IR website shortly after we finish here. We thank you for your interest in Expedia, and we'll talk to you again next quarter.

Thank you.

Thank you, ladies and gentlemen. This does conclude our conference for today. We thank you for your participation. And at this time, you may now disconnect.