Good day, and welcome to Expedia's Second Quarter 2015 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Alan Pickerill, Vice President, Investor Relations at Expedia. Please go ahead.

Thanks, Kevin. Good afternoon, everybody, and welcome to Expedia Inc.'s financial results conference call for second quarter ended June 30, 2015. I'm pleased to be joined on the call today by Dara Khosrowshahi, Expedia's CEO and President and Mark Okerstrom, our CFO and EVP of Operations. The following discussion including responses to questions reflects management's views as of today, July 30, 2015, only, and we do not undertake any obligation to update or revise this information. As always, some of the statements made on the call today 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. Please note that we sold our 62.4% ownership stake in eLong on May 22, 2015, which was previously a consolidated entity of Expedia, Inc. For GAAP accounting purposes, the results of eLong are included in our results through the date of the sale, in order to allow investors to compare our results on a like-for-like basis with our historical results. Our commentary in the earnings release and on this call is principally focused on our results excluding eLong, which should be considered in addition to the GAAP results on a fully consolidated basis. Finally, unless otherwise stated, all references to cost of revenue, selling and marketing expense, general and administrative expense, and technology and content expense also excludes stock-based compensation and depreciation expense, and all comparisons on this call will be against our results for the comparable period of 2014. And with that, let me turn the call over to Dara.

Thanks, Alan. Second quarter was another solid quarter for Expedia. We once again saw healthy unit trends across products, with global room nights up 35%, air tickets up 26%, and car rental days up 35% year-on-year. We were pleased with the revenue growth of 15% and adjusted EBITDA growth of 12% for the quarter. Our core OTA segment continued to perform well, led by strong top line growth for brand Expedia and Hotels.com, our two biggest businesses. We also saw healthy revenue growth from Travelocity and EAN, along with an inorganic tailwind from Wotif and our AirAsia/Expedia joint venture, which we now consolidate as a result of increasing our ownership stake to 75%. Of particular note, we continue to see very good growth rates for Travelocity even as we anniversary the ramp-up of that business last year. We're also optimistic about Wotif's potential to grow organically over time, despite near term FX headwinds, now that it's fully integrated into the Expedia platform and with the team starting to iterate on the site and on marketing channels. As was the case last year, we continued to see strong progress in new hotel property acquisition around the world with approximately 27,000 additional properties this quarter, including some recently integrated Wotif properties. This is a significant milestone as we now have added more properties in the first half of 2015 than we did in all of 2014. We've got a very long runway here and we expect to spend the next several years building out our global lodging inventory. From a technology perspective, we recently completed a move – a project move, Venere, onto the Hotels.com platform. This is similar to our efforts in the last few years to extend the Brand Expedia platform to brands such as Travelocity and Wotif. We now…

Thanks, Dara. One quick note before I get started. As mentioned earlier, we sold our 62% stake in eLong on May 22. Financial results for eLong are included in our GAAP results on a consolidated basis through that date. To aid in comparability and to focus on the parts of the business that will be ongoing, our comments today focus on Expedia Inc. results excluding eLong. The overall trajectory of the business remains very strong, as has been the case for some time now, with the second quarter results broadly consistent with Q1 trends and a bit better than we had expected. Strength across our breadth of leading brands and across geographies continues with rare exception. Our core OTA segment, trivago and Egencia are all having solid years with strong execution and good financial results. Top-line growth was again driven by robust unit growth across all major geographies. Room night growth remains strong for all of our major brands relative to Q1 growth rates, leading to global room night growth of 35% year-over-year an acceleration from 32% growth last quarter. Domestic room nights grew 24% in Q2, while international room nights were up 50%. The inorganic impact from Wotif and the consolidation of the AirAsia/Expedia joint venture added approximately 7 percentage points to global room night growth this quarter. For comparison, last quarter excluding eLong, inorganic impacts drove over 5 percentage points of room night growth. Revenue per room night was down just under 16% this quarter while ADRs were down almost 6%. The factors influencing our room night economics are largely the same as they have been for quite a while now. Foreign currency accounted for a little less than half of the decline in revenue per room night, while deliberate reductions in hotel margins and the impact of…

Thank you. We'll take our first question from Justin Post with Merrill Lynch. Please go ahead. Justin Post - Merrill Lynch, Pierce, Fenner & Smith, Inc.: Thank you. Maybe two questions. First, it looks like you've really been able to accelerate room nights, and is that primarily just your tech platform generating higher ROI or better conversion rates? Anything you want to kind of call out there, maybe supply is helping. And then, on the competitive side, a lot of noise out there about TripAdvisor and Google taking bookings, how do you view that? Can you participate? And do you see that as a potential headwind down the road? Thank you.

Sure, Justin. As far as the room night acceleration, I'd say it's a game of inches and a lot of inches coming together. It certainly starts with the websites and the websites' ability to convert. If you don't have a great website that's very easy to use, easy to understand, you're nowhere in this business. So it does start with that. But we have our marketing teams always looking for new demand veins that we can reach on an affordable basis and it's really the website and those marketing teams working together that have been able to get us to a state of accelerated room nights growth for some period of time. And we have no reason to think that that's going to change. I think the other two factors that you would add to it that are a bit more recent are obviously the addition of new hotel supply, 27,000 hotels. As we are going down the line in bringing in new hotels, on average they tend to be smaller hotels, so the contribution per hotel is something that we would expect to come down over a period of time, but obviously the number of hotels that we are adding has increased. There's some cannibalization in larger markets, but we think the new hotels are certainly a nice positive for us. And the last factor that I discuss is that we are seeing an increased percentage of our business in general coming from repeat customers. We've been investing very aggressively in our loyalty programs and our customer service to keep customers coming back. It is those repeat customers that account for the majority of the profit of the company. And that repeat customer base has been growing as we've been investing in those customers as we've been growing our…

You're welcome. Next question?

Next to Naved Khan with Cantor Fitzgerald. Please go ahead.

Yeah, thanks. TripAdvisor spoke about seeing some CPC weakness in its international geographies. As ad buyers you should be seeing a net benefit of that. So any comment you can provide there would be helpful. And then, I had a question on in terms of travel conditions in Europe and what you are seeing there.

Sure, Naved. Listen, we – if I just focus on Europe, we're not seeing real changes in the local currency CPC environment. Most major geographies are seeing CPC increases. When we look at trivago, they are seeing broadly speaking across Europe, CPC increases. Certainly the foreign exchange impact makes those look worse on translated basis, but again in local currency we continue to see a healthy environment. CPC is up, ADR is up, occupancies look strong. And really that rolls into the travel conditions in Europe. We are continuing to see similar trends to what we mentioned last quarter, which is we're seeing an increased mix of European travel staying in Europe and the addition of an increased propensity of Americans to travel into Europe and across the board, I think with a few obvious exceptions in Southern Europe, we're seeing a lot of health in the European market. Thanks.

And then, anything to add with respect to better ad efficiency on TripAdvisor?

We don't like to comment on specific efficiencies in specific channels. I would say that we continue to be broadly happy with the efficiencies we're seeing across all channels and we haven't seen a marked change really across the board.

Maybe happy, maybe broadly unhappy or happy.

Instantly mildly unhappy.

Yeah, it continues to be a competitive marketplace.

Thank you.

You're welcome.

Thank you. Next question, please?

We go next to Mark Mahaney with RBC Capital Markets.

Thanks. Dara, you talked a little bit about the China outbound opportunity and Expedia is still part of that. Could you talk about how interesting of a market that is, call it in the next three to five years? Is that the largest outbound market that a global travel provider like Expedia is likely to look at and frame it as an opportunity for us? And then, just talk briefly about vacation rentals, any new updated thinking on that opportunity for Expedia? Thank you.

Sure. Sure. As far as just the sheer scale and the size of that market as an outbound market, it's one of the top markets for us and I think for any travel provider out there. I think that the Chinese customer is quite different in what they're looking for in their behavior and their device mix. So I think that it is a market that in general has been difficult to reach for Western companies. That doesn't make it impossible, but it has been difficult to reach for Western companies. And as a result, we see our exposure going forward being partially organic through the building up of some of the brands that we have there and then through partnership. Partnership with eLong and Ctrip in certain aspects of the business and then our EAN business going out and offering our global inventory, both on a standalone basis and on a package basis. And you can imagine that the Chinese outbound business is quite package-related and our ability to offer package inventory on a global basis with the kind of scope that we have has proven to be quite interesting to local Chinese travel providers and we see the partnership opportunities there already pretty strong and we think we've got a lot of runway ahead of us. So this is not a one-year thing. It's a multi-year thing. And we won't be competing as much as we had in the past for the local Chinese customer, but we are very much involved in both the Chinese outbound business and inbound business going into China as well. I think on vacation rentals, listen, I think we continue to test and learn. We have a partnership with HomeAway. We're expanding that partnership into Europe and we're testing and learning in certain European markets and we're very excited to do that because the vacation rental market tends to be quite strong in the European market, so we absolutely want to be there and we're happy to be there with the HomeAway team. I don't think that we've hit kind of on a magic bullet at this point, so we don't see the additional inventory at this point materially increasing our revenue per shopper, but we think the customer experience at this point isn't what it needs to be and we think we can materially improve the customer experience and we're hoping that will add to our customer satisfaction and also help our revenue per shopper. And we're working with HomeAway on that front and we'll look to bring in additional inventory as well.

Thank you, Dara.

You're welcome. Next question?

And we go next to Brian Fitzgerald with Jefferies. Please go ahead.

Thanks, guys. A couple questions, are there any near-term or long-term impacts on the business in your view from the recent rate parity changes in Europe, noting that they don't go into effect until August 1? And then, Dara, in terms of your comments around integration efforts with Wotif and the Venere consolidation, are all those fully bolted on or do you still have small tasks or tweaks you need to do in terms of getting them onto common platforms?

Yeah, I think as far as the near or long-term impacts from rate parity changes, I'd certainly say from a near-term standpoint, we don't see a change. The fact is that customers come to our site looking for the best availability and the best prices. Any hotelier is free to list on our sites as long as they treat our customers well, as long as they meet certain standards. And the hotel partners would give us the most attractive inventory both in terms of pricing and availability. Those partners are going to be the ones who do best because the customers are going to pick that inventory. It's as long as the customers can find cheaper prices and they can find great availability, they will tend to move towards those partners and we don't see that changing. It's happened for many, many years and we think it'll continue for many, many years. From a long-term perspective, we think this normal economic law will take care of itself. But I think it's too soon to make comments on the long-term. This is something that is new. We're comfortable with it and we'll look to manage it on a go-forward basis.

And, Brian, I'll just take the integration question. Wotif, Travelocity, Venere really all fall into this bucket. All of them are substantially complete with respect to the technology migration. Venere is now fully on the Hotels.com platform. Wotif, Travelocity is fully on the Brand Expedia platform. What's left to do there is really around the areas of marketing optimization largely. We've got to build a track record of performance on these websites in order to train our online marketing models, and there's also some back office type stuff. But I would think of them as substantially complete with optimization yet to come.

Great. Thanks, guys.

You're welcome. Next question?

We go next to Lloyd Walmsley with Deutsche Bank.

Thanks. Two if I may. First, just kind of big picture – in the markets where you're kind of coming in as a new entrant behind competitors already in the market at lower take rate, makes a lot of sense to move take rates lower to build supply in new markets. Just curious, can you talk about what's happening in the markets kind of where you are more established? How you feel take rates are progressing and where you think it will go in the future? And then, a second one, just on the supply growth in the quarter, it looked really strong. Curious how much of that came from the SynXis kind of 20,000 properties that they have versus some of those may have already been ones where you had a relationship – can you just give us a little color there?

Sure. As far as our take rates go, while every market is different, I would say the lowering of our take rates in general to both secure new inventory and secure better inventory for existing partners has been broad. So our take rates have come down in the U.S., they've come down in Europe, they've come down in Asia, whether we're a new entrant or not. And we don't necessarily see that changing. We've adjusted our business model to be able to reduce costs to our marketing partners while able to drive good economics for our shareholders, and that's our job and we feel comfortable that we can continue to deliver on that. As far as long-term position et cetera, it's very difficult to tell. The only thing that I know is that there's lots and lots of different distribution channels for supply partners on a global basis. And in order to continue to be competitive as a distribution partner you have to be good and you've got to be cheap. And I don't see that changing. And we're prepared for that world. We think we've been able to grow in that world and we're comfortable with it. As far as the supply growth going, the majority of the supply growth came from kind of call it organic acquisition. We have been investing in our market manager force pretty aggressively and that investment has led us to be able to go out and sign-up hotels on a direct basis. So I'd say the direct sign-ups have been the majority of the increase in supply growth. We had a bit of a nice bump from Wotif. Thank you for that team for bringing those hotels on board. And then we are also signing up hotels through some third parties, but that is the significant minority of the sign-ups that you saw at this point. We're hoping to accelerate it on a go-forward basis.

Great. Thanks a lot.

You're welcome. Next question?

Next to Heath Terry with Goldman Sachs. Heath P. Terry - Goldman Sachs & Co.: Great, thanks. Dara, just kind of curious, what would it take for international revenue growth to start to match up with hotel room night growth again? Is there just sort of a business model shift that has to be annualized through here or is there more to it than that?

Hey, Heath. It's Mark. I'll take that one. Really the big drivers for international revenue growth lagging room night growth so significantly are really two-fold. One is just the overall drag in revenue per room night we've seen, which is the biggest component, has been, or a substantial component, has been us taking down our hotel margins. That is a business model shift that'll work its way through over the course of the next few years. Over the course, though, of the last year or so particularly we have seen just a huge impact from foreign exchange and it's largely foreign exchange translation. And so, as we move to the end of Q4 and hopefully into next year, we would expect that to subside a bit as well. Heath P. Terry - Goldman Sachs & Co.: Okay. Great. Thank you.

All right. Thanks. Next question, please?

We'll go next to Michael Millman with Millman Research Associates. Please go ahead.

Thank you. Can you discuss Ryanair? Are they having any impact on trying to get everyone to follow their lead out of OTA or are we hearing more talk than actually what is going on? Where do you see that going in Europe and do you see any of that in the U.S.? And then I have another question.

Yeah, we haven't seen any significant effect from Ryanair. They're a very strong company. They tend to be vocal, but I don't think they're necessarily representative of the industry. We've got very strong long-term contracts with the vast majority of our air supply partners and I'd say that those relationships are getting stronger, not the other way around. One of the pretty important initiatives for us is to move from really just being a commodity provider of air product as far as just showing, call it, the lowest price and schedule, to becoming a value-added player in selling air. So if you look at our air product now, we have more content on the quality of the flights through a partnership with Routehappy and we are adding features such as branded fare, so that – while we will show you the lowest price, you can get some more flexibility. You might be able to get, be able to choose your seat, et cetera, and essentially sell in ancillary type revenue, which is very, very important revenue. If you follow the airline industry the airlines have done remarkably well with ancillary revenue. And we are building out features to be able to assist our airline partners in marketing those ancillary services and revenue such as seat choice, for example. So this is a really important initiative for us. We're seeing nice traction from our air partners and right now I'd say the relationships with the majority of our air partners are most definitely on the upswing.

So, this is in the U.S. and Europe?

This is on a worldwide basis.

Okay. And on U.S. rental cars, Hertz has just come back, it seems, in the market talking about how its fleet is down, and enterprise seems to have finished repositioning. I was wondering what effects you were seeing from these actions?

Well, I would say we're generally happy with our overall car business. As we said, great unit growth, we're innovating on the platform, car rental days were up 35% in the quarter. So we're seeing generally pretty good strength. We have seen little bits of incremental opaque inventory come back into Hotwire, which has been a great thing. But I can say no dramatic changes from quarter-to-quarter. We continue to be reasonably happy with what we see.

Are you seeing any changes in pricing?

What we're seeing on our side is relatively flat pricing.

Okay. Great. Thank you.

Okay. Thanks. Next question?

We go next to Ken Sena with Evercore ISI. Please go ahead.

Hi. Could you just maybe talk a little bit about Expedia and the cross-sell and maybe the package capabilities in tracking the new supply maybe versus price, and perhaps how Expedia, then I think from that perspective is a differentiator, I think as far as how you expand and maybe it's driving some of that growth? And then also if you could comment maybe a little bit more just on the traction that you're seeing within the loyalty program? That would be great. Thanks.

Sure. As far as cross-sell goes, we're very happy with our production in the cross-sell area. We measure the percentage of Expedia bookers who buy more than one item for us, bundle item for us, and that number has been consistently increasing over a period of time and it allows a couple things. One is, it often allows us to deliver a discount to the consumer by buying multiple products in one purchase. It's like your cable bundle. You buy your internet and your phone service, and your TV service together, you get a discount. We are offering the internet bundle for online travel and consumers are increasingly taking advantage of it, and they're taking advantage of the discounts there. From a supply partner basis, it also helps and that these transactions tend to be longer dated transactions, so that the supplier can kind of fill up their window, their inventory on a long data basis and they carry with them lower cancellation rates because the consumer was booking multiple things, multiple items, typically is a more committed consumer as well. So, it's proven to be a great value proposition for our consumers. It's a differentiator versus the other standalone players out there, and it's a nice differentiator for our hotel and air partners as well. It's been a nice win-win and that business continues to track along well. I think a coming benefit in that area is going to be our increasingly merchandising mobile offerings to consumers while they're on their trip. So you can imagine that if you've gone to – we know that you've flown into New Orleans, and you download the Expedia app, we can offer you activities in New Orleans. If you got to the airport and don't have a ride, we can offer you…

Great. Thank you.

You're welcome. Next question?

Next to Ron Josey with JMP Securities. Please go ahead.

Great. Thanks for taking the questions. I wanted to follow-up quickly just on margins. I think Dara you said we are at the longer-term process, but where are you in the process in terms of having these commissions in those markets come down? Are they down enough, or is there still room to go? And then, I guess the real question is around reviews. I think, Dara, you mentioned reviews, real-time reviews, hotels are using them to improve the quality of stays. Can you just talk about the importance of hotel reviews to Expedia, just noticing trivago highlight that in some commercials? Thank you.

Thanks Ron, it's Mark. I'll take the first one and then I'll turn it to Dara for the second one. With respect to margins, listen, what we're doing is essentially bringing our margins around the globe down to what we would say our sort of market parity type locally appropriately – locally appropriate margins. We've been at it for, I would say, the better part of 2.5 years to 3 years. We're going to continue to make adjustments through the end of 2015 and could slip into 2016 before we see ourselves really at parity or where we want to get to. And then you've got to annualize those. So, I think you are into 2017 nicely before you see the revenue per room night pressure from the deliberate margin actions recede. Dara, you want to take the reviews?

Yeah, as far as reviews goes, it's a very important factor in our travelers' decision as to which hotel they pick, second only to pictures I believe. So we are very actively continuing to collect more reviews on our hotels. Our higher-rated hotels tend to do best in the Expedia marketplace, so I think there is a nice incentive for hoteliers to make sure that the Expedia or Hotels.com customer gets a good – gets treated well because not only do those hotels perform better in the marketplace but then over 50 million, 60 million other consumers are reading those reviews as well, so it's very important to treat those customers well. The value that we bring with real-time reviews is that, if you look at our reviews in the past, the customer value for those reviews was that they were all real reviews, right? You knew that a customer stayed at that hotel, they're 100% dependable. We got some complaints from some hoteliers saying, listen I wish I knew about this customer's poor experience. I wish I could do something about a review other than comment, I'm sorry about your experience. So now with real-time reviews, we are asking the customer when they are in the market how the experience was. We are then sending the comments from those consumers either good or bad. We will highlight the bad because you can do something about it to our hotel partners through our Expedia partner tool, which by the way is going mobile as well so that if someone didn't like the room, if someone didn't like their view, if someone did not have towels in their room, the hotelier can do something about it on a real-time basis. And you can imagine that being just a delightful experience if the hotelier does something about it without a complaint coming directly. So we think it's a great tool for hoteliers and we think it could be a terrific experience for our consumers as well. It's early innings, but we're pretty excited about it.

Super helpful. Thank you.

Sure. Next question?

We go next to Jed Kelly with Oppenheimer. Jed Kelly - Oppenheimer & Co., Inc. (Broker): Thanks for taking my questions. Elimination as a percentage of trivago revenue decline sequentially. Is this a big function of the auction becoming more competitive or are there other factors you can point to?

Sure, Jed. Well, I would say it's up and down quarter-to-quarter based upon competitive factors. I would say the trivago auction is competitive, has always been competitive. Some of this also can be influenced by the geographic mix because foreign exchange is a big factor here and we did see probably a higher portion of international business that had a higher portion of essentially FX headwinds against it in the quarter. Jed Kelly - Oppenheimer & Co., Inc. (Broker): Thank you.

You're welcome. Next question please.

We go next to Kevin Kopelman with Cowen and Company.

Thanks. First, could you just give us any more color on your marketing plans for the second half? You said you're reinvesting some of the upside from Q2. Should we expect kind of the levels of advertising spend to accelerate or will it be around the same as what you spent in the first half?

Sure, Kevin. So we do plan to step on the gas in sales and marketing in the second quarter, particularly in the third quarter, which is a pretty important one for us. We also had in June some spend that we held back on and shifted into Q3. So, I would expect levels to be elevated through the back part of the year, and I think it's a good factor to keep in mind as people are shaping their models.

Kevin, I'd also add that, we don't know how much we are going to spend for the majority of our marketing spend going into a quarter, right? The majority of our marketing spend are essentially it's variable spend. We don't know how competitive the auction is going to be and essentially in some of those marketing channels, the more we spend the better, because we are acquiring more new customers as long as you can do it in a competitive manner. So, when we talk about shifting marketing spend, that's for plan spend, that tends to be offline. And then things can change pretty darn materially, when we are in quarter, and I think our teams have handled it well and they operate within kind of their efficiency formula, so to speak, but marketing spend is not something that we necessarily want to keep predictable one way or the other. We're really about the core economics and we're not about the quarter.

That's great. Thank you very much.

You're welcome. Next question?

We go next to Eric Sheridan with UBS.

Okay. Thanks for taking the question. Dara, I was really interested in your comment around Travelocity that as you are coming up on anniversarying the deal, you are seeing continued strength in the property, and then maybe going forward the property could even be stronger than you thought. So in terms of how you are thinking about properties like that that you bought, what are you seeing in Travelocity? How should we think about the tail for growth that's potential of a Travelocity? And how much of that has to do with marketing spend and how much has to do with integrating it into the tech platform that you guys spent a number of years investing in? Thanks.

Thanks, Eric. I think it goes to what Mark was talking about as far as the Wotif integration, the first benefit that we got from the Travelocity integration was higher conversion, because Travelocity was able to piggyback off of a substantial investment that we made on the Brand Expedia platform. There's a second benefit that it got, which is cost efficiency. We didn't have to carry a bunch of secondary cost building out features that had already been built up, probably in a better way. So those two come pretty quickly. And then the teams start optimizing on the marketing side in various marketing channels, and at that point they've got to burn in a bunch of algorithms and a bunch of decisions that have to be made, one, based on the conversion of that site in various channels and two, based on the lifetime value of its customer base. And those factors, while conversion has improved, the conversion of a Travelocity customer, let's say, in the trivago marketplace and the lifetime of value there is going to be different than Expedia. It's going to be different from Hotels.com. So you start moving through a period of optimization in these marketing channels, and I would say it takes a good six months, if not more, for you to start getting these marketing channels to work in the way that they should. And then, if you have a good site, if you've got good marketing, if you've got a great brand, which you see with Travelocity, you tend to have an entity that can grow. And that's what we're seeing with Travelocity. The thing that I would add is that we don't take 100% of those savings to the bottom line. We take some of the savings on overhead and we re-apply them into the brand. So if you look at the Travelocity brand spend this year versus last year, it will be up. We think that's a good thing. And we think the combination of better conversion, better, variable marketing, higher brand spend, that's a formula that you need to grow a business, and our intention with Travelocity is to grow the business. It's been a year. We hope we can do it for multiple years.

Great. Thank you.

You're welcome. Next question?

We'll go next to Brian Nowak with Morgan Stanley. Brian Nowak - Morgan Stanley & Co. LLC: Thanks for taking my questions. Just to go back to the Travelocity one for a second, it sounds like the business is really humming along. Any help at all on how many points Travelocity added to the domestic room night growth this quarter? And how should we think about it, Dara, as you kind of continue to experiment on the advertising side and kind of get more efficient in the Travelocity marketing channels going forward? And then the second one, the CapEx was pretty high, I think it was about $366 million. I think that's more than you guys spent in all of 2014. What are the major areas you're investing in, and how should we think about that flowing through tech and content for the rest of the year?

Sure, Brian. I'll sort of deal with the Travelocity question. It is doing well. We did start to lap over the hotel revenue side of that business in Q2. As a reminder, we started lapping over essentially the gross bookings part of it in the beginning of the year and then revenue lags, and that cleaned out in the back part of the second quarter. So there was some impact, but it's in and around call it the 100 bp type of range. It's not a very significant number for us. We think it can continue to grow quite nicely as we optimize the sales and marketing spend. With respect to CapEx, the biggest thing this quarter was the closing of our transactions for the new Seattle headquarters. And that was a number that hit CapEx pretty significantly. With respect to the rest of it which is largely capitalized software development, I would say just look at the past for a decent predictor of what to expect into the future and just specifically on the real estate purchase is about $229 million of that CapEx was just for that. Okay, next question please.

Next to Dan Wasiolek with Morningstar. Please go ahead.

Hi, guys. Thanks for taking the question. So you guys have been quite active the last several months with expanded partnerships and acquisitions. At this point, are there particular regions or verticals within in the travel industry that you would like to strengthen either through partnership or acquisition? Or at this point are you guys kind of comfortable with your current portfolio and growing organically from here? Thank you.

Hi, I think for the time being, we've got plenty on our plates. We are going to be opportunistic and I'd say especially outside the U.S., we think we have potential. We want our revenue outside the U.S. to be bigger than our revenue in the U.S. So I think to the extent we look for partnerships or acquisitions, it would tend to be outside the U.S. and we think we certainly have our plates full here and we have plenty of work ahead of us for the next couple of months.

Makes sense. Thank you.

You're welcome. Next question.

And at this time, there are no further – I'm sorry, please go ahead there are no further questions.

Thank you. So thank you very much for joining us this quarter. Really good work to the Expedia Inc. team and let's keep it up, the year ain't over. And to our investors, we look forward to talking to you next quarter. Thank you.

Thank you.