Expedia, Inc. (Expedia) is an online travel agency and is a parent company to some of the world’s leading online travel brands, including, among others; Expedia, Hotels.com, Hotwire.com and trivago. Expedia caters to need of both leisure and business travellers in over 70 countries through their 150 websites, and connects them to 435.000 bookable properties and more than 400 airlines.
The primary source of income for Expedia is generated through transactions involving the booking of hotel reservations, this accounts for 70% of total revenue. And eight percent of total revenue is derived from the sales of airline tickets. Expedia uses the merchant and agency model to market their products and services. With the use of both…show more content… The cost of revenue increased due to higher credit card processing costs and due to increased transaction costs and volumes. Although the absolute cost of revenue increased, the relative cost of revenue decreased in the last couple of years. Year ended December 31 2014 2013 2012 ($ in millions)
Customer operations 536 481 445
Credit card processing 414 358 281
Data center and other 229 199 173
Total cost of revenue 1.179 1.038 899
% of revenue 20,5% 21,8% 22,3%
Selling and…show more content… All the figures used are derived from Expedia’s income statement and balance sheet and are shown in tables throughout the text.
The return of equity (ROE) for Expedia in the year 2014 is 14.69%, this is significantly greater than the ratios of the previous years, respectively 8,61% and 11.91%. The increase in 2014 is mainly caused by increased revenue in the leisure and advertisement and media segments and recent acquisitions. The ROE consists of three parts and together provide a better understanding:
1. Return on sales (ROS), which is an indicator of how profitable a company is relative to its total asset.
2. Asset turnover (ATO), which is an indicator of the efficiency of a company in deploying its assets.
3. Equity multiplier (EQM), which is an indication of company risk to