SC TO-I/A

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

Amendment No. 1 to

Schedule TO

Tender Offer Statement under Section

14(d)(1) or 13(e)(1) of the Securities Exchange Act of 1934

Expedia, Inc.

(Name of Subject Company (Issuer))

Expedia, Inc.

(Name of Filing Person (Offeror/Issuer))

Common Stock, Par Value $.001 Per Share

(Title of Class of Securities)

30212P105

(CUSIP Number of Class of Securities)

Burke F. Norton, Esq.

Executive Vice President, General Counsel and Secretary

Expedia, Inc.

3150 139th Avenue S.E.

Bellevue, WA 98005

Telephone: (425) 679-7200

(Name, Address and Telephone Number of Person Authorized

to Receive Notices and Communications on Behalf of Filing Persons)

Copy to:

Pamela S. Seymon, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Telephone: (212) 403-1000

CALCULATION OF FILING FEE

Transaction Valuation*	Amount of Filing Fee**
$3,499,999,950	$	107,450

*	Calculated solely for purposes of determining the amount of the filing fee. Pursuant to Rule 0-11(b)(1) of the Securities Exchange Act of 1934, as amended, the Transaction Valuation was calculated assuming that 116,666,665 outstanding shares of common stock, par value $.001 per share, are being purchased at the maximum possible tender offer price of $30.00 per share.
**	The amount of the filing fee, calculated in accordance with Rule 0-11(b)(1) of the Securities Exchange Act of 1934, as amended, equals $30.70 per million of the value of the transaction.
þ	Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

Amount Previously Paid: $107,450	Filing Party: Expedia, Inc.
Form or Registration No.: Schedule TO	Date Filed: June 29, 2007

o Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which the statement relates:

o third-party tender offer subject to Rule 14d-1.

þ issuer tender offer subject to Rule 13e-4.

o going-private transaction subject to Rule 13e-3.

o amendment to Schedule 13D under Rule 13d-2.

Check the following box if the filing is a final amendment reporting the results of the tender offer: o

Amendment No. 1 to Schedule TO

     This Amendment No. 1 amends and supplements the Tender Offer Statement on Schedule TO originally filed with the Securities and Exchange Commission on June 29, 2007 (the “Schedule TO”) by Expedia, Inc., a Delaware corporation (“Expedia”), relating to the offer to purchase for cash up to 116,666,665 shares of Expedia’s common stock, par value $.001 per share (“Shares”), or such lesser number of Shares as is properly tendered and not properly withdrawn, at a price determined by Expedia of not more than $30.00 nor less than $27.50 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the offer to purchase, dated June 29, 2007 (the “Offer to Purchase”), and the related letter of transmittal (the “Letter of Transmittal”), which together, as each may be amended or supplemented from time to time, constitute the “Offer.” This Amendment No. 1 is intended to satisfy the reporting requirements of Rule 13e-4(c)(3) of the Securities Exchange Act of 1934, as amended. Copies of the Offer to Purchase and the related Letter of Transmittal were previously filed with the Schedule TO as Exhibits (a)(1)(A) and (a)(1)(B), respectively.

     The information in the Offer is incorporated in this Amendment No. 1 to the Schedule TO by reference in response to all of the applicable items in the Schedule TO, except that such information is hereby amended and supplemented to the extent specifically provided herein.

ITEM 12. EXHIBITS.

     Item 12 of the Schedule TO is hereby amended and restated, as follows:

(a)(1)(A)	Offer to Purchase, dated June 29, 2007(14)
(a)(1)(B)	Letter of Transmittal(14)
(a)(1)(C)	Notice of Guaranteed Delivery(14)
(a)(1)(D)	Letter to brokers, dealers, commercial banks, trust companies and other nominees, dated June 29, 2007(14)
(a)(1)(E)	Letter to clients for use by brokers, dealers, commercial banks, trust companies and other nominees, dated June 29, 2007(14)
(a)(1)(F)	Letter from the Trustee of the Expedia Retirement Savings Plan to plan participants, dated June 29, 2007(14)
(a)(1)(G)	Direction Form for participants in the Expedia Retirement Savings Plan(14)
(a)(2)	Not applicable
(a)(3)	Not applicable
(a)(4)	Not applicable
(a)(5)(A)	Summary Advertisement, dated June 29, 2007(14)
(a)(5)(B)	Letter from Dara Khosrowshahi, Chief Executive Officer of Expedia, Inc., to stockholders of Expedia, Inc., dated June 29, 2007(14)
(a)(5)(C)	Press release, dated June 19, 2007(1)
(a)(5)(D)	Letter to Warrant and Series A Cumulative Convertible Preferred Stock Holders, dated June 29, 2007(14)
(a)(5)(E)	Email Message from Dara Khosrowshahi, Chief Executive Officer of Expedia, Inc., to employees of Expedia, Inc., dated June 29, 2007, and Employee Frequently Asked Questions Regarding the Tender Offer
(b)(1)	Credit Agreement dated as of July 8, 2005, among Expedia, Inc., a Delaware corporation, Expedia, Inc., a Washington corporation, Travelscape, Inc., a Nevada corporation, Hotels.com, a Delaware corporation, and Hotwire, Inc., a Delaware corporation, as Borrowers; the Lenders party thereto; Bank of America, N.A., as Syndication Agent; Wachovia Bank, N.A. and The Royal Bank of Scotland PLC, as Co-Documentation Agents; JPMorgan Chase Bank, N.A., as Administrative Agent; and J.P. Morgan Europe Limited, as London Agent(2)
(b)(2)	First Amendment, dated as of December 7, 2006, to the Credit Agreement dated as of July 8, 2005, among Expedia, Inc., a Delaware corporation; Expedia, Inc., a Washington corporation; Travelscape LLC, a Nevada limited liability company; Hotels.com, a Delaware corporation; Hotwire, Inc., a Delaware corporation; the other Borrowing Subsidiaries from time to time party thereto; the Lenders from time to time party thereto; JPMorgan Chase Bank, N.A., as Administrative Agent; and J.P. Morgan Europe Limited, as London Agent(3)

(b)(3)	Second Amendment, dated as of December 18, 2006, to the Credit Agreement dated as of July 8, 2005, among Expedia, Inc., a Delaware corporation; Expedia, Inc., a Washington corporation; Travelscape LLC, a Nevada limited liability company; Hotels.com, a Delaware corporation; Hotwire, Inc., a Delaware corporation; the other Borrowing Subsidiaries from time to time party thereto; the Lenders from time to time party thereto; JPMorgan Chase Bank, N.A., as Administrative Agent; and J.P. Morgan Europe Limited, as London Agent(4)
(d)(1)	Expedia, Inc. Non-Employee Director Deferred Compensation Plan(5)
(d)(2)	Expedia, Inc. 2005 Stock and Annual Incentive Plan(6)
(d)(3)	Summary of Expedia, Inc. Non-Employee Director Compensation Arrangements(7)
(d)(4)	Stockholders Agreement between Liberty Media Corporation and Barry Diller, dated as of August 9, 2005(8)
(d)(5)	Governance Agreement, by and among Expedia, Inc., Liberty Media Corporation and Barry Diller, dated as of August 9, 2005(8)
(d)(6)	First Amendment to Governance Agreement, by and among Expedia, Inc., Liberty Media Corporation and Barry Diller, dated as of June 19, 2007(1)
(d)(7)	Separation Agreement, dated as of August 9, 2005, by and between IAC/InterActiveCorp and Expedia, Inc.(8)
(d)(8)	Tax Sharing Agreement dated as of August 9, 2005, by and between IAC/InterActiveCorp and Expedia, Inc.(8)
(d)(9)	Form of Expedia, Inc. Restricted Stock Unit Agreement (directors)(8)
(d)(10)	Expedia, Inc. Executive Deferred Compensation Plan, effective as of August 9, 2005(9)
(d)(11)	Expedia, Inc. Restricted Stock Unit Agreement between Expedia, Inc. and Dara Khosrowshahi, dated as of March 7, 2006(10)
(d)(12)	Employment Agreement by and between Michael B. Adler and Expedia, Inc., effective as of May 16, 2006(11)
(d)(13)	Expedia, Inc. Restricted Stock Unit Agreement between Expedia, Inc. and Michael B. Adler, effective as of May 16, 2006(11)
(d)(14)	Employment Agreement by and between Burke F. Norton and Expedia, Inc., effective as of October 25, 2006(11)
(d)(15)	Expedia, Inc., Restricted Stock Unit Agreement (First Agreement) between Expedia, Inc. and Burke F. Norton, dated as of October 25, 2006(11)
(d)(16)	Expedia, Inc. Restricted Stock Unit Agreement (Second Agreement) between Expedia, Inc. and Burke F. Norton, dated as of October 25, 2006(11)
(d)(17)	Form of Expedia, Inc. Restricted Stock Unit Agreement (domestic employees)(11)

(d)(18)	Equity Warrant Agreement for Warrants to Purchase up to 14,590,514 Shares of Common Stock expiring February 4, 2009, between Expedia, Inc. and The Bank of New York, as Equity Warrant Agent, dated as of August 9, 2005(12)
(d)(19)	Stockholder Equity Warrant Agreement for Warrants to Purchase up to 11,450,182 Shares of Common Stock, between Expedia, Inc. and Mellon Investor Services LLC, as Equity Warrant Agent, dated as of August 9, 2005(12)
(d)(20)	Optionholder Equity Warrant Agreement for Warrants to Purchase up to 1,558,651 Shares of Common Stock, between Expedia, Inc. and Mellon Investor Services LLC, as Equity Warrant Agent, dated as of August 9, 2005(12)
(d)(21)	Indenture, dated as of August 21, 2006, among Expedia, Inc., as Issuer, the Subsidiary Guarantors from time to time parties thereto, and The Bank of New York Trust Company, N.A., as Trustee, relating to Expedia, Inc.’s 7.456% Senior Notes due 2018(11)
(d)(22)	First Supplemental Indenture, dated as of January 19, 2007, to Indenture, dated as of August 21, 2006, by and among Expedia, Inc., certain Subsidiary Guarantors (as defined therein) and The Bank of New York Trust Company, N.A., as Trustee(13)
(d)(23)	Amended and Restated Expedia, Inc. Retirement Savings Plan(14)
(d)(24)	First Amendment to Expedia, Inc. Retirement Savings Plan(14)
(d)(25)	Trust Agreement between Expedia, Inc. and Fidelity Management Trust Company, dated as of August 15, 2005, relating to the Expedia Retirement Savings Plan(3)
(g)	Not applicable
(h)	Not applicable

(1)	Incorporated by reference to Expedia, Inc.’s Current Report on Form 8-K filed on June 19, 2007
(2)	Incorporated by reference to Expedia, Inc.’s Current Report on Form 8-K filed on July 14, 2005
(3)	Incorporated by reference to Expedia, Inc.’s Tender Offer Statement on Schedule TO (File No. 005-80395) filed on December 11, 2006
(4)	Incorporated by reference to Expedia, Inc.’s Amendment No. 3 to Tender Offer Statement on Schedule TO (File No. 005-80395) filed on December 22, 2006
(5)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form S-4/A (File No. 333-124303-01) filed on June 13, 2005
(6)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form S-8 (File No. 333-127324) filed on August 9, 2005

(7)	Incorporated by reference to Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007
(8)	Incorporated by reference to Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005
(9)	Incorporated by reference to Expedia, Inc.’s Current Report on Form 8-K filed on December 20, 2005
(10)	Incorporated by reference to Expedia, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005
(11)	Incorporated by reference to Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006
(12)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form 8-A/A filed on August 22, 2005
(13)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form S-4 (File No. 333-140195) filed on January 25, 2007
(14)	Previously filed with Expedia, Inc.’s Tender Offer Statement on Schedule TO filed on June 29, 2007

SIGNATURE

     After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

EXPEDIA, INC.
By:	/s/	Burke F. Norton
	Name:	Burke F. Norton
	Title:	Executive Vice President,
		General Counsel & Secretary

Dated: June 29, 2007

EXHIBIT INDEX

(a)(1)(A)	Offer to Purchase, dated June 29, 2007(14)
(a)(1)(B)	Letter of Transmittal(14)
(a)(1)(C)	Notice of Guaranteed Delivery(14)
(a)(1)(D)	Letter to brokers, dealers, commercial banks, trust companies and other nominees, dated June 29, 2007(14)
(a)(1)(E)	Letter to clients for use by brokers, dealers, commercial banks, trust companies and other nominees, dated June 29, 2007(14)
(a)(1)(F)	Letter from the Trustee of the Expedia Retirement Savings Plan to plan participants, dated June 29, 2007(14)
(a)(1)(G)	Direction Form for participants in the Expedia Retirement Savings Plan(14)
(a)(2)	Not applicable
(a)(3)	Not applicable
(a)(4)	Not applicable
(a)(5)(A)	Summary Advertisement, dated June 29, 2007(14)
(a)(5)(B)	Letter from Dara Khosrowshahi, Chief Executive Officer of Expedia, Inc., to stockholders of Expedia, Inc., dated June 29, 2007(14)
(a)(5)(C)	Press release, dated June 19, 2007(1)
(a)(5)(D)	Letter to Warrant and Series A Cumulative Convertible Preferred Stock Holders, dated June 29, 2007(14)
(a)(5)(E)	Email Message from Dara Khosrowshahi, Chief Executive Officer of Expedia, Inc., to employees of Expedia, Inc., dated June 29, 2007, and Employee Frequently Asked Questions Regarding the Tender Offer
(b)(1)	Credit Agreement dated as of July 8, 2005, among Expedia, Inc., a Delaware corporation, Expedia, Inc., a Washington corporation, Travelscape, Inc., a Nevada corporation, Hotels.com, a Delaware corporation, and Hotwire, Inc., a Delaware corporation, as Borrowers; the Lenders party thereto; Bank of America, N.A., as Syndication Agent; Wachovia Bank, N.A. and The Royal Bank of Scotland PLC, as Co-Documentation Agents; JPMorgan Chase Bank, N.A., as Administrative Agent; and J.P. Morgan Europe Limited, as London Agent(2)
(b)(2)	First Amendment, dated as of December 7, 2006, to the Credit Agreement dated as of July 8, 2005, among Expedia, Inc., a Delaware corporation; Expedia, Inc., a Washington corporation; Travelscape LLC, a Nevada limited liability company; Hotels.com, a Delaware corporation; Hotwire, Inc., a Delaware corporation; the other Borrowing Subsidiaries from time to time party thereto; the Lenders from time to time party thereto; JPMorgan Chase Bank, N.A., as Administrative Agent; and J.P. Morgan Europe Limited, as London Agent(3)

(b)(3)	Second Amendment, dated as of December 18, 2006, to the Credit Agreement dated as of July 8, 2005, among Expedia, Inc., a Delaware corporation; Expedia, Inc., a Washington corporation; Travelscape LLC, a Nevada limited liability company; Hotels.com, a Delaware corporation; Hotwire, Inc., a Delaware corporation; the other Borrowing Subsidiaries from time to time party thereto; the Lenders from time to time party thereto; JPMorgan Chase Bank, N.A., as Administrative Agent; and J.P. Morgan Europe Limited, as London Agent(4)
(d)(1)	Expedia, Inc. Non-Employee Director Deferred Compensation Plan(5)
(d)(2)	Expedia, Inc. 2005 Stock and Annual Incentive Plan(6)
(d)(3)	Summary of Expedia, Inc. Non-Employee Director Compensation Arrangements(7)
(d)(4)	Stockholders Agreement between Liberty Media Corporation and Barry Diller, dated as of August 9, 2005(8)
(d)(5)	Governance Agreement, by and among Expedia, Inc., Liberty Media Corporation and Barry Diller, dated as of August 9, 2005(8)
(d)(6)	First Amendment to Governance Agreement, by and among Expedia, Inc., Liberty Media Corporation and Barry Diller, dated as of June 19, 2007(1)
(d)(7)	Separation Agreement, dated as of August 9, 2005, by and between IAC/InterActiveCorp and Expedia, Inc.(8)
(d)(8)	Tax Sharing Agreement dated as of August 9, 2005, by and between IAC/InterActiveCorp and Expedia, Inc.(8)
(d)(9)	Form of Expedia, Inc. Restricted Stock Unit Agreement (directors)(8)
(d)(10)	Expedia, Inc. Executive Deferred Compensation Plan, effective as of August 9, 2005(9)
(d)(11)	Expedia, Inc. Restricted Stock Unit Agreement between Expedia, Inc. and Dara Khosrowshahi, dated as of March 7, 2006(10)
(d)(12)	Employment Agreement by and between Michael B. Adler and Expedia, Inc., effective as of May 16, 2006(11)
(d)(13)	Expedia, Inc. Restricted Stock Unit Agreement between Expedia, Inc. and Michael B. Adler, effective as of May 16, 2006(11)
(d)(14)	Employment Agreement by and between Burke F. Norton and Expedia, Inc., effective as of October 25, 2006(11)
(d)(15)	Expedia, Inc., Restricted Stock Unit Agreement (First Agreement) between Expedia, Inc. and Burke F. Norton, dated as of October 25, 2006(11)
(d)(16)	Expedia, Inc. Restricted Stock Unit Agreement (Second Agreement) between Expedia, Inc. and Burke F. Norton, dated as of October 25, 2006(11)
(d)(17)	Form of Expedia, Inc. Restricted Stock Unit Agreement (domestic employees)(11)

(d)(18)	Equity Warrant Agreement for Warrants to Purchase up to 14,590,514 Shares of Common Stock expiring February 4, 2009, between Expedia, Inc. and The Bank of New York, as Equity Warrant Agent, dated as of August 9, 2005(12)
(d)(19)	Stockholder Equity Warrant Agreement for Warrants to Purchase up to 11,450,182 Shares of Common Stock, between Expedia, Inc. and Mellon Investor Services LLC, as Equity Warrant Agent, dated as of August 9, 2005(12)
(d)(20)	Optionholder Equity Warrant Agreement for Warrants to Purchase up to 1,558,651 Shares of Common Stock, between Expedia, Inc. and Mellon Investor Services LLC, as Equity Warrant Agent, dated as of August 9, 2005(12)
(d)(21)	Indenture, dated as of August 21, 2006, among Expedia, Inc., as Issuer, the Subsidiary Guarantors from time to time parties thereto, and The Bank of New York Trust Company, N.A., as Trustee, relating to Expedia, Inc.’s 7.456% Senior Notes due 2018(11)
(d)(22)	First Supplemental Indenture, dated as of January 19, 2007, to Indenture, dated as of August 21, 2006, by and among Expedia, Inc., certain Subsidiary Guarantors (as defined therein) and The Bank of New York Trust Company, N.A., as Trustee(13)
(d)(23)	Amended and Restated Expedia, Inc. Retirement Savings Plan(14)
(d)(24)	First Amendment to Expedia, Inc. Retirement Savings Plan(14)
(d)(25)	Trust Agreement between Expedia, Inc. and Fidelity Management Trust Company, dated as of August 15, 2005, relating to the Expedia Retirement Savings Plan(3)
(g)	Not applicable
(h)	Not applicable

(1)	Incorporated by reference to Expedia, Inc.’s Current Report on Form 8-K filed on June 19, 2007
(2)	Incorporated by reference to Expedia, Inc.’s Current Report on Form 8-K filed on July 14, 2005
(3)	Incorporated by reference to Expedia, Inc.’s Tender Offer Statement on Schedule TO (File No. 005-80395) filed on December 11, 2006
(4)	Incorporated by reference to Expedia, Inc.’s Amendment No. 3 to Tender Offer Statement on Schedule TO (File No. 005-80395) filed on December 22, 2006
(5)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form S-4/A (File No. 333-124303-01) filed on June 13, 2005
(6)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form S-8 (File No. 333-127324) filed on August 9, 2005

(7)	Incorporated by reference to Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007
(8)	Incorporated by reference to Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005
(9)	Incorporated by reference to Expedia, Inc.’s Current Report on Form 8-K filed on December 20, 2005
(10)	Incorporated by reference to Expedia, Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005
(11)	Incorporated by reference to Expedia, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2006
(12)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form 8-A/A filed on August 22, 2005
(13)	Incorporated by reference to Expedia, Inc.’s Registration Statement on Form S-4 (File No. 333-140195) filed on January 25, 2007
(14)	Previously filed with Expedia, Inc.’s Tender Offer Statement on Schedule TO filed on June 29, 2007

EX-99.(A)(5)(E)

Exhibit (a)(5)(E)

Team Expedia:

Today we officially launched our tender offer for up to 116.7 million shares of our common stock at a price between $27.50 and $30 a share. In other words, we could repurchase up to $3.5 billion of our own stock. We filed the tender offer materials, which provide plenty of information regarding the specifics of the tender offer http://www.sec.gov/Archives/edgar/data/1324424/000089102007000187/v31477orexv99wxayx1yxay.htm, but I also wanted to address some questions that employees have asked me during the past week.

1. Why are we doing this? We launched the tender offer because we are long-term believers in our company. We are lucky enough to have a company that generates a significant amount of cash, and part of our job as management, in addition to growing the core businesses, is to work with the Expedia Board to determine the best use of our cash flow — where to invest it and what to do with it. We constantly look at outside investment opportunities, but we believe that investment in our own stock is a great use of capital at this time.

2. How will we finance the repurchase? I ask Mike Adler this all the time. :-) We are still finalizing our financing plans, but we currently expect that we will borrow all or a portion of the purchase price from banks or that we will issue long-term debt securities. We may also fund a portion of the stock repurchase with cash on hand.

3. Will we continue to invest in our business? Yes. We believe that we have and will continue to have plenty of free cash flow to cover the anticipated annual interest cost of the debt, and to be able to pay down a portion of our debt as well (or use the capital in some other way). We will need to ensure that we bring the appropriate rigor and discipline to investment decisions. And we of course must continue to focus on opportunities to increase productivity and efficiency, which is the best way to fund investments. The additional debt that we will incur will reduce the margin of error that we have as a company. We are raising the stakes and it’s up to us and only us to focus and make sure that we have made the right call.

4. What about the rumors of an LBO, a TripAdvisor spin-off and layoffs? As we’ve said before, these are merely rumors. I can’t speak to anything that we might contemplate down the road, but at this time, we are operating as a public company, we have TripAdvisor firmly in the fold, and no 400-person layoff coming down the pike.

There are many other questions answered in the attached FAQ — it’s your effort and passion that has made all these opportunities possible and I thank you for that. Let’s keep it up!

Dara

     This email is for informational purposes only and is not an offer to purchase or the solicitation of an offer to sell any shares of the company’s common stock. The solicitation and offer to purchase the company’s common stock will only be made pursuant to the Offer to Purchase and related materials that the company will send to its stockholders. Stockholders should read those materials carefully because they will contain important information, including the various terms and conditions of the tender offer. Stockholders will be able to obtain copies of the Offer to Purchase, related materials filed by the company as part of the statement on Schedule “TO” and other documents filed with the Securities and Exchange Commission (“SEC”) through the SEC’s internet address at http://www.sec.gov without charge when these documents become available. Stockholders and investors may also obtain a copy of these documents, as well as any other documents the company has filed with the SEC, without charge, from the company or at the Investor Relations section of the company’s website: www.expediainc.com. Stockholders are urged to carefully read these materials prior to making any decision with respect to the offer.

ATTACHMENT TO E-MAIL

EXPEDIA, INC.

EMPLOYEE FREQUENTLY ASKED QUESTIONS

REGARDING THE TENDER OFFER

What action is Expedia taking?	The company is offering to repurchase up to 116,666,665 shares of its common stock at a price per share not less than $27.50 and not greater than $30.00. The tender offer commenced on June 29, 2007 and will end, unless extended, at 5:00 p.m., New York City time, on August 8, 2007. The company’s obligation to purchase shares in the tender offer is subject to conditions, including the receipt of financing, described in the tender offer documents.
What will the purchase price for the shares be?	Expedia is offering to repurchase shares through a modified “Dutch auction.” This means the purchase price will be the lowest price at which, based on the number of shares tendered and the prices specified by the tendering stockholders, Expedia is able to purchase 116,666,665 shares, or such fewer number of shares as are properly tendered and not properly withdrawn prior to the expiration date. The purchase price will not be greater than $30.00 nor less than $27.50 per share. Expedia will pay this purchase price in cash, without interest, for all the shares purchased under the tender offer, even if some of the shares are tendered at a price below the purchase price.
Can employees participate in the tender offer?	Employees who are stockholders can participate in the tender offer, except for our executive officers who have advised the company that they do not intend to participate in the tender offer.
Has Expedia or the Board of Directors adopted a position on the tender offer?	Our Board of Directors has approved the tender offer. However, neither management nor the Board of Directors has made any recommendation to stockholders, including employees, as to whether they should tender or refrain from tendering their shares or as to the price or prices at which they may choose to tender their shares. You must make your own decision

	as to whether to tender your shares and, if so, how many shares to tender and the price or prices at which you choose to tender your shares. In so doing, you should read carefully the information in the offer to purchase and in the letter of transmittal, including the company’s reasons for making the tender offer. Expedia’s directors and executive officers and Liberty Media Corporation have advised the company that they do not intend to tender any shares in the tender offer.
Why is the Company making the tender offer?	Expedia believes that the tender offer, together with an increase in Expedia’s indebtedness, is a prudent use of its financial resources given its business profile, cash flow, capital structure, assets, the current market price of the shares and the terms on which corporate credit currently is generally available in the credit markets, and that investing in its own shares is an attractive use of capital and an efficient and effective means to provide value to its stockholders, including by lowering the company’s weighted average cost of capital. The tender offer represents the opportunity for Expedia to return cash to stockholders who elect to tender their shares, while at the same time increasing non-tendering stockholders’ proportionate interest in Expedia.
Following the tender offer, will Expedia continue as a public company?	Yes. The completion of the tender offer in accordance with its terms and conditions will not cause Expedia’s shares to cease to be listed on Nasdaq or to stop Expedia being subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended.
How do I tender my shares?	The tender offer will expire at 5:00 p.m., New York City time, on Wednesday, August 8, 2007, unless Expedia extends the tender offer. All stockholders will be mailed information beginning on or about Monday, July 2, 2007. Information also can be obtained by contacting MacKenzie Partners, Inc., the company’s information agent, at 1-800-322-2885 (United States and Canada) or +212-929-5500 (all other countries). If you hold your stock in a brokerage account you should contact your broker. Participants in the company’s

	401(k) plan who hold stock in Expedia will receive a communication directly from Fidelity Investments. If you hold stock both individually (including through a brokerage account) and through the company’s 401(k) plan and you decide to tender shares held in both manners, you will need to take separate actions as to these shares.
What do I do if I do not want to participate in the tender offer?	If you do not wish to participate in the tender offer, you do not need to take any action.
Can I participate in the tender offer if I hold shares through the Expedia Retirement Savings Plan?	Yes. Participants in the Expedia Retirement Savings Plan (i.e. the 401(k) plan) who hold shares of Expedia in their accounts will receive instruction forms which they may use to direct the trustee for the plan to tender eligible shares held through their accounts.
How do holders of stock options for shares participate in the tender offer?	The tender offer only applies to issued shares of Expedia common stock, therefore stock options may not be tendered. However, if you hold vested but unexercised options, you may exercise such options in accordance with the terms of the applicable stock option plans and tender the shares received upon such exercise in accordance with this tender offer.
	Employees should note that an exercise of a stock option may not be revoked even if (a) the shares acquired are tendered but are not purchased in the tender offer or (b) the employee elects to revoke his or her tender of shares.
	An employee who currently holds unvested options may not exercise those options until they vest, and thus the employee cannot tender the shares underlying the options in the tender offer unless the options vest before the tender offer expires.
How do holders of warrants participate in the tender offer?	If you hold exercisable warrants for common stock, you may exercise such warrants in accordance with the terms of the applicable warrant agreement and tender the shares received upon such exercise in accordance with this tender offer. You should note that an exercise of a warrant may not be revoked even if (a)

	the shares acquired are tendered but are not purchased in the tender offer or (b) you elect to revoke your tender of shares.
Does this affect employee Restricted Stock Units?	No. The tender offers only applies to issued shares of Expedia common stock. Therefore unvested Restricted Stock Units that remain unvested through the expiration of the tender offer may not be tendered and are not affected by the tender offer. However, shares that have been issued as a result of vesting of Restricted Stock Units may be tendered in the tender offer by following the process specified in the tender offer documentation and instructions.
Will I have to pay brokerage commissions if I tender my shares?	If you are a registered stockholder and you tender your shares directly to the depositary, you will not incur any brokerage commissions. If you hold shares through a broker or bank, we urge you to consult your broker or bank to determine whether transaction costs are applicable.
What are the U.S. federal income tax consequences if I tender my shares?	Generally, you will be subject to U.S. federal income taxation when you receive cash from us in exchange for the shares you tender. The receipt of cash for your tendered shares generally will be treated either as (1) consideration received in respect of a sale or exchange of the tendered shares or (2) a distribution from us in respect of our stock.
Will I have to pay any stock transfer tax if I tender my shares?	If you instruct the depositary in the letter of transmittal to make the payment for the shares to the registered holder, you will not incur any stock transfer tax.
Whom can I talk to if I have questions?	The information agent can help answer your questions. The information agent is MacKenzie Partners, Inc. You can call MacKenzie Partners, Inc. at 1-800-322-2885 in the United States and Canada, and +212-929-5500 for all other countries.

This Q&A is for informational purposes only and is not an offer to buy or the solicitation of an offer to sell any shares of the company’s common stock. The solicitation and offer to buy the company’s common stock will only be made pursuant to the Offer to Purchase and related materials that the company will send to its stockholders. Stockholders should read those materials carefully because they will contain important information, including the various terms and conditions of the tender offer. Stockholders will be able to obtain copies of the Offer to Purchase, related materials filed by the company as part of the statement on Schedule “TO” and other documents filed with the Securities and Exchange Commission through the Commission’s internet address at http://www.sec.gov without charge when these documents become available. Stockholders and investors may also obtain a copy of these documents, as well as any other documents the company has filed with the Securities and Exchange Commission, without charge, from the company or at the Investor Relations section of the company’s website: www.expediainc.com/ir. Stockholders are urged to carefully read these materials prior to making any decision with respect to the offer. Stockholders and investors who have questions or need assistance may call MacKenzie Partners, Inc. at 1-800-322-2885 in the United States and Canada, and +212-929-5500 for all other countries.