Alan Pickerill - Dara Khosrowshahi - Chief Executive Officer, President, Director and Member of Executive Committee Mark D. Okerstrom - Chief Financial Officer and Executive Vice President

A. Justin Post - BofA Merrill Lynch, Research Division Naved Khan - Cantor Fitzgerald & Co., Research Division Mark S. Mahaney - RBC Capital Markets, LLC, Research Division Brian Patrick Fitzgerald - Jefferies LLC, Research Division Eric James Sheridan - UBS Investment Bank, Research Division Michael J. Olson - Piper Jaffray Companies, Research Division Thomas Cauthorn White - Macquarie Research Douglas Anmuth - JP Morgan Chase & Co, Research Division Dean Prissman - Crédit Suisse AG, Research Division Ronald V. Josey - JMP Securities LLC, Research Division Ross Sandler - Deutsche Bank AG, Research Division Michael Millman - Millman Research Associates Kenneth Sena - Evercore Partners Inc., Research Division Manish Hemrajani - Oppenheimer & Co. Inc., Research Division Kevin Kopelman - Cowen and Company, LLC, Research Division Ansel Parikh - Stifel, Nicolaus & Company, Incorporated, Research Division

Good day and welcome to the Expedia Q3 2014 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Alan Pickerill, Vice President of Investor Relations. Please go ahead, sir.

Thanks, Tina. Good afternoon, everybody, and welcome to Expedia Inc.'s financial results conference call for the third quarter ended September 30, 2014. I'm pleased to be joined on the call today by Dara Khosrowshahi, Expedia's CEO and President; and Mark Okerstrom, our CFO. The following discussion, including responses to your questions, reflects management's views as of today, October 30, 2014 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'll find reconciliations of non-GAAP measures to the most comparable GAAP measures discussed today in our earnings release, which is posted on the company's IR website at ir.expediainc.com. I encourage you to periodically visit our Investor Relations site for important content, including today's earnings release and an updated investor deck. Finally, unless otherwise stated, all references to cost of revenue, selling and marketing expense, general and administrative expense and technology and content expense, exclude stock-based compensation and depreciation expense and all comparisons on this call will be against our results for the comparable period of 2013. With that, I'll turn the call over to Dara.

Thanks, Alan. The third quarter was another good one for Expedia, in what is turning out to be a very good year. Gross bookings growth of 29% and revenue growth of 22% continue the healthy top line trends that we've seen throughout 2014. Strong fixed cost discipline allowed us to invest aggressively in selling and marketing, while continuing to grow the bottom line, with adjusted EBITDA up 20% and adjusted earnings per share up 35% year-on-year. As a group, our core OTA transactional businesses continued to perform well on a global basis, with Brand Expedia and Hotels.com delivering strong top and bottom line growth, augmented by our Travelocity marketing agreement. We continue to invest aggressively in expanding our trivago brand worldwide and are very encouraged with the scale and growth that we're seeing in the U.S., Canada, Australia and certain Asia Pacific markets, such as Hong Kong, Taiwan and Singapore. trivago growth also helps our core OTA growth. While TripAdvisor is a our largest metasearch partner overall, trivago continues to gain share and deliver more clicks to Brand Expedia than TripAdvisor did in the third quarter. As such, we anticipate continued investment in share gains for trivago for the balance of the year. The market in China continues to be very dynamic and fiercely competitive, with a number of players making significant and increasing investments. This has led to challenges and competitive headwinds for eLong, which has been aggressively competing and generally taking share over the past number of years. As such, the plan is to increase investments there, which we expect to lead to increased losses for eLong beginning in the fourth quarter and into 2015. We intend to build a big business in what is expected to become the largest travel market in the world and we believe our investments there will lead to substantial value creation for our shareholders over the long term. Meanwhile, Egencia is in full execution mode, scaling nicely, signing new business at an unprecedented pace, investing in innovation and moving VIA clients on to its online platform. What we're seeing environmentally is a healthy overall travel market, along with ongoing competitive intensity worldwide and shared generally accruing to the bigger global players, who can compete aggressively across the marketing channels, attract new travelers and deliver in a way that creates a significant base of loyal customers. We're seeing strong growth in variable channels, where the cost to acquire customers continues to increase. We've also increased spend on brand advertising across our brands in a space that's quite competitive, with key players pushing hard to get their brand message heard by travelers around the globe. These dynamics put pressure on our overall marketing efficiencies, but we feel good about our ability to continue to profitably gain share on a global basis through best-in-class consumer experiences and ever broadening travel supply. In terms of our overall hotel business, we continued to see healthy trends of room night and revenue growth. As we mentioned last quarter, we continue to ramp up hiring in our hotel supply organization and are seeing excellent results in terms of the revenue contribution from newly added hotels, up nearly threefold year-over-year. From a technology perspective, work is ongoing to improve supplier-facing tools, so that we can increase engagement with hotels and at the same time, improve their self-service capabilities. We believe that combining a bigger team with better technology should help us grow our total business over the long term. Overall, 2014 is shaping up to be a good year for Expedia. We've made a lot of progress in the last few years, but competition is not sitting still and we know that there's a lot of work ahead of us. We have a good strategy in some very clear focus areas that we think will continue to drive growth and create value over time. These include focusing on our core technology and conversion improvements; continuing to build out our global hotel supply and making the right investments to do so; leaning in on marketing to drive traffic and downloads; investing in key, long-term growth market, such as China; building a big media and advertising business; and lastly, employing smart, capitalized allocation that includes opportunistic M&A and share repurchases to augment organic growth. Each of these factors adds up incrementally to a strong business that we believe can deliver balanced and sustainable long-term growth, through a constantly improving search and booking experience for travelers, both leisure and corporate, all over the world. With that, I'll hand it to Mark. Mark D. Okerstrom: Thanks, Dara. Hotel revenue growth of 21% year-over-year was driven primarily by room night growth of 24%. Domestic room night growth was also 24%, consistent with the rate of growth posted in Q2, while international growth decelerated to 24%. The deceleration of international room night growth is explained entirely by trends in China and excluding eLong, international room night growth was essentially consistent quarter-to-quarter. Travelocity again added about 4 percentage points of growth to global room nights. Aided by almost 5 percentage points of growth in average daily rates this quarter, revenue per room night was down 2% year-over-year. The gap between ADR growth and the revenue per room night decline remained pretty consistent with the second quarter. Decreases in our room night unit economics continue to be driven primarily by inventory expansion efforts and the impact of our loyalty programs and discounting. Our advertising and media business, which is made up of trivago and our Media Solutions group, has become quite large and has delivered just about $450 million of net revenue on a trailing 12-month basis. For the quarter, advertising and media revenue grew 29%, net of intercompany amounts. On a stand-alone basis, trivago grew revenue a healthy 50% year-over-year. Air revenue grew 21% on ticket growth of 30% and a decline in revenue per ticket of 7%. Air gross bookings and air revenue were helped again this quarter by Travelocity, which represented 18 percentage points of the total ticket volume growth. Revenue per ticket was down after the renewal of certain airline deals. And we expect this trend to continue in Q4 and into 2015. We also saw nice contributions from our car and insurance products. On the expense side, we saw solids leverage this quarter in cost of revenue and general and administrative expenses, with each growing at rates nicely lower than revenue. Cost of revenue benefited from increased automation and continued scale of our global customer operations and support platform, as well as favorable trends in merchant credit card fees, as more of our hotel business moves to agency and on reduced levels of fraud and charge-backs year-over-year. The pace of growth of our technology and content expense was consistent with that of the second quarter and a bit lower than we expected. In the fourth quarter, we do expect a faster rate of growth. Selling and marketing expenses grew faster than revenue, as we compete aggressively on a global basis and as we ramp up our supply teams to accelerate hotel acquisition. For expenses overall, I would also remind you that we have a difficult comp this year for incentive compensation in both Q3 and Q4. The net result was a healthy 20% growth in adjusted EBITDA for the quarter. Briefly, you'll notice that our effective tax rate was lower this quarter, driven primarily by the release of tax reserves after the expiration of the statute of limitations for certain federal tax years. We continued to expect an effective tax rate of around 25% in future quarters. From a capital allocation perspective, we repurchased 1.5 million shares since our last earnings call, bringing our total year-to-date to 6.5 million shares for $492 million or approximately $75.30 per share. Our trailing 12-month free cash flow totaled $1 billion, which has allowed us to return substantial capital to our shareholders while also allocating capital for global growth. This is a key strength of the company and one we intend to continue to take advantage of. Turning to our financial expectations for 2014. We continue to expect full year adjusted EBITDA to grow in the range of 16% to 19%. Our year-to-date performance has been quite strong and we plan to invest into the strength in the fourth quarter. Our core OTA transactional businesses and Egencia continued to perform well and our expectations for their Q4 performance have not changed dramatically. For eLong and trivago, given the investments we've described, we now expect their combined adjusted EBITDA contribution to be down by roughly $15 million to $20 million year-over-year in the fourth quarter, a more significant investment than we had contemplated on our second quarter call. Given the huge opportunity in front of us, the dynamic and highly competitive nature of the industry and the clear long-term benefits of size and global scale, we believe that we are effectively balancing the delivery of near-term profits against the strategic objective of investing in the business to fuel long-term growth. Our current expectations assume no change in foreign exchange rates, which at current levels, represent a headwind for adjusted EBITDA growth in Q4, relative to our prior guidance. To be clear, our guidance does not include any financial impact from the pending acquisition of Wotif. We will build those factors in after the transaction closes and expect to include the impact from Wotif in our 2015 guidance on our Q4 call. I would note, however, that if the transaction closes in the fourth quarter between transaction fees and the impact to purchase accounting, we would expect a small but negative impact to adjusted EBITDA in the quarter. With that, let's move to Q&A. Operator, will you please remind participants how to line up for questions.

[Operator Instructions] We'll take our first question from Justin Post with Merrill Lynch. A. Justin Post - BofA Merrill Lynch, Research Division: A couple of questions. First, maybe you could comment a little bit about the travel environment in Europe. People are wondering about potentially a market slowdown on a macro front. And then, just overall travel conditions there. And then, also, in your press release, you talked about growing loyalty programs and couponing. Does that mostly apply to China? Or are there other areas that you're getting pretty aggressive with those programs?

Sure. Thanks, Justin. As far as Europe goes, we haven't observed, I would say, a big macro move in the environment. Obviously, with the euro getting weaker compared to the U.S. dollar and it's not just unique to the euro, it's also common to a lot of other currencies out there, the strength of the dollar is going to be a headwind for us in a number of these markets. And as Mark mentioned, is going to be a headwind for Q4, at least as we -- compared to where we were in Q2. So I mean, when we look at euro -- when we look at Europe, the first thing that we look at is the strength of the euro. Some airlines are dealing with strikes, some labor issues, but we've -- through our industry, we've seen lots of unrest in different parts of the world. And because we do have a global scope, the business doesn't seem to move significantly as a result of local issues. But we'll watch Europe. Obviously, the economy there is not as strong as we would like it to be and most companies would like it to be, but we haven't observed any significant macro trends there. As far as the -- your question on loyalty. I'd say there are 2 significant factors there. One is eLong, which has been couponing for some period of time, continues to coupon aggressively, especially on mobile and a higher and higher percentage of their traffic is going on mobile as well. And then the second in general is -- has to do with Hotels.com and also, Expedia, to some extent, in that a higher percentage of Hotels.com's bookings, especially, are rolling over members who are Welcome Rewards members. And to the Welcome Rewards, cost is kind of an upfront cost that we recognize. And the benefit that we get is that we have higher repeat rates and typically welcome Rewards Members come to us direct versus other channels. So the benefit is delayed, while the cost is recognized upfront. And as a higher percentage of our bookings come over Welcome Rewards, it's a wonderful thing. But essentially, we're building a long-term asset of loyal customers and paying for it upfront. So that's another factor as far as what we talked about with our loyalty programs as well. I'd say the last factor, when we talk about discounting, is that, we are, in general, pricing more aggressively on Hotwire. This is in good macro environment, opaque channels and opaque supply in general takes a step back. And the Hotwire team has elected essentially to move some of their margins over to their customers. And we're seeing some pretty interesting trends there. And I do think that that's something that's going to continue.

We'll go next to Naved Khan with Cantor Fitzgerald. Naved Khan - Cantor Fitzgerald & Co., Research Division: Just a quick clarification on trivago growing faster versus TripAdvisor. Can you talk about the ROI you're getting on trivago and how it compares with TripAdvisor?

Yes, I'd say the ROIs are roughly comparable. We've been able to -- the EI brands in general, I think, are growing share within the trivago marketplace. trivago is growing a lot of share as far as overall traffic to, call it, travel websites. And the good news is that we are able to get this growth within the trivago marketplace at ROIs that are good and they're roughly comparable with ROIs that we look in general for the meta's channel. Naved Khan - Cantor Fitzgerald & Co., Research Division: Great. And then sticking with meta, you talked a little bit about Google Hotel Finder and what do you see there in terms of opportunity as a channel, as well as a -- maybe a thread as the launch limited offers?

As far as Google Hotel Finder goes, we're seeing increased traffic coming through Google Hotel Finder. It is -- it's clearly getting more exposure. And in general, I think that the product continues to improve. And Google has invested in it, we'll continue to invest in it. I think, from our standpoint, we're happy to play in any market that Google puts out there. And I think, over a long period of time, we have proven an ability to get our fair share in the Google marketplaces, whether to bid at marketplace, whether it's CPC, whether it's SEO and I think the same will be true of Hotel Finder as well. I think Google, in general, is introducing a number of technologies, retargeting technologies, not just against Hotel Finder, but other parts of their site. We're experimenting with them and we are seeing some potential wins there. And we'll continue to work with Google to kind of create win-win situations, where we can spend more and make more.

We'll go next to Mark Mahaney with RBC Capital Markets. Mark S. Mahaney - RBC Capital Markets, LLC, Research Division: Dara, big picture question for you. There's a 3-year trend here, maybe 4 years, of deleverage and marketing costs for Expedia. But Priceline, Orbitz -- really across the board. How do you think this all plays out? I mean, I assume that sales and marketing as a percentage of revenue isn't going to keep rising forever -- or maybe it will. Is there -- are there 1 or 2 trigger points or things that can either happen, I don't know, if it's technology solutions, or I don't know, what would it be that would cause those marketing cost to finally kind of normalize out? And do you think that's realistic in the next 2 to 3 years?

Mark, I think it's a great question. That is something that we talk about a ton here. I think one of the significant factors, as it relates to our specific P&L, is that marketing and -- sales and marketing efficiency will continue to have headwinds against it, as long as we are aggressively growing our international points of sale. And we intend to continue to aggressively grow our international points of sale. We don't think we're close even to midstream there. We have a very, very strong position domestically, but -- and we're improving in Europe. We're improving in Asia Pacific. We're improving in Latin America. But we're talking years and years of continued investment and growth and growth. So as long as we're able to find more pockets internationally to grow, in general, that growth will come at higher cost than domestic and will hurt our sales and marketing percentage as a percentage of revenue. Now if you look at each of those countries themselves, in general, as our different points of sale mature, they do tend to get more efficient on a sales and marketing front. But then we typically take a good amount of that sales and marketing and then we reinvest it in a new country or we invest more aggressively in a country that is less mature. So we think that formula is going to continue for some period of time. And the formula that we do have is that we combine that -- the pressure on sales and marketing with very disciplined structure on the fixed costs. And for a long period of time and I think it'll continue, we are going to leverage our fixed costs, our cost of sales, our G&A, even technology, at this point, so that we can afford to make those marketing investments and we can afford to keep growing at the bottom line, cash flow, earnings per share, et cetera. We think, as long as we can do that, we will be a share gainer in what is an enormous industry. So at this point, while we ask ourselves the same question, it's not a matter of life and death. This is the growth formula and so far, it's working for us. Mark S. Mahaney - RBC Capital Markets, LLC, Research Division: And can I just -- a quick follow-up on China. It sounds like that's a -- maybe at the margin picked up as investment area of focus for you. Maybe that market is becoming more competitive, maybe not. But could you maybe just remind us about how material China is? And then how would you describe that market in terms of its competitive intensities? Is there something you're seeing that makes you think it's a more attractive market, therefore, more investments or more competitive markets and therefore, more investments?

Yes, I think what we've observed in the China market are a couple of factors. One is that, with the advent of mobile, China is going online and it's mobile very, very fast. The overall market is going very quickly. And as a result of those 2 factors going online fast, going mobile fast and in general, travel being a very, very big category, it is a -- it's a very attractive category for companies to invest in. And we have seen more investment coming in from, not just Ctrip, who's our primary competitor, but other players in the metasearch category. There was news, for example, that Alibaba is launching a site as well. So it's an attractive category. It's a big category that's going online fast. And as a result, we are seeing more capital come into the marketplace. And we built a very nice, big business with eLong with a really, really strong management team and our plan is to keep investing behind that. Mark D. Okerstrom: And Mark, just with respect to mix. If you look back over the course of and they haven't announced yet, but if you look over the course of the last number of quarters, as a percentage of revenue, they've been in and around 3% or 4%. So relatively small part of revenue for us.

Our next question comes from Brian Fitzgerald with Jefferies & Company. Brian Patrick Fitzgerald - Jefferies LLC, Research Division: Two quick questions. In September, you expanded your partnership with Home Away. In general, what level of interest are you seeing towards vacation rentals from travelers? Do you -- is it an all incremental demand? Or is there some degree of cannibalization going on there versus regular hotel bookings?

Sure. As far as Home Away goes, there's -- we have been slowly turning on exposure to Home Away inventory. And more recently, as Home Away piped in more inventory into Brand Expedia, we have -- we kind of the increased the exposure to our customer segment. So I will be able to answer that question much better over the next couple of quarters. In general, we are seeing interest. I'd say it's interesting interest, it's not huge, but it's certainly interesting. There is a cross-sell going on. There is some cannibalization. I would say that our instinct is that it's net positive, but it's too early to tell. So if you ask me the same question next quarter, I'll probably have a better answer.

We'll go next to Eric Sheridan with UBS. Eric James Sheridan - UBS Investment Bank, Research Division: I guess, Dara, first, I'm wondering if we can get an update on your thinking about Trip Instant Booking, thinking about that as another distribution channel through that marketing vehicle in terms of generating leads going forward and how you think the industry might evolve their view about that? And then, Mark, maybe the second question. You quantified the impact from the investments in Q4, but I don't think you quantified the impact from FX. Didn't know if you could give us a little bit of guidance there on what the dollar amount of the FX impact would be?

Thanks, Eric. So I'll start with Trip Instant Booking and that our thinking pretty much remains the same as far as trip instant booking goes. Obviously, Trip is a big partner of our, so we're interested in what they're doing generally. We decided not to participate in instant booking because we didn't think that it was in our strategic interest to do so. And certainly, we didn't think it was profitable enough, short term, to do something that wasn't necessarily strategically interesting for us. So as we've seen instant book develop, we haven't seen the -- we haven't kind of changed our position. And at this point, we don't think that will change our position. We are anticipating some headwinds on the top line because of that as TripAdvisor rolls out Instant Book more expansively, we will have less access to TripAdvisor clicks, so to speak, but we certainly think that's manageable. And in general, TripAdvisor is one of our less profitable channel. So we think that the bottom line is going to be quite manageable, even if TripAdvisor expands Instant Booking significantly. So Mark, do you want to take on the other one? Mark D. Okerstrom: Absolutely. Eric, so with respect to FX, at the current rates, we think they're somewhere around 300 to 400 basis point impact on Q4 adjusted EBITDA growth.

We'll go next to Mike Olson with Piper Jaffray. Michael J. Olson - Piper Jaffray Companies, Research Division: More specifically on China, can you give us a sense for what increased investment eLong will look like? Like, would this potentially include both increased couponing and higher marketing spend? Or is it more increased expense on mobile development or all of the above?

I'd say it's more all of the above. And the China market is moving very fast. It's quite entrepreneurial. And at this point, it's a battle across multiple fronts. Couponing is prevalent there. Everyone is -- the mobile penetration is moving very fast. So everyone is developing aggressively for mobile and marketing aggressively with mobile as well. And also, we are aggressively investing on the technology and supply front. So it's a multi-front investment and we're quite confident that the eLong team can build value there. Michael J. Olson - Piper Jaffray Companies, Research Division: All right. And then, I get the sense that you guys believe there's enough fish to fry in the core travel market without really expanding into a lot of other peripheral areas, like tourist attractions or restaurants, et cetera. Is that true? Or how would you describe how narrow or broad your focus is?

Yes. Listen, this is a trillion-dollar global marketplace. And Mark and I are never bored, as is anyone here. We've got plenty to do. We think, as a company, we're executing better, but we think we can execute much better going forward. And we think, as a result, staying focused on what we're doing now is going to give us plenty of opportunity and it's going to keep us pretty darn busy. Mark D. Okerstrom: And I would just add that with respect to tourist attractions, we've actually got a decent sized business, we call it our local expert business. It's a large business. It's something that we'll be increasingly focusing on. And it's something we think, that mobile creates specific opportunity on. So I think you might hear more about that business in the coming years. It's something that we've got already in-house and it's something we can build nicely organically.

Yes. And we have moved over that business on to some of the newer technology platforms that we had previously moved our hotel business, air business, et cetera. And we are very optimistic about the increased capabilities that we can build there. So it's an existing business. We're not getting into a new business. We've got a strong management team there and we think there's plenty of organic growth in that category.

We'll go next to Tom White, Macquarie. Thomas Cauthorn White - Macquarie Research: I think in the prepared remarks, you mentioned strong growth in all variable channels, but costs to acquire were kind of increasing. I was hoping maybe you can just give us a little bit more color. Are there particular channels where you're seeing sort of the biggest pressure? Or is it kind of across the board? And then, also, I'm not sure if you give any sort of updated metrics on the rollout of ETP, but any update there?

Yes. In general, as far as the variable channels go, the 2 most significant variable channels that we have are Google SEM and metasearch. And in general, we are seeing CPCs, or cost-per-click, in both of those channels increase on a year-on-year basis. Some of it is because ADR's increased in general. You're going to see CPC increase. But some of it, we believe, is because of increased competition, we are seeing more of a supplier-direct presence in some of those channels that we had seen in the past. But the good news is that we're still able to innovate. We're still able to optimize in those channels and in general, grow those channels. But it is getting more expensive. Mark D. Okerstrom: And with respect to ETP. As a reminder, it has really become business as usual for us. We continue to see great traction and a positive response from both consumers and suppliers. We are up to well north of 50,000 hotels that are now on the program and it's growing nicely. We recently signed up Choice Hotels on the ETP deal. And there's very few of the major chains that are not participating. Most of them and certainly, a vast majority of the large ones are involved in the program. And again, we continue to be very happy with what we see there.

We'll go next to Douglas Anmuth with JPMorgan. Douglas Anmuth - JP Morgan Chase & Co, Research Division: Two things. Dara, you talked trivago and just how important to the channel it's become. Can you just talk more, how much further you'll be able to push things there? Just trying to understand if you realize kind of a lot of the benefits early on as you brought it into the fold and whether you can still stay on the same kind of trajectory there in terms of helping the rest of the business. And then, secondly, also as you move closer to lapping Travelocity, can you talk about how you think about the growth from that vehicle going forward?

Sure. As far as trivago goes, when we originally acquired trivago, I would say that our share in the trivago marketplace was lower than our natural share in other meta marketplaces. And I think, as we have optimized against the trivago marketplace and it's been a really good marketplace to allocate capital into, even if it were a third-party, we've been able to grow our share inside the marketplace. And then the trivago team has been very aggressively investing in marketing and building that brand on a global basis and doing it successfully. And I think, at this point, they have moved from, call it, their core European, their European core, nicely into North America and are now experimenting in markets in Asia Pacific, markets in Latin America, et cetera, that are pretty interesting markets and we're starting to see some pretty good trends in. Obviously, as trivago is getting bigger, they're not going to be able to grow at quite the growth rates that we have seen historically. But we do anticipate that trivago is going to be a nice growth driver for us over the next couple of years. I think the other factor with trivago as well is that one of their fastest growing markets has been the North American and Canadian markets and those are markets in which our inventory is really, really strong and our brands are really strong. So that has helped our share within the trivago marketplace as well. So Mark, you want to take the other question? Mark D. Okerstrom: Yes. Doug, on Travelocity, obviously we got a nice boost from adding that business into our P&L this year. And that will create a more difficult comp for us next year. However, as a reminder, Q1 of this year was a partial quarter. So we still will have some baked-in benefit going into 2015. And also, just as a reminder, I mean, the Travelocity business is on the Brand Expedia platform and that's a platform that continues to innovate. And the Travelocity business will be a recipient of the year-on-year gains that Brand Expedia has been able to consistently turn out on that platform. So we continue to think that, that can be a growth business and we will obviously bake in our expectations for that business into our 2015 guidance, which we'll give you on the next call.

We'll go next to Dean Prissman with Credit Suisse. Dean Prissman - Crédit Suisse AG, Research Division: So looking at the 500 basis points of year-over-year growth for ADRs, can you share some color on how much of this relates to broad cyclical strength in the lodging industry versus what sounds like a smaller contribution to room nights from eLong? And then, separately, with regard to your CapEx spend, how should we think about the mix in terms of growth versus maintenance? And then looking out over the next 12 to 18 months, can you talk about some of the key initiatives that are nearing completion versus some that are more nascent?

Yes, I'd say, as far as the 500 basis points of ADR growth, I'd say the majority of that ADR growth was related to, call it, core ADR growth. That is the cyclical recovery that we have seen in the hotel sector. Obviously, FX, on a go-forward basis, is going to be a headwind there, especially in the European, Latin American and some of the Asian markets. So my guess is, the ADRs for Q4 are going to come down, at least for us, in U.S. dollar terms, compared to where they were in Q3. There was some mixed shift with eLong, but the majority of it was kind of core global ADRs. Mark D. Okerstrom: And with respect to CapEx. I mean, the biggest portion of our CapEx is capitalized software development. And the portion that we capitalize is generally all-around new features and innovation as opposed to pure maintenance. So the big picture answer is that most of the CapEx is around new products. It's mostly about innovation. And really, with respect to big initiatives, they might be nearing completion. I mean, we have largely moved this business away from big initiatives. The Brand Expedia replatforming is largely done. ETP has been rolled up -- rolled out. And really, we're in a spot now where the things we're working on are a lot of small things that together, add up to nice conversion benefits. And so we don't expect there to be a significant roll-off, if anything, in the future that would slow down the trajectory we're on right now in terms of our tech and content expenses on a cash basis, which have an impact on CapEx.

Yes. And just adding to something that Mark said. We -- our businesses operate on lots and lots of different platforms. And those platforms, different parts of those platforms or different platforms, age over a period of time. And we are constantly revitalizing different platforms that affect different parts of the business. And what we don't want to get into is a situation where we were 5, 6 years ago, where we were really under-investing and had a bunch of catch-up to do. And I think, at this point, we've got the right kind of balance of, as we see a platform that needs to be revitalized, we can make that investment without it causing huge shifts in our technology spend or CapEx in general. It's a much more healthy spot to be.

We'll go next to Ron Josey with JMP Securities. Ronald V. Josey - JMP Securities LLC, Research Division: Two, please. Maybe a follow-up on Travelocity. Could you provide any update on maybe pushing, or I guess, the partnership between 2 companies, maybe there's any additional insight in what Travelocity's planning on the marketing spend to help plan the overall business? And then, separately, Dara, I think you commented that very healthy travel environment, ADRs are up. I think occupancy is close to record highs. So I'm wondering if this is among the best macro environments you've been at least here domestically. And is this one of the reasons why maybe the AMR and other airlines provided lower overall -- or suppliers pushing back on pricing, I guess, is the question.

I'd say, on Travelocity, as far as an update on the partnership, I'd say the Travelocity team and our teams are working closely. We don't control the Travelocity marketing plan. They've got a very, very strong marketing team there. And in general, they continue to build their brand, which is a very strong brand. And they are developing, really, the variable channels, which have become more available to them now that they have a platform that is -- that can convert well and a supply base that is a -- that's kind of a best-of-breed supply base, especially in North America. That said, we don't have, I would say, very significant visibility into their plans or spend. That's a separate company. They are competitor of sorts with us. So there is a bit of a Chinese wall there. And as a result, we would have a hard time giving you real insight as to what their plans are for Q4 or for 2015. As far as the travel environment goes, I have a relatively -- we've been here for a long time, but I feel like I've got a short memory. But this is -- this is a pretty darn strong environment and it's strong broadly. And the strength is also augmented by the fact that there's very little supply coming into the marketplace. You don't hear about -- much about increased supply for, certainly, the domestic airlines. And in general, hotel supply growth, which trails kind of cyclically slow, other than a couple of markets. New York was an exemption, for example, last year. Hotel supply growth has been muted as well. So that creates a very, very strong environment for our supply partners. And it's a great tailwind for us as well, as far as ADRs go. So I think it's an environment where you can have win wins. I do think that in strong environments, intermediaries like us have to work harder because suppliers have -- the alternatives for suppliers improve. And I think, as a company, we know we have to get better. There are certain parts of our business, the opaque parts of our business, for example, Hotwire, or the package parts of our business, that take a bit of a nick as far as the quality of the inventory goes, or the quality of the discounts. But it's unquestionably good for the retail part of the business and the retail part of the business is growing very, very nicely. So all in all, when we look at the environment, we're happy about the environment. And frankly, we don't want it to change.

We'll go next to Ross Sandler with Deutsche Bank. Ross Sandler - Deutsche Bank AG, Research Division: Just -- I had 2 questions. Mark, so if we look at the advertising and other line, up 29% versus last quarter, 54%. I guess that explains the shift of clicks within trivago to Expedia properties. So how do we think about that going forward? Is that a one-time step-up? Or will it continue to kind of creep higher? And I think you called out 50% gross revenue growth for trivago. Can you just remind us how that compared with prior periods on a gross basis? And then, looking into 4Q, what kind of domestic room night growth are we -- do you think we can expect to see in the fourth quarter? Mark D. Okerstrom: Sure. So the advertising and other line, up 29% versus last quarter, 54%. There was a little bit of a slowdown in our ad and media growth, our ad and media business, the Media Solutions business. But there certainly was a continuation of share gains by particularly Brand Expedia and Hotels.com in trivago. I think the teams are continuing to look for ways to gain more share in trivago. And I would just say generally, that trivago is a channel that really reflects what's happening in the broader industry, which is the global players are generally taking share from the smaller players. So it's hard for me to look into crystal ball and tell you whether share gains will continue forever. But I do think that that's a very real possibility. In terms of the sequential growth rate in trivago. We said in the last call that it had been growing broadly in line in the second quarter, as it had since the time of the acquisition. So this is a bit of a slowdown from that. Certainly, something we are anticipating largely because they were lapping over a pretty aggressive push into the U.S. through 2013...

And euro weaknesses is also going to, obviously, affect trivago growth. Mark D. Okerstrom: Yes, definitely, as well. With respect to room night growth outlook for Q4, we're not going to give a guide on the overall room night growth trends. But I think, if you take a look at the past number of quarters and you normalize for Easter and you normalize for some slowdown we saw in eLong this quarter, it's been pretty consistent.

We'll go next to Michael Millman with Millman Research Associates. Michael Millman - Millman Research Associates: Two questions. First, I was looking at -- or to what extent are you seeing any travel changes related to Ebola or terrorism in terms of where people are going or where they're not going or how they're going, or when they're going? And then I have a question on U.S. car rental.

Sure. As far as Ebola, terrorism, et cetera goes, we do see local changes in travel patterns as a result of local events. So for example, Russian ADRs came down with the trouble there. The Hong Kong market has softened a bit as a result of the troubles there or the protests. And travel to West Africa is down on a year-on-year basis as well. So we certainly see local effects. It is tough, at this point, to assess out whether there's been a global effect with Ebola. We've done some analysis, but honestly, we haven't spent much time on it. So while Ebola might be having some effect, we don't think that it's a significant effect. And if it were significant, it will be something that we would -- we bring up in this call. We just don't see it yet. It could change if the news gets worse, but at this point, there's not a big macro effect that we're observing. Michael Millman - Millman Research Associates: Just a follow-on on that question. When you're seeing these changes, Hong Kong, Russia, West Africa, are these -- are people traveling -- having alternative plans or staying locked in their bedrooms?

It's tough to tell. I'd say the local people maybe are staying more in their bedrooms. But there's always some place exciting to travel to. In general, the price of getting to destinations, flights other than the U.S., has come down. It's become quite available with low cost carriers to the general public. So it's our feeling that the demand just shifts from one market to the other and doesn't suffer in a significant way on an overall basis. Mark D. Okerstrom: Michael, on car. I would just say, generally, in the overall U.S. environment, particularly, no real change to the story. Fleets remain tight, access to inventory remains a bit of a challenge and I think that's something that we're certainly expecting to continue, just given the consolidation that we've seen in that industry. With respect to our performance in car, we've seen some very nice results, Brand Expedia putting the car business on the new technology platform has really helped us out there and they're seeing great trends. Obviously, with the addition of the Travelocity business and to a lesser extent, the Auto Escape business, our recent acquisition has helped us. RPDs are relatively flat year-on-year, slight growth primarily on mix. And we are seeing some revenue margin pressure principally with respect to mixed shift away from the Hotwire or opaque business and some more discounting there as well. So I think, overall, it's a healthy story for us. But the challenges remain in the U.S. car rental industry more broadly.

We'll go next to the Ken Sena with Evercore. Kenneth Sena - Evercore Partners Inc., Research Division: So just going back to the comparison of TripAdvisor versus trivago and the fact that you're seeing more clicks from trivago. Is there anything -- having worked with those companies now for as long as you have, that you can maybe provide to us as far as the consumer experience being provided on each of those platforms that might be leading to that higher conversion and those additional clicks?

Yes, I think as far as clicks go, the volume of clicks isn't dependent on conversion. That's a volume of clicks that essentially click off that a trivago will send us or a TripAdvisor will send us, but it certainly wasn't a comment on conversion. I would say, in general, while this isn't a comment on consumer experience, trivago traffic tends to be more domestic based and TripAdvisor has a greater international mix of customers, which makes some sense. One of the strengths of TripAdvisor is their reviews, et cetera. So maybe if you're flying off to France and you're looking for some place to stay in the South of France, TripAdvisor can certainly add a lot of value there. trivago seems to add very significant value for a price conscious consumer who wants to find, who -- kind of a power user who wants to find the absolute best pricing and availability out there. So maybe that's a reflection of the mix. Both products are very, very strong products and both products continuing to grow and take increasing share of travel search.

We'll go next to Manish Hemrajani with Oppenheimer. Manish Hemrajani - Oppenheimer & Co. Inc., Research Division: Can you talk about mobile here a bit. What was mobile share of total bookings? And any color you can provide geographically where you're seeing better traction with mobile? And also, how do conversion rates stack up on mobile versus desktop?

Yes, as far as mobile share goes. In previous calls, we talked about mobile being, I'd say around 20% of room nights across our various brands. And that share continues to grow as our mobile channels, I'd say, across the board, are growing faster than our desktop channels. And that's both in terms of traffic and in terms of room nights as well. On the conversion rates on mobile, that's not something that we talk about, for competitive reasons. But certainly, we see in mobile, as you would expect, very significant, last-minute activity. We also see significantly shorter length of stay. Again, to be expected. In general, while mobile is a very, very nice growth story for us, our ability to acquire customers across mobile channels profitably is challenged. So mobile, I'd say, is a revenue, is a great revenue tailwind and is a sales and marketing headwind for us. But one thing that we are seeing that's very encouraging is that the pattern of use from mobile bookers on our apps, et cetera, is very, very strong. These are really good products that we are introducing and innovating and Hotwire has won a bunch of prizes for their product. Brand Expedia introduced a great new mobile app experience, et cetera. And the various brands are also launching on wearables. So our ability to invest and innovate, I think, creates an advantage for us. And as a result of that, we think, over a long period of time, mobile is going to be a very, very significant opportunity for us. I would say, internationally, what I've said, applies internationally everywhere. China, in particular, is seeing a higher percentage of mobile adoption than, I'd say, elsewhere in the world. And a very high percentage of that mobile activity is on apps versus mobile web.

We'll go next to Kevin Kopelman with Cowen and Company. Kevin Kopelman - Cowen and Company, LLC, Research Division: Just a quick one. Hotel supply. Can you just give us some color on what kind of hotels, in which geographies, your new investments are having the biggest impact in? In terms of your hotel supply investment? Mark D. Okerstrom: Sure, happy to, Kevin. I would say that we are adding hotel supply everywhere. We're still very much at the early stage here. But again, just for context, this quarter, we ended up at about 365,000 properties, including eLong. And if you compare that to the 700,000 or 800,000 or even more that's on trivago or TripAdvisor, there's just a ton of headroom left. We think there's headroom and pretty significant headroom still remaining in the U.S., for example, one of our most mature markets and secondary and tertiary markets. We think there's a big opportunity for us in Europe, particularly in the Expedia Traveler Preference Program. It's certainly opened that up for us. So we are -- we're adding everywhere and we would -- I would expect that the pace of acquisition is only going to increase from here. And I think as Dara said, this year, year-to-date, we've got 3x the amount of revenue from new hotels than we did last year. So the results of what we're doing seem to be working and we're going to continue on the path that we're on right now.

And we'll go next to Scott Devitt with Stifel. Ansel Parikh - Stifel, Nicolaus & Company, Incorporated, Research Division: This is Ansel Parikh in for Scott Devitt. I just had a quick question regarding Travelocity. Previously, you guys kind of provided the contribution, the percentage contribution, Travelocity provided to total room nights growth. I was just wondering if you could give that out this quarter. Mark D. Okerstrom: Sure. It was about 400 basis points again this quarter.

We have no further questions in the queue at this time.

Okay. Thanks, everybody, for joining the call. Dara, do you have any closing remarks?

No, just good -- thank you to the Expedia, Inc. worldwide employee base. We had another good quarter and let's keep our eyes on the ball and let's keep executing. And thanks, everyone, for joining us.

That concludes today's conference. We thank you for your participation.