UNITEDSTATESSECURITIESANDEXCHANGECOMMISSION

Washington,D.C. 20549

Form10K

ANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934ForthefiscalyearendedDecember31,2014

OR TRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934

ForthetransitionperiodfromtoCommissionfilenumber:00135362

TRIPADVISOR,INC.(Exactnameofregistrantasspecifiedinitscharter)

Delaware 800743202(Stateorotherjurisdictionofincorporationororganization)

(I.R.S.EmployerIdentificationNo.)

141NeedhamStreetNewton,MA02464

(Addressofprincipalexecutiveoffice)(ZipCode)Registrantstelephonenumber,includingareacode:

(617)6706300

SecuritiesregisteredpursuanttoSection12(b)oftheAct:

Titleofeachclass: Nameofeachexchangeonwhichregistered:CommonStock,$0.001parvalue TheNASDAQStockMarketLLC

SecuritiesregisteredpursuanttoSection12(g)oftheAct:None

Indicatebycheckmarkiftheregistrantisawellknownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.YesNoIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YesNoIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934

duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesNo

IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedandpostedpursuanttoRule405ofRegulationST(232.405ofthischapter)duringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitandpostsuchfiles).YesNo

IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationSKisnotcontainedherein,andwillnotbecontained,tothebestofregistrantsknowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10KoranyamendmenttothisForm10K.

Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anonacceleratedfiler,orasmallerreportingcompany.Seethedefinitionsoflargeacceleratedfiler,acceleratedfilerandsmallerreportingcompanyinRule12b2oftheExchangeAct.

Largeacceleratedfiler Acceleratedfiler Nonacceleratedfiler (Donotcheckifasmallerreportingcompany) Smallerreportingcompany

Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b2oftheExchangeAct).YesNoTheaggregatemarketvalueofthecommonstockoftheregistrantheldbynonaffiliatesoftheregistrantasofthelastbusinessdayoftheregistrantsmost

recentlycompletedsecondfiscalquarterwas$12,115,385,937basedontheclosingpriceonTheNASDAQGlobalSelectMarketonsuchdate.Forthepurposeoftheforegoingcalculationonly,alldirectorsandexecutiveofficersoftheregistrantareassumedtobeaffiliatesoftheregistrant.

Class OutstandingSharesatFebruary6,2015CommonStock,$0.001parvaluepershare 130,126,683shares

ClassBCommonStock,$0.001parvaluepershare 12,799,999shares

DocumentsIncorporatedbyReferenceTheregistrantintendstofileaproxystatementpursuanttoRegulation14Anotlaterthan120daysafterthecloseofthefiscalyearendedDecember31,

2014.PortionsofsuchproxystatementareincorporatedbyreferenceintoPartIIIofthisAnnualReportonForm10K.

TableofContents PagePARTI 2

Item1. Business 2

Item1A. RiskFactors 11

Item1B. UnresolvedStaffComments 25

Item2. Properties 25

Item3. LegalProceedings 25

Item4. MineSafetyDisclosures 25

PARTII 26

Item5.MarketforRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities 26

Item6. SelectedFinancialData 28

Item7. ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations 30

Item7A. QuantitativeandQualitativeDisclosuresAboutMarketRisk 53

Item8. FinancialStatementsandSupplementaryData 55

Item9. ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure 97

Item9A. ControlsandProcedures 97

Item9B. OtherInformation 100

PARTIII 100

Item10. Directors,ExecutiveOfficersandCorporateGovernance 100

Item11. ExecutiveCompensation 100

Item12. SecurityOwnershipofCertainBeneficialOwnersandManagementandRelatedStockholderMatters 100

Item13. CertainRelationshipsandRelatedTransactions,andDirectorIndependence 100

Item14. PrincipalAccountingFeesandServices 100

PARTIV 101

Item15. ExhibitsFinancialStatementSchedules 101

SIGNATURES 102

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WerefertoTripAdvisor,Inc.andourwhollyownedsubsidiariesasTripAdvisor,theCompany,us,weandourinthisAnnualReportonForm10K.

CautionaryNoteRegardingForwardLookingStatements

ThisAnnualReportonForm10Kcontainsforwardlookingstatementsthatinvolverisksanduncertainties,aswellasassumptionsthat,iftheynevermaterializeorproveincorrect,couldcauseourresultstodiffermateriallyfromthoseexpressedorimpliedbysuchforwardlookingstatements.ThestatementscontainedinthisAnnualReportthatarenotpurelyhistoricalareforwardlookingstatementswithinthemeaningofSection27AoftheSecuritiesActof1933,asamended,ortheSecuritiesAct,andSection21EoftheSecuritiesExchangeActof1934,asamended,ortheExchangeAct.Whenused,thewordsanticipate,believe,could,estimate,expect,intend,may,might,plan,project,resultshould,will,andsimilarexpressionswhichdonotrelatesolelytohistoricalmattersareintendedtoidentifyforwardlookingstatements.Wecautioninvestorsthatanyforwardlookingstatementsinthisreport,orwhichmanagementmaymakeorallyorinwritingfromtimetotime,arebasedonmanagementsbeliefsandonassumptionsmadeby,andinformationcurrentlyavailableto,management.Suchstatementsaresubjecttorisks,uncertaintiesandassumptionsandarenotguaranteesoffutureperformance,whichmaybeaffectedbyknownandunknownrisks,trends,uncertaintiesandfactorsthatarebeyondourcontrol.Someoftherisksanduncertaintiesthatmaycauseouractualresults,performanceorachievementstodiffermateriallyfromthoseexpressedorimpliedbyforwardlookingstatementsaremorefullydescribedinPartI,Item1A,"RiskFactors."Moreover,weoperateinaverycompetitiveandrapidlychangingenvironment.Newriskfactorsemergefromtimetotimeanditisnotpossibleformanagementtopredictallsuchriskfactors,norcanweassesstheimpactofallsuchriskfactorsonourbusinessortheextenttowhichanyfactor,orcombinationoffactors,maycauseactualresultstodiffermateriallyfromthosecontainedinanyforwardlookingstatements.Wecautionyouthat,whileforwardlookingstatementsreflectourgoodfaithbeliefswhenwemakethem,theyarenotguaranteesoffutureperformanceandareimpactedbyactualeventswhentheyoccurafterwemakesuchstatements.Weexpresslydisclaimanyresponsibilitytoupdateourforwardlookingstatements,whetherasaresultofnewinformation,futureeventsorotherwise.

InvestorsshouldalsorefertoourquarterlyreportsonForm10QforfutureperiodsandcurrentreportsonForm8KaswefilethemwiththeU.S.SecuritiesandExchangeCommission,ortheSEC,andtoothermaterialswemayfurnishtothepublicfromtimetotimethroughCurrentReportsonForm8Korotherwise,foradiscussionofrisksanduncertaintiesthatmaycauseactualresults,performanceorachievementstodiffermateriallyfromthoseexpressedorimpliedbyforwardlookingstatements.

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PARTIItem1. Business

Overview

TripAdvisor,Inc.ownsandoperatesaportfolioofleadingonlinetravelbrands.TripAdvisor,ourflagshipbrand,istheworldslargesttravelsite,andourmissionistohelppeoplearoundtheworldplanandbooktheperfecttrip.Weaccomplishthisby,amongotherthings,aggregatingmillionsoftravelersreviewsandopinionsaboutaccommodations,destinations,activitiesandattractions,andrestaurants,throughouttheworldsothatourusershaveaccesstotrustedadvicewherevertheirtriptakesthem.Ourplatformnotonlyhelpsusersplantheirtripwithouruniqueusergeneratedcontent,butalsoenablesuserstocomparerealtimepricingandavailabilitysothattheycanbookhotels,vacationrentals,flights,activitiesandattractions,andrestaurants.

TheinitiallaunchofourU.S.basedtripadvisor.comwebsitewasinNovember2000.OurTripAdvisorbrandedwebsitesnowincludelocalizedversionsoftheTripAdvisorwebsitein45countries,includingChinaunderthebrand,daodao.comandareofferedin28languages:English,SpanishChinese(TraditionalandSimplified),Russian,Arabic,Greek,Korean,Polish,Norwegian,Turkish,Danish,Swedish,Dutch,Bahasa,Thai,Portuguese,Japanese,Italian,French,Turkish,Vietnamese,Hebrew,Suomi,Hungarian,Czech,Slovak,Serbian,andGerman.TripAdvisorbrandedsitesmakeupthelargesttravelcommunityintheworld,reachingmorethan315millionuniquemonthlyvisitors,andmorethan200millionreviewsandopinionscoveringmorethan4.5millionplacestostay,placestoeatandthingstodo,duringtheyearendedDecember31,2014.

InadditiontotheflagshipTripAdvisorbrand,wenowmanageandoperate24othertravelmediabrands,connectedbythecommongoalofprovidingusersthemostcomprehensiveplanningandbookingresourcesinthetravelindustry.Thesemediabrandsarelistedbelow:

airfarewatchdog.com Providesuptodateairlinedealsthathavebeenresearchedandverifiedbyateam

ofdedicatedairfareexperts.bookingbuddy.com Travelshoppingwebsitethatgivestravelerseasyaccesstoairfare,hotel,car

rental,cruise,vacationrental,andvacationdeals,pluspricesfromselectedtravelsites.

cruisecritic.com Acommunityofavidandfirsttimecruiserswhoenjoythefunofplanning,researchingandsharingtheirpassionforcruising.

everytrail.com Mobileapplicationandwebsiteforcollectingandsharinggeotaggedusergeneratedtravelcontent,suchaswalkingtours,roadtrips,sightseeingtours.

familyvacationcritic.com Reviewsoffamilyfriendlyhotels,resorts,destinationsandattractions,writtenbyexperiencedfamilytravelexperts.

flipkey.com Avacationrentalsitefeaturingresidentialpropertiesfromaroundtheworld,withalargecollectionofguestreviews.

gateguru.com Mobileresourceforuptodateflightandairportinformationaroundtheworld.holidaylettings.co.uk AleadingU.K.basedvacationrentalsite,featuringresidentialproperties

globallylistedforrental,enablinguserstolivelikealocalwhileonholiday.holidaywatchdog.com AU.K.basedwebsitefortravelerreviewsonhotelsanddestinationsfocusingon

theMediterranean.independenttraveler.com Atravelersexchangethatfeaturespracticaltravelresourcesforacommunityof

internationaltravelerswhoenjoytheadventureofindependenttravel.jetsetter.com Membersonlyprivatesalesiteprovidinginsideraccess,expertknowledgeand

exclusivedealsforvacationsaroundtheworld.thefork.com(includinglafourchette.com,eltenedor.comandiens.nl)

AleadingonlineandmobilereservationplatformforrestaurantswithanextensivenetworkofrestaurantpartnersinEurope.

kuxun.cn Travelmetasearchengine,muchlikeTripAdvisor,operatinginChina.niumba.com ASpanishbasedvacationrentalsite,featuringpropertieslistedgloballyandthe

worldslargestcollectionofSpanishvacationrentals.onetime.com Comparisonshoppingtravelwebsitethatallowstravelshopperstoconduct

itinerarybased,multisitesearchesforflights,hotels,cruises,vacations,andcarrentals.

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oyster.com Hotelreviewwebsitefeaturingexpertreviewsandphotoscoveringcitiesaroundtheworld.

seatguru.com Featuresaircraftseatmaps,seatreviews,andacolorcodedsystemtoidentifysuperiorandsubstandardairlineseats.

smartertravel.com Oneofthelargestonlinetravelresourcesforindependentexpertadviceforthebudgetconscioustraveler,helpingthemfindthebestdealsandgetthemostvaluefromtheirtrips.

tingo.com Thefirsthotelbookingsitethatautomaticallyrebookshotelroomsatalowerpriceiftheratedropsandrefundsthedifferencetothetravelerscreditcards.

travelpod.com Pioneeringtravelblogwebsite.tripbod.com Atravelcommunitythathelpsconnecttravelerstolocalexpertsallowingthe

travelertoobtainrelevantrecommendationsdirectfromalocalexpert.vacationhomerentals.com AU.S.basedvacationrentalwebsitefeaturingpropertiesaroundtheworld.viator.com Aleadingresourceforresearchingandbookingdestinationactivitiesaroundthe

world.virtualtourist.com Travelorientedcommunitywebsitefeaturingusercontributedtravelguidesfor

locationsworldwide.

2014Highlights

Followingaresomebusinesshighlightsforfiscal2014:

Wereachedmorethan200millionreviewsandopinionsonmorethan4.5millionplacestostay,placestoeatandthingstodoincludingmorethan915,000hotelsandaccommodationsandapproximately650,000vacationrentals,2.4millionrestaurantsandmorethan500,000attractionsin147,000destinationsthroughouttheworld.

Ourwebsitesgloballyreachedmorethan315millionmonthlyuniquevisitorsduringtheyearendedDecember31,2014,accordingtoGoogleAnalytics.

Wereachednearly175millioncumulativemobileappdownloadsandapproximately50%ofTripAdvisortrafficvisitedwasviatabletsorsmartphonesin2014.Averagemonthlyuniquevisitorsviatabletsandsmartphonesgrewover60%yearoveryeartoapproximately140millionfortheyearendedDecember31,2014,accordingtocompanylogs.

WelaunchedTripAdvisorpointsofsaleinNewZealand,Philippines,SouthAfrica,Vietnam,Austria,Israel,Finland,Hungary,CzechRepublic,Slovakia,andSerbia.

Wenowmanageandoperate24travelmediabrandsinadditiontoourflagshipTripAdvisorbrand,allofwhichareconnectedbythecommongoalofprovidingcomprehensivetravelplanningresourcesacrossthetravelsector.

WeintroducedInstantBooking,afeaturethatenablesuserstoquicklyandeasilybookahotelonTripAdvisorthroughourhoteloronlinetravelagentpartners.

Welaunched,JustforYou,afeaturethatmakesthehotelresearchexperiencemorepersonalizedwithhotelrecommendationstoTripAdvisorusersbasedontheirindividualpreferencesandtravelhistoryonthesite.

WebecameagloballeaderinattractionsbyacquiringViator,theleadingresourceforresearchingandbookingdestinationactivitiesaroundtheworld.ViatorenablesuserstobookonlineorindestinationactivitiesviatheViatorToursandActivitiesapp,featuringworldwidebookabletoursandattractions,includingmorethan600,000userreviews,photos,andvideos.

WeestablishedaleadershippositioninonlinerestaurantreservationsinEuropebyacquiringLafourchette,Mytable.it,Restopolis,andIens.nl.Subsequently,weannouncedthelaunchofourInstantReservationfeatureforrestaurants,whichletsusersselectarestaurantandcompleteareservationonTripAdvisorandtheLafourchettenetworkofrestaurants.

CorporateHistory,EquityOwnershipandVotingControl

TripAdvisorwascofoundedinFebruary2000byStephenKaufer,ourcurrentPresidentandChiefExecutiveOfficer.TripAdvisorwasacquiredbyIAC/InterActiveCorp,orIAC,inApril2004.InAugust2005,IACspunoffitsportfoliooftravelbrands,includingTripAdvisor,intoaseparatenewlyformedDelawarecorporation,calledExpedia,Inc.,orExpedia.

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During2011,Expediaannounceditsplantoseparateintotwoindependentpubliccompaniesinordertobetterachievecertainstrategicobjectivesofitsvariousbusinesses.OnDecember20,2011ExpediacompletedthespinoffofTripAdvisorintoaseparatepubliclytradedDelawarecorporation.WerefertothistransactionastheSpinOff.TripAdvisorbegantradingonTheNASDAQGlobalSelectMarket,orNASDAQ,asanindependentpubliccompanyonDecember21,2011underthesymbolTRIP.

OnDecember11,2012,LibertyInteractiveCorporation,orLiberty,purchasedanaggregateof4,799,848sharesofcommonstockofTripAdvisorfromBarryDiller,ourformerChairmanoftheBoardofDirectorsandSeniorExecutive,andcertainofhisaffiliates(theStockPurchase).Asaresult,Libertybeneficiallyowned18,159,752sharesofourcommonstockand12,799,999sharesofourClassBcommonstock.

OnAugust27,2014,theentirebeneficialownershipofourcommonstockandClassBcommonstockheldbyLibertywasacquiredbyLibertyTripAdvisorHoldings,Inc.,orLTRIP.Simultaneously,Liberty,LTRIPsformerparentcompany,distributed,bymeansofadividend,totheholdersofitsLibertyVenturescommonstock,LibertysentireequityinterestinLTRIP.WerefertothistransactionastheLibertySpinOff.AsaresultoftheLibertySpinOff,effectiveAugust27,2014LTRIPbecameaseparate,publiclytradedcompanyand100%ofLibertysinterestinTripAdvisorwasheldbyLTRIP.

Asaresultofthesetransactions,asofDecember31,2014,LTRIPbeneficiallyowned18,159,752sharesofourcommonstockand12,799,999sharesofourClassBcommonstock,whichsharesconstitute14.0%oftheoutstandingsharesofcommonstockand100%oftheoutstandingsharesofClassBcommonstock.AssumingtheconversionofallofLTRIPssharesofClassBcommonstockintocommonstock,LTRIPwouldbeneficiallyown21.7%oftheoutstandingcommonstock(calculatedinaccordancewithRule13d3).BecauseeachshareofClassBcommonstockisgenerallyentitledtotenvotespershareandeachshareofcommonstockisentitledtoonevotepershare,LTRIPmaybedeemedtobeneficiallyownequitysecuritiesrepresentingapproximately56.6%ofourvotingpower.

OurBusinessModel

Ourplatformsconnectuserswishingtoplanandbookthebesttravelexperienceswithprovidersoftravelaccommodationsandtravelservicesaroundtheworld.Wederivethemajorityofourrevenuefromthesaleofadvertising,primarilythroughclickbasedadvertisingand,toalesserextent,displaybasedadvertising.Theremainderofourrevenueisgeneratedthroughacombinationofsubscriptionandtransactionbasedofferingsandotherrevenueincludingcontentlicensing.

ClickBasedAdvertisingRevenue.Ourlargestsourceofrevenueisclickbasedadvertising,whichincludeslinkstoourpartnersbookingsitesandcontextuallyrelevantbrandedandunbrandedtextlinks.Ourclickbasedadvertisingpartnersarepredominantlyonlinetravelagencies,orOTAs,anddirectsuppliersinthehotel,airlineandcruiseproductcategories.Clickbasedadvertisingisgenerallypricedonacostperclick,orCPC,basis,withpaymentsfromadvertisersbasedonthenumberofuserswhoclickoneachtypeoflink.CPCpricesaredeterminedinabiddingprocessthatallowsourpartnerstouseourproprietarysystemtosubmitCPCbidstohavetheirratesandavailabilitylistedonoursite.WhenapartnersubmitsaCPCbidtheyagreetopaytheamountofthatbideachtimeausersubsequentlyclicksontheURLlinktothepartnerswebsite.Bidsaresubmittedperiodicallysometimesasoftenasdailyorweeklyonapropertybypropertybasisandthesizeofthebidrelativetootherbidsreceiveddeterminesthepartnersplacementinallmetaplacementsonoursitewithoneormoreoffersshown,includinghotelcomparisonsearchresultsandthepropertydetailpage.Thesystemisautomatedandthesizeofthepartnersbidistheonlyfactorimpactingthepartnersplacementonthatpage,exceptthatindividualpartnersmaybesortedlowerintheeventthattheyhavenotprovidedpriceinformationoriftheyceasetohaveavailabilityfortheproperty.Whileweenterintomasteradvertisingcontractswithourpartners,thetermsoftheseagreementsgenerallyaddressmatterssuchasprivacyandcompliance,paymenttermsandconditions,terminationandindemnities.Mostofourclickbasedadvertisingcontractscanbeterminatedbyourpartnersatwilloronshortnotice. ClickbasedrevenuealsoincludesrevenuefromournewInstantBookingfeature,whichallowsapartnertopayacommissionrateforauserthatcompletesareservationonTripAdvisor.TripAdvisorisnotthemerchantofrecordonInstantBookingreservations.FortheyearsendedDecember31,2014,2013and2012,weearned$870million,or70%,$696million,or74%and$588million,or77%,respectively,ofrevenuefromclickbasedadvertising.

DisplayBasedAdvertisingRevenue.Weearnrevenuefromavarietyofdisplaybasedadvertisingplacementsonourwebsitesthroughwhichouradvertisingpartnerscanpromotetheirbrandsinacontextuallyrelevantmanner.Whileourdisplaybasedadvertisingclientsarepredominatelydirectsuppliersinthehotel,airlineandcruisecategoriesaswellasOTAs,wealsoacceptdisplayadvertisingfromdestinationmarketingorganizations,casinos,resortsandattractions,aswellasadvertisersfromnontravelcategories.Wegenerallysellourdisplaybasedadvertisingonacostperthousandimpressions,orCPM,basis.Ourdisplaybasedadvertisingproductsalsoincludeanumberofcustombuiltfeatures.Forexample,DelayedAdCall,chargescustomersonlywhentheadunitisinausersview,aswellascertain

customizedcobrandedfeatures.FortheyearsendedDecember31,2014,2013and2012,weearned$140million,or11%,$119million,or13%,and$94million,or12%,respectively,inrevenuefromdisplaybasedadvertising.

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SubscriptionBased,TransactionandOtherRevenue.BusinessListings,isasubscriptionbasedadvertisingproductofferedtohotels,B&Bsandotherspecialtylodgingproperties.ManagedbyourTripAdvisorforBusinessteam,thisadvertisingproductissoldforaflatfeeandallowssubscriberstolist,foracontractedperiodoftime,awebsiteURL,emailaddressandphonenumberonourTripAdvisorbrandedwebsites,aswellastopostspecialoffersfortravelers.Inaddition,weearnrevenuefrommakinghotelroomnightsavailableforbookingonourtransactionbasedsites,includingJetsetterandTingoforwhichwearethemerchantofrecordmakingrentalsavailablethroughourvacationrentalsbusinesssellingdestinationactivitiesthroughViatorandprovidingonlinerestaurantreservationsthroughLafourchetteaswellasotherrevenueincludingcontentlicensingwiththirdpartysites.FortheyearsendedDecember31,2014,2013and2012weearned$236million,or19%,$130million,or14%,and$81million,or11%,respectively,inrevenuefromsubscriptionbased,transactionandotherrevenue.

OurIndustry

Weoperateintheglobaltravelindustry,focusingexclusivelyononlinetravelactivityandtheonlineadvertisingmarket.

AccordingtothePhoCusWright,grossbookingsintheglobaltravelindustryareexpectedtobegreaterthan$1.3trillionin2015.Recenthistoricaltrendsshowthat,eachyear,anincreasingpercentageofglobaltravelspendinghasbeenconductedonlinethroughsupplierwebsitesandonlinetravelagencies.Webelievethatthistrendwillcontinueasonlinepenetrationcontinuestogrow,asmoreconsumersgainbroadbandaccesstotheInternet,assmartphone,tabletsandothermobilecomputingdevicescontinuetoproliferate,andastravelactivityincreasesalongwithanexpandingmiddleclassincertaindevelopingcountrieslikeChinaandIndia.

AccordingtotheInternationalDataCorporation,orIDC,NewMediaMarketModel,only26%oftheapproximately$51billionthatisexpectedtobespentontraveladvertisingwillbespentonlinein2016.WebelievethattheInternetwillcontinuetobecomeevenmoreintegraltothetravelplanningprocessduetoincreasingworldwideonlinepenetration,particularlygiventhecapabilitiesthattheInternetprovidestravelers,includingtheabilitytorefinesearches,comparedestinations,viewrealtimepricing,completebookings,andaccessinformationwhileindestination.

AccordingtotheIDCNewMediaMarketModel,theglobalonlineadvertisingmarketisgrowingandisprojectedtoexceed$165billionby2016,asmoreandmoreadvertiserscontinuetoshifttheirspendingfromofflinetoonlinechannels,mirroringthetrendinconsumermediaconsumptiongenerally.Giventhesizeoftheonlineadvertisingmarket,webelievethattravelprovidersandtravelrelatedadvertisersare,andwillcontinuetobe,motivatedtodevotesignificantresourcestoadvertisetheirtravelproductsandservices.Inaddition,asmoreandmoretraveltransactionsareconductedonlinegenerally,webelievethatanincreasingamountoftraveladvertisingspendingwillmigratefromtraditionalofflineadvertisingchannelstoonlineadvertisingopportunities.

OurKeyStrengths

OurTripAdvisorbrandedsiteshelptravelersplanandbooktheperfecttrip.Tohelpourusersplantheirtrip,wehavemorethan200millionreviewsandopinions,approximately30millioncandidphotos,andhelpfulcontentrangingfromhotelroomtipstotravelguides.Wehavecreatedacomprehensiveonlineresourceforusergeneratedcontentondestinations,lodging,restaurantsandattractions.Weproviderealtimepricingandavailabilitysearchfunctionalitythatcompareshundredsofpartnerwebsitessothatouruserscanfindandbookthebestprices.Wealsoenableuserstobookactivitiesandattractionsandmakerestaurantreservationsthroughoursite.Thetoolsandinformationweprovideareavailablein28differentlanguagesonwebbasedandmobileapplicationsondesktopsandacrossallmobiledevices.

Inordertoachieveourgoal,weleverageourkeyassetsarobusttravelcommunity,richusergeneratedcontent,continuoustechnologicalinnovationandglobalreachasfollows:

RobustTravelCommunity.Webelievethatwehavethelargestbreadthofcontentinourmarkets,andthat,becauseofthisbreadth,travelersgravitatetoourwebsitestoresearchandplantheirtrips.Byprovidinganinteractiveforumtosharetheirexperiences,ourlargeandhighlyengagedcommunityoftravelersisavaluableresource.Tofacilitateplanning,weenableconsumerstoresearchpricingandavailabilityfromthirdpartytravelbookingsites.Toencouragebettertravelexperiencesforconsumersandtocreateafeedbackloopbetweenthehospitalityindustryandindividualtravelers,weallowhospitalitymanagementrepresentativestorespondtoreviewsoftheirpropertiesonourwebsite.Aftercompletingtheirtrip,consumerscanreturntoourwebsitestowritereviewstogivebacktothecommunitythathelpedthemplantheirtrip.Throughthiscycle,morecontentisgenerated,whichdrivescommunity,traffic,loyaltyandhighersearchenginerankings,allofwhichleadtofurthercontentcreation.Webelievethatthevolumeofreviewsgeneratedonourwebsitesandtherobustfeedbackloopcreatedonourwebsitesprovidesuswithasignificantadvantageoverourcompetitors.

RichUserGeneratedContent.Webelievethatthebesttravelcontentcomesfromthewisdomandinsightofarobustcommunityoftravelers.Weleverageusergeneratedcontenttopowertravelplanningbyallowingmemberstocreate

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reviewsandshareopinionsonhundredsofthousandsofaccommodations,destinations,attractionsandrestaurants.Asevidencedbythegrowthofourbusiness,thistypeoftravelplanninghasbeenembracedbytravelers.Topromoteanenthusiasticreviewercommunitythatcontinuestoprovidevaluablecontentandpromotesourbrand,wehavelaunchedseveralprogramstorecognizereviewercontributions,includingsitebadges,helpfulvoterecognition,andotherfeatures,allofwhichhighlightthecurrentandhelpfulreviewsandopinionsavailablethroughouttheTripAdvisorcommunity.

TechnologyandInnovation.Productinnovationandspeedtomarketareourtwomostimportantprioritiesinordertocreateanincreasinglyrichuserexperience.Wehaveweeklyengineeringreleasesthatcontainnewproductsandfeaturesforourwebsitesandmobileapps.Somerecentexamplesofthisproductinnovationinclude:JustForYou,whichdeliversusersamorepersonalizedhotelshoppingexperienceInstantBooking,whichenablesuserstocompleteahotelreservationwhileremainingontheTripAdvisorwebsitehotelmetasearch,whichenablesuserstoseerealtimeavailabilityandcomparepricesfromhundredsofpartnerwebsites,withoutrequiringtheusertovisitanotherwebsiteandTripConnect,whichenablesindependenthotelierstocompeteforleadsonTripAdvisor.Ourongoingcommitmenttoinnovationalsoextendstocontentsyndicationandreviewcollectionpartnerships,asweleverageourtechnologyandcontentforthebenefitofotherwebsites.Inaddition,weutilizemanualandelectronicfrauddetectioninordertomaintainthequalityandauthenticityofuserreviews.

GlobalReach.Weareaglobalcompany,boththroughthereachofourportfolioofbrandedwebsitesandthroughourinmarketstaffingin20countries.AsofDecember31,2014,wehadapproximately1,500employeesbasedoutsideoftheUnitedStates,representing54%ofouremployeepopulation.AsofDecember31,2014,wehadbrandedwebsitesin45countriesand28languages,includingalocallanguagewebsiteinChinaunderthebranddaodao.com.Wehaveover570millionreviewtranslations,andarecommittedtocontinuingtoimprovetheincountryuserexperienceandthelocalcontentcoverageforallofourpointsofsale.WebelievethattheuniversallyrelevantcontentandcommunityofourcoreTripAdvisorplatformandotherbrandsuniquelypositionustoappealtotravelersthroughouttheworld.

OurStrategy

Weleveragesignificantinvestmentsintechnology,operations,brandbuilding,andrelationshipswithadvertisersandotherpartnerstoexpandourbusinessandenhanceourglobalcompetitiveposition.Theseinvestmentshaveenabledusto,amongotherthings,aggregatealargebaseofconsumerreviews,inavarietyoflanguages,acrossourglobalplatformofourwebsites.Wecontinuetofocusonthefollowingareastogrowourbusiness:

ContinuingTechnologyInnovation.Webelieveourabilitytoinnovateandtoprovideadditionalfunctionalitytoourwebsitesandappsacrossalldeviceswillenableustocontinuetodeliveranindustryleadinguserexperience.Ourinnovationculturesupportsbringingproductenhancementstomarketatspeed.Indoingso,webelievethatwecancontinueto,amongotherthings,growcontent,usage,loyaltyandengagement,aswellastoreinforceourcompetitivepositioning.

ExpandingOurSocialandPersonalizationPlatform.Wegrowbrandawarenessandmemberacquisitiononsocialmediachannels,includingFacebook,Twitterandothersocialsharingplatforms.Weintendtocontinuetoexpandoursocialintegrationandpersonalizationeffortsaswebelievetheseinitiativeshelptodriveusage,engagement,andcontent.UserscansharetheirreviewsandratingswiththeirfriendsthroughFacebookConnectandalsocanpublishtheirTripAdvisorcontenttotheirFacebooktimeline.Additionally,ourJustForYoupersonalizationfeaturegivesuserspersonalizedrecommendationsbasedonfriendsreviewsandratingsaswellasinformationcollectedaboutuserpreferencesinselectinghotels.

ImprovingtheExperience.Wecontinuetoinvestinuserexperienceenhancementsthatimprovetheresearching,comparingandbookingexperienceaswellashelpauserwhiletheyareonthetrip.Wehaveofferedaflightmetasearchproductthatdisplaysavailabilityandpricinginformationfrommultiplesourcessince2009,expandinginternationallyto38pointsofsaleasofDecember31,2014.In2012,weintroducedhotelmetasearchtoourglobalsmartphonetrafficandinJune2013,wecompletedtheprocessoffullyimplementinghotelmetasearchfunctionalityontoourdesktopandtabletplatforms.During2014weintroducedInstantBooking,toourmobileusers.Thisproductfeatureallowstravelerstocompleteahotelreservation,poweredbyourOTAandhotelierpartners,whileremainingontheTripAdvisormobileapp.Wecontinuetointegratethisfeatureontodesktopandtablets.InadditiontometasearchandInstantBooking,wecontinuetoofferandimprovefeaturessuchasuserreviews,photos,mapping,andfilteringtoassistusersinfindingtherighthotelfortheirtrip.

InvestinginTrafficGrowth.Attractingmorevisitorstooursitesisatthecoreofourstrategicplanandwededicatesignificanttimeandfinancialresourcestowardsamplifyingourglobalbrand.Wedothisthroughonlineandofflinemarketingchannelstomaximizethenumberofuserswhonavigatetooursiteeitherdirectly,alsoknownasdomain

directtraffic,orfromthemarketingchanneldirectly.Offlineadvertisingchannelswehaveusedinthepasttoamplifyourbrandsinclude:permanentbrandingcampaignssuchasTripAdvisorbrandedtravelawards,certificates,stickersand

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badgesandtelevisionadvertising.Onlineadvertisingchannelswehaveusedinthepasttoamplifyourbrandinclude,butarenotlimitedto:customerrelationshipmanagementemailcampaigns,orCRMsocialnetworksorganicsearchthroughsearchengineoptimization,orSEOpaidsearchthroughsearchenginemarketing,orSEMandreferralsfrompartnerswhosesitescontainlinkstoTripAdvisorcontent,badgesorwidgets.Atapproximately11%ofglobalonlinetraveluniquevisitors,accordingtocomScoreMediaMetrix,webelievethatwehavealargeopportunitytocontinuegrowingvisitors.Inordertoachievethisobjective,weintendtoinvestintheaforementionedchannels,aswellasanynewchannelsthatwemayidentifyinthefuture.

EnhancingInternationalOfferings.Wearefocusedonstrengtheningourbroadglobalfootprintaswebelievethatinternationalmarketsrepresentalongtermstrategicopportunityforus.WearecontinuingtoimprovelocalizationandgrowouruserbaseinEurope,AsiaandSouthAmerica,especiallyinemergingmarkets,suchasBrazil,RussiaandChina.Inaddition,wecurrentlyhavetwoleadproductofferingsintheChinesemarketDaoDaoandKuxunbothheadquarteredinBeijing.WecontinuetoinvestintheChinesemarket,despiteoperatingataloss,andwillcontinuetoincreaseourinternationalofferings.

GrowingthroughStrategicAcquisitions.Wehaveahistoryofsuccessfullyacquiringandintegratingcompaniesthatexpandourfootprinteithergeographicallyorinmarketsectorsthatarecomplementarytoourflagshipproperties.Weintendtocontinuetogrowourbusinessandexpandourproductandserviceofferingsthroughacquisitionsthateithercomplementourexistingbusinessesorprovideadditionalresources,productsand/orservicesthatwillimprovetheuserexperience.AfewrecentexamplesincludeLafourchette,theleadingonlineandmobilereservationplatformforrestaurantsinFrance,SpainandSwitzerland,withanetworkofrestaurantpartnersinEuropeandViator,theleadingonlineresourceforresearchingandbookingdestinationactivitiesaroundtheworld.

OurStrategicRelationships

Wehaveanumberofrelationshipsthatarestrategicallyimportanttothesuccessofourbusiness.Theserelationshipsarememorializedinsomeformofagreement,althoughmanyoftheseagreementsareforalimitedtermorareterminableatwilloronshortnotice.Asaresult,weworkhardtoensurethemutualsuccessoftheserelationships.

WehaveadvertisingrelationshipswiththevastmajorityoftheleadingOTAsaswellasavarietyofothertravelsupplierspursuanttowhichthesecompaniespurchasetravelerleadsfromus,generallyonaCPCbasis.FortheyearendedDecember31,2014,ourtwomostsignificantadvertisingpartners,ExpediaandPriceline(andtheirsubsidiaries),eachaccountedformorethan10%ofourtotalrevenueandcombinedaccountedfor46%ofourtotalrevenue.

Wehaveacontentlicensingprogramutilizedbyover1,000partnersaroundtheworld,includinghotelchains,onlinetravelagents,touristboards,airlinesandmediasites.TripAdvisoralsodistributesitscontentthroughselfserviceHTMLwidgets,whichareusedonthewebsitesofhotels,restaurants,attractionsanddestinationmarketingorganizations.Theseproducts,whichareavailableatnocostintheTripAdvisorManagementCenter,allowbusinessesanddestinationstopromotethemselvesbydisplayingtheirTripAdvisorratings,reviewsandawards.TripAdvisorwidgetsarepresentlyfoundonmorethan150,000uniquedomainsaroundtheglobe,reachingover800millionpeoplepermonth.Partnersbenefitfromourusergeneratedcontent,suchasreviews,ratings,photosandtravelerforums.Inaddition,wepowerreviewcollectionforagrowingnumberofpartners,suchasAccorHotels,WyndhamHotelGroup,BestWesternandEasytobook.com,enablingthemtoproactivelycollectreviewsfromtheirowncustomerspoststayintheirownbrandedenvironment.Wehavealsodevelopedpartnershipswithmobilecarriersanddevicemanufacturers.

Wealsosyndicateourclickbasedadvertisingtothirdpartywebsites.ThelargestsuchsyndicationrelationshipiswithYahoo!TravelGuides,pursuanttowhichweprovideshowpricesadvertisingontheYahoo!TravelGuideshotelpages.OthersyndicationpartnersincludeBingandAxelSpringer.

MarketingandPromotions

Wehaveestablishedwidelyusedandrecognizedbrandsthroughmarketingandpromotioncampaigns.Wecontinuetoaggressivelypromoteourbrands,particularlyourflagshipbrandTripAdvisor.Ourmarketingprogramsareintendedtobuildandmaintainthevalueofourbrands,promoteconsumerengagementandcontributions,drivequalifiedclickstoourpartnersandstrategicallypositionourbrandsinthemarket.Ourlongtermsuccessdependsonourcontinuedabilitytomaintainandincreasetheoverallnumberofconsumersflowingthroughourbrandinacosteffectivemanner,aswellasourabilitytoattractconsumerswhowillsharetheirowncontentfromtheirtrips.OurmarketingchannelsincludeSEMandSEO.Wealsoreachconsumersacrossthewebthroughouronlinemarketingprogram,andofflinethroughourofflinebrandcampaigns.WealsoutilizeCRMinwhichwesendrelevantandengagingtravelercommunicationstoourmembersviaemail.Wehavearobustglobalpublicrelationsprogram

thatyieldsplacementsonaconstantbasisinmajorprintandonlinepublications.Wecontinuetolookfornewwaystobuildbrandawarenessandexpandnewchannels,whichmayincludetraditionalmediaandsocialmediachannelsincludingFacebookandTwitter

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todeepencustomerengagement.WesyndicateourcontentsothatothersitescanfeatureTripAdvisorbrandingandcontent.Lastly,marketingandproductdevelopmentinitiativesarecloselytied.Weareconstantlycreatinghelpfulfeaturesandfunctionalitysothatourconsumerscandiscovermorerelevanttravelandreviewcontentthattheywanttotalkaboutandsharewiththeirfriends.

OperationsandTechnology

Wehaveassembledateamofhighlyskilledsoftwareengineers,computerscientists,datascientists,networkengineers,andsystemsengineerswhoseexpertisespansabroadrangeoftechnicalareas,includingawidevarietyofopensourceoperatingsystems,databases,languages,analytics,networking,scalablewebarchitecture,operations,andwarehousingtechnologies.Wemakesignificantinvestmentsinproductandfeaturedevelopment,datamanagement,personalizationtechnologies,scalableinfrastructures,networking,datawarehousing,andsearchenginetechnologies.TheTripAdvisorbrandedwebsitesarepoweredprimarilyusingJavaprogramminglanguage.

Oursystemsinfrastructure,webanddatabaseserversforTripAdvisorbrandedwebsitesarehousedattwogeographicallyseparatefacilitiesandhavemultiplecommunicationlinksaswellascontinuousmonitoringandengineeringsupport.Eachfacilityisfullyselfsufficientandoperationalwithitsownhardware,networking,software,andcontent,andisstructuredinanactive/passive,fullyredundantconfiguration.Substantiallyallofoursoftwarecomponents,data,andcontentarereplicatedinmultipledatacentersanddevelopmentcenters,aswellasbeingbackedupatoffsitelocations.Oursystemsaremonitoredandprotectedthoughmultiplelayersofsecurity.Severalofourindividualsubsidiariesandbusinesses,includingoursubsidiariesinChina,havetheirowndatainfrastructureandtechnologyteams.

WidespreadadoptionofmobiledevicessuchasiPhone,AndroidenabledsmartphonesandtabletssuchastheiPad,coupledwiththeimprovedwebbrowsingfunctionalityanddevelopmentofthousandsofusefulappsavailableonthesedevices,isdrivingsubstantialtrafficandcommerceactivitytomobileplatforms.Wehaveseentremendousgrowthintheadoptionofmobileplatforms,ashaveouradvertisingpartners.Advertisingopportunitiesmaybemorelimitedonmobiledevicesgiventheirsmallscreensizes.Further,giventhesizeandtechnicallimitationsoftabletsandsmartphones,mobileconsumersmaynotbewillingtodownloadmultipleappsfrommultipletravelserviceprovidersandinsteadprefertouseoneoralimitednumberofappsfortheirmobiletravelactivity.Asaresult,theconsumerexperiencewithmobileapps(aswellasbrandrecognitionandloyalty)isbecomingincreasinglyimportantandwemakesignificantinvestmentsinthisarea.

Webelievethatmobilebookingsarenecessarytomaintainandgrowourbusinessasconsumersincreasinglyturntomobiledevicesandmobileapplications.Ifweareunabletocontinuetorapidlyinnovateandcreatenew,userfriendlyanddifferentiatedmobileofferingsandefficientlyandeffectivelyadvertiseanddistributeontheseplatforms,orifourmobileappsarenotdownloadedandusedbytravelconsumers,wecouldlosemarketsharetoexistingornewentrantsandourfuturegrowthandresultsofoperationscouldbeadverselyeffected.Asaresult,wehavemadesignificantprogresscreatingmobileofferingswhichhavereceivedstrongreviews,soliddownloadtrendsandaredrivingamaterialandincreasingshareofourbusiness.Oursmartphonemonetizationstrategiesarestilldeveloping,assmartphonemonetizationremainssignificantlylowerthandesktopmonetizationofhotelshoppersduringtheyearendedDecember31,2014,whiletabletsmonetizemorecloselytodesktops.

Competition

Wefacecompetitionforcontent,users,andadvertisers.Ourprimarycompetitorsincludelargeonlineportals,socialnetworkingsitesandsearchengines,suchasGoogle,MicrosoftsBing(includingBingTravel),Yahoo!(includingYahoo!Travel)andBaidu.WefacecompetitionfromOTAs(suchasExpediaandPricelineandtheirrespectivesubsidiaries),aswellaswholesalers,touroperatorsandtraditionalofflinetravelagencies.Wealsocompetewithawiderangeofothercompanies,includingAirbnb,Inc.,Ctrip.comInternational,Ltd.,HolidayCheckAG,HomeAway,Inc.,Yelp,Inc.andOpenTable,Inc.,asubsidiaryofPriceline.

WebelievewearetheworldslargestglobalplatformfortravelrelatedreviewsandopinionsandwefacecompetitioninthetravelreviewspacefromOTAs,suchasExpediaandPricelineandtheirrespectivesubsidiaries,whichsolicitreviewsfromtravelerswhobooktravelontheirwebsites.Withrespecttoourrestaurantandattractionsbusiness,wefacecompetitionforreviewsfromOpenTable,asubsidiaryofPricelineandYelp,Inc.Moreover,networkswithsignificantinstalleduserbasessuchasGoogle(forexample,viaGoogle+LocalandGoogleHotelFinder)havebeguntocompetemoredirectlywithusbyattractingandaccumulatingusergeneratedreviewsandopinionsormaypursuetheacquisitionoftravelrelatedcontentdirectlyfromconsumers,andothernetworksandchannels,likeFacebook,couldchoosetodothesame.

Inthecompetitiontoattractusers,werelyonourabilitytoacquiretrafficthroughofflinebrandrecognitionandbranddirecteffortssuchastelevision,emailandonlinesearch,whetherunpaidorpaid.UnpaidsearchissometimesreferredtoasSEO,which

isthepracticeofdevelopingwebsiteswithrelevantandcurrentcontentthatrankwellinorganic,orunpaid,searchengineresults.SEOcanbeaffectedbyanumberoffactorsincludingcompetitivesitecontent,changestoourwebsitearchitectureandpagedesigns,changestosearchenginerankingalgorithms,orchangestodisplayorderinginsearchengineresultssuchaspreferredplacementfor

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internalproductsofferedbysearchengines.SEMisaformofInternetmarketingthatinvolvesthepromotionofwebsitesbyincreasingtheirvisibilityinsearchengineresultspagesthroughtheuseofpaidplacement,contextualadvertising,andpaidinclusion.SEMisacompetitivemarketplacewithcompetitorscontinuallyupdatingtheirtrafficacquisitionstrategiesandeconomicmodelsacrossalargenumberofkeywordsandmarkets.

CompetitionforAdvertisers

Wecompetefortravelrelatedadvertisingbudgetswithlarge,establishedsearchengineswithsignificantlygreaterresourcesthanwehave,suchasGoogle,Bing,andYahoo!,aswellasonlinemediacompaniesandadnetworks,offlineadvertisingsources,suchastelevisionandprintmedia.Thesecompetitorshavelargeclientbasesandsignificantlygreaterresourcesthanwehaveandexpertiseindevelopingonlinecommerceandfacilitatinginternettrafficarecreatinginroadsintoonlinetravel.Competitionfromthesepartiescouldcauseustoloseadvertisingcustomersorsharesofadvertisingexpenditures.Forexample,GooglehaslaunchedHotelFinder,asearchtoolthatenablesuserstosearchandcomparehotelaccommodationsbasedonparameterssetbyusersandhas,attimes,placedtheGooglesupplierwebsitesoritsownsearchengineatornearthetopofhotelrelatedsearchresults.Inaddition,MicrosofthaslaunchedBingTravel,whichsearchesforhotelreservationsandairfaresonlineandpredictsthebesttimetopurchasethem.IfGoogle,Bingoranyotherleadingsearchenginesrefersignificanttraffictotheseorothertravelservicesthattheydevelopinthefuture,orotherwisefavorsupplierwebsitesorothertravelservicewebsitesoverotheronlinetravelsites,includingus,itwouldlikelybecomemoredifficultandexpensiveforustogeneratetraffictoourwebsitesandthereforemaintainorgrowourmarketshare.

Certainofthecompanieswedobusinesswitharealsoourcompetitors.Theconsolidationofourcompetitorsandpartners,includingExpedia(throughitsinvestmentinTrivago)andPriceline(throughitsacquisitionofKayakandOpenTable),mayaffectourcompetitivenessandpartnerrelationships.Asthemarketevolvesforonlinetravelcontentandthetechnologysupportingit,includingnewplatformssuchassmartphoneandtabletcomputingdevices,weanticipatethattheexistingcompetitivelandscapewillchangeandnewcompetitorsmayemerge.

IntellectualProperty

Ourintellectualproperty,includingpatents,trademarks,copyrights,domainnames,tradedress,proprietarytechnologyandtradesecrets,isanimportantcomponentofourbusiness.Werelyonourintellectualpropertyrightsinourcontent,proprietarytechnology,softwarecode,ratingsindexes,databasesofreviewsandforumcontent,images,videos,graphicsandbrands.Wehaveacquiredsomeofourintellectualpropertyrightsthroughlicensesandcontentagreementswiththirdparties.Theselicensesandagreementsmayplacerestrictionsontheuseofourintellectualproperty.

Weprotectourintellectualpropertybyrelyingonourtermsofuse,confidentialityproceduresandcontractualprovisions,aswellasoninternational,national,stateandcommonlawrights.Inaddition,weenterintoconfidentialityandinventionassignmentagreementswithemployeesandcontractors,andconfidentialityagreementswithotherthirdparties.Weprotectourbrandsbypursuingthetrademarkregistrationofourcorebrands,suchasTripAdvisorandtheOwlLogo,maintainingourtrademarkportfolio,securingcontractualtrademarkrightsprotectionwhenappropriate,andrelyingoncommonlawtrademarkrightswhenappropriate.Wealsoregistercopyrightsanddomainnamesasdeemedappropriate.Additionally,weprotectourtrademarks,domainnamesandcopyrightswiththeuseofintellectualpropertylicensesandanenforcementprogram.

Wehaveconsidered,andwillcontinuetoconsider,theappropriatenessoffilingforpatentstoprotectfutureinventions,ascircumstancesmaywarrant.However,manypatentsprotectonlyspecificinventionsandtherecanbenoassurancethatothersmaynotcreatenewproductsormethodsthatachievesimilarresultswithoutinfringinguponpatentsownedbyus.

GovernmentRegulation

WearesubjecttoanumberofUnitedStatesfederalandstateandforeignlawsandregulationsthataffectcompaniesconductingbusinessontheInternet,manyofwhicharestillevolvingandbeingtestedincourts,andcouldbeinterpretedinwaysthatcouldharmourbusiness.Thesemayinvolveuserprivacy,libel,rightsofpublicity,dataprotection,content,intellectualproperty,distribution,electroniccontractsandothercommunications,competition,protectionofminors,consumerprotection,taxationandonlinepaymentservices.Inparticular,wearesubjecttoUnitedStatesfederalandstateandforeignlawsregardingprivacyandprotectionofuserdata.Foreigndataprotection,privacy,andotherlawsandregulationsareoftenmorerestrictivethanthoseintheUnitedStates.UnitedStatesfederalandstateandforeignlawsandregulationsareconstantlyevolvingandcanbesubjecttosignificantchange.Inaddition,theapplicationandinterpretationoftheselawsandregulationsisoftenuncertain,particularlyinthenewandrapidlyevolvingindustryinwhichweoperate.TherearealsoanumberoflegislativeproposalspendingbeforetheUnitedStatesCongress,variousstatelegislativebodies,andforeigngovernmentsconcerningdataprotectionwhich

couldaffectus.

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Inaddition,weprovideadvertisingdataandinformationandconductmarketingactivitiesthataresubjecttoUnitedStatesfederalandstateconsumerprotectionlawsthatregulateunfairanddeceptivepractices,domesticallyandinternationally.TheUnitedStatesandEuropeanUnionhavebeguntoadoptlegislationthatregulatescertainaspectsoftheInternet,includingonlineeditorialandusergeneratedcontent,userprivacy,behavioraltargetingandonlineadvertising,taxation,andliabilityforthirdpartyactivities.

UnitedStatesfederal,stateandforeigngovernmentsarealsoconsideringalternativelegislativeandregulatoryproposalsthatwouldincreaseregulationonInternetadvertising.Itisimpossibletoaccuratelypredictwhethernewtaxesorregulationswillbeimposedonourservices,andwhetherorhowwemightbeaffected.IncreasedregulationoftheInternetcouldincreasethecostofdoingbusinessorotherwisemateriallyadverselyaffectourbusiness,financialconditionoroperationalresults.

OurReportableSegments

Duringthefourthquarterof2014,managementchangedTripAdvisorsreportablesegmentstoreflectchangesinthemanagementreportingstructureoftheorganization,primarilyduetorecentbusinessacquisitions,andthemannerinwhichthechiefoperatingdecisionmaker,orCODM,regularlyassessesinformationandevaluatesperformanceforoperatingdecisionmakingpurposes,includingallocationofresources.WebelievethisnewsegmentstructurebetterprovidestheCODMwithinformationtoassessperformanceandtomakeresourceallocationdecisions.TheCODMforthecompanyisourChiefExecutiveOfficer.

Therevisedreportingstructureincludestworeportablesegments:HotelandOther.OurOthersegmentconsistsoftheaggregationofthreeoperatingsegments,whichincludeourAttractions,RestaurantsandVacationRentalsbusinesses.

HotelSegment

OurHotelsegmentaccountedfor91%ofourCompanysconsolidatedrevenuein2014.

OurHotelsegmentincludesrevenuegeneratedfromservicesrelatedtohotels,includingclickbasedanddisplaybasedadvertisingrevenuefrommakinghotelroomnights,airlinereservations,andcruisereservationsavailableforpricecomparisonandbooking,aswellassubscriptionbasedproductssuchasBusinessListings,transactionbasedproductssuchasJetsetterandTingo,andotherrevenuerelatedtohotels.

TheHotelsegmentsfinancialperformanceisprincipallydependentonourabilitytogrowclickbasedadvertisingrevenue.Thisrevenuestreamishighlydependentupongrowthinourhotelshoppers,howeffectivelyweconverthotelshoppersintorevenue,andthepricewegetpaidperhotelshopper,allofwhichequatestorevenueperhotelshopper.ThetermhotelshoppersreferstouserswhoviewservletsonourwebsitesthatcontainalistingofhotelsinacityorvisitorstoaspecifichotelpageonTripAdvisor.

MorethanhalfofTripAdvisorusersvisitpagesthatarenothotelrelated.RevenuegeneratedfromtheseusersisreflectedinourOthersegmentbelow.

OtherSegment

OurOthersegmentaccountedfor9%ofourconsolidatedrevenuein2014andconsistsofthefollowingbusinessesbelow:

Attractions.Weprovide,throughViator,informationandservicesforresearchingandbookingdestinationactivitiesaroundtheworld.Viatorworkswithlocaloperatorstoprovidetravelerswithaccesstotoursandactivitiesinpopulardestinationsworldwide,earningacommissionforsuchservice.Inadditiontoitsconsumerdirectbusiness,Viatoralsoprovideslocalexperiencestoaffiliatepartners,includingsomeoftheworldstopairlines,hotelsandtravelagencies.

Restaurants.Wehaveseveralwebsitesthatprovideonlineandmobilereservationservicesthatconnectrestaurantswithdiners.ThesewebsitesarecurrentlyfocusedontheEuropeanmarket,primarilythroughLafourchette.LafourchetteisanonlinerestaurantbookingplatformwithanetworkofrestaurantpartnersacrossEurope.Lafourchettealsooffersmanagementsoftwaresolutionshelpingrestaurantstomaximizebusinessbyprovidingaflexibleonlinebooking,discountanddatatool.Wegeneraterevenueprimarilybychargingafeeforeachrestaurantguestseatedthroughtheonlinereservationsystems.

VacationRentals.Weofferindividualpropertyownersandpropertymanagerstheabilitytolisttheirproperties

availableforrentalandconnectwithtravelersusingasubscriptionbasedfeestructureorafreetolist,commissionperbookingbasedoption.Ourvacationrentalinventorycurrentlyincludesfullhomerentals,condos,villas,beachrentals,cabins,cottages,andmanyotheraccommodationtypes.Thesepropertiesarelistedacrossanumberofplatforms,includingTripAdvisorVacationRentals,U.S.basedFlipKey(whichincludestheVacationHomeRentalssitethatwasacquiredduring2014),andourEuropeanbasedHolidayLettingsandNiumbabusinesses.

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SubstantiallyallofourrevenuefromourOthersegmentisincludedinsubscriptionbased,transactionandotherrevenue.

FinancialInformationaboutReportableSegmentsandGeographicInformation

FortheyearsendedDecember31,2014,2013and2012ourtwomostsignificantadvertisingpartners,ExpediaandPriceline,eachaccountedformorethan10%ofourconsolidatedrevenueandcombinedaccountedfor46%,47%and48%ofourconsolidatedrevenue,respectively.ThisconcentrationofrevenueisrecordedinourHotelsegmentforthesereportingperiods.AsofDecember31,2014and2013,Expediaaccountedfor15%and14%,respectively,ofourtotalaccountsreceivable.

FinancialinformationrelatedtoourtworeportablesegmentsandgeographicinformationrequiredhereiniscontainedinNote16SegmentandGeographicInformation,inthenotestoourconsolidatedfinancialstatements.

Employees

AsofDecember31,2014,wehadapproximately2,793employees.Oftheseemployees,approximately1,292werebasedintheUnitedStates.Webelievethatwehavegoodrelationshipswithouremployees,includingrelationshipswithemployeesrepresentedbyinternationalworkscouncilsorothersimilarorganizations.

Seasonality

Expendituresbytraveladvertiserstendtobeseasonal.Historically,ourstrongestquarterhasbeenthethirdquarter,whichisakeytravelresearchperiod,withtheweakestquarterbeingthefourthquarter.However,adverseeconomicconditionsorcontinuedgrowthofourinternationaloperationswithdifferingholidaypeaksmayinfluencethetypicaltrendofourseasonalityinthefuture.

AdditionalInformation

CompanyWebsiteandPublicFilings

Wemaintainacorporatewebsiteatwww.tripadvisor.com.Exceptasexplicitlynoted,theinformationonourwebsite,aswellasthewebsitesofourvariousbrandsandbusinesses,isnotincorporatedbyreferenceinthisAnnualReportonForm10K,orinanyotherfilingswith,orinanyinformationfurnishedorsubmittedto,theSEC.

Wemakeavailable,freeofchargethroughtheInvestorRelationssectionofourwebsite,ourAnnualReportsonForm10K,QuarterlyReportsonForm10QandCurrentReportsonForm8K,andamendmentstothosereports,filedorfurnishedpursuanttoSections13(a)orSection15(d)oftheExchangeActassoonasreasonablypracticableaftertheyhavebeenelectronicallyfiledwith,orfurnishedto,theSEC.

CodeofEthics

Wepostourcodeofbusinessconductandethics,whichappliestoallemployees,includingallexecutiveofficers,seniorfinancialofficersanddirectors,onourcorporatewebsiteatwww.tripadvisor.com.OurcodeofbusinessconductandethicscomplieswithItem406ofSECRegulationSKandtherulesofNASDAQ.WeintendtodiscloseanychangestothecodethataffecttheprovisionsrequiredbyItem406ofRegulationSK,andanywaiversofthecodeofethicsforourexecutiveofficers,seniorfinancialofficersordirectors,onourcorporatewebsite.Item1A. RiskFactors

YoushouldconsidercarefullytherisksdescribedbelowtogetherwithalloftheotherinformationincludedinthisAnnualReportastheymayimpactourbusiness,resultsofoperationsand/orfinancialcondition.Therisksanduncertaintiesdescribedbelowarenottheonlyonesweface.Additionalrisksanduncertaintiesnotpresentlyknowntousorthatwecurrentlybelieveareimmaterialmayalsoimpairourbusiness,resultsofoperationsorfinancialcondition.Ifanyofthefollowingrisksoccur,ourbusiness,financialcondition,operatingresultsandcashflowscouldbemateriallyadverselyaffected.

Ifweareunabletocontinuetoincreasevisitorstoourwebsitesandtocosteffectivelyconvertthesevisitorsintorepeatusersorcontributors,ouradvertisingrevenuecoulddecline.

Theprimaryassetthatweusetoattractvisitorstraffictoourwebsitesandconvertthesevisitorsintorepeatusersisourcontinuedabilitytocollect,create,organizeanddistributehighquality,commerciallyvaluablecontentthatmeetsusersspecific

interestsandenablesthemtoshareandinteractwiththecontentandsupportingcommunities.Therecanbenoassurancesthatwewill

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continuetoobtaincontentinacosteffectivemannerorinamannerthatmeetsrapidlychangingconsumerdemand.Anyfailuretoobtainsuchcontentororganizeanddistributesuchcontentinamannerthatwillengageusers,orafailuretoprovideproductsthatareperceivedasuseful,reliableandtrustworthy,couldadverselyaffectuserexperiencesandreducetrafficdriventoourwebsites,whichwouldmakeourwebsiteslessattractivetoadvertisers.Anychangeinthecoststructurepursuanttowhichweobtainourcontent,orintravelersrelativeappreciationofuserbasedversusexpertcontentorouruserbasedcontentversusothersitesuserbasedcontent,couldalsoreducetrafficdriventoourwebsiteswhichwouldnegativelyimpactourbusinessandfinancialperformance.

Wederivesubstantiallyallofourrevenuefromadvertisingandanysignificantreductioninspendingbyadvertiserscouldharmourbusiness.

Wederivesubstantiallyallofourrevenuefromthesaleofadvertising,primarilythroughclickbasedadvertisingand,toalesserextent,displaybasedadvertising.Whileweenterintomasteradvertisingcontractswithourpartners,theseagreementsgenerallyaddressmatterssuchasprivacyandcompliance,paymenttermsandconditions,terminationandindemnities.Mostofourclickbasedadvertisingcontractscanbeterminatedbyourpartnersatwilloronshortnotice.Ourabilitytogrowadvertisingrevenuewithourexistingornewadvertisingpartnersisdependentinlargepartonourabilitytogeneraterevenueforthem.Advertiserswillnotcontinuetodobusinesswithusiftheirinvestmentinsuchadvertisingdoesnotgeneratesalesleads,customers,bookings,orrevenueandprofitonacosteffectivebasis,orifwedonotdeliveradvertisementsinaneffectivemanner.Ifweareunabletoprovidevaluetoouradvertisers,theywilllikelystopplacingadsonourwebsites,whichwouldharmourrevenuesandbusiness.Wecannotguaranteethatourcurrentadvertiserswillfulfilltheirobligationsunderexistingcontracts,continuetoadvertisebeyondthetermsofexistingcontractsorenterintoanyadditionalcontractswithus.

Clickbasedadvertisingaccountsforthemajorityofouradvertisingrevenue.Anychangeswemaketoourbusinessmodelmayimpactouradvertisingrevenueinwaysthatwedonotexpect.Ifourpartnersdonotreceivethebenefitstheyexpectfromtheiradvertisingspendwithus,theymayreducetheirspending.Inaddition,ifnew,moreeffectiveadvertisingmodelsweretoemerge,therecanbenoassurancethatwewillhavetheabilitytoofferthesemodels,oroffertheminaneffectivemanner.

Furthermore,ourCPCpricingforclickbasedadvertisingdepends,inpart,oncompetitionbetweenadvertisers.Ifourlargeadvertisersbecomelesscompetitivewitheachother,mergewitheachotherorwithourcompetitors,focusmoreonperclickprofitthanontrafficvolume,orareabletoreduceCPCs,thiscouldhaveanadverseimpactonourclickbasedadvertisingrevenuewhichwould,inturn,haveanadverseeffectonourbusiness,financialconditionandresultsofoperations.

Expendituresbyadvertisersalsotendtobecyclical,subjecttovariationbasedonbudgetaryconstraints,projectcancellationordelay,andtoreflectoveralleconomicconditionsandbuyingpatterns.Ifweareunabletogenerateadvertisingrevenueduetofactorsoutsideofourcontrol,ourbusinessandfinancialperformancewouldbeadverselyaffected.

Ourbusinessescouldbenegativelyaffectedbychangesinsearchenginealgorithmsanddynamics,orsearchenginedisintermediation.

WerelyheavilyonInternetsearchenginessuchasGoogle,bothfororganictrafficandthroughthepurchaseoftravelrelatedkeywords,togeneratetraffictoourwebsites.Weobtainasignificantamountoftrafficviasearchenginesand,therefore,utilizetechniquessuchasSEOandSEMtoimproveourplacementinrelevantsearchqueries.Searchengines,includingGoogle,frequentlyupdateandchangethelogicthatdeterminestheplacementanddisplayofresultsofauserssearch,suchthatthepurchasedoralgorithmicplacementoflinkstoourwebsitescanbenegativelyaffected.Moreover,asearchenginecould,forcompetitiveorotherpurposes,alteritssearchalgorithmsorresultscausingourwebsitestoplacelowerinsearchqueryresults.Ifamajorsearchenginechangesitsalgorithmsinamannerthatnegativelyaffectsourpaidorunpaidsearchranking,orifcompetitivedynamicsimpacttheeffectivenessofSEOorSEMinanegativemanner,ourbusinessandfinancialperformancewouldbeadverselyaffected,potentiallytoamaterialextent.Furthermore,ourfailuretosuccessfullymanageourSEOandSEMstrategiescouldresultinasubstantialdecreaseintraffictoourwebsites,aswellasincreasedcostsifweweretoreplacefreetrafficwithpaidtraffic.

Inaddition,totheextentthatGoogle(includingGoogle+LocalandGoogleHotelFinder)andBing(includingBingTravel),orotherleadingsearchormetasearchenginesthathaveasignificantpresenceinourkeymarkets,disintermediateOTAsortravelcontentprovidersbyofferingcomprehensivetravelplanningorshoppingcapabilities,orreferthoseleadstosuppliersdirectly,ortootherfavoredpartners,therecouldbeamaterialadverseimpactonourbusinessandfinancialperformance.Forexample,during2012,GooglecompleteditsacquisitionofflightsearchtechnologycompanyITASoftwareandseparatelymadechangestoitshotelsearchresults,includingbothexpandingandpromotingtheuseofGoogle+Local.Totheextenttheseactionshaveanegativeeffectonoursearchtraffic,whetherondesktop,tabletormobiledevices,ourbusinessandfinancialperformancecouldbe

adverselyaffected.

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Werelyonarelativelysmallnumberofsignificantadvertisersandanyreductioninspendingbyorlossofthoseadvertiserscouldseriouslyharmourbusiness.

Wederiveasubstantialportionofourrevenuefromarelativelysmallnumberofsignificantadvertisers.Forexample,fortheyearendedDecember31,2014,ourtwomostsignificantadvertisingpartners,ExpediaandPriceline(andtheirsubsidiaries),accountedforacombined46%oftotalrevenue.Ifanyofoursignificantadvertisersweretoceaseorsignificantlycurtailadvertisingonourwebsites,wecouldexperiencearapiddeclineinourrevenueoverarelativelyshortperiodoftime.

Oursuccessdependsupontheacceptance,andsuccessfulmeasurement,ofonlineadvertisingasanalternativetoofflineadvertising.

Thelongtermgrowthofourbusinesswilldependheavilyonthecontinuedacceptanceofonlineadvertisingasanalternativeorsupplementtoofflineadvertisingandtheincreaseinthepercentageoftheadvertisingmarketallocatedtoonlineadvertising,whichmaynothappeninamannerortotheextentthatwecurrentlyexpect.Wecompetewithtraditionalmediaforadvertisingdollars,inadditiontowebsiteswithhigherlevelsoftraffic.Ifonlineadvertisingceasestobeanacceptablealternativeorsupplementtoofflineadvertisingthenourbusiness,financialconditionandresultsofoperationswillbenegativelyimpacted.

Theadoptionofonlineadvertising,particularlybythoseentitiesthathavehistoricallyreliedupontraditionalmediaforadvertising,requirestheacceptanceofanewwayofconductingbusiness,exchanginginformationandevaluatingnewadvertisingandmarketingtechnologiesandservices.Becausetheonlinemarketingindustryisrelativelynewandrapidlyevolving,itusesdifferentmethodsthantraditionalmediatogaugeitseffectiveness.SomeofourpotentialcustomershavelittleornoexperienceusingtheInternetforadvertisingandmarketingpurposesandhaveallocatedonlylimitedportionsoftheiradvertisingandmarketingbudgetstotheInternet.Asaresult,wearecontinuallyevaluatingchangestoaspectsofourbusinessmodeltokeeppacewiththeexpectationsofusersandadvertisers,andthesechangesmaynotyieldthebenefitsweexpect.Inparticular,wearedependentonourclientsadoptionofnewmetricstomeasurethesuccessofonlinemarketingcampaigns.

Inaddition,ifadvertisersmateriallychangetheirtransactionattributionmodelsortheirreturnoninvestmentcalculationsand/orincreasetheirreturnoninvestmenttargetswithrespecttoonlineadvertisingingeneral,orTripAdvisortrafficinparticular,theymightreducethepricestheyarewillingtopayforouradvertisingproducts,whichwouldhaveanadverseeffectonourbusiness,financialconditionandresultsofoperations.

Growthintheuseofdevicesotherthandesktopcomputersmaynegativelyaffectourrevenueandfinancialresults.

OurcontentwasoriginallydesignedforusersaccessingtheInternetonadesktopcomputer.ThenumberofpeoplewhoaccesstheInternetthroughdevicesotherthandesktopscomputers,includingmobilephones,smartphones,handheldcomputerssuchasnotebooksandtablets,videogameconsolesandtelevisionsettopdevices,hasincreasedsubstantiallyinthelastfewyears.Weanticipatethattherateofuseofthesecomputingdeviceswillcontinuetogrow.Thelowerresolution,functionalityandmemoryassociatedwithsomeofthesealternativedevicesmaketheuseofourproductsandservicesthroughsuchdevicesmoredifficultandversionsofourproductsandservicesdevelopedforthesedevicesmaynotbecompellingtousers.Wehavedevelopedservicesandapplicationstoaddresslimitationsofthesedevicesandouradvertisingrevenuescontinuetogrow,however,wemonetizeusersofthesedevicesatalowerratecomparedtouserswhoaccessourwebsitesthroughdesktopcomputers.

Declinesordisruptionsintheeconomyingeneralandtravelindustryinparticularcouldadverselyaffectourbusinessesandfinancialperformance.

Ourbusinessesandfinancialperformanceareaffectedbythehealthoftheglobaleconomygenerallyaswellasthetravelindustryinparticular.Theglobaleconomymaybeadverselyimpactedbyanumberofnegativeeconomicdevelopmentsincludingdefaultsongovernmentdebt,significantincreasesinfuelandenergycosts,taxincreasesandothermattersthatcouldreducediscretionaryspending,continuedtighteningofcreditmarkets,furtherdeclinesinconsumerconfidence,andpolicymissteps.Theseconditionscouldhaveamaterialadverseimpactonourbusinessandfinancialperformance.

Travelexpendituresaresensitivetopersonalandbusinessdiscretionaryspendinglevelsandtendtodeclineorgrowmoreslowlyduringeconomicdownturns.Decreasedtravelexpenditurescouldreducethedemandforourservices,therebycausingareductioninrevenue.

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Werelyonthevalueofourbrandandconsumertrustinourbrand.Ifwearenotabletomaintainandenhanceourbrand,orifeventsoccurthatdamageourreputationandbrand,ourbusinessmaybeharmed.

WebelievethattheTripAdvisorbrandhascontributedsignificantlytooursuccessandthatmaintainingandenhancingourbrandiscriticaltoexpandingourbaseofusers,creatingcontentandattractingadvertisers.Asaresult,weinvestsignificantlyinbrandmarketingincludingtelevision.Weexpecttheseinvestmentstocontinue,orevenincrease,asaresultofavarietyoffactors,includingincreasedspendingfromcompetitors,theincreasingcostsofsupportingmultiplebrands,expansionintogeographiesandproductswhereourbrandsarelesswellknown,inflationinmediapricing,andthecontinuedemergenceandrelativetrafficsharegrowthofsearchenginesasdestinationsitesfortravelers.Sucheffortsmaynotmaintainorenhanceconsumerawarenessofourbrandsand,evenifwearesuccessfulinourbrandingefforts,sucheffortsmaynotbecosteffectiveorasefficientastheyhavebeenhistorically.Ifweareunabletomaintainorenhanceconsumerawarenessofourbrandsortogeneratedemandinacosteffectivemanner,itwouldhaveamaterialadverseeffectonourbusinessandfinancialperformance.

Wereceivesignificantmediacoverageinourvariousgeographicmarkets.Unfavorablepublicityregarding,forexample,ourprivacypractices,productchanges,theaccuracyofusergeneratedcontent,productquality,litigationorregulatoryactivitycouldadverselyaffectourreputationwithourusersandouradvertisers.Suchnegativepublicityalsocouldhaveanadverseeffectonthesize,engagement,andloyaltyofouruserbaseandresultindecreasedrevenue,whichcouldadverselyaffectourbusinessandfinancialresults.

Intensecompetitioncouldreduceourmarketshareandharmourfinancialperformance.

Themarketfortheservicesweofferisintenselycompetitive.Wefacecompetitionfromanumberofdifferentsourcesandmanyofourcompetitorshavesignificantlygreaterandmorediversifiedresourcesthanwedoandmaybeabletoleverageotheraspectsoftheirbusinesstoenablethemtocompetemoreeffectivelyagainstus.Morespecifically:

Wefacecompetitionfromtravelserviceproviderssuchasmajorhotelcompanies,airlinesandrentalcarcompanies,manyofwhichhavetheirownwebsitestowhichtheydrivebusiness.Forexample,severalmajorhotelcompanieslaunchedanonlinehotelreservationservicewithastatedgoalofdrivingconsumersdirectlytotheirbrandwebsitestherebyreducingthesharereceivebyonlinetravelagents.Theymayalsoattempttoimprovetheircompetitivepositionbyofferinglowerroomrates,betterroomavailabilityoradditionalfeaturesoramenitiesthroughthisreservationservicethanareavailablethroughserviceslikeours.

Wefacecompetitionfromonlinetravelagents,suchasExpediaandPriceline(andtheirsubsidiaries),andthiscompetitionmayincreasetotheextentthattheseonlinetravelagentsaccumulateanddevelopacomprehensiveofferingoftravelrelatedreviewsandresources.Thebarrierstoentryforthesecompaniesmaybelimitedgiventheiraccesstotravelrelatedinformationandrelationshipswithconsumers.

Wefaceincreasedcompetitionfromthelargesearchenginesandsocialnetworkingsites,companies,suchasGoogleandFacebook,orothercompanies,whichcompetitionwillonlyincreaseshouldtheychosetocompetemoredirectlywithusinthetravelreviewspace,andcreatecommerciallyvaluableonlinecontentatsignificantscale.Forexample,Google+Local,withitsaggregatedreviewsandlocalrecommendations,competeswithusandGooglesaccesstomorecomprehensivedataregardingusersearchqueriesthroughitssearchalgorithmsgivesitasignificantcompetitiveadvantageoverothercompaniesintheindustry,includingus.Inaddition,ifsignificantnumbersofusersadoptFacebooksnewlyreleasedGraphSearchtogettravelrecommendations,itcouldhavetheeffectofreducingtrafficanduserengagementonTripAdvisor.

Wealsofacecompetitionfromtravelagencies,wholesalersandtraveloperatorsaswellasoperatorsoftravelindustryreservationdatabasessuchasGalileo,Travelport,AmadeusandSabre.

Inaddition,wecompetewithnewspapers,magazinesandothertraditionalmediacompaniesthatprovideofflineandonlineadvertisingopportunities.

Forourvacationrentalbusiness,wealsofacecompetitionfromseveralcompanies,includingHomeAwayandAirbnb,someofwhomhavealargerinventoryofroomsavailablethanwedo.

Forourrestaurantreservationandattractionsbusiness,thecompetitionisnotasconsolidatedasitisforotherareasofourbusinesshowever,wefacecompetitionfromcertaincompanieslikeOpenTableintheUnitedStates.

Manyofourcompetitorshavesignificantlygreaterfinancial,technical,marketingandotherresourcescomparedtousandhaveexpertiseindevelopingonlinecommerceandfacilitatingInternettrafficaswellaslargeclientbases.Weexpecttofaceadditionalcompetitionasotherestablishedandemergingcompaniesenterthetraveladvertisingmarket.

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Certainofthecompanieswedobusinesswith,includingsomeofourclickbasedadvertisingpartners,arealsoourcompetitors.Theconsolidationofourcompetitorsandpartners,includingExpedia(throughitsinvestmentinTrivago)andPriceline(throughitsacquisitionofKayakandOpenTable),mayaffectourrelativecompetitivenessandourpartnerrelationships.Competitionandconsolidationcouldresultinhighertrafficacquisitioncosts,reducedmarginsonouradvertisingservices,lossofmarketshare,reducedcustomertraffictoourwebsitesandreducedadvertisingbytravelcompaniesonourwebsites.Forexample,Google(throughitslaunchofGoogleHotelFinder,evolutionandexpansionofGoogle+LocalandpreferredtopplacementofPlacesresultsinGoogleorganictravelsearchresults)andMicrosoftsBing(throughitslaunchofBingTravel),haveeachtakenstepstoappealmoredirectlytotravelcustomers,whichcouldleadtodiversionofcustomertraffictotheirownwebsitesorthoseofafavoredpartner,orundermineourabilitytoobtainprominentplacementinpaidorunpaidsearchresultsatareasonablecost,oratall.Competitioninourindustrymayresultinpricingpressure,lossofmarketshareordecreasedmemberengagement,anyofwhichcouldadverselyaffectourbusinessandfinancialperformance.

Weareregularlysubjecttoclaims,suits,governmentinvestigations,andotherproceedingsthatmayresultinadverseoutcomes.

Weareregularlysubjecttoclaims,suits,andgovernmentinvestigationsinvolvingcompetition,intellectualproperty,privacy,consumerprotection,tax,laborandemployment,commercialdisputes,contentgeneratedbyourusers,goodsandservicesofferedbyadvertisersorpublishersusingourplatforms,andothermatters.Thesaleofhardwareproductsalsoexposesustotheriskofproductliabilityandotherlitigationinvolvingassertionsaboutproductdefects,aswellashealthandsafety,hazardousmaterialsusage,andotherenvironmentalconcerns.Inaddition,ourbusinessesfaceintellectualpropertylitigation,asfurtherdiscussedlater,thatexposesustotheriskofexclusionandceaseanddesistorders,whichcouldlimitourabilitytosellproductsandservices.

Suchclaims,suits,andgovernmentinvestigationsareinherentlyuncertainandtheirresultscannotbepredictedwithcertainty.Regardlessoftheoutcome,anyofthesetypesoflegalproceedingscanhaveanadverseimpactonusbecauseoflegalcosts,diversionofmanagementresources,andotherfactors.Determiningreservesforourpendinglitigationisacomplex,factintensiveprocessthatrequiressignificantjudgment.Itispossiblethataresolutionofoneormoresuchproceedingscouldresultinsubstantialfinesandpenaltiesthatcouldadverselyaffectourbusiness,consolidatedfinancialposition,resultsofoperations,orcashflowsinaparticularperiod.Theseproceedingscouldalsoresultinreputationalharm,criminalsanctions,consentdecrees,ororderspreventingusfromofferingcertainfeatures,functionalities,products,orservices,requiringachangeinourbusinesspracticesorproductrecallsorotherfieldaction,orrequiringdevelopmentofnoninfringingorotherwisealteredproductsortechnologies.Anyoftheseconsequencescouldadverselyaffectourbusinessandresultsofoperations.

Wearedependentuponthequalityoftrafficinournetworktoprovidevaluetoonlineadvertisers,andanyfailureinourqualitycontrolcouldhaveamaterialadverseeffectonthevalueofourwebsitestoouradvertisersandadverselyaffectourrevenue.

Weusetechnologyandprocessestomonitorthequalityofandtoidentifyanyanomalousmetricsassociatedwith,theInternettrafficthatwedelivertoonlineadvertisers.Thesemetricsmaybeindicativeoflowqualityclickssuchasnonhumanprocesses,includingrobots,spidersorothersoftwarethemechanicalautomationofclickingandothertypesofinvalidclicksorclickfraud.Evenwithsuchmonitoringinplace,thereisariskthatacertainamountoflowqualitytraffic,ortrafficthatonlineadvertisersdeemtobeinvalid,willbedeliveredtosuchonlineadvertisers.Asaresult,wemayberequiredtocreditamountsowedtousbyouradvertisers.Furthermore,lowqualityorinvalidtrafficmaybedetrimentaltoourrelationshipswithadvertisers,andcouldadverselyaffectouradvertisingpricingandrevenue.

Werelyonassumptionsandestimatesanddatafromthirdpartiestocalculatecertainofourkeymetrics,andrealorperceivedinaccuraciesinsuchmetricsmayharmourreputationandnegativelyaffectourbusiness.

Certainkeymetrics,suchasthenumberofouractiveusers,uniquevisitors,totaltrafficandnumberofreviewsandopinions,arecalculated,insomecases,usinginternalcompanydataand,inothercases,relyingondatafromthirdparties.Whilethesenumbersarebasedonwhatwebelievetobereasonablecalculationsfortheapplicableperiodsofmeasurement,thereareinherentchallengesinmeasuringusageanduserengagementacrossourlargeuserbasearoundtheworld.Forexample,asinglepersonorusermayhavemultipleaccountsorbrowsetheinternetonmultiplebrowsers,somemobileapplicationsautomaticallycontactourserversforregularupdateswithnouseractionandwearenotabletocaptureuserinformationonallofourplatforms.Assuch,thecalculationsofouractiveusersanduniquevisitorsmaynotaccuratelyreflectthenumberofpeopleactuallyusingourplatforms.Inaddition,ourmeasuresofusergrowthanduserengagementmaydifferfromestimatespublishedbythirdpartiesorfromsimilarmetricsofourcompetitorsduetodifferencesinmethodologiesutilizedbyusandthethirdpartiesforwhichwerelyonthisdata.

Wearecontinuallyseekingtoimproveourabilitytoestimatethesekeymetrics.Weregularlyreviewandadjustourprocessesforcalculatingourinternalmetricstoimprovetheiraccuracy.Ifourusers,advertisers,partnersandshareholdersdonotperceiveourmetricstobeaccuraterepresentationsorifwediscovermaterialinaccuraciesinourusermetrics,ourreputationmay

beharmed.Inwhichcase,usersmaynotuseourproductsandservicesandadvertisersandpartnersmaybelesswillingtoallocatetheirbudgetstoourproductsandserviceswhichcouldnegativelyaffectourbusinessandoperatingresults.

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Werelyoninformationtechnologytooperateourbusinessandmaintaincompetitiveness,andanyfailuretoadapttotechnologicaldevelopmentsorindustrytrendscouldharmourbusinesses.

Wedependontheuseofsophisticatedinformationtechnologiesandsystems.Asouroperationsgrowinsizeandscope,wemustcontinuouslyimproveandupgradeoursystemsandinfrastructurewhilemaintainingorimprovingthereliabilityandintegrityofoursystemsandinfrastructure.Ourfuturesuccessalsodependsonourabilitytoadaptourservicesandinfrastructuretomeetrapidlyevolvingconsumertrendsanddemandswhilecontinuingtoimprovetheperformance,featuresandreliabilityofourservicesinresponsetocompetitiveserviceandproductofferings.Theemergenceofalternativeplatformssuchassmartphoneandtabletcomputingdevicesandtheemergenceofnichecompetitorswhomaybeabletooptimizeproducts,servicesorstrategiesforsuchplatformswillrequirenewinvestmentintechnology.Newdevelopmentsinotherareas,suchascloudcomputing,couldalsomakeiteasierforcompetitiontoenterourmarketsduetolowerupfronttechnologycosts.Inaddition,wemaynotbeabletomaintainourexistingsystemsorreplaceorintroducenewtechnologiesandsystemsasquicklyaswewouldlikeorinacosteffectivemanner.

Ifwedonotcontinuetoinnovateandprovidetoolsandservicesthatareusefultotravelers,wemaynotremaincompetitive,andourbusinessandfinancialperformancecouldsuffer.

Oursuccessdependsinpartoncontinuedinnovationtoprovidefeaturesandservicesthatmakeourwebsitesandsmartphoneandtabletcomputingapplicationsusefulfortravelers.Ourcompetitorsarecontinuallydevelopinginnovationsinonlinetravelrelatedservicesandfeatures.Asaresult,wearecontinuallyworkingtoimproveourbusinessmodelanduserexperienceinordertodriveusertrafficandconversiondates.Wecangivenoassurancesthatthechangeswemakewillyieldthebenefitsweexpectandwillnothaveadverseimpactsthatwedidnotanticipate.Ifweareunabletocontinueofferinginnovativeproductsandservicesandqualityfeaturesthattravelerswanttouse,existingusersmaybecomedissatisfiedandusecompetitorsofferingsandwemaybeunabletoattractadditionalusers,whichcouldadverselyaffectourbusinessandfinancialperformance.

Newtechnologiescouldblockourads,whichwouldharmourbusiness.

Wederivemostofourrevenuesfromfeespaidtousbyadvertisersinconnectionwiththedisplayofadsonwebpagesforourusers.Technologieshavebeendevelopedthatcanblockthedisplayofonlineadsandthatprovidetoolstouserstooptoutofsomewebbasedadvertisingproducts.Asaresult,thesetechnologiesandtoolscouldadverselyaffectourbusinessandfinancialperformance.

Ourcultureemphasizesrapidinnovationandprioritizesuserengagementovershorttermfinancialresults.

Weoperateinaculturethatencouragesrapiddevelopmentandreleaseofnewandimprovedproducts,whichmayattimesresultinunintendedconsequencesordecisionsthatarepoorlyreceivedbyusersoradvertisers.Ourculturealsoprioritizesuserengagement,orwebsitestickiness,overshorttermfinancialresults.Wehavetakenactionsinthepastandmaycontinuetomakeproductdecisionsgoingforwardthathavetheeffectofreducingourshorttermrevenueorprofitabilityifwebelievethatthedecisionsbenefittheaggregateuserexperience,conversionratesand/orCPCpricing,therebyultimatelyimprovingourfinancialperformanceoverthelongterm.Theshorttermreductionsinrevenueorprofitabilitycouldbemoreseverethanweanticipateorthesedecisionsmaynotproducethelongtermbenefitsthatweexpect,inwhichcaseourusergrowthandengagement,ourrelationshipswithusersandadvertisers,andourbusinessandresultsofoperationscouldbeharmed.

Theonlinevacationrentalmarketisrapidlyevolvingandifwefailtopredictthemannerinwhichthemarketdevelops,ourbusinessandprospectsmaysuffer.

WeoffervacationrentalservicesthroughourU.S.basedFlipKeyandVacationHomeRentalsandEuropeanbasedHolidayLettingsandNiumba.Theonlinevacationrentalmarketisrelativelynewandrapidlyevolvinginmanyrespects,includingacceptanceofthebusinessmodelbytravelers,propertyownersandpropertymanagersfromabusinessandmarketingperspectiveaswellastheregulatoryenvironment.Weoperateinvariousdisparatejurisdictionsandmarketsandhavelimitedinsightintotrendsthatmaydevelopinthosemarketsandmayaffectourbusiness.Sincewebeganofferingsuchservices,therehavebeenandcontinuetobesignificantbusiness,marketingandregulatorydevelopments.Operatinginnewanduntestedjurisdictionsrequiressignificantmanagementattentionandfinancialresources.Wecannotassurethatourexpansioneffortswillbesuccessful,andtheinvestmentandadditionalresourcesrequiredtoestablishoperationsandmanagegrowthmaynotproducethedesiredlevelsofrevenueorprofitability.

Ifwefailtoattractandmaintainacriticalmassofvacationrentallistingsandtravelers,ourvacationrentalmarketplaceswill

becomelessvaluableandthismayhaveanegativeimpactonourbusiness.

Inourvacationrentalbusiness,revenueisgeneratedwhenownersormanagersofvacationrentalpropertiespayusfeestolistandmarketvacationrentalpropertiestouserswhovisitthewebsitescomprisingourmarketplace,ownersand/ortravelerspayusfeesuponbookingatransactionandpropertymanagerspayusfeesforemailandtelephoneleadsfrompotentialtravelers.Asaresult,our

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successinthisareaprimarilydependsonourabilitytoattractowners,managers,travelersandadvertiserstoourmarketplace.Ifpropertyownersandmanagersdonotperceivethebenefitsofmarketingtheirpropertiesthroughourwebsites,orelecttolistthemwithacompetitorinsteadoflistingwithus,ourvolumeofnewlistingsandlistingrenewalsmaysuffer.Asaresult,wemaybeunabletoofferasufficientsupplyandvarietyofvacationpropertiestoattracttravelerstoourwebsites.Largercompetitoralreadyexistsinthevacationrentalspace,withsignificantlymoreusersandlistedproperties,andnewcompetitorswithsignificantfinancialresourcesarecontinuallyemerging.

Wemaybesubjecttoclaimsthatweviolatedintellectualpropertyrightsofothersandtheseclaimscanbeextremelycostlytodefendandcouldrequireustopaysignificantdamagesandlimitourabilitytooperate.

CompaniesintheInternetandtechnologyindustries,andotherpatentandtrademarkholdersseekingtoprofitfromroyaltiesinconnectionwithgrantsoflicenses,ownlargenumbersofpatents,copyrights,trademarksandtradesecretsandfrequentlyenterintolitigationbasedonallegationsofinfringementorotherviolationsofintellectualpropertyrights.Wehavereceivedinthepast,andmayinthefuturereceive,noticesthatclaimwehavemisappropriatedormisusedotherpartiesintellectualpropertyrights.Anyintellectualpropertyclaimagainstus,regardlessofmerit,couldbetimeconsumingandexpensivetosettleorlitigateandcoulddivertmanagementsattentionandotherresources.Theseclaimsalsocouldsubjectustosignificantliabilityfordamagesandcouldresultinourhavingtostopusingtechnologyorcontentfoundtobeinviolationofanotherpartysrights.Wemightberequiredormayopttoseekalicenseforrightstointellectualpropertyheldbyothers,whichmaynotbeavailableoncommerciallyreasonableterms,oratall.Evenifalicenseisavailable,wecouldberequiredtopaysignificantroyalties,whichwouldincreaseouroperatingexpenses.Wemayalsoberequiredtodevelopalternativenoninfringingtechnology,orcontent,whichcouldrequiresignificanteffortandexpenseandmakeuslesscompetitiveintherelevantmarket.Anyoftheseresultscouldharmourbusinessandfinancialperformance.

Investment in new business strategies and acquisitions could disrupt our ongoing business and present risks not originallycontemplated.

Wehaveinvested,andinthefuturemayinvest,innewbusinessstrategiesoracquisitions.Suchendeavorsmayinvolvesignificantrisksanduncertainties,includingdistractionofmanagementfromcurrentoperations,greaterthanexpectedliabilitiesandexpenses,inadequatereturnofcapital,andunidentifiedissuesnotdiscoveredinourinvestigationsandevaluationsofthosestrategiesandacquisitions.Wemaydecidetomakeminorityinvestments,includingthroughjointventures,inwhichwehavelimitedornomanagementoroperationalcontrol.Thecontrollingpersoninsuchacasemayhavebusinessinterests,strategiesorgoalsthatareinconsistentwithours,anddecisionsofthecompanyorventureinwhichweinvestedmayresultinharmtoourreputationoradverselyaffectthevalueofourinvestment.Further,wemayissuesharesofourcommonstockinthesetransactions,whichcouldresultindilutiontoourstockholders.

Ifthebusinesseswehaveacquiredorinvestedindonotperformasexpectedorweareunabletoeffectivelyintegrateacquiredbusinesses,ouroperatingresultsandprospectscouldbeharmed.

Wehaveacquiredanumberofbusinessesinthepastandourfuturegrowthmaydepend,inpart,onfutureacquisitions,anyofwhichcouldbematerialtoourfinancialconditionandresultsofoperations.Certainfinancialandoperationalrisksrelatedtoacquisitionsthatmayhaveamaterialimpactonourbusinessare:

Useofcashresourcesandincurrenceofdebtandcontingentliabilitiesinfundingacquisitionsmaylimitotherpotentialusesofourcash,includingstockrepurchases,dividendpaymentsandretirementofoutstandingindebtedness

Amortizationexpensesrelatedtoacquiredintangibleassetsandotheradverseaccountingconsequences

Expectedandunexpectedcostsincurredinidentifyingandpursuingacquisitions,andperformingduediligenceonpotentialacquisitiontargetsthatmayormaynotbesuccessful

Diversionofmanagementsattentionorotherresourcesfromourexistingbusiness

Difficultiesandexpensesinintegratingtheoperations,products,technology,privacyprotectionsystems,informationsystemsorpersonneloftheacquiredcompany

Costsassociatedwithlitigationorotherclaimsrelatingtotheacquiredcompany

Impairmentofrelationshipswithemployees,suppliersandaffiliatesofourbusinessandtheacquiredbusiness

Theassumptionofknownandunknowndebtandliabilitiesoftheacquiredcompany

Failureoftheacquiredcompanytoachieveanticipatedtraffic,revenues,earningsorcashflowsortoretainkey

managementoremployees

Failuretogenerateadequatereturnsonacquisitionsandinvestments

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Entranceintomarketsinwhichwehavenodirectpriorexperienceandincreasedcomplexityinourbusiness

Impairmentofgoodwillorotherintangibleassetssuchastrademarksorotherintellectualpropertyarisingfromacquisitionsand

Adversemarketreactiontoacquisitions.

Moreover,werelyheavilyontherepresentationsandwarrantiesprovidedtousbythesellersofacquiredcompanies,includingastheyrelatetocreation,ownershipandrightsinintellectualpropertyandcompliancewithlawsandcontractualrequirements.Ourfailuretoaddresstheserisksorotherproblemsencounteredinconnectionwithpastorfutureacquisitionsandinvestmentscouldcauseustofailtorealizetheanticipatedbenefitsofsuchacquisitionsorinvestments,incurunanticipatedliabilitiesandharmourbusinessgenerally.

Ifwefailtomanageourgrowtheffectively,ourbrand,resultsofoperationsandbusinesscouldbeharmed.

Wehaveexperiencedrapidgrowthinourheadcountandoperations,whichplacessubstantialdemandsonmanagementandouroperationalinfrastructure.Wecontinuetomakesubstantialinvestmentsinourtechnology,salesandmarketingandcommunitymanagementorganizations.Aswecontinuetogrow,wemusteffectivelyintegrate,developandmotivatealargenumberofnewemployees,includingemployeesininternationalmarkets,whilemaintainingthebeneficialaspectsofourcompanyculture.Ifwedonotmanagethegrowthofourbusinessandoperationseffectively,thequalityofourplatformandefficiencyofouroperationscouldsuffer,whichcouldharmourbrand,resultsofoperationsandbusiness.

Wemayhavefuturecapitalneedsandmaynotbeabletoobtainadditionalfinancingonacceptableterms.

Wearepartytoatermloanwitharemainingprincipalof$300million,aswellasarevolvingcreditfacilityof$200millionatDecember31,2014.Thesearrangementsmaylimitourabilitytosecuresignificantadditionalfinancinginthefutureonfavorabletermsorouroperatingcashflowmaybeinsufficienttosatisfyourfinancialobligationsunderindebtednessoutstandingfromtimetotime.Ourabilitytosecureadditionalfinancingandsatisfyourfinancialobligationsunderindebtednessoutstandingfromtimetotimewilldependuponourfutureoperatingperformance,whichissubjecttothenprevailinggeneraleconomicandcreditmarketconditions,includinginterestratelevelsandtheavailabilityofcreditgenerally,andfinancial,businessandotherfactors,manyofwhicharebeyondourcontrol.Inlightofperiodicuncertaintyinthecapitalandcreditmarkets,therecanbenoassurancethatsufficientfinancingwillbeavailableondesirableorevenanytermstofundinvestments,acquisitions,stockrepurchases,dividends,debtrefinancingorextraordinaryactionsorthatcounterpartiesinanysuchfinancingswouldhonortheircontractualcommitments.Iffinancingisnotavailablewhenneededorisnotavailableonfavorableterms,wemaybeunabletoissueordevelopneworenhancedexistingservices,completeacquisitions,repurchaseequityorotherwisetakeadvantageofbusinessopportunities,anyofwhichcouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.Ifweraiseadditionalfundsthroughtheissuanceofequitysecurities,ourstockholdersmayexperiencesignificantdilution.

Furthermore,wearealsoaccumulatingagreaterportionofourcashflowsinforeignjurisdictionsthanpreviously,whichweconsiderindefinitelyreinvested.TherepatriationofsuchfundsforuseintheUnitedStates,includingforcorporatepurposessuchasacquisitions,stockrepurchases,dividendsordebtrefinancings,mayresultinadditionalU.S.incometaxexpenseandhighercostforsuchcapital.

Wehavesignificantindebtedness,whichcouldadverselyaffectourbusinessandfinancialcondition.

Theremainingprincipalonourtermloan$300millionatDecember31,2014.Risksrelatingtoourindebtednessinclude:

Increasingourvulnerabilitytogeneraladverseeconomicandindustryconditions

Requiringustodedicateaportionofourcashflowfromoperationstoprincipalandinterestpaymentsonourindebtedness,therebyreducingtheavailabilityofcashflowtofundworkingcapital,capitalexpenditures,acquisitionsandinvestmentsandothergeneralcorporatepurposes

Makingitmoredifficultforustooptimallycapitalizeandmanagethecashflowforourbusinesses

Limitingourflexibilityinplanningfor,orreactingto,changesinourbusinessesandthemarketsinwhichweoperate

Possiblyplacingusatacompetitivedisadvantagecomparedtoourcompetitorsthathavelessdebt

Limitingourabilitytoborrowadditionalfundsortoborrowfundsatratesoronothertermsthatwefindsacceptableand

Exposingustotheriskofincreasedinterestratesbecauseouroutstandingdebtisexpectedtobesubjecttovariableratesofinterest.

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Inaddition,itispossiblethatwemayneedtoincuradditionalindebtednessinthefutureintheordinarycourseofbusiness.Thetermsofourtermloanandrevolvingcreditfacilitywillallowustoincuradditionaldebtsubjecttocertainlimitations.Ifnewdebtisaddedtocurrentdebtlevels,therisksdescribedabovecouldintensify.

Theagreementsthatgovernourcreditfacilitycontainvariouscovenantsthatlimitourdiscretionintheoperationofourbusinessandalsorequireustomeetfinancialmaintenancetestsandothercovenants.Thefailuretocomplywithsuchtestsandcovenantscouldhaveamaterialadverseeffectonus.

Wearepartytoacreditagreementprovidingforarevolvingcreditfacilitywithaborrowingcapacityof$200millionandatermoffiveyears,aswellasafiveyear,termloanwithanoriginalprincipalof$400milliontoourwhollyownedsubsidiary,TripAdvisorHoldings,LLC.Theagreementsthatgovernthetermloanandrevolvingcreditfacilitycontainvariouscovenants,includingthosethatlimitourabilityto,amongotherthings:

Incurindebtedness

Paydividendson,redeemorrepurchaseourcapitalstock

Enterintocertainassetsaletransactions,includingpartialorfullspinofftransactions

Enterintosecuredfinancingarrangements

Enterintosaleandleasebacktransactionsand

Enterintounrelatedbusinesses.

Thesecovenantsmaylimitourabilitytooptimallyoperateourbusiness.Inaddition,ourtermloanandrevolvingcreditfacilityrequirethatwemeetcertainfinancialtests,includinganinterestcoveragetestandaleverageratiotest.Anyfailuretocomplywiththerestrictionsofourtermloancreditfacilitymayresultinaneventofdefaultundertheagreementsgoverningsuchfacilities.Suchdefaultmayallowthecreditorstoacceleratethedebtincurredunderthereunder.Inaddition,lendersmaybeabletoterminateanycommitmentstheyhadmadetosupplyuswithfurtherfunds(includingperiodicrolloversofexistingborrowings).

IftheSpinOff,togetherwithcertainrelatedtransactions,weretofailtoqualifyasatransactionthatisgenerallytaxfreeforU.S.federalincometaxpurposes,wecouldbesubjecttosignificanttaxliabilities.

AsaconditiontothecompletionoftheSpinOff,ExpediaobtainedaprivateletterrulingfromtheInternalRevenueService,orIRS,alongwithanopinionofcounsel,regardingthequalificationoftheSpinOffandcertainrelatedtransactions,astransactionsthataregenerallytaxfreeforU.S.federalincometaxpurposes.TheIRSprivateletterrulingandtheopinionofcounselwerebasedon,amongotherthings,certainfactsandassumptionsaswellastheaccuracyofcertainrepresentations,statementsandundertakingsthatExpediaandwemadetotheIRSandtocounsel.Ifanyoftheserepresentations,statementsorundertakingsare,orbecome,inaccurateorincomplete,orifweorExpediabreachanyofthecovenants,theIRSprivateletterrulingandtheopinionofcounselmaybeinvalid.

Moreover,theIRSprivateletterrulingdoesnotaddressalltheissuesthatarerelevanttodeterminingwhethertheSpinOffqualifiesasatransactionthatisgenerallytaxfreeforU.S.federalincometaxpurposes.NotwithstandingtheIRSprivateletterrulingand/ortheopinionofcounsel,theIRScoulddeterminethattheSpinOffshouldbetreatedasataxabletransactionifitdeterminesthatanyoftherepresentations,assumptionsorundertakingsthatwereincludedintherequestfortheIRSprivateletterrulingoronwhichtheopinionofcounselwasbasedisfalseorhasbeenviolatedorifitdisagreeswiththeconclusionsintheopinionofcounselthatarenotcoveredbyanyIRSruling.

UndertheTaxSharingAgreementbetweenusandExpedia,wearegenerallyrequiredtoindemnifyExpediaforanytaxesresultingfromtheSpinOff(andanyrelatedinterest,penalties,le