Expedia Inc.'s gross bookings and revenue were lower than expected in the first quarter, but the online travel company is taking steps to address the shortfalls, President and Chief Executive Dara Khosrowshahi said Thursday.

"There's no sugarcoating the fact that the first quarter of 2006 was a disappointing one for Expedia," Khosrowshahi said, speaking during a conference call to discuss the results. Those results were released after the markets closed.

The softness in gross bookings stemmed mainly from Expedia's domestic operations, with most of that from within the Expedia brand because of customer traffic and lower conversion rates, Khosrowshahi said.

The company's new marketing campaign is nice, but it didn't draw enough incremental users and shoppers to the site, Khosrowshahi said. Also, customer traffic from the new deal Expedia inked with MSN was "significantly lower" than the company expected and was less than in the past, he said. Expedia will continue to work with MSN on the matter, but it won't change overnight, Khosrowshahi said.

As for addressing the top-line shortfalls, Khosrowshahi said Expedia is changing its marketing approach, such as shifting its media mix and promotions to have more local impact. It's also emphasizing the benefits of shopping on Expedia, he said.

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