Expedia (NASDAQ: EXPE) is the world's largest online travel company by transaction volume. Through its portfolio of travel websites, including includes: Expedia.com® , hotels.com®, Hotwire.comTM, TripAdvisor Media Network (Expedia spun off TripAdvisor in December 2011), Expedia Affiliate Network (formerly “Worldwide Travel Exchange” and “Interactive Affiliate Network”), Classic Vacations®, Expedia Local ExpertTM, Expedia® CruiseShipCenters®, Egencia TM, eLongTM, Inc. (“eLong”) and VenereTM Net SpA (“Venere”), the company allows travelers to book plane tickets, hotel rooms and customized vacation packages.^[1] Expedia makes money by either charging a fee per transaction or by purchasing the travel inventory(plane tickets/hotel stays) from the travel provider at a discounted price and charging the customer a premium on top the original price.

In recent years, major U.S. airlines have struggled to remain profitable in the face of surging fuel prices and increased competition from discount airlines. As their economic outlooks have worsened, major airlines have become less willing to sell travel inventory to Expedia at highly discounted prices. The company has been able to maintain positive revenue growth by exploiting other healthier segments of the travel industry, like hotels, but the company could see a significant drop in demand for its services, if economic conditions continue to worsen throughout 2010. The company should benefit, however, from its expansion into the still relatively underpenetrated European and Asian online travel markets.

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