Business Case Study: Expedia, Inc.
Expedia, Inc.
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 models Expedia facilitates the booking of hotel rooms, airline seats, car rentals and destination services from their travel suppliers. In some cases Expedia is the merchant of record, where they buy the services of their travel suppliers in bulk and sell them directly to their customers. And the company also operates as an intermediary, where they merely supply their …show more content…
In 2014 the spread was 6,01%, and the years before that it was 2,61% and 4,63%. The EIRAT of Expedia is calculated by dividing their IEAT by their FO, which was the same in 2012 and 2013, but increased with almost 50% in 2014. This increase was caused by additional long term debt. In these years the interest expense rate was proportional to its financial obligations, but the difference in the spread for these years is caused by a difference in revenue and deferred income tax. The financial leverage is calculated by dividing the firm’s FO by its equity, and can reveal if a company is aggressive in financing its growth with debt. The financial leverage in 2014 is 0,65 and 0,55 and 0,58 in previous years, which shows that Expedia is using debt in order to grow in
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 models Expedia facilitates the booking of hotel rooms, airline seats, car rentals and destination services from their travel suppliers. In some cases Expedia is the merchant of record, where they buy the services of their travel suppliers in bulk and sell them directly to their customers. And the company also operates as an intermediary, where they merely supply their …show more content…
In 2014 the spread was 6,01%, and the years before that it was 2,61% and 4,63%. The EIRAT of Expedia is calculated by dividing their IEAT by their FO, which was the same in 2012 and 2013, but increased with almost 50% in 2014. This increase was caused by additional long term debt. In these years the interest expense rate was proportional to its financial obligations, but the difference in the spread for these years is caused by a difference in revenue and deferred income tax. The financial leverage is calculated by dividing the firm’s FO by its equity, and can reveal if a company is aggressive in financing its growth with debt. The financial leverage in 2014 is 0,65 and 0,55 and 0,58 in previous years, which shows that Expedia is using debt in order to grow in