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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 20-F
_________________________
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
OF 1934
OR
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
Commission file number 001-38209
_________________________
Despegar.com, Corp.
(Exact Name of Registrant as Specified in its charter)
_________________________
N/A
(Translation of Registrant’s name into English)
British Virgin Islands
(Jurisdiction of Incorporation or Organization)
Commerce House
4th Floor
Wickhams Cay 1
Road Town, Tortola VG1110
British Virgin Islands
Telephone: +1 284 852-1195
(Address of principal executive offices)
Monica Alexandra Soares da Silva, General Counsel
Alameda Grajau, 219, Alphaville Industrial, Barueri, São Paulo, Brazil
Telephone: +55 11 4632-1220
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
_________________________
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol
Name of each exchange
on which registered
Ordinary Shares, no par value
DESP
The New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
_________________________
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the Annual Report:
At December 31, 2024
83,572,285 ordinary shares
(excluding ordinary shares held in treasury and warrants)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934. Yes o No x
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes x No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See
definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
x
Accelerated filer
o
Non-accelerated filer
o
Emerging growth company
o
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to
use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange
Act. o
†
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued
its audit report. Yes x No o
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP x International Financial Reporting Standards as issued by the International Accounting Standards Board o Other o
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow. Item 17 o Item 18 o
If this is an Annual Report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
Table of Contents
TABLE OF CONTENTS
Page
PART I.
1
ITEM 1
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
4
ITEM 2
OFFER STATISTICS AND EXPECTED TIMETABLE
4
ITEM 3
KEY INFORMATION
5
ITEM 4
INFORMATION ON THE COMPANY
36
ITEM 4A.
UNRESOLVED STAFF COMMENTS
57
ITEM 5
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
57
ITEM 6
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
57
ITEM 7
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
67
ITEM 8
FINANCIAL INFORMATION
71
ITEM 9
THE OFFER AND LISTING
73
ITEM 10
ADDITIONAL INFORMATION
73
ITEM 11
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
83
ITEM 12
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
84
PART II
85
ITEM 13
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
85
ITEM 14
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
85
ITEM 15
CONTROLS AND PROCEDURES
85
ITEM 16
[RESERVED]
87
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
87
ITEM 16B.
CODE OF ETHICS
87
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
87
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
88
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
88
ITEM 16F.
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
88
ITEM 16G.
CORPORATE GOVERNANCE
88
ITEM 16H.
MINE SAFETY DISCLOSURE
89
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
90
ITEM 16J.
INSIDER TRADING POLICIES
90
ITEM 16K
CYBERSECURITY
109
PART III
91
ITEM 17
FINANCIAL STATEMENTS
91
ITEM 18
FINANCIAL STATEMENTS
91
ITEM 19
EXHIBITS
91
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PART I.
INTRODUCTION
Unless the context suggests otherwise, references in this annual report on Form 20-F (“Annual Report”) to “Despegar,” the “Company,” “we,” “us” and “our”
are to Despegar.com, Corp., a business company incorporated in the British Virgin Islands (“BVI”), and its consolidated subsidiaries. Unless the context
suggests otherwise, references to “Latin America” are to South America, Mexico, Central America and the Caribbean.
Financial Statements
Our consolidated financial information contained in this Annual Report is derived from our audited consolidated financial statements as of December 31, 2024
and 2023 and for the fiscal years ended December 31, 2024, 2023 and 2022 included in this Annual Report. Our consolidated financial statements are prepared
in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and presented in U.S. dollars.
Segment Information
We determine our operating segments based on how our chief operating decision makers (“CODM”) manage our business, make operating decisions and
evaluate operating performance. Effective for our fiscal year 2022, our CODM changed their internal reporting to refine the way they view our financial
services business and its interaction with our travel business. Additionally, we started allocating certain expenses to our segments which were previously
considered part of our corporate structure and were unallocated. These changes resulted in revisions to the financial information provided to the CODM on a
recurring basis in their evaluation of our financial performance and the decision-making process. Accordingly, we changed our segment reporting under ASC
280 “Segment Reporting” to report three reportable segments: “Air,” “Packages, Hotels and Other Travel Products” and “Financial Services.”
For our fiscal year 2022, we revised the presentation of credit loss expense in our consolidated statements of operations. Previously, we classified credit loss
expense within general and administrative expenses. In line with the increasing significance of our financial services business and the impact of its credit loss
expense to our consolidated operations, we determined that the credit loss expense would be more appropriately reflected in the financial statement line item
cost of revenue.
Adjusted Segment EBITDA
We measure our segment’s performance by our Adjusted Segment EBITDA. We use Adjusted Segment EBITDA for purposes of making decisions about
allocating resources to our segments and to internally evaluate their financial performance because we believe Adjusted Segment EBITDA reflects current core
operating performance of each segment and provides an indicator of each segment’s ability to generate cash.
We calculate Adjusted Segment EBITDA with respect to each segment, as our net income (loss) for the year adjusted for (1) income tax expense (benefit); (2)
financial results, net; (3) stock-based compensation expense; (4) acquisition transaction costs; (5) depreciation and amortization; (6) impairment charges; and
(7) restructuring, reorganization and other exit activities charges. See Note 21 to our audited consolidated financial statements for our Adjusted Segment
EBITDA information and segment information.
Non-GAAP Financial Measures
This Annual Report includes certain references to Consolidated Adjusted EBITDA, a non-GAAP financial measure. We calculate Consolidated Adjusted
EBITDA as net income / (loss) for the year adjusted for (1) provision for income tax expense (benefit); (2) financial results, net; (3) stock-based compensation
expense; (4) acquisition transaction costs; (5) depreciation and amortization; (6) impairment charges; and (7) restructuring, reorganization and other exit
activities charges. See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Operating and Financial Metrics—Non-GAAP
Financial Measures” for a reconciliation of Consolidated Adjusted EBITDA to net income. Consolidated Adjusted EBITDA is not prepared in accordance with
U.S. GAAP. Accordingly, you are cautioned not to place undue reliance on this information and should note that Consolidated Adjusted EBITDA, as calculated
by us, may differ materially from similarly titled measures reported by other companies, including our competitors.
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Market Data
This Annual Report includes industry, market and competitive position data that we have derived from independent consultant reports, publicly available
information, industry publications, official government information and other third-party sources, as well as our internal data and estimates. Independent
consultant reports, industry publications and other published sources generally indicate that the information contained therein was obtained from sources
believed to be reliable. Although we believe that this information is reliable, the information has not been independently verified by us.
Certain Operating Measures
This Annual Report includes certain references to the number of travel customers, the number of transactions and gross bookings and total payment volume,
which are operating measures. We calculate our number of travel customers to reflect, during a given period, the number of customers who purchased and
finalized payment for one or more of our travel products. We define the number of transactions as the total number of travel customer orders completed on our
platform or financing merchant customers (excluding Decolar) of the “Buy Now, Pay Later” solution during a given period. We define gross bookings as the
aggregate purchase price of all travel products booked by our travel customers through our platform during a given period related to our travel business. We
define gross bookings net as the operating measure that represents our gross bookings net of withholding taxes on international trips in Argentina. We define
total payment volume as the US dollar loan volume processed by our “Buy Now, Pay Later” financing solution during a specific period of time. For more
information, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Operating and Financial Metrics.”
Currency Presentation
In this Annual Report, references to “dollars” and “$” are to the currency of the United States, references to “Brazilian Real,” “Brazilian Reais” and “R$” are to
the currency of Brazil, references to “Mexican Peso” and “MX$” are to the currency of Mexico and references to “Argentine Peso” and “AR$” are to the
currency of Argentina.
Rounding
Certain figures included in this Annual Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be
exact arithmetic aggregations or percentages of the figures that precede them.
Trademarks
Our key trademarks are “Despegar,” “Despegar.com,” “Decolar,” “Decolar.com,” “Best Day,” “HotelDo,” “Viajanet,” “Stays” and “Koin.” Other trademarks or
service marks appearing in this Annual Report are the property of their respective holders. Solely for the convenience of the reader, we refer to our brands in
this Annual Report without the symbol, but these references are not intended to indicate in any way that we will not assert our rights to these brands to the
fullest extent permitted by law.
Forward-Looking Statements
This Annual Report includes forward-looking statements, principally under the captions “Item 3. Key Information,” “Item 4. Information on the Company––B.
Business Overview” and “Item 5. Operating and Financial Review and Prospects.” We have based these forward-looking statements largely on our current
beliefs, expectations and projections about future events and financial trends affecting our business and our market, as well as the expected benefits, timing,
and completion of the proposed Merger (as defined in “—Corporate Reorganization and the Merger”) with Prosus N.V. and certain of its affiliates (“Prosus”).
Many important factors, in addition to those discussed elsewhere in this Annual Report, could cause our actual results to differ substantially from those
anticipated in our forward-looking statements.
We operate in a competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all
risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report. The words “believe,” “may,” “should,”
“aim,” “estimate,” “continue,” “anticipate,” “intend,” “will,” “expect” and similar words are intended to identify forward-looking statements. Forward-looking
statements include information concerning our possible or assumed future results of operations, business strategies, capital expenditures, financing plans,
competitive position, industry environment, potential growth opportunities, the effects of future regulation, and the effects of competition. Forward-looking
statements speak only as of the date they are made, and we undertake no obligation to update publicly or to revise any forward-looking statements after we
distribute this Annual
®
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Report because of new information, future events or other factors. These statements are intended to qualify for the safe harbors from liability provided by
Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are not guarantees of future
performance and the future events and circumstances discussed in this Annual Report may not occur or come into existence. Considering these limitations, you
should not make any investment decision in reliance on forward-looking statements contained in this Annual Report. Unless indicated otherwise, any other
capitalized term used herein but not otherwise defined herein has the meaning assigned to such term in
the Merger Agreement. For further information on the Merger Agreement, see “—Corporate Reorganization and the Merger” and Exhibit 4.9 to this Annual
Report. In evaluating forward-looking statements, current and prospective shareholders should specifically consider various factors, including the risks
discussed under the caption “Item 3. Key Information—D. Risk Factors” in this Annual Report and the following factors:
•
the ability of the parties to consummate the Merger in a timely manner or at all;
•
the risk that the Merger Agreement may be terminated in circumstances that require Despegar to pay the Company Termination Fee;
•
the satisfaction (or waiver) of the conditions to the consummation of the Merger, including with respect to the approvals under applicable antitrust or
competition laws;
•
potential delays in consummating the Merger;
•
the risk related to the diversion of management’s attention from Despegar’s ongoing business operations;
•
the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement;
•
the effect of the announcement or pendency of the Merger on our business relationships, operating results, and business generally;
•
the risk that the Merger disrupts our current plans and operations or affects our ability to retain or recruit key employees;
•
costs, fees, expenses, and charges related to the Merger;
•
the effect of limitations that the Merger Agreement places on our ability to operate our business or engage in an alternate transaction;
•
the conditions of the capital markets during the period covered by the forward-looking statements;
•
the outcome of any legal proceedings that may be instituted against Despegar, Parent (as defined below) or any of their respective directors or officers
related to the Merger Agreement or the Merger;
•
the risk that our share price may decline significantly if the Merger is not completed;
•
our plans for future growth, while balancing the need to sensibly control costs;
•
the effect of inflationary and/or recessionary pressure, macroeconomic uncertainty, and foreign exchange fluctuations;
•
the ongoing conflict in Ukraine and the imposition of broad economic sanctions on Russia or the Middle East conflict, for example, could raise energy
prices again, disrupt global markets and, generally, have a negative impact on the global economic and political conditions in the future;
•
our expectations concerning our relationships and actions with third parties;
•
our financial performance; and
•
developments and projections relating to our competitors, our industry and the general economy.
These cautionary statements should not be construed by you to be exhaustive and are made only as of the date hereof. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Corporate Reorganization and the Merger
On December 23, 2024, we entered into that certain Agreement and Plan of Merger (as it may be amended, modified or supplemented from time to time, the
“Merger Agreement”) with MIH Internet Holdings B.V., a Netherlands private limited liability company (besloten vennootschap) (“Parent”) and a wholly-
owned subsidiary of Prosus N.V., MIH Investments Merger Sub Limited, a BVI business company with limited liability (“Merger Sub”) and a wholly owned
indirect subsidiary of Parent, providing for our acquisition by Parent for $19.50 per ordinary share in an all-cash transaction. Upon the terms and subject to the
conditions of the Merger Agreement, Parent will acquire us via the merger of Merger Sub with and into us, with the separate corporate existence of Merger Sub
thereupon ceasing and Despegar.com, Corp. continuing as the surviving company and a wholly-owned indirect subsidiary of Parent (the “Merger”). Upon
completion of the Merger, we will become a privately-held company, and our ordinary shares will be delisted from the New York Stock Exchange and we will
no longer be listed on any public market. On March 4, 2025, at a special shareholders meeting, we received the required affirmative vote of the shares present
and voting at the meetings, which was sufficient to approve the Merger. Consummation of the Merger is currently subject to the receipt of required regulatory
clearances in Brazil and Mexico, and
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satisfaction or waiver (where permissible) of other customary closing conditions. We received required regulatory clearances in Chile. See “Item 4. Information
on the Company—B. Business Overview—Merger with Prosus” and “Item 3. Key Information—D. Risk Factors—Risks Associated with the Merger” for
further information about the Merger and the risks related thereto.
Additional Information
Our principal website addresses are www.despegar.com and www.decolar.com. The information on our websites should not be deemed to be part of this Annual
Report. SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that
make electronic filings with SEC using its EDGAR system.
ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
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ITEM 3 KEY INFORMATION
A.
[Reserved]
B.
Capitalization and Indebtedness
Not applicable.
C.
Reasons for the Offer and Use of Proceeds
Not applicable.
D.
Risk Factors
Summary of Risk Factors
The following summarizes some, but not all, of the principal risks provided below. Please carefully consider all of the information discussed in this “Item 3.
Key Information—D. Risk Factors” in this Annual Report for a detailed description of these and other risks.
Certain Risks Related to the Merger
•
Completion of the Merger is currently subject to certain conditions and if these conditions are not satisfied or waived, the Merger will not be
completed.
•
Uncertainty about the Merger may adversely affect our relationships with customers and employees, which could negatively affect our business,
whether or not the Merger is completed.
•
The regulatory approvals required in connection with the Merger may not be obtained or may contain materially burdensome conditions.
•
The pending Merger can materially harm our business and results of operations.
•
Litigation against the Company could result in substantial costs, an injunction preventing the completion of the Merger and/or a judgment resulting in
the payment of damages.
•
The Merger Agreement limits our ability to pursue alternatives to the Merger.
Certain Risks Related to Our Business
•
We are subject to the risks generally associated with doing business in Latin America.
•
General declines or disruptions in the travel industry may adversely affect our business and results of operations.
•
Our business and results of operations could be adversely affected by macroeconomic and political conditions.
•
If we are unable to maintain or increase consumer traffic to our sites and our conversion rates, our business and results of operations may be harmed.
•
We operate in a highly competitive and evolving market, and pressure from existing and new companies may adversely affect our business and results
of operations.
•
If we are unable to maintain existing, and establish new arrangements with travel suppliers, our business may be adversely affected.
Certain Risks Related to Latin America
•
Latin American countries are subject to political and social instability.
•
Latin American countries have experienced periods of adverse macroeconomic conditions.
•
Latin American governments have exercised and continue to exercise significant influence over their economies.
•
Inflation, and government measures to curb inflation, may adversely affect Latin American economies.
•
Exchange rate fluctuations against the dollar in the countries in which we operate could negatively affect our results of operations.
•
We are subject to foreign currency exchange controls in certain countries in which we operate.
Certain Risks Related to our Ordinary Shares
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•
The strategic interests of our significant shareholders may, from time to time, differ from, and conflict with, our interests and the interests of our other
shareholders.
•
We are a foreign private issuer under U.S. securities regulations and, as a result, we are not subject to U.S. proxy rules and we are subject to Exchange
Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. issuer.
•
We are exempt from certain corporate governance requirements of the New York Stock Exchange.
•
The requirements of being a public company may strain our resources and distract our management.
•
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
•
Any failure to maintain an effective system of internal control may result in material misstatements of our consolidated financial statements or cause
us to fail to meet our reporting obligations or fail to prevent fraud; and in that case, our shareholders could lose confidence in our financial reporting,
which would harm our business and could negatively impact the price of our ordinary shares.
You should carefully consider the risks described below, in addition to the other information contained in this Annual Report. We also may face additional risks
and uncertainties that are not presently known to us, or that as of the date of this Annual Report we deem immaterial, which may impair our business, financial
condition and results of operations. If any of these events occur, the trading price of our ordinary shares could decline. In general, you take more risk when you
invest in the securities of issuers with operations in emerging markets such as Latin American countries than when you invest in the securities of issuers in the
United States and other developed markets. The information in this Risk Factors section includes forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of numerous factors, including those
described in “Introduction—Forward-Looking Statements.”
Certain Risks Related to the Merger
Completion of the Merger is currently subject to certain conditions and if these conditions are not satisfied or waived, the Merger will not be completed.
The completion of the Merger is currently subject to satisfaction or waiver of certain customary conditions, including (a) the absence of any decision,
injunction, decree, ruling, law or order enacted, issued, promulgated, enforced, or entered by any governmental authority of competent jurisdiction that is in
effect and enjoins or otherwise prohibits or makes illegal the consummation of the Merger (the “No Order Condition”), (b) all required Requisite Regulatory
Approvals (as defined in the Merger Agreement) having been obtained, (c) subject to certain qualifications and materiality thresholds, the accuracy of the
representations and warranties of each party, as applicable, (d) the performance by the parties in all material respects of their respective obligations under the
Merger Agreement, and (e) in the case of Parent, (i) the absence of any material adverse effect on the Company, (ii) the Company having delivered to Parent a
certificate, dated on which the closing of the Merger occurs (such date, the “Closing Date”) and signed by a duly authorized officer of the Company, certifying
satisfaction as to the conditions in (c) and (d) above and (iii) (A) the No Order Condition being satisfied, and (B) the Required Regulatory Approvals having
been obtained without the imposition of a Burdensome Condition (as defined in the Merger Agreement). On March 4, 2025, at a special shareholders meeting,
we received the required affirmative vote of our shareholders to approve the Merger.
There can be no assurance that the conditions to the closing of the Merger will be satisfied, waived, or fulfilled in a timely fashion or that the Merger will be
completed. If the conditions are not satisfied or waived in a timely manner and the Merger is not completed, the shareholders of the Company will not receive
any of the $19.50 per ordinary share consideration.
Uncertainty about the Merger may adversely affect our relationships with customers and employees, which could negatively affect our business, whether or
not the Merger is completed.
The announcement of the Merger on December 23, 2024, whether or not the Merger is subsequently completed, may cause uncertainties in our relationships
with our clients which could impair our ability to or expand our historical growth. Furthermore, uncertainties about the Merger may cause our current and
prospective employees to experience uncertainty about their future with us. These uncertainties may impair our ability to retain, recruit or motivate key
employees which could affect our business.
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The regulatory approvals required in connection with the Merger may not be obtained or may contain materially burdensome conditions.
The completion of the Merger is conditioned upon obtaining certain regulatory approvals, and we cannot provide assurance that these approvals will be
obtained. If any conditions or changes to the proposed structure of the Merger are required to obtain required regulatory approvals, they may have the effect of
jeopardizing or delaying completion of the Merger or reducing the anticipated benefits of the Merger. If we agree to any material conditions in order to obtain
regulatory approvals for the Merger, the business and results of operations of the combined company may be adversely affected.
The pending Merger can materially harm our business and results of operations.
While the Merger is pending, we are subject to a number of risks that may harm our business and results of operations, including the potential loss of current
customers, the limitation on the execution of our strategy to expand our business through mergers, acquisitions, partnerships, and other investments, as well as
our ability to raise additional funds through offerings of equity and/or debt and/or other financial vehicles. In addition, the Merger might diverge our
management’s and employees’ attention from implementing our growth strategy in our existing markets or in new markets that we are targeting, as well as
divert public attention from our positioning of our independent brand and products in a manner that appeals to customers. We will also continue to incur
expenses related to the Merger prior to its closing, and we could be subject to costly litigation associated with the Merger. Finally, our ability to respond
effectively to competitive pressures, industry developments and future opportunities might be compromised, in particular, given certain restrictions, limitations
and commitments stipulated in the Merger Agreement.
Litigation against the Company could result in substantial costs, an injunction preventing the completion of the Merger and/or a judgment resulting in the
payment of damages.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into merger agreements. Even if such a
lawsuit is unsuccessful, defending against these claims can result in substantial costs. Lawsuits could prevent or delay the completion of the Merger and result
in significant costs to us, including any costs associated with the indemnification of directors and officers. There can be no assurance that any of the defendants
will be successful in the outcome of any potential lawsuits.
The Merger Agreement limits our ability to pursue alternatives to the Merger.
The Merger Agreement contains provisions that may discourage a third party from submitting a competing proposal that might result in greater value to our
shareholders than the Merger or may result in a potential competing acquirer of the Company proposing to pay a lower per share price to acquire us than it
might otherwise have proposed to pay. These provisions include a general prohibition on us from soliciting or, since our shareholders approved the Merger on
March 4, 2025, from entering into discussions with any third party regarding any competing proposal or offer for a competing transaction.
Certain Risks Related to Our Business
We are subject to the risks generally associated with doing business in Latin America.
Our business serves the Latin American travel industry and substantially all of our revenue is derived from Latin American countries. Substantially all of our
operations are located in Latin America. Moreover, we have a significant number of transactions from Brazil, Mexico, and Argentina as well as other Latin
American countries. In 2024, Brazil accounted for 49% of our total transactions and Mexico accounted for 13% of our total transactions. For more information,
see “Item 3. Key Information—D. Risk Factors—Certain Risks Related to Latin America.”
General declines or disruptions in the travel industry may adversely affect our business and results of operations.
Our business is significantly affected by the trends that occur in the travel industry. As the travel industry is highly sensitive to business and personal
discretionary spending levels, it tends to decline during general economic downturns, including as a result of pandemics such as the outbreak of COVID-19 in
2020, which disrupted worldwide economic activity and, in particular, the travel industry, including as a result of travel restrictions and bans, closing borders,
issuing stay at home advisories and orders, implementing quarantines and similar actions. As a result, global travel demand
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declined significantly and, consequently, resulted in a material adverse effect in our business, results of operations and cash flows. Trends or events that tend to
reduce travel and are likely to reduce our revenue include:
•
health-related risks, such as the spread of new variants of COVID-19 or the emergence of new pandemics;
•
terrorist attacks, threats of terrorist attacks or wars;
•
fluctuations in currency exchange rates;
•
increased prices in the airline ticketing, hotel, or other travel-related sectors;
•
significant changes in oil prices; travel-related strikes or labor unrest, bankruptcies or liquidations;
•
travel-related accidents or the grounding of aircraft due to safety or other concerns;
•
political unrest and geopolitical conflicts;
•
high levels of crime;
•
natural disasters or severe weather conditions, including volcanic eruptions, hurricanes, flooding, or earthquakes;
•
changes in immigration and visa policies; and
•
travel restrictions, tariffs, trade restrictions, or other security procedures implemented in connection with any major events, particularly those that
affect travel by Latin Americans within their respective countries, across the region and outbound from the region to the rest of the world.
We could be severely and adversely affected by declines or disruptions in the travel industry and, in many cases, have little or no control over the occurrence of
such events. Such events could result in a decrease in demand for our travel services. Any decrease in demand, depending on the scope and duration, could
significantly and adversely affect our business and financial performance over the short and long term.
Our business and results of operations could be adversely affected by macroeconomic and political conditions.
Our results of operations are affected by global macroeconomic and political conditions, including inflation, interest rates, availability of capital, energy and
commodity prices, trade laws and the effects of governmental initiatives to manage economic conditions. Global macroeconomic and political conditions may
also materially affect travel suppliers and travelers. The ongoing conflict in Ukraine and the imposition of broad economic sanctions on Russia or the Middle
East conflict, for example, could raise energy prices again, disrupt global markets and, generally, have a negative impact on the global economic and political
conditions in the future.
Consumer purchases of discretionary items generally decline during periods of recession and other periods in which disposable income is adversely affected.
As a substantial portion of travel expenditure, for both business and leisure, is discretionary, the travel industry tends to experience weak or reduced demand
during economic downturns.
General adverse economic conditions, including the possibility of recessionary conditions in Latin America or a worldwide economic slowdown, would
adversely impact our business, financial condition and results of operations. As an intermediary in the travel industry, a significant portion of our revenue is
affected by prices charged by travel suppliers. During periods of poor economic conditions, airlines, hotels and other travel suppliers tend to reduce rates or
offer discounted sales to stimulate demand, thereby reducing our commission-based income. A slowdown in economic conditions may also result in a decrease
in transaction volumes and adversely affect our revenue, including our consumer fee-based income. It is difficult to predict the effects of the uncertainty in
global economic conditions.
If economic conditions decline globally or in Latin America, our business, financial condition and results of operations could be adversely impacted.
If we are unable to maintain or increase consumer traffic to our sites and our conversion rates, our business and results of operations may be harmed.
Our ability to generate revenue depends, in part, on our ability to attract consumers to our platform. If we fail to maintain or increase consumer traffic and our
conversion rates, our ability to grow our revenue could be negatively affected. We expect that our efforts to maintain or increase traffic are likely to include,
among other things, significant increases to our marketing expenditures. We cannot assure you that any increases in our expenses will be successful in
generating additional consumer traffic.
Additionally, some of our services and marketing activities rely on cookies, which are placed on individual browsers when users visit websites. We use these
cookies to optimize our marketing campaigns, to better understand our users’ preferences
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and to detect and prevent fraudulent activity. Users however can block or delete cookies through their browsers or “ad blocking” software or apps.
Any decrease to user retention, growth, or engagement could render our products less attractive to consumers and would seriously harm our business.
We operate in a highly competitive and evolving market, and pressure from existing and new companies may adversely affect our business and results of
operations.
The travel market in Latin America and worldwide is intensely competitive and rapidly evolving. Factors affecting our competitive success include, among
other things, price, availability and breadth of choice of travel services and products, brand recognition, customer service, fees charged to travelers, ease of use,
accessibility, consumer payment options and reliability. We currently compete with both established and emerging providers of travel services and products,
including regional offline travel agency chains and tour operators, global online travel agencies (“OTAs”) with presence in Latin America and smaller, country-
specific online and offline travel agencies and tour operators. In addition, our travel customers have the option to book travel directly with airlines, hotels and
other travel suppliers who are increasingly focused on further refining their online offerings. Large, established internet search engines have also launched
applications offering travel itineraries in destinations around the world, and meta-search companies who can aggregate travel search results also compete
against us for travel customers. We also face competition from Airbnb and other providers acting in the alternative accommodations space. Some of our
competitors have significantly greater financial and other resources than us. From time to time we may be required to reduce service fees and revenue margins
in order to compete effectively and maintain or gain travel customers, brand awareness and supplier relationships.
Further, we may also face increased competition from new entrants in our industry that offer discounted rates and other incentives from time to time, as well as
social media channels that market travel products and experiences. We cannot assure you that we will be able to successfully compete against existing or new
competitors. If we are not able to compete effectively, our business, financial condition and results of operations may be adversely affected.
Some travel suppliers are seeking to decrease their reliance on distribution intermediaries like us by promoting direct distribution channels. Many airlines,
hotels, car rental companies and tour operators have call centers and have established their own travel distribution websites and mobile applications. From time
to time, travel suppliers offer advantages, such as bonus loyalty awards and lower transaction fees or discounted prices, when their services and products are
purchased from supplier-related channels. We also compete with competitors which may offer less content, functionality and marketing reach but at a relatively
lower cost to suppliers. If our access to supplier-provided content or features were to be diminished either relative to our competitors or in absolute terms or if
we are unable to compete effectively with travel supplier-related channels or other competitors, our business could be materially and adversely affected.
If we are unable to maintain existing, and establish new arrangements with travel suppliers, our business may be adversely affected.
Our business is dependent on our ability to maintain our relationships and arrangements with existing suppliers, such as airlines, global distribution system
(GDS), service providers, hotels, hotel consolidators, and destination services companies, car rental companies, cruise companies and travel assistance
providers, as well as our ability to establish and maintain relationships with new travel suppliers. There are various factors that may affect our relationship with
these suppliers and we cannot guarantee that we will be able to continue these relationships or the existing terms with the suppliers. In addition, substantial part
of the hotel and other lodging products that we offer through our platform for all countries outside Latin America are provided to us by affiliates of Expedia,
and Expedia is amongst the key providers to us of hotel and other lodging products in Latin America, pursuant to a lodging outsourcing agreement, as amended
from time to time. For more information on our relationships with Expedia, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party
Transactions—Relationship with Expedia.”
In January 2025, we entered into a new strategic partnership with HBX Group through a lodging outsourcing agreement with Hotelbeds USA Inc. (the “HBX
Outsourcing Agreement”) through which we offer to our customers wider access to HBX Group’s diverse range of accommodations. Under the terms of the
HBX Outsourcing Agreement, if we fail to meet such booking targets during certain measurement periods, we may be subject to certain penalties, including the
payment to HBX Group of a percentage of the shortfall amount. For more information on our relationship with HBX, see “Item 4. Information on the Company
—B. Business Overview—Our Products and Services—Packages, Hotels and Other Travel Products—HBX Outsourcing Agreement.”
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Adverse changes in key arrangements with our suppliers, including an inability of any key travel supplier to fulfill its payment obligation to us in a timely
manner, increasing industry consolidation or our inability to enter into or renew arrangements with these parties on favorable terms, if at all, could reduce the
amount, quality, pricing, and breadth of the travel services and products that we are able to offer, which could adversely affect our business, financial condition,
and results of operations.
We cannot assure you that our agreements or arrangements with our travel suppliers or travel-related service providers will continue or that our travel suppliers
or travel-related service providers will not further reduce commissions, terminate our contracts, make their products or services unavailable to us as part of
exclusive arrangements with our competitors or default on or dispute their payment or other obligations towards us, any of which could reduce our revenue and
margins or may require us to initiate legal or arbitral proceedings to enforce their contractual payment obligations, which may adversely affect our business,
financial condition and results of operations.
We rely on the value of our brands, and any failure to maintain or enhance consumer awareness of our brands could adversely affect our business and
results of operations.
We believe continued investment in our brand is critical to retain and expand our business. The travel customers’ awareness of our brand, which we foster via
our online and offline marketing throughout our target markets in Latin America, has become one of the most important drivers of growth in our travel
customer base, and we believe that our brands are well recognized in the Latin American travel market. We have invested in developing and promoting our
brand since our inception and expect to continue to spend on maintaining the value of our brands to enable us to compete against increased spending by
competitors and to allow us to expand into new services or increase our penetration in certain markets where our brands are less well known.
We cannot assure you that we will be able to successfully maintain or enhance consumer awareness of our brands. Even if we are successful in our branding
efforts, such efforts may not be cost-effective. Our marketing costs may also increase as a result of inflation in media pricing. If we are unable to maintain or
enhance consumer awareness of our brands and generate demand in a cost-effective manner, it would negatively impact our ability to compete in the travel
industry and would have a material adverse effect on our business, financial condition and results of operations.
We rely on information technology, including artificial intelligence and machine-learning technology, to operate our business and maintain our
competitiveness, and any failure to adapt to technological developments or industry trends could adversely affect our business.
We depend on the use of sophisticated information technology and systems, including artificial intelligence and machine-learning technology, for search and
reservation for airline tickets, hotels, and any of the other products that we offer on our platform, as well as payments, refunds, customer relationship
management, communications and administration. As our operations grow in both size and scope, we must continuously improve and upgrade our systems and
infrastructure to improve services, features and functionality, while maintaining the reliability and integrity of our systems and infrastructure in a cost-effective
manner. Our future success also depends on our ability to upgrade our services and infrastructure ahead of rapidly evolving consumer demands while
continuing to improve the performance, features, and reliability of our service in response to competitive offerings.
We may not be able to maintain or replace our existing systems or introduce new technologies and systems (including those based on generative artificial
intelligence) as quickly as our competitors, in a cost-effective manner or at all. We may also be unable to devote adequate financial resources to develop or
acquire new technologies and systems in the future.
We may not be able to use new technologies effectively, or we may fail to adapt our websites, mobile apps, transaction processing systems, and network
infrastructure to meet consumer requirements or emerging industry standards, comply with government regulation or prevent fraud or security breaches. If we
face material delays in introducing new or enhanced solutions, our travel customers may forego the use of our services in favor of those of our competitors.
Any of these events could have a material adverse effect on our business, financial condition, and results of operations.
In addition, the introduction of these technologies, particularly generative artificial intelligence, into new or existing offerings may result in new or expanded
risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality, or security
risks, as well as other factors that could adversely affect our business, reputation, and financial results. Our personnel could, unbeknownst to us, improperly
utilize artificial intelligence and machine learning-technology while carrying out their responsibilities. The use of artificial
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intelligence can lead to unintended consequences, including generating content that appears correct but is factually inaccurate, misleading, or otherwise flawed,
or that results in unintended biases and discriminatory outcomes, which could harm our reputation and business and expose us to risks related to inaccuracies or
errors in the output of such technologies and the risk that using such technologies could result in leakage of our confidential information.
Some of our airline suppliers (including our GDS service providers) may reduce or eliminate the commission and other compensation they pay to us for the
sale of airline tickets, which could adversely affect our business and results of operations.
In our air business, we generate revenue through commissions and incentive payments from airline suppliers (including our GDS service providers) and service
fees charged to our travel customers. Our airline suppliers (including our GDS service providers) may reduce or eliminate the commissions, incentive payments
or other compensation they pay to us. To the extent any of our airline suppliers (including our GDS service providers) reduce or eliminate the commissions,
incentive payments or other compensation they pay to us, our revenue may be reduced unless we are able to adequately mitigate such reduction by increasing
the service fee we charge to our travel customers or increasing our transaction volume in a sustainable manner. However, any increase in service fees may also
result in a loss of potential travel customers. In addition, our arrangement with the airlines that supply airline tickets to us may limit the amount of service fee
that we are able to charge our travel customers. Our business would also be negatively impacted if competition or regulation in the Latin American travel
industry causes us to have to reduce or eliminate our service fees.
Our business and results of operations could be adversely affected when one or more of our major travel suppliers suffers a deterioration in its financial
condition or restructures its operations.
As we are an intermediary in the travel industry, a substantial portion of our revenue is affected by the prices charged by our suppliers, including airlines, GDS
service providers, hotels, destination service providers, car rental suppliers, tour operators, supply aggregators (such as other OTAs), cruise operators, bus
service providers and travel assistance providers, and the volume of products offered by our suppliers. As a result, if one or more of our major suppliers suffers
a deterioration in its financial condition or restructures its operations, it could adversely affect our business, financial condition and results of operations.
Accordingly, our business may be negatively affected by adverse changes in the markets in which our suppliers operate.
In particular, as a substantial portion of our revenue depends on our sales of airline flights, we could be adversely affected by changes in the airline industry,
including consolidation or bankruptcies and liquidations, and in many cases, we will have no control over such changes. Any consolidation in the airline
industry in the future would result in fewer airlines with potentially more bargaining power with respect to the commissions and incentive payments or other
fees they pay to intermediaries. Events or weaknesses specific to the airline industry that could negatively affect our business include airfare fluctuations,
airport, airspace, and landing fee increases, seat capacity constraints, removal of destinations or flight routes, travel-related strikes or labor unrest, imposition of
taxes or surcharges by regulatory authorities, and fuel price volatility.
If one of our major airline suppliers merges or consolidates with, or is acquired by, another company that either does not participate in the GDS systems we
use, or that participates in such systems but at substantially lower levels, the surviving company may elect not to make supply available to us or may elect to do
so at lower levels than the previous supplier. Similarly, if one of our major airline suppliers voluntarily or involuntarily declares bankruptcy and is subsequently
unable to successfully emerge from bankruptcy, and we are unable to replace such supplier, our business would be adversely affected. In addition, in certain of
the countries in which we operate, we may be liable to claims from customers for suspension or termination of services in the event an airline files for
bankruptcy. Further consolidation of one or more of the major airlines could result in further capacity reductions, a reduction in the number of airline tickets
available for booking on our website and increased air fares, which may have a negative impact on demand for travel products.
The suspension or termination of services by major travel suppliers, in particular airlines, may affect the products we can offer to our travel customers.
Furthermore, in certain of the countries in which we operate, we could potentially be liable for suspended or terminated bookings in the event of bankruptcy by
the airline or other travel service provider.
Any system interruption, security breaches, or lack of sufficient redundancy in our information systems may harm our businesses.
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We rely on information technology systems, including the internet and third-party hosted services, to support a variety of business processes including booking
transactions, and activities and to store sensitive data, including our proprietary business information and that of our suppliers, personally identifiable
information and other information of our travel customers and employees and data with respect to invoicing and the collection of payments, accounting and
procurement activities. In addition, we rely on our information technology systems to process financial information and results of operations for internal
reporting purposes and to comply with financial reporting, legal, and tax requirements. The risk of a cybersecurity-related attack, intrusion, or disruption,
including spyware, viruses, phishing, denial of service and similar attacks by criminal organizations, hacktivists, foreign governments, and terrorists, is
persistent. We have experienced and may in the future experience system interruptions that make some or all of these systems unavailable or prevent us from
efficiently fulfilling orders or providing services to third parties. Interruptions of this nature could include security intrusions and attacks on our systems for
fraud or service interruption. Significant interruptions, outages or delays in our internal systems, or systems of third parties that we rely upon—including
multiple co-location providers for data centers, cloud computing providers for application hosting, and network access providers—and network access, or
deterioration in the performance of such systems, would impair our ability to process transactions, decrease our quality of service that we can offer to our travel
customers, damage our reputation and brands, increase our costs and/or cause losses.
Potential security breaches to our systems or the systems of our service providers, whether resulting from internal or external sources, could significantly harm
our business. Our cybersecurity risk management program is based on the National Institute of Standards and Technology Cybersecurity Framework (NIST
CSF), and on recognized best practices and standards for cybersecurity and information technology and we conduct regular scans, penetration tests, and
vulnerability assessments to identify potential threats or vulnerabilities in our systems, but we cannot assure you that these measures will prevent all possible
security breaches or attacks that could cause significant interruptions in our operations. We may need to expend significant resources to protect against security
breaches or to address problems caused by breaches, and reductions in website availability could cause a loss of substantial business volume during the
occurrence of any such incident. Because the techniques used to sabotage security change frequently, often are not recognized until launched against a target
and may originate from less regulated and remote areas around the world, we may be unable to proactively address these techniques or to implement adequate
preventive measures. We have obtained cyber-insurance, however we cannot assure you that our insurance will be sufficient to protect against our losses or will
cover all potential incidents. Moreover, security breaches could result in negative publicity and damage to our reputation, result in regulatory scrutiny and
exposure to risk of loss or litigation and possible liability due to regulatory penalties and sanctions or pursuant to our contractual arrangements with payment
card processors for associated expenses and penalties. Security breaches could also cause travel customers and potential users and our suppliers to lose
confidence in our security, which would have a negative effect on the value of our brands. Failure to adequately protect against attacks or intrusions, whether
for our own systems or those of our suppliers, could expose us to security breaches that could have an adverse impact on our financial performance.
In addition, we cannot assure you that our backup systems or contingency plans will sustain critical aspects of our operations or business processes in all
circumstances, many other systems are not fully redundant and our disaster recovery or business continuity planning may not be sufficient. Fire, flood, power
loss, telecommunications failure, break-ins, earthquakes, acts of war or terrorism, acts of God, computer viruses, electronic intrusion attempts from both
external and internal sources and similar events or disruptions may damage or impact or interrupt computer or communications systems or business processes
at any time. Although we have put measures in place to protect certain portions of our facilities and assets, any of these events could cause system interruption,
delays and loss of critical data, and could prevent us from providing services to our travel customers and/or third parties for a significant period of time.
Remediation may be costly and we may not have adequate insurance to cover such costs. Moreover, the costs of enhancing infrastructure to attain improved
stability and redundancy may be time consuming and expensive and may require resources and expertise that are difficult to obtain.
We are subject to payments-related fraud risks.
We are held liable for accepting fraudulent bookings on our platform and other bookings for which payment is successfully disputed by the cardholder, both of
which lead to the reversal of payments received by us for such bookings (referred to as a “chargeback”). Our results of operations may be negatively affected
by our acceptance of fraudulent bookings made using credit cards. Our ability to detect and combat fraud, which has become increasingly common and
sophisticated, may be negatively impacted by the adoption of new payment methods, the emergence and innovation of new technology platforms, including
smartphones, tablets and other mobile devices, and our expansion, including into geographies with a history of elevated fraudulent activity. If we are unable to
effectively combat fraud on our platform or if we otherwise experience increased levels of chargebacks, our results of operations could be materially adversely
affected.
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We have agreements with companies that process travel customers’ credit and debit card transactions for the facilitation of travel customer bookings of travel
services from our travel suppliers. These agreements allow these processing companies, under certain conditions, to hold an amount of our cash (referred to as
a “holdback”) or require us to otherwise post security equal to a portion of bookings that have been processed by such companies. These processing companies
may be entitled to a holdback or suspension of processing services upon the occurrence of specified events, including material adverse changes in our financial
condition. Moreover, there can be no assurance that the rates we pay for the processing of travel customer’s credit and debit card transactions will not increase,
which could reduce our revenue thereby adversely affecting our business and financial performance.
In addition, when onboarding suppliers to our platform, we may fail to identify falsified or stolen supplier credentials, which may result in fraudulent bookings
or unauthorized access to personal or confidential information of users of our websites and mobile applications. A fraudulent supplier scheme could also result
in negative publicity and damage to our reputation and could cause users of our websites and mobile applications to lose confidence in the quality of our
services. Any of these events would have a negative effect on the value of our brands, which could have an adverse impact on our financial performance.
Our ability to attract, train and retain executives and other qualified employees, particularly highly-skilled IT professionals, is critical to our business and
future growth.
Our business and future success is substantially dependent on the continued services and performance of our key executives, senior management and skilled
personnel, particularly personnel with experience in our industry and our information technology and systems. Any of these individuals may choose to
terminate their employment with us at any time and we cannot assure you that we will be able to retain these employees or find adequate replacements, if at all.
The specialized skills we require can be difficult, time-consuming, and expensive to acquire and/or develop and, as a result, these skills are often in short
supply. A lengthy period of time may be required to hire and train replacement personnel when skilled personnel depart our company. Our ability to compete
effectively depends on our ability to attract new employees and to retain and motivate our existing employees. We may be required to increase our levels of
employee compensation more rapidly than in the past to remain competitive in attracting the quality of employees that our business requires. Competition for
these personnel is intense, and we cannot assure you that we will be able to successfully attract, integrate, train, retain, motivate, and manage sufficiently
qualified personnel. In addition, prospective and existing employees often consider the value of the equity awards they receive in connection with their
employment. If the perceived value of our equity awards declines, experiences significant volatility or increases such that prospective employees or
independent contractors believe there is limited or less upside to the value of our equity awards, it may adversely affect our ability to recruit and retain key
employees.
In addition, we compete for talented individuals not only with other companies in our industry but also with companies in other industries, such as software
services, engineering services and financial services companies, among others, and there is a limited pool of individuals who have the skills and training
needed to help us grow our company. High attrition rates of qualified personnel could have an adverse effect on our ability to expand our business, as well as
cause us to incur greater personnel expenses and training costs.
Moreover, while we sometimes require our senior management to sign non-compete agreements, typically for a period of one year following termination, we
cannot assure you that our former employees will not compete with us in the future. In addition, these non-compete agreements may be difficult to enforce in
certain Latin-American jurisdictions.
If we are unable to identify, attract, hire, train, and retain sufficient employees in these areas, users may not have satisfactory experiences and may turn to our
competitors, which may adversely affect our business and results of operations.
We rely on third-party systems and service providers and any disruption or adverse change in their businesses could have a material adverse effect on our
business.
We currently rely on a variety of third-party systems, service providers and software companies, including the GDS and other electronic central reservation
systems used by airlines, various channel managing systems and reservation systems used by other suppliers, as well as other technologies used by payment
gateway providers.
Any interruption or deterioration in performance of these third-party systems and services could have a material adverse effect on our business. Further, the
information provided to us by certain of these third-party systems may not always be accurate due to either technical glitches or human error, and we may incur
monetary and/or reputational loss as a result.
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Our success is also dependent on our ability to maintain our relationships with these third-party systems and service providers. In the event our arrangements
with any of these third parties are impaired or terminated, we may not be able to find an adequate alternative source of systems support on a timely basis or on
commercially reasonable terms, which could result in significant additional costs or disruptions to our business. Any security breach at one of these companies
could also affect our travel customers and harm our business.
Our business depends on the availability of credit cards and financing options for consumers.
Our business is highly dependent on the availability of credit cards and financing options for consumers. The continued growth of our business is also partially
dependent on the expansion of credit card penetration in Latin America, which may never reach a percentage similar to more developed countries for reasons
that are beyond our control, such as low credit availability for a significant portion of the population in such countries. The provision of credit cards and other
consumer financing depends on the product offerings at local and regional banks operating in the countries we serve. In the past, banking systems in Latin
America have suffered disruptions and significantly limited availability and increased cost of consumer credit. Banks may also change their product offerings
that they provide to consumers or may change the availability or costs of such products, due to credit, regulations or other reasons beyond our control.
We rely on various banks to provide financing to our travel customers who elect to use an installment plan payment option. Under our agreements with local
and regional banks, we offer consumers the possibility of financing their purchases under installment plans established, offered, and administered by the credit
card holders’ issuing banks. Under these agreements, the banks provide the financing arrangements to the consumers and they assume the risk of any potential
payment default or delinquency by consumers. Some of our competitors also offer installment plans and may offer installment plans with more attractive terms.
If we are not able to offer a competitive selection of installment plan financing at competitive rates, our business and results of operations could be adversely
affected. Moreover, our agreements with local banks allow us to offer installment payment plans without assuming collection risk from the travel customer and
receive payment in full (provided we choose not to factor such installment payments). We cannot assure you that local banks will not change their credit
practices in the future. If our arrangements with local banks are impaired or terminated, our business and results of operations could be adversely affected.
In November 2021, the Central Bank in Argentina enacted Resolution 7407 (still in force) which imposes restrictions on consumers’ ability to use credit card
installment plans to finance international travel products and services, including air tickets, hotels and tourism services. These restrictions currently remain in
place and we cannot predict if authorities will implement any other restrictions. In our Argentine sales channels, we offer additional payment methods to
enhance flexibility for our customers, including the option to complete purchases in U.S. dollars.
We rely on banks or payment processors to collect payments from travel customers and facilitate payments to suppliers, and changes to credit card
association fees, rules or practices may adversely affect our business.
We rely on banks or payment processors to process collections and payments, and we pay a fee for this service. In the countries where we operate, the number
of processors is limited so there is little or no competition among processors. From time to time, credit card associations may increase the interchange fees that
they charge for each transaction using one of their cards.
For certain payment methods, including credit cards, we pay transaction and other fees, which may increase over time and raise our operating costs, lowering
profitability. We rely on third parties to provide payment processing services and it could disrupt our business if these companies become unwilling or unable
to provide these services to us. If we fail to comply with these third-party servicers’ rules or requirements, or if our data security systems are breached or
compromised, we may be liable for chargebacks, credit card issuing banks’ costs, fines and higher transaction fees and we may lose our ability to accept credit
card payments from our travel customers, process electronic funds transfers, or facilitate other types of online payments. If any of these situations were to
occur, our business and results of operations could be adversely affected.
Our business could be negatively affected by changes in search engine algorithms and dynamics or other traffic-generating arrangements.
We utilize internet search engines such as Google, principally through the purchase of travel-related keywords, to generate a significant portion of the traffic to
our websites. Search engines frequently update and change the algorithms that
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determine the placement and display of results of a user’s search. It is possible that any such update could negatively affect us or may negatively affect us
relative to our competitors. We have developed search engine management tools that are designed to bid more efficiently on portfolios of travel-related
keywords, and we have a search engine management team dedicated to reviewing the return of investment of all biddings. We cannot assure you that these
tools will be effective over the long term, as the search engine sector is dynamic and rapidly changing.
In addition, a significant amount of traffic is directed to our websites through participation in pay-per-click and display advertising campaigns on search
engines, including Google, and travel metasearch engines, including TripAdvisor and Trivago. A search or metasearch engine could, for competitive or other
purposes, adopt emerging technologies, such as voice, or alter its search algorithms or results, any of which could cause us to place lower in search query
results, or exclude our website from the search query results. If a major search engine changes its algorithms or results in a manner that negatively affects the
search engine ranking, paid or unpaid, of our websites, or if competitive dynamics impact the costs or effectiveness of search engine optimization, search
engine marketing or other traffic-generating arrangements in a negative manner, this may have a material and adverse effect on our business and financial
performance. In addition, certain metasearch engines have added or may add various forms of direct or assisted booking functionality to their sites. To the
extent such functionality is promoted at the expense of traditional paid listings, this may reduce the amount of traffic to our websites or those of our affiliates.
Our business depends on the continued growth of e-commerce and the availability and reliability of the internet in Latin America.
The market for e-commerce is developing in Latin America. Our future revenue depends substantially on Latin American consumers’ widespread acceptance
and use of the internet as a way to conduct commerce. The use of and interest in the internet (particularly as a way to conduct commerce) has grown rapidly
since our inception, and we cannot assure you that this acceptance, interest and use will continue in the regions we target. For us to grow our user base
successfully, more consumers in our markets must accept and use new ways of conducting business and exchanging information.
The price of personal computers and/or mobile devices and internet access may limit our potential growth in countries with low levels of internet penetration
and/or high levels of poverty. In addition, the infrastructure for the internet may not be able to support continued growth in the number of internet users, their
frequency of use or their bandwidth requirements.
The internet could lose its viability in our target markets due to delays in telecommunications technological developments, or due to increased government
regulation. If telecommunications services change or are not sufficiently available to support the internet, response times would be slower, which would
adversely affect use of the internet and our service in particular. Moreover, lack of investment in mobile infrastructure in Latin America may limit the
expansion of our mobile offerings, which is one of our key growth strategies.
Growth of e-commerce transactions in Latin America may be impeded by the lack of secure payment methods.
As secure methods of payment for e-commerce transactions have not been widely adopted in Latin America, both consumers and merchants may have a
relatively low confidence level in the integrity of e-commerce transactions. Consumer confidence can be adversely affected by incidents of fraud and security
breaches, including generally in the marketplace, which is beyond our control. Moreover, although we are certified under the Payment Card Industry Data
Security Standards, most of our suppliers with which we share information are not. The continued growth of e-commerce in the region will depend on
consumers’ confidence in the safety of online payment methods.
Our future success depends on our ability to expand and adapt our operations in a cost-effective and timely manner.
We plan to continue to expand our operations by developing and promoting new and complementary services and increasing our penetration in our markets.
Moreover, we seek to expand our travel customer base as income levels and access to internet and banking services, such as credit card issuances, increase in
Latin America. We may not succeed at expanding our operations in a cost-effective or timely manner, and our expansion efforts may not have the same or
greater overall market acceptance as our current services. Furthermore, any new service that we launch that is not favorably received by consumers could
damage our reputation and diminish the value of our brands. To expand our operations, we will also need to spend significant amounts on development,
operations, and other resources, and this may place a strain on our management, financial and operational resources. Similarly, a lack of market acceptance of
these services or our inability to generate satisfactory revenue from any expanded services to offset their cost could have a material adverse effect on our
business, financial condition and results of operations.
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We may not be successful in implementing our long-term growth strategies.
Our long-term growth strategies involve expanding our service and product offerings, enhancing our service platforms and potentially pursuing acquisitions or
other strategic opportunities.
Our success in implementing our growth strategies could be affected by:
•
our ability to attract travel customers in a cost-effective manner, including in markets where we have lower brand awareness or operational history;
•
our ability to improve the competitiveness of our product offerings including by expanding the number of suppliers and negotiating fares and rates
with existing and potential suppliers;
•
our ability to market and cross-sell our travel services and products to facilitate the expansion of our business;
•
our ability to compete effectively with existing and new entrants to the Latin American travel industry;
•
our ability to expand and promote our mobile platform;
•
our ability to build required technology;
•
our ability to expand our businesses through strategic acquisitions and successfully integrate such acquisitions;
•
the general condition of the global economy (particularly in Latin America) and continued growth in demand for travel services, particularly online;
•
the growth of the internet and mobile technology as a medium for commerce in Latin America; and
•
changes in the regulatory environments where we operate.
Many of these factors are beyond our control, and we cannot assure you that we will succeed in implementing our strategies. Even if we are successful in
executing our growth strategies, our different businesses may not grow at the same rate or with a uniform effect on our revenue and profitability.
Acquisitions could present risks and disrupt our ongoing business.
We consider and evaluate acquisitions of, or significant investments in, complementary businesses as part of our business strategy. Acquisitions involve
numerous risks, and any acquisition could have a material adverse effect on our business, financial condition and results of operations.
We may seek to undertake additional strategic acquisitions in the future. We cannot assure you that we will be successful in identifying opportunities and
consummating acquisitions on favorable terms or at all. Depending on the size and timing of an acquisition, we may be required to raise future financing to
consummate the acquisition.
Moreover, even if we are able to consummate a transaction, acquisitions may involve significant risks and uncertainties, which risks may include: distraction of
management and other employees from our day-to-day operations and the development of new business opportunities; difficulties in integrating the operations
of the acquired business and technology with our existing business and technology; greater than expected costs, liabilities, expenses and working capital
requirements; challenges retaining travel customers or suppliers of acquired businesses; regulatory restrictions that prevent us from achieving the expected
benefits of the acquisition; we may not derive the benefits such as operational or administrative synergies we expect from acquisitions, which may result in us
committing capital resources and not receiving the expected returns; difficulties in modifying accounting standards rapidly; challenges in the ability to properly
access and maintain an effective internal control environment over an acquired company to comply with public reporting requirements; problems assimilating
or retaining employees; and other unidentified issues or contingencies not discovered in our pre-acquisition investigations and evaluations of those strategies
and acquisitions. Furthermore, acquisitions, even if successful, could result in changes to the overall business and risk profile of our operations.
Our financial services business exposes us to additional risks and we may not be successful in growing the business.
Koin (BVI) Limited (“Koin BVI”) and its operating company, Koin Administradora de Cartões e Meios de Pagamento S.A. (“Koin S.A.” and jointly with Koin
BVI, referred to as “Koin”). Koin is a financial services company currently focused on digital payments and credit, in addition to the fraud business, primarily
in Brazil and expanding to other countries in the region. Part of our strategy is to grow Koin’s business in Brazil and to continue to expand its business into
other markets in Latin America, such as Mexico. Our financial services business involves additional risks not generally associated with our risks of operations,
including:
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•
measuring and limiting credit risk adequately, in particular given that the typical “Buy Now, Pay Later” users are individuals with limited access to
traditional financial services;
•
managing for and limiting payment defaults;
•
collectability of the loan portfolio is susceptible to changes in economic and market conditions;
•
reliance on the availability of favorable financing;
•
greater exposure to fraud-related risks, including identity theft and payment fraud; and
•
additional compliance with legal obligations related to data privacy, data protection and information and cybersecurity.
We may not be successful in growing our financial services business, including if we are not able to adequately manage these risks.
Our ability to effectively detect and mitigate fraud depends on continuously adapting our proprietary technologies and methodologies, and failure to
adequately respond to evolving fraudulent activities could adversely impact our reputation and financial results.
Our anti-fraud oversight involves identifying fraudulent transactions for merchants operating across diverse industries. Fraudulent activities are becoming
increasingly sophisticated, driven by advancements in technology and the evolving techniques employed by fraud perpetrators. To effectively identify and
mitigate fraud, we rely heavily on proprietary algorithms, machine learning models, and analytical methodologies we strive to update on an ongoing basis.
These tools require frequent refinement to adapt to new fraudulent patterns, trends, and techniques. Failure to keep pace with evolving fraud techniques or to
accurately predict new fraud scenarios could result in incorrect classifications, causing either unnecessary rejection of legitimate transactions or acceptance of
fraudulent ones. Either outcome could negatively affect our relationships with merchants, damage our brand, increase customer churn, and adversely impact
our financial results and growth.
We may incur financial and reputational losses if our systems fail to accurately identify fraudulent transactions or if we experience false positives resulting
in legitimate transactions being declined.
Our anti-fraud solutions are designed to balance fraud prevention with the risk of erroneously declining legitimate transactions, known as “false positives.”
Excessive false positives may lead to merchant dissatisfaction, lost revenue, and damage to our reputation. Conversely, insufficient fraud detection capabilities
could result in merchants experiencing higher fraud-related losses, which could trigger financial liabilities, customer complaints, and termination of
commercial agreements. Our ability to manage and balance these risks is critical to the success of our anti-fraud business and our resources, technologies and
fraud detection tools may be insufficient to accurately detect and prevent fraudulent or illegal activities. A sustained increase in either accepted fraud or false
positive rates could materially harm our brand and reputation, customer retention, merchant relationships, and overall financial performance.
Our anti-fraud solutions rely on access to extensive data from merchants and third-party sources, and any limitations, inaccuracies, interruptions, or
breaches of such data could materially impair our fraud detection capabilities and adversely affect our business.
Effective fraud detection depends on timely and accurate data collected from merchants and third-party sources, including payment processors, identity
verification providers, and other partners. If such data is incomplete, inaccurate, or compromised, our fraud detection accuracy and efficiency may be severely
impaired. In addition, any interruption in the availability or quality of this data—due to regulatory changes, contractual disputes, cyber-attacks, or technical
failures—could reduce our ability to detect fraud effectively. The growing complexity and volume of transactions also demand robust technological
infrastructure. Any operational disruption, scalability limitation, or security breach could negatively affect our business operations, regulatory compliance,
merchant relationships, and financial condition.
Inadequate credit analysis may adversely affect our financial services business.
One of the payment methods we accept is the “Buy Now, Pay Later” option which is supported by our subsidiary Koin. The credit analysis of our customers'
financial condition is based on Koin’s proprietary risk model that uses multiple variables as predictors of the consumer’s ability to repay the credit, including
external and internal indicators which are combined in a risk matrix. Koin’s risk model includes a number of assumptions and projections that may prove to be
incorrect, since these assumptions and projections involve the exercise of judgment. We could suffer losses due to developments that are contrary to our
expectations based on incorrect assumptions used for credit calculations, including with respect to a customer’s credit profile, as well as with respect to
macroeconomic conditions. Furthermore, the
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customers that we target with our “Buy Now, Pay Later” option tend to have limited credit histories and may be particularly susceptible to economic
downturns. Therefore, our predictions about the repayment capacity and behavior of these customers is particularly difficult.
Although we reassess the adequacy of our credit analysis from time to time, we cannot accurately determine whether our customers will pay according to our
expectations. If our customers are not able to make the committed future payments, our results of operations may be adversely affected.
If our collection efforts on delinquent loans in our financial services business are ineffective or unsuccessful, the performance of the loans would be
adversely affected.
Our ability to collect on loans in our financial services business is dependent on the consumer’s continuing financial stability, and consequently, collections can
be adversely affected by several factors, including job loss, divorce, death, illness, or personal bankruptcy. Furthermore, the application of various laws,
including bankruptcy and debtor relief laws, may limit the amount that can be recovered on the loans. It is possible that a higher percentage of customers will
seek protection under bankruptcy or debtor relief laws due to the current inflationary environment, the possibility of a recession and market volatility. Federal,
state, or other restrictions could impair our ability to collect amounts owed and due on the loans facilitated through our platform, reduce income received from
the loans facilitated through our platform, or negatively affect our ability to comply with our current financing arrangements or obtain financing with respect to
the loans facilitated through our platform. If initial attempts to contact a consumer are unsuccessful, certain delinquent loans may be referred to a collection
agent that will service the loans using its own servicing platform. Further, if collection action must be taken in respect of a loan, the collection agent may
charge additional amounts, which may reduce the amounts of collections that we receive.
Moreover, because our servicing fees in connection with the services we provide depend on the collectability of the loans facilitated through our platform, if
there is an unexpected significant increase in the number of customers who fail to repay their loans or an increase in the principal amount of the loans that are
not repaid, we will be unable to collect our entire servicing fee for the loans facilitated through our platform for which we act as service, and our business,
results of operations, financial condition, future prospects, and cash flows could be materially and adversely affected our financial services business. In
addition, if a consumer defaults on a loan, we may be unsuccessful in our efforts to collect the amount of the loan. As such, our originating bank partners could
decide to originate fewer loans through our platform. An increase in defaults precipitated by these risks and uncertainties would adversely affect our financial
services.
Changes in market interest rates could have an adverse effect on our financial services business.
The fixed interest rates charged on Koin’s “Buy Now, Pay Later” option on the installment payments to our customers are calculated based upon existing and
forecasted interest rates at the time of the purchase by the customer. Increases in the market benchmark would result in increases in the interest rates on new
purchases. Increased interest rates may adversely impact the spending levels of consumers and their ability and willingness to purchase our products. Higher
interest rates often lead to higher payment obligations, which may reduce the ability of customers to remain current on their obligations and, therefore, lead to
increased delinquencies, defaults and charge-offs, and decreasing recoveries, all of which would adversely affect our results of operation.
We rely on funding sources to support our financial services business.
If we are unable to enter into new funding arrangements for our financial services business on terms acceptable to us, or at all, the prospects and growth of our
financial services business would be adversely affected. To support the financial services model and the growth of our business, we must maintain a variety of
funding arrangements.
We cannot assure you that funding arrangements will continue to be available on favorable terms or at all, and our funding strategy may change over time and
depends on the availability of such funding arrangements. Disruptions in the credit markets or other factors, such as the current inflationary environment and
rising interest rates, could adversely affect the availability, diversity, cost, and terms of our funding arrangements. In addition, our funding sources may reassess
their exposure to our industry and either curtail access to uncommitted financing capacity, fail to renew or extend facilities, or impose higher costs to access our
funding. The availability and diversity of our funding arrangements depends on various factors and are subject to numerous risks, many of which are outside of
our control.
We depend on the accuracy and completeness of information about customers furnished to our financial services business, and any misrepresented
information could adversely affect our business.
In evaluating credit risk, Koin relies on the information furnished by our customers, including identification, employment, financial condition and other
relevant information. Some of the information regarding customers provided to us is used in
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proprietary credit scoring models, which we use to determine whether a customer meets the applicable criteria for installment payments. We rely on the
accuracy and completeness of that information.
Not all customer information is independently verified. As a result, we rely on the accuracy and completeness of the information provided. If any of the
information that is considered in the review process is inaccurate, incorrect or stale, whether intentional or not, and such inaccuracy or error is not detected
prior to payment acceptance, the installment payment may have a greater risk of default than expected. Additionally, there is a risk that, following the date of
the credit analysis that we obtain and review, a customer may have defaulted on, or become delinquent in the payment of, a pre-existing debt obligation, taken
on additional debt, lost his or her job or other sources of income, or experienced other adverse financial events. Where an inaccuracy constitutes fraud or
otherwise causes us to incorrectly conclude that a customer meets the applicable criteria, we generally bear the risk of loss associated with the inaccuracy. Any
significant increase in inaccuracies or resulting increases in losses would adversely affect our business and results of operations.
Application of existing tax laws or regulations is subject to interpretation by taxing authorities, we are routinely audited by tax authorities and we are
subject to potential tax, labor, and social security contingencies and tax liabilities related to uncertain tax positions.
The application of income and non-income tax laws and regulations to our products and services, including transfer pricing rules applicable to cross-border
operations with related parties or parties in tax havens or subject to privileged fiscal regimes, is subject to interpretation by the applicable taxing authorities
across the multiple jurisdictions in which we operate our business. This may contribute to an increase in audit activity and harsher stances by tax authorities.
Audits include questioning the timing and the amount of income and deductions, and the allocation of income and deductions among various tax jurisdictions.
As such, additional taxes or other assessments may be in excess of our current tax reserves or may require us to modify our business practices to reduce our
exposure to additional taxes going forward, any of which could have a material adverse effect on our business, financial condition and results of operations. In
addition, tax regulations may be subject to change from time to time which may impact our business.
Significant judgment and estimation is required in determining our tax liabilities. In the ordinary course of our business, there are transactions and calculations,
including intercompany transactions and cross-jurisdictional transfer pricing, for which the ultimate tax determination may be uncertain or otherwise subject to
interpretation. Tax authorities may disagree with our intercompany charges, including the amount of or basis for such charges, cross-jurisdictional transfer
pricing or other matters, and assess additional taxes. Although we believe our tax estimates are reasonable, the final determination of tax audits could be
materially different from our historical income tax provisions and accruals, in which case we may be subject to additional tax liabilities, possibly including
interest and penalties, which could have a material adverse effect on our cash flows and results of operations. Moreover, we have in the past and may in the
future be required in certain jurisdictions to pay any such tax assessments prior to contesting their validity, which payments may be substantial.
Moreover, we are a party to a number of tax, labor and social security, regulatory and legal matters in the ordinary course of business. We estimate the range of
our liability related to contingencies when we believe the amount or range of loss can be estimated. We record our best estimate of a loss when the loss is
considered probable. When a liability is probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated
liability related to the lawsuits or claims. As additional information becomes available, we assess the potential liability related to our pending litigation and
claims and revise our estimates. Significant judgment is required to determine the probability that a liability has been incurred and whether such liability is
reasonably estimable. We base accruals made on the best information available at the time which can be highly subjective. Due to uncertainties related to the
resolution of lawsuits and claims, the ultimate outcome may differ significantly from our estimates.
We also evaluate other potential contingent matters related to tax, labor, social security, regulatory, and legal matters. We periodically evaluate the likelihood of
probable and reasonably possible losses, if any, related to all known contingencies on an ongoing basis. Future increases or decreases to our accrued liabilities
may be necessary and will be recorded in the period when such amounts are determined to be probable and reasonably estimable.
We evaluate our tax positions and establish liabilities for uncertain tax positions that may be challenged by local authorities and may not be fully sustained,
despite our belief that the underlying tax positions are fully supportable. Uncertain tax positions are reviewed on an ongoing basis and are adjusted in light of
changing facts and circumstances, including progress of tax audits, developments in case law, and closing of statute of limitations. Such adjustments are
reflected in the income tax provision as appropriate. Our estimate of the potential outcome for any uncertain tax issue is highly judgmental. Although we
believe we have adequately reserved for our uncertain tax positions, no assurance can be given with respect to the final outcome of these matters.
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Internet regulation in the countries where we operate is scarce, and several legal issues related to the internet are uncertain.
Most of the countries where we operate do not have specific laws governing the liability of e-commerce business intermediaries, such as ourselves, for fraud,
intellectual property infringement or other illegal activities committed by individual users or third-party infringing content hosted on a provider’s servers. This
legal uncertainty allows for different judges or courts to decide very similar claims in different ways and establish contradictory case law.
In addition, we are subject to a variety of laws, decrees and regulations across the countries where we operate that affect e-commerce, electronic or mobile
payments, tourism, data collection, data protection, privacy, anti-money laundering, taxation (including VAT or sales tax collection obligations), obligations to
provide certain information to certain authorities about transactions which are processed through our platforms or about our users and those regulations
applicable to consumer protection and businesses in general. However, it is not clear how existing laws governing issues such as general commercial activities,
property ownership, copyrights and other intellectual property issues, taxation (including tax laws that require us to provide certain information about
transactions consummated through our platforms or about our users) and personal privacy apply to online businesses. Many of these laws were adopted before
the internet was available and, as a result, do not contemplate or address the unique issues of the internet.
Moreover, due to these areas of legal uncertainty, and the increasing popularity and use of the internet and other online services, it is possible that new laws and
regulations will be adopted with respect to the internet or other online services. If laws relating to these issues are enacted, they may have a material adverse
effect on our business, results of operations, and financial condition.
We are subject to laws relating to the collection, use, storage and transfer of personally identifiable information about our users, especially financial
information. Several jurisdictions have regulations in this area, and other jurisdictions are considering imposing additional restrictions or regulations.
Because our services are accessible worldwide, other foreign jurisdictions may claim that we are required to comply with their laws. Laws regulating internet
companies outside of the Latin American jurisdictions where we operate may be more restrictive to us than those in Latin America. In order to comply with
these laws, we may have to change our business practices or restrict our services. We could be subject to penalties ranging from criminal prosecution,
significant fines, or outright bans on our services for failure to comply with foreign laws.
We process, store and use personal information, card payment information and other consumer data, which subjects us to risks stemming from possible
failure to comply with governmental regulation and other legal obligations.
In our business, we use personal information, card payment information and other consumer data from users of our website and mobile applications. There are
numerous laws regarding privacy and the storing, sharing, use, processing, transfer, disclosure, and protection of personal information, card payment
information and other consumer data, the scope of which are changing, subject to differing interpretations, and may be inconsistent between countries or
conflict with other rules. We strive to comply with all applicable laws, policies, legal obligations and industry codes of conduct relating to privacy and data
protection. It is possible, however, that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and
may conflict with other rules or the practices of the company. Any failure or perceived failure by us, or our service providers, to comply with the privacy
policies, privacy-related obligations to users or other third parties, or privacy related legal obligations, or any compromise of security that results in the
unauthorized release or transfer of personally identifiable information, payment card information or other consumer data, may result in governmental
enforcement actions, litigation or public statements against the Company by consumer advocacy groups or others and could cause our travel customers and
members to lose trust in our Company, as well as subject us to bank fines, penalties, or increased transaction costs, all of which could have an adverse effect on
our business.
The regulatory framework for privacy issues is currently in flux and is likely to remain so for the foreseeable future. Practices regarding the collection, use,
storage, transmission, and security of personal information by companies operating over the internet have recently come under increased public scrutiny.
Countries in Latin America are increasingly implementing new privacy regulations, resulting in additional compliance burdens and uncertainty as to how some
of these laws will be interpreted.
Amendment to existing tax laws or regulations or enactment of new unfavorable tax laws or regulations could adversely affect our business and results of
operations.
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Many of the underlying laws or regulations imposing taxes and other obligations were established before the growth of the digital economy. If the tax or other
laws or regulations were amended, or if new unfavorable laws or regulations were enacted, our tax payments or other obligations could increase, prospectively
or retrospectively, which may subject us to interest and penalties, decrease the demand for our products and services if we pass on such costs to our travel
customers, result in increased costs to update or expand our technical or administrative infrastructure or effectively limit the scope of our business activities if
we decided not to conduct business in particular jurisdictions. As a result, these changes could have an adverse effect on our business or results of operations.
Governments could adopt tax laws that increase our tax rate or tax liabilities or affect the carrying value of deferred tax assets or liabilities, including the
termination of tax-free incentives or termination of treaties for the avoidance of double taxation. Any changes to tax laws could impact the tax treatment of our
earnings and adversely affect our profitability.
In addition, we have benefited from, and continue to benefit from, certain tax exemptions and incentive programs in various jurisdictions in which we have
operations. When any of our tax exemptions or incentive programs expire or terminate, or if the applicable government withdraws or reduces the benefits of a
tax exemption or incentive that we enjoy, our tax expense may materially increase and this increase may have a material impact on our results of operations.
Our tax liabilities in the future may also be adversely affected by changes to our operating structure, changes in the mix of revenue and earnings in countries
with differing statutory tax rates, changes in the valuation of deferred tax balances, or the discontinuance of beneficial tax arrangements in certain jurisdictions.
We continue to work with relevant governmental authorities to clarify our obligations under existing, new and emerging tax laws, rules and regulations.
However, due to the increasing pace of legislative changes and the scale of our business activities, any substantial changes in tax policies, enforcement
activities or legislative initiatives may materially and adversely affect our business, financial condition and results of operations, and the taxes we are required
to pay.
We are subject to anti-corruption and economic sanctions laws and regulations in the jurisdictions in which we operate, and failure to comply with these
laws and regulations could negatively impact our business, our results of operations, and our financial condition.
We are subject to a number of anti-corruption and economic sanctions laws and regulations, including the U.S. Foreign Corrupt Practices Act (“FCPA”) and
regulations administered and enforced by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”). Failure to comply with these laws and
regulations could negatively impact our business, our results of operations, and our financial condition.
The FCPA and similar anti-bribery laws generally prohibit companies and their intermediaries from making improper payments or improperly providing
anything of value to foreign officials, directly or indirectly, for the purpose of obtaining or keeping business and/or other benefits. The FCPA also requires
maintenance of adequate record-keeping and internal accounting practices to accurately reflect the transactions of covered entities. Under the FCPA, companies
operating in the United States may be held liable for actions taken by their strategic or local partners or representatives. Other jurisdictions in which we operate
have adopted similar anti-corruption, anti-bribery and anti-kickback laws to which we are subject.
Economic sanctions and embargo laws and regulations, such as those administered and enforced by OFAC, vary in their application, as they do not all apply to
the same covered persons or proscribe the same activities, and such sanctions and embargo laws and regulations may be amended over time. Although it is our
policy to comply with all applicable sanctions and embargo laws and regulations, there can be no assurance that we will be in compliance with such laws and
regulations at all times in the future, particularly as the scope of certain laws may be unclear and may be subject to varying interpretations.
Civil and criminal penalties may be imposed for violations of these laws. We operate in some countries which may be viewed as high risk for corruption and/or
economic sanctions compliance issues. Despite our ongoing efforts to ensure compliance with the FCPA and similar applicable anti-corruption laws, and
economic sanctions laws and regulations applicable to our business, there can be no assurance that our officers, directors, employees, agents, and third-party
intermediaries will at all times comply with those laws and our policies, and we may be ultimately held responsible for any such non-compliance. If we or our
officers or directors violate such laws or other similar laws governing the conduct of our business (including local laws), we or our officers or directors may be
subject to criminal and/or civil penalties or other remedial measures, which could harm our reputation and have a material adverse impact on our business,
financial
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condition and results of operations. Any investigation of any actual or alleged violations of such laws could also harm our reputation or have an adverse impact
on our business, financial condition and results of operations.
We are, and may be in the future, involved in various legal proceedings, the outcomes of which could adversely affect our business and results of
operations.
We are, and may be in the future, involved in various legal proceedings relating to allegations of our failure to comply with consumer protection, labor, tax, or
antitrust regulations, that could involve claims or sanctions for substantial amounts of money or for other relief or that might necessitate changes to our
business or operations.
Our websites contain information about hotels, flights, popular vacation destinations and other travel-related topics. It is possible that if any information,
accessible on our websites, contains errors or false or misleading information, third parties could take action against us for losses incurred in connection with
the use of such information. In addition, because consumer protection laws in many of our markets provide for joint liability, travel customers may bring claims
against us for a failure or deficiencies in the provision of a travel product or service by one of our suppliers that is outside of our control.
The defense of any of these actions is, and may continue to be, both time-consuming and expensive. We cannot assure you that we will prevail in these legal
proceedings or in any future legal proceedings and if such disputes were to result in an unfavorable outcome, it could result in reputational damage and have a
material adverse effect on our business, financial condition and results of operations. For a discussion of certain key legal proceedings relating to us, see “Item
4. Information on the Company—B. Business Overview—Legal Proceedings.”
We may not be able to adequately protect and enforce our intellectual property rights; and we could potentially face claims alleging that our technologies
infringe the property rights of others.
We protect our brands and domain names by relying on trademark and domain name registration in accordance with laws in Latin America. We have also
entered into confidentiality and invention assignment agreements with our employees and certain contractors, as well as confidentiality agreements with certain
suppliers and strategic partners, in order to protect our technology and content. We own our technology platform, which consists of applications that we
develop in-house using primarily open source software. We have not registered our technology, however, because we believe it would be difficult to replicate
and that it is adequately protected by the agreements we have in place. Additionally, our technology is constantly evolving and any registration may run the risk
of protecting outdated technology. Even with these precautions, it may be possible for another party to copy or otherwise obtain and use our intellectual
property without our authorization or to develop similar intellectual property independently. Effective trademark protection may not be available in every
jurisdiction in which our services are made available, and policing unauthorized use of our intellectual property is difficult and expensive. Any
misappropriation or violation of our rights could have a material adverse effect on our business.
Furthermore, we may need to go to court or other tribunals to enforce our intellectual property rights or to determine the validity and scope of the proprietary
rights of others. These proceedings might result in substantial costs and diversion of resources and management attention.
We currently license from third parties some of the technologies, trademarks and content incorporated into our websites. As we continue to introduce new
services that incorporate new technologies, third-party trademarks and content, we may be required to license additional technologies, third-party trademarks,
and content. We cannot be sure that such technologies and content licenses will be available on commercially reasonable terms, if at all.
Third parties may assert that our services, products and technology, including software and processes, violate their intellectual property rights. As competition
in our industry increases and the functionality of technology offerings further overlaps, such claims and counterclaims could increase. We cannot assure you
that we do not or will not inadvertently infringe on the intellectual property rights of third parties. Any intellectual property claim against us, regardless of its
merit, could have an adverse effect on our business, financial condition and results of operations and could be expensive and time consuming to defend. Our
failure to prevail in such matters could result in loss of intellectual property rights, judgments awarding substantial damages and injunctive or other equitable
relief against us, or require us to delay or cease offering services or reduce features in our services.
Increased labor costs, compliance with labor laws and regulations and failure to maintain good relations with labor unions may adversely affect our results
of operations.
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We are required to comply with extensive labor regulations in each of the countries in which we have employees, including with respect to wages, social
security benefits and termination payments. If we fail to comply with these regulations, we may face labor claims and government fines.
In the past, governments from certain countries in which we operate, including Argentina, have adopted laws, regulations and other measures requiring
companies in the private sector to increase wages and provide specified benefits to employees. We cannot assure you that these governments will not do so
again in the future. In addition, some of our employees in Argentina, Brazil and certain other countries are currently represented by labor unions. We may face
pressure from our labor unions or otherwise to increase salaries.
Due to high levels of inflation and full employment in the tech industry, we expect to continue to raise salaries. If future salary increases in the Argentine peso
or the currencies of other countries in which we have employees exceed the pace of the devaluation of those currencies, such salary increases could adversely
affect our business, results of operations and financial condition.
Moreover, while we have enjoyed satisfactory relationships with labor unions that represent our employees, labor-related disputes may still arise. Labor
disputes that result in strikes or other disruptions could adversely affect our business, financial condition and result of operations.
A failure to comply with current laws, rules and regulations or changes to such laws, rules and regulations and other legal uncertainties may adversely
affect our business, results of operations or business growth.
We have been subject, and we may or will likely be subject in the future, to inquiries from time to time from regulatory bodies concerning compliance with
consumer protection, tax, labor, antitrust, economic sanctions, and travel industry-specific laws and regulations.
Such inquiries have included investigations and legal proceedings relating to the travel industry and, in particular, parity provisions in contracts between hotels
and travel companies, including us, as well as allegations of “geopricing” or “geoblocking practices.” See “Item 4. Information on the Company—B. Business
Overview—Legal Proceedings” for more information. Parity provisions are significant to our business model, and their removal or modification may adversely
affect our business, financial condition and results of operations. We are unable at this time to predict the timing or outcome of these various investigations and
lawsuits, or similar future investigations or lawsuits, and their impact, if any, on our business and results of operations.
The failure of our businesses to comply with these laws and regulations could result in fines and/or proceedings against us by governmental agencies and/or
consumers, which if material, could adversely affect our business, financial condition and results of operations. Further, if such laws and regulations are not
enforced equally against other competitors in a particular market, our compliance with such laws may put us at a competitive disadvantage vis-à-vis
competitors which do not comply with such requirements.
Complaints from travel customers or negative publicity about our services can diminish consumer confidence and adversely affect our business.
In the past, government and consumer protection agencies have received a substantial number of complaints about our products, which represent a small
percentage of our total transactions but could increase in the future. Many of these claims are related to the behavior of our suppliers. From time to time, we are
involved in disputes or regulatory inquiries that arise in the ordinary course of business. The number and significance of these disputes and inquiries have
increased as our business has expanded. We have responded to inquiries from regulatory agencies; however, we are likely to receive inquiries in the future,
which may lead to actions against us. If during these inquiries we were found to violate any laws or to constitute unfair business practices, we could be subject
to civil damages, enforcement actions, fines or penalties. Such actions or fines could require us to restructure our business processes in ways that would harm
our business and cause us to incur substantial costs.
Because volume and growth in the number of new travel customers are key drivers of our revenue and profitability, travel customers’ complaints or negative
publicity about our customer service could severely diminish consumer confidence and use of our services. Measures we sometimes take to combat risks of
fraud and breaches of privacy and security can damage relations with our travel customers. To maintain good customer relations, we need prompt and accurate
customer service to
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resolve irregularities and disputes. Effective customer service requires significant personnel expense and investment in developing programs and technology
infrastructure to help customer service representatives carry out their functions. These expenses, if not managed properly, could significantly impact our
profitability. Failure to manage or train our customer service representatives properly, could compromise our ability to handle our travel customer’s complaints
effectively. In addition, if we do not handle travel customer complaints effectively, our reputation and brand may suffer and we may lose our travel customers’
confidence.
Consumer adoption and use of mobile devices creates new challenges.
Widespread adoption of mobile devices, coupled with the web browsing functionality and development of apps available on these devices, is driving
substantial online traffic and commerce to mobile platforms. We have experienced a significant shift of business to mobile platforms, and our suppliers are also
seeing a rapid shift of traffic to mobile platforms.
Many of our competitors and new market entrants are offering mobile apps for travel products and other functionality, including proprietary last-minute
discounts for accommodation reservations. Advertising and distribution opportunities may be more limited on mobile devices given their smaller screen sizes.
The average price of travel products purchased in mobile transactions may be less than a typical desktop transaction due to different consumer purchasing
patterns. Further, given the device sizes and technical limitations of tablets and smartphones, mobile consumers may not be willing to download multiple apps
from multiple companies providing a similar service and instead prefer to use one or a limited number of apps for their mobile travel activity. As a result, the
consumer experience with mobile apps, as well as brand recognition and loyalty, is likely to become increasingly important. Our mobile offerings drive a
material and increasing share of our business. We believe that mobile bookings present an opportunity for growth and are necessary to maintain and grow our
business as consumers increasingly turn to mobile devices instead of a desktop computer. As a result, it is increasingly important for us to develop and maintain
effective mobile apps and websites optimized for mobile devices to provide consumers with an appealing, easy-to-use mobile experience. If we are unable to
continue to innovate rapidly and create new, user-friendly and differentiated mobile offerings and advertise and distribute on these platforms efficiently and
effectively, or if our mobile offerings are not used by consumers, we could lose considerable market share to existing competitors or new entrants and our
business, financial condition and results of operations could be adversely affected.
Moreover, we are dependent on the compatibility of our app with popular mobile operating systems that we do not control, such as Android and iOS, and any
changes in such systems that degrade our products’ functionality or give preferential treatment to competitive products could adversely affect the usage of our
app on mobile devices. Additionally, in order to deliver high-quality mobile products, it is important that our products work well with a range of mobile
technologies, systems, networks, and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile
industry or in developing products that operate effectively with these technologies, systems, networks, or standards. In the event that it is more difficult for our
users to access and use our app on their mobile devices, or if our users choose not to access or use our app on their mobile devices or use mobile products that
do not offer access to our app, our user growth and user engagement could be harmed.
Expedia remains a key lodging supply partner for hotel and other lodging products that we offer for all countries outside Latin America.
A substantial number of hotel and other lodging products that we offer through our platform for all countries outside Latin America are provided to us by
affiliates of Expedia pursuant to the Expedia Outsourcing Agreement, as amended from time to time. In addition, Expedia is amongst the key providers to us of
hotel and other lodging products in Latin America. For more information on our relationship with Expedia and the Expedia Outsourcing Agreement, see “Item
7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Relationship with Expedia.”
In September 2024, we entered into the second amended and restated lodging outsourcing agreement with Expedia (the “Expedia Outsourcing Agreement”),
whereby the parties agreed to terminate the then existing outsourcing agreement, entered into on July 12, 2017 (as amended and restated on November 15,
2019). Most of the terms of the Expedia Outsourcing Agreement are effective since January 1, 2025, with a ten-year term. Expedia is the beneficial owner of
11.5% of our ordinary shares outstanding as of March 31, 2025. We believe that the Expedia Outsourcing Agreement has enhanced our business relationship,
and has helped us foster new long-term growth opportunities, while we further optimize our lodging supply.
Pursuant to the Expedia Outsourcing Agreement, Expedia pays monthly marketing fees to us, which are calculated as a percentage of the gross profit of
consumed bookings we sourced through Expedia during the month. We are required to
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maintain a certain level of bookings through Expedia; otherwise, Expedia may require us to pay a $125.0 million termination fee. The Expedia Outsourcing
Agreement may also be terminated by Expedia, and we may be required to pay the termination payment, if the termination by Expedia is under certain
circumstances, including material breach of certain terms under the Expedia Outsourcing Agreement or our Shareholder Agreements. In addition, without
requiring us to pay the termination fee, Expedia may unilaterally terminate the Expedia Outsourcing Agreement in the event of a “Change of Control” (as
defined in the Expedia Outsourcing Agreement).
Subject to the terms of the agreement, the Expedia Outsourcing Agreement allows us to grant to certain third parties (“Decolar Partners”) the right to access
and distribute Expedia-sourced lodging inventory. We must ensure that each Decolar Partner remains subject to obligations at least equivalent to those imposed
on us under the Expedia Outsourcing Agreement. We remain solely responsible for our Decolar Partners, including for any liabilities or breaches arising from
their activities.
If Expedia’s affiliates were to discontinue providing us with their hotel and other lodging products, we could experience temporary and partial limitations in the
availability of these products. While we would seek alternative providers, replacing this supply in the short-term might present some challenges, which could
have an adverse impact on our business, financial condition, and results of operations. Moreover, if the hotel and other lodging products provided by Expedia
were to suffer a deterioration in scale or quality, or if their pricing were not attractive, the products and services that we offer to our users would be adversely
affected. Consequently, if a deterioration in the scale or quality of the products and services provided to us by affiliates of Expedia were to occur, or if their
pricing were not attractive, we may continue to be limited from terminating the Expedia Outsourcing Agreement.
We may experience constraints in our liquidity and may be unable to access capital when necessary or desirable, either of which could adversely affect our
financial condition.
A significant part of our cash balance is held in U.S. dollars. Foreign currency exposure is minimized by managing natural hedges, such as netting the
Company’s current assets and current liabilities denominated in the same foreign currencies, by managing short-term loans and short-term investments and
engaging in forward contracts for hedging purposes.
Although we believe we have a sufficient level of cash and cash equivalents to cover our working capital needs in the ordinary course of business for at least
the next twelve months, we may, from time to time, explore additional financing sources and means to improve our liquidity and lower our cost of capital,
which could include equity, equity-linked and debt financing and factoring activities. In addition, from time to time, we review acquisition and investment
opportunities to further implement our business strategy and may fund these investments with bank financing, the issuance of debt or equity or a combination
thereof.
The availability of financing depends in significant measure on capital markets and liquidity factors over which we exert no control. Considering periodic
uncertainty in the capital and credit markets, we can provide no assurance that sufficient financing will be available on desirable or even any terms to improve
our liquidity, fund investments, acquisitions or extraordinary actions or that our counterparties in any such financings would honor their contractual
commitments, which in turn could negatively affect our business, results of operations and financial condition. In addition, if we raise funding through the
issuance of new equity or equity-linked securities, it would dilute the percentage ownership of our then existing shareholders.
We may incur significant losses in the future for a number of reasons, including the other risks described in this Annual Report, and we may further encounter
unforeseen expenses, difficulties, complications, delays, and other unknown events. If our costs and expenses increase at a more rapid rate than our revenue, we
may not be able to sustain profitability and may incur losses.
Our business experiences seasonal fluctuations and quarter-to-quarter comparisons of our results may not be meaningful.
Our business experiences fluctuations, reflecting seasonal variations in demand for travel services. We generally experience seasonal fluctuations in the
demand for our travel services, which affects our revenues in a quarterly basis. The seasonal revenue impact is exacerbated with respect to income by the
nature of variable cost of revenue and direct sales and marketing costs, which is typically realized in closer alignment to booking volumes, and the more stable
nature of fixed costs.
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The continued growth of international operations or a change in product mix may influence the typical trend of the seasonality in the future, and there may also
be business or market driven dynamics that result in short-term impacts to revenue or profitability that differ from the typical seasonal trends.
As a result, quarter-to-quarter comparisons of our results may not be meaningful. Moreover, seasonal fluctuations in our results of operations could result in
declines in our share price that are not related to the overall performance and prospects of our business.
The use of derivative financial instruments may adversely affect our results of operations, particularly in a volatile and uncertain market.
From time to time, we enter into derivative transactions to manage our risks associated with currency exchange rates and interest rates. Significant changes
may occur in our portfolio of derivative instruments due to increasing volatility and the fluctuation of the currencies of certain countries where we operate,
including Brazil, Mexico and Argentina, against the dollar and volatility in the relevant interest rates, and we may incur net losses from our derivative financial
instruments. The fair value of the derivative instruments fluctuates over time as a result of the effects of future interest rates and exchange rates. These values
must be analyzed in connection with the underlying transactions and as a part of our total average exposure to interest rate and exchange rate fluctuations. It is
difficult to predict the magnitude of the risk resulting from derivative instruments because the appreciation is imprecise and variable. We may be adversely
affected by our derivative financial positions.
Increased focus on our environmental, social and governance responsibilities have and will likely continue to result in additional costs and risks, and may
adversely impact our reputation, employee retention and willingness of customers and partners to do business with us.
Institutional, individual, and other investors, proxy advisory services, regulatory authorities, consumers and other stakeholders are increasingly focused on
environmental, social, and governance (“ESG”) practices of companies. As we look to respond to evolving standards for identifying, measuring, and reporting
ESG metrics, our efforts may result in a significant increase in costs and may nevertheless not meet investor or other stakeholder expectations and evolving
standards or regulatory requirements, which may negatively impact our financial results, our reputation, our cost of capital, our ability to attract or retain
employees, our attractiveness as a service provider, investment, or business partner, or expose us to government enforcement actions, private litigation, and
actions by shareholders or stakeholders.
Our ability to achieve ESG goals and initiatives is subject to numerous risks, including: (1) the availability and cost of limiting or eliminating our use of
carbon-based energy sources and technologies; (2) evolving regulatory requirements affecting ESG standards or disclosures; (3) our ability to work with
partners and providers that can meet our sustainability, diversity, and other standards; (4) our ability to recruit, develop, and retain diverse talent; (5) the impact
of our organic growth and acquisitions or dispositions of businesses or operations on our ESG goals; and (6) customers’ actual demand for ESG-oriented
product offerings, which may be more expensive and less available than other options.
The standards for tracking and reporting on ESG matters are relatively new, have not been harmonized, and continue to evolve. In March 2024, the SEC
adopted final rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which requires
registrants to provide certain climate-related information in their registration statements and annual reports. On April 4, 2024, the SEC voluntarily stayed the
rules, pending judicial review. The final rules, to the extent they survive ongoing and possibly additional forthcoming legal challenges, may require us to
provide certain climate-related information in the future. As such, the final disclosure requirements and reporting timeline are currently unknown, as is the cost
of compliance with the new disclosure requirements in their final form. Ensuring there are systems and processes in place to comply with the various ESG
tracking and reporting obligations will require management time and expense. In addition, our processes and controls may not always comply with evolving
standards for identifying, measuring, and reporting ESG metrics, our interpretation of reporting standards may differ from those of others, and such standards
may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.
If our ESG practices do not meet evolving investor or other stakeholder expectations and standards or regulatory requirements, then our reputation, our ability
to attract or retain employees, and our attractiveness as an investment, business partner, or investor could be negatively impacted. Similarly, our failure or
perceived failure to pursue or fulfill our goals, targets and objectives or to satisfy various reporting standards within the timelines we announce, or at all, could
also have similar negative impacts and expose us to government enforcement actions, private litigation, and actions by shareholders or stakeholders.
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Our business may be adversely affected by climate change.
Climate change could adversely impact our business in the short, medium and long term. Impact may be direct by disruptions to travel and to our operations
due to more frequent or severe storms, hurricanes, flooding, rising sea levels, shortages of water, droughts and wildfires. Moreover, we could be indirectly
impacted by a change in consumer preferences or as a result of a general perception of travel as an environmental harm.
Additionally, new climate-related laws and reporting requirements and the related costs to comply with the emerging regulations, which may be significant,
may affect our business.
Certain Risks Related to Latin America
Latin American countries are subject to political and social instability.
Political and social developments in Latin America, including the results of elections, government deadlock, instability, civil strife, terrorism, high levels of
crime, expropriations and other risks of doing business in Latin America could impact our business, financial condition and results of operations.
Although political and social conditions in one country may differ significantly from another country, events in any of our key markets could adversely affect
our business, financial condition or results of operations.
Latin American countries have experienced periods of adverse macroeconomic conditions.
Our business is dependent upon economic conditions prevalent in Latin America. Latin American countries have historically experienced economic instability,
including uneven periods of economic growth as well as significant downturns. Since our business is dependent on discretionary consumer spending, which is
influenced by general economic conditions, any prolonged economic downturn in any of our key markets could have adverse effects on our business, financial
condition and results of operations.
Latin American governments have exercised and continue to exercise significant influence over their economies.
Governments in Latin America frequently intervene in the economies of their respective countries and occasionally make significant changes in policy and
regulations. Governmental actions have often involved, among other measures, nationalizations and expropriations, price controls, currency devaluations,
mandatory increases on wages and employee benefits, capital controls and limits on imports.
Our business, financial condition and results of operations may be adversely affected by changes in government policies or regulations, including such factors
as exchange rates and exchange control policies; inflation control policies; price control policies; consumer protection policies; import duties and restrictions;
liquidity of domestic capital and lending markets; electricity rationing; tax policies, including tax increases and retroactive tax claims; and other political,
diplomatic, social and economic developments in or affecting the countries where we operate.
In the future, the level of intervention by Latin American governments may continue or increase. We cannot assure you that these or other measures will not
have a material adverse effect on the economy of each respective country and, consequently, will not adversely affect our business, financial condition and
results of operations.
Inflation, and government measures to curb inflation, may adversely affect Latin American economies.
Many of the countries in which we operate have experienced, or are currently experiencing, high rates of inflation. For example, the inflation rate in Brazil, as
reflected by the Broad Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo, or “IPCA”), published by the IBGE, was 5.8%, 4.6% and
4.8% in 2022, 2023 and 2024, respectively. In Mexico, the inflation published by the INEGI was 7.8%, 4.7% and 4.2% in 2022, 2023 and 2024, respectively. In
Argentina, according to measurements from INDEC of the national consumer price index, cumulative consumer price inflation (Inflación Acumulada de
Precios al Consumo), was 94.8%, 211.4% and 117.8% in 2022, 2023 and 2024, respectively.
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Inflation in Brazil, Mexico and Argentina could increase our costs of operations and impact our financial condition and results of operations. Inflation rates
may continue to increase in the future, and the government measures to control inflation, adopted presently or in the future, remain uncertain. Measures taken
by the governments of these countries to control inflation have often included maintaining a tight monetary policy with high interest rates, thereby restricting
the availability of credit and retarding economic growth. Inflation, measures to combat inflation and public speculation about possible additional actions have
contributed materially to economic uncertainty in many of these countries.
Exchange rate fluctuations against the dollar in the countries in which we operate could negatively affect our results of operations.
Local currencies used in the conduct of our business are subject to depreciation and volatility. The currencies of many countries in Latin America have
experienced significant volatility in the past, particularly against the dollar. For example, the Brazilian real appreciated 5.3% and 8.0% during 2022 and 2023,
respectively, and depreciated 27.2% in 2024; the Mexican peso appreciated 5.0% and 13.0% during 2022 and 2023, respectively, and depreciated 22.7% in
2024; and the Argentine peso depreciated 72.4%, 356.4% and 27.5% during 2022, 2023 and 2024, respectively.
If the dollar weakens against foreign currencies, the translation of these foreign-currency-denominated transactions will typically result in increased revenue
and operating expenses, and our revenue and operating expenses will typically decrease if the dollar strengthens. Moreover, if the dollar strengthens against the
foreign currencies of countries in which we operate, the purchasing power of our travel customers from those countries could be negatively affected by
potentially increased prices in local currencies, and we could experience a reduction in the demand for our travel services, particularly with respect to
international travel.
Additionally, foreign exchange exposure also arises from pre-pay transactions, where we accept upfront payments for bookings in the travel customer’s home
currency, but payment to the hotel is not due until after the travel customer checks out and is paid by us in the hotel’s home currency. We are therefore exposed
to foreign exchange risk between the time of the initial reservation and the time when the hotel is paid.
We attempt to minimize our foreign currency exposures by managing natural hedges, netting our current assets and current liabilities in the same foreign
currencies, and managing short-term loans and investments for hedging purposes. Additionally, from time to time we enter into derivative transactions.
However, depending on the size of the exposures and the relative movements of exchange rates, if we choose not to hedge or fail to effectively hedge our
exposure, we could experience a material adverse effect on our financial condition and results of operations.
We are subject to foreign currency exchange controls in certain countries in which we operate.
Certain Latin American economies have experienced shortages in foreign currency reserves and their respective governments have adopted restrictions on the
ability to transfer funds out of the country and convert local currencies into dollars. For example, Brazilian law provides that whenever there is a serious
imbalance in Brazil’s balance of payments or reason to foresee a serious imbalance, the Brazilian government may impose temporary restrictions on the
remittance to foreign investors of the proceeds of their investments in Brazil. Further, exchange controls implemented by the Argentine government control and
restrict the ability of companies and individuals to exchange Argentine pesos for foreign currencies and their ability to remit foreign currency out of Argentina.
We cannot assure you that the Central Bank of Argentina or other government agencies will not increase those controls or restrictions, or make modifications to
these regulations or establish more severe restrictions on currency exchange, which could affect our ability to make payments to foreign creditors or providers,
or make dividend payments to foreign shareholders. We cannot assure you that foreign exchange controls in Brazil, Argentina or any other country where we
operate, may not reemerge or worsen in the future to prevent capital flight, counter a significant depreciation of the Brazilian real, Argentine peso or other
currency, or address other unforeseen circumstances. Additional controls could have a negative effect on the ability of our operating entities in the affected
country to access the international credit or capital markets.
As a result of these exchange controls, markets in Argentina developed trading mechanisms in which an entity or individual buys U.S. dollar-denominated
securities in Argentina (e.g., shares, sovereign debt) using Argentine peso, and subsequently sells the securities for U.S. dollars, in Argentina, to access U.S.
dollars locally, or outside Argentina, by transferring the securities abroad, prior to being sold (the latter commonly known as “Blue Chip Swap Rate”). The
Blue Chip Swap Rate has diverged significantly from Argentina’s official exchange rate (commonly known as exchange spread). In recent years, the Blue Chip
Swap Rate has been higher than Argentina’s official exchange rate. As of December 31, 2024, 2023 and 2022, the spread of the Blue Chip Swap Rate was
15.0%, 20.4% and 94.2%, respectively. Since the new
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government in Argentina, the Blue Chip Swap Rate has decreased. For a discussion of certain foreign exchange regulations applicable to us, see “Item 10.
Additional Information—D. Exchange Controls.”
Any shortages or restrictions on the transfer of funds from abroad may impede our ability to convert these currencies into dollars and to transfer funds,
including for the payment of dividends or debt. Moreover, such restrictions limit our ability to use funds for operating purposes in other countries.
Consequently, if we are prohibited from transferring funds out of the countries in which we operate, our business, financial condition and results of operations
could be adversely affected.
Those kinds of exchange controls could have a material adverse impact on our operations, business, financial condition and results of operations. It is uncertain
whether the Brazilian and/or Argentine governments will or will not increase such controls or restraints which could affect the ability to make payments to
foreign creditors or suppliers, and dividend payments to shareholders.
Developments in other markets may affect Latin America.
The market value of companies like us may be, to varying degrees, affected by economic and market conditions in other global markets. Various Latin
American economies have been adversely impacted by the political and economic events that occurred in several emerging economies in recent times.
As of the date of this Annual Report, recent global developments have occurred in the world which could impact the economies of the Latin American
countries in which we operate and consequently have an adverse effect on our business, financial condition and results of operations, such as any new
restrictions on travel, immigration or trade.
Developments of a similar magnitude to the international markets in the future can be expected to adversely affect the economies of Latin American countries
and, therefore, us.
Certain Risks Related to our Ordinary Shares
The strategic interests of our significant shareholders may, from time to time, differ from, and conflict with, our interests and the interests of our other
shareholders.
If L Catterton, Expedia, or other investors acquire or continue to own and control, directly or indirectly, a significant portion of our voting share capital, even if
their respective interests represent less than a majority of our total voting share capital, such shareholders may be able to exert influence over decisions at both
the shareholder and board level of our Company. For more information, see “Item 7. Major Shareholders and Related Party Transactions.”
The strategic interests of our significant shareholders may differ from, and conflict with, our interests and the interests of our other shareholders in material
respects. In addition, our memorandum and articles of association provides that Expedia and any of our directors affiliated with Expedia do not have any duty
to refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in which we operate.
Expedia also competes in the global travel industry, and also acts as a supplier to us and certain of our competitors. For a further description of our relationship
with Expedia, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions,” “Item 3. Key Information—D. Risk Factors—
Certain Risks Related to our Business—Expedia remains a key lodging supply partner for hotel and other lodging products that we offer for all countries
outside Latin America.” and “Item 16G. Corporate Governance—Differences in Corporate Law.”
We cannot assure you that the actions of Expedia and other significant shareholders will not conflict with our interests or the interests of our other shareholders.
We are a foreign private issuer under U.S. securities regulations, and as a result, we are not subject to U.S. proxy rules, and we are subject to Exchange Act
reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. issuer.
We report under the Exchange Act as a non-U.S. company and a “foreign private issuer,” as such term is defined under U.S. securities regulations. Because we
qualify as a foreign private issuer, we are exempt from certain provisions of the Exchange Act that are applicable to U.S. public companies, including (1) the
sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; (2) the
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sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from
trades made in a short period of time; and (3) the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing
unaudited financial and other specified information, or current reports on Form 8-K upon the occurrence of specified events. In addition, we are not required to
file an annual report on Form 20-F until 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file
their Annual Report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation FD (Fair
Disclosure), aimed at preventing issuers from making selective disclosures of material information. As a result of the above, even though we are required to
furnish reports on Form 6-K disclosing whatever information we have made or are required to make public pursuant to BVI law or distribute to our
shareholders and that is material to our Company, you may not have the same protections afforded to shareholders of companies that are not foreign private
issuers. For further information on our insider trading policies, please see “Item 16J. Insider Trading Policies.”
We are exempt from certain corporate governance requirements of the New York Stock Exchange.
We are exempt from certain corporate governance requirements of the New York Stock Exchange, by virtue of being a foreign private issuer. The standards
applicable to us are considerably different from the standards applied to U.S. domestic issuers. For instance, we are not required to:
•
have a majority of our board of directors be independent;
•
have a compensation committee or a nominating or corporate governance committee;
•
have regularly scheduled executive sessions with only non-management directors;
•
have an executive session of solely independent directors each year; or
•
adopt and disclose a code of business conduct and ethics for officers, directors and employees.
For more information, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.” We have relied on and intend to
continue to rely on some of these exemptions. As a result, you may not be provided with the benefits and protections of certain corporate governance
requirements of the New York Stock Exchange.
The requirements of being a public company may strain our resources and distract our management.
As a public company, we are subject to the reporting requirements of the Exchange Act and requirements of the Sarbanes-Oxley Act applicable to a foreign
private issuer. These requirements may place a strain on our systems and resources. The Exchange Act requires that we file annual and current reports with
respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal
controls over financial reporting. To maintain and improve the effectiveness of our disclosure and internal controls and procedures, we need to commit
significant resources, potentially hire additional staff and provide additional management oversight. We have implemented additional procedures and processes
for the purpose of addressing the standards and requirements applicable to public companies. In addition, sustaining our growth will also require us to commit
additional management, operational and financial resources to identify new professionals to join our Company and to maintain appropriate operational and
financial systems to adequately support expansion. These activities may divert management’s attention from other business concerns, which could have a
material adverse effect on our business, financial condition and results of operations.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
We are a “foreign private issuer,” as such term is defined under the Securities Act, and therefore, we are not required to comply with all the periodic disclosure
and current reporting requirements of the Exchange Act and related rules and regulations. Under the Securities Act, the determination of foreign private issuer
status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and accordingly, the next determination will be
made with respect to us on June 30, 2025.
In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are U.S. citizens or residents and we
fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory
provisions, our loss of foreign private issuer status would make such provisions mandatory. If we are not a foreign private issuer, we will be required to file
periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the
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forms available to a foreign private issuer such as the Annual Report on Form 10-K. We will also have to mandatorily comply with U.S. federal proxy
requirements, and our executive officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions
of Section 16 of the Exchange Act. We may also be required to modify certain of our policies to comply with good governance practices associated with U.S.
domestic issuers. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that
are available to foreign private issuers. Such transition and modifications will involve additional costs and may divert our management’s attention from other
business concerns, which could have a material adverse effect on our business, financial condition and results of operations.
We have identified a material weakness in our internal control over financial reporting, and if we fail to remediate such deficiency and to maintain an
effective system of internal control over financial reporting, we may be unable to accurately report our results of operations, meet our reporting obligations
and/or prevent fraud; and in that case, our shareholders could lose confidence in our financial reporting, which would harm our business and could
negatively impact the price of our ordinary shares.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we are required to furnish a report by our senior management on our internal
control over financial reporting. Effective internal controls are necessary for us to provide reliable and accurate financial reports on a timely basis and prevent
fraud. During the course of documenting and testing our internal control procedures for the fiscal year ended December 31, 2024, in order to satisfy the
requirements of Section 404, we identified a material weakness with respect to the design of effective controls over the authorization of certain pricing policies.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that
a material misstatement of our annual financial statements will not be prevented or detected on a timely basis. For further information on the material
weakness, see “Item 15. Controls and Procedures—B. Management’s Annual Report on Internal Control over Financial Reporting.”
In this regard, while we believe that we have sufficient personnel and review procedures to allow us to maintain an effective system of internal control, we will
need to continue to dedicate internal resources, and may be required to potentially engage outside consultants, adopt a detailed work plan to assess and
document the adequacy of internal control over financial reporting and continue steps to improve control processes as appropriate. Despite our efforts, there is a
risk that we will not be able to conclude, within the prescribed timeframe or at all, that our internal control over financial reporting is effective as required by
Section 404. Also, we cannot provide assurance that we will not experience significant deficiencies or other material weaknesses in our internal control over
financial reporting in the future.
Even if we conclude that our internal control over financial reporting provides reasonable assurance regarding the reliability of financial reporting and the
preparation of consolidated financial statements for external purposes in accordance with U.S. GAAP, because of its inherent limitations, internal control over
financial reporting may not prevent or detect fraud or misstatements. Also, even if our management concludes that our internal control over financial reporting
is effective, our independent registered public accounting firm, after conducting its own independent testing, may disagree with our assessment or may issue a
report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it
interprets the relevant requirements differently from us. As a result, we may be unable to timely complete our evaluation testing and any required remediation.
If we identify one or more material weaknesses or fail to timely implement required new or improved controls or otherwise maintain an effective system of
internal controls, we might not be able to report our financial results accurately or on a timely basis or prevent fraud; and in that case, our shareholders could
lose confidence in our financial reporting or we could be sanctioned by the SEC, as well as result in litigation, which would harm our business and our results
of operations, and may negatively impact the price of our ordinary shares.
Future issuances of our ordinary or other classes of shares may cause a dilution in your shareholding.
We may raise additional funding to meet our working capital, capital expenditure requirements for our planned long-term capital needs, or to fund future
acquisitions. If such funding is raised through issuance of new equity or equity-linked securities, it may cause a dilution in the percentage ownership of our
then existing shareholders.
From time to time we may grant equity-based compensation to our management and employees, which may dilute the value of your ordinary shares.
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From time to time we may grant equity-based compensation to our management and employees, which may dilute the value of your ordinary shares. Pursuant
to the Amended and Restated 2016 Stock Incentive Plan, we may grant restricted stock units (“RSUs”) and stock options to our officers, directors and/or
employees. We issue new shares to satisfy the exercise or release of stock-based awards.
During 2024, 2023 and 2022 we granted an aggregate of 788,556, 892,367 and 622,781 RSUs to certain of our directors, senior management and other
personnel. During 2024, 2023 and 2022, we did not grant any stock options. For more information about our equity-based compensation, see “Item 6.
Directors, Senior Management and Employees—B. Compensation.” If our board of directors approves the issuance of new equity incentive plans (or the
issuance of additional shares under the existing equity incentive plans), the interests of other shareholders may be diluted.
If securities or industry research analysts cease publishing research or reports about our business or if they issue unfavorable commentary or downgrade
our ordinary shares, our stock price and trading volume could decline.
The trading market for our ordinary shares relies in part on the research and reports that securities and industry research analysts publish about us, our industry
and our business. We do not have any control over these analysts. Our stock price and trading volumes could decline if one or more securities or industry
analysts downgrade our ordinary shares, issue unfavorable commentary about us, our industry or our business, cease to cover us or fail to regularly publish
reports about us, our industry or our business.
An active or liquid trading market for our ordinary shares may not be maintained, and the price of our ordinary shares may fluctuate significantly, and
your investment may decline in value.
An active, liquid trading market for our ordinary shares may not be maintained in the long term. Loss of liquidity could increase the price volatility of our
ordinary shares. Moreover, we cannot assure you that investors will be able to sell ordinary shares should they decide to do so. On December 23, 2024, we
entered into the Merger Agreement to be acquired by an affiliate of Prosus for $19.50 per ordinary share in an all cash transaction. Upon completion of the
transaction we will become a privately-held company, our ordinary shares will be delisted from the New York Stock Exchange and we will no longer be listed
on any public market. For more information, see “Item 4. Information on the Company—B. Business Overview—Merger with Prosus” and “Item 3. Key
Information—D. Risk Factors—Risks Associated with the Merger” for further information about the Merger and the risks related thereto.
Furthermore, the stock markets in general, and the shares of emerging market and technology companies in particular, have experienced price and volume
fluctuations that have often been unrelated or disproportionate to the operating performance of the companies involved. We cannot assure you that any trading
price or valuation will be sustained. These factors may materially and adversely affect the market price of our ordinary shares, which may limit or prevent
investors from readily selling our ordinary shares and may otherwise affect liquidity, regardless of our operating performance.
Market fluctuations, as well as general political and economic conditions in the markets in which we operate, such as recession or currency exchange rate
fluctuations, may also adversely affect the market price of our ordinary shares. Following periods of volatility in the market price of a company’s securities,
that company may often be subject to securities class-action litigation. This kind of litigation may result in substantial costs and a diversion of management’s
attention and resources, which would have a material adverse effect on our business, financial condition and results of operation.
The sale or availability for sale of substantial amounts of our ordinary shares could adversely affect their market price.
Sales of substantial amounts of our ordinary shares in the public market, or the perception that such sales could occur, could adversely affect the market price
of our ordinary shares, even if there is no relationship between such sales and the performance of our business.
A portion of our ordinary shares are currently held by affiliates, which means they may not be sold unless the sale is registered under the Securities Act, other
than if an exemption from registration is available. Certain of our shareholders have demand and/or other piggyback registration rights which may enable them
to sell some or all of their ordinary shares in a public offering in the United States registered under the Securities Act. For more information, see “Item 7. Major
Shareholders and Related Party Transactions—B. Related Party Transactions.”
Investors may have difficulty enforcing judgments against us, our directors and management.
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We are incorporated under the laws of the BVI and many of our officers and directors reside outside the United States. Moreover, many of these persons do not
have significant assets in the United States. As a result, it may be difficult or impossible to effect service of process within the United States upon these
persons, or to recover against us or them on judgments of U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal
securities laws.
Furthermore, our memorandum and articles of association include an exclusive jurisdiction clause pursuant to which, to the fullest extent permitted by
applicable law, (i) other than claims specified in clause (ii) below and except as may otherwise be expressly agreed between the Company and a shareholder or
between two or more shareholders in relation to the Company, we and all our shareholders agree that the BVI courts shall have exclusive jurisdiction to hear
and determine all disputes of any kind regarding us and shareholders’ respective investments in us, irrevocably submit to the jurisdiction of the BVI courts,
irrevocably waive any objection to the BVI courts being nominated as the forum to hear and determine any such dispute, and undertake and agree not to claim
any such court is not a convenient or appropriate forum; and (ii) the federal district courts of the United States of America shall be the exclusive forum for the
resolution of any complaint asserting a cause of action arising under the Securities Act, in each case unless our board of directors consents in writing to the
selection of an alternative forum.
An award of punitive damages under a U.S. court judgment based upon U.S. federal securities laws is likely to be construed by BVI courts to be penal in nature
and therefore unenforceable in the BVI. Further, no claim may be brought in the BVI against us or our officers and directors in the first instance for violation of
U.S. federal securities laws because these laws have no extraterritorial application under BVI law and do not have force of law in the BVI.
However, a BVI court may impose civil liability, including the possibility of monetary damages, on us or our officers and directors if the facts alleged in a
complaint constitute or give rise to a cause of action under BVI law. Moreover, it is unlikely that a court in the BVI would award damages on the same basis as
a foreign court if an action were brought in the BVI or that a BVI court would enforce foreign judgments if it viewed the judgment as inconsistent with BVI
practice or public policy.
The courts of the BVI would not automatically enforce judgments of U.S. courts obtained in actions against us or our officers and directors, or some of the
experts named herein, predicated upon the civil liability provisions of the U.S. federal securities laws, or entertain actions brought in the BVI against us or such
persons predicated solely upon U.S. federal securities laws. Further, there is no treaty in effect between the United States and the BVI providing for the
enforcement of judgments of U.S. courts in civil and commercial matters, and there are grounds upon which BVI courts may decline to enforce the judgments
of U.S. courts. Some remedies available under the laws of U.S. jurisdictions, including remedies available under the U.S. federal securities laws, may not be
allowed in the BVI courts if contrary to public policy in the BVI. Because judgments of U.S. courts are not automatically enforceable in the BVI, it may be
difficult for you to recover against us or our officers and directors based upon such judgments.
Certain types of class or derivative actions generally available under U.S. law may not be available as a result of the fact that we are incorporated in the
BVI and the exclusive jurisdiction clause included in our memorandum and articles of association. As a result, the rights of shareholders may be limited.
Shareholders of BVI companies may not have standing to initiate a shareholder derivative action in a court of the United States. Furthermore, our
memorandum and articles of association include an exclusive jurisdiction clause which, to the fullest extent permitted by applicable law, will act as a bar to any
such action in a court of the United States. In any event, the circumstances in which any such action may be brought, if at all, and the procedures and defenses
that may be available in respect to any such action, may result in the rights of shareholders of a BVI company being more limited than those of shareholders of
a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing
has occurred. The BVI courts are also unlikely to recognize or enforce against us judgments of courts in the United States based on certain liability provisions
of U.S. securities law or to impose liabilities against us, in original actions brought in the BVI, based on certain liability provisions of U.S. securities laws that
are penal in nature.
You may have more difficulty protecting your interests than you would as a shareholder of a U.S. corporation.
Our corporate affairs are governed by the provisions of our memorandum and articles of association, as amended and restated from time to time, and by the
provisions of applicable BVI law. The rights of shareholders and the fiduciary
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responsibilities of our officers and directors under BVI law are not as clearly established as they would be under statutes or judicial precedents in some
jurisdictions in the United States, and some states (such as Delaware) have more fully developed and judicially interpreted bodies of corporate law.
These rights and responsibilities are to a large extent governed by the BVI Business Companies Act, 2004 as amended from time to time (the “BVI Act”) and
the common law of the BVI. The common law of the BVI is derived in part from judicial precedent in the BVI as well as from English common law, which has
persuasive, but not binding, authority on a court in the BVI. In addition, BVI law does not make a distinction between public and private companies and some
of the protections and safeguards (such as statutory pre-emption rights, save to the extent expressly provided for in the memorandum and articles of
association) that investors may expect to find in relation to a public company are not provided for under BVI law.
There may be less publicly available information about us than is regularly published by or about U.S. issuers. Also, the BVI regulations governing the
securities of BVI companies may not be as extensive as those in effect in the United States, and the BVI law and regulations regarding corporate governance
matters may not be as protective of minority shareholders as state corporation laws in the United States. Therefore, you may have more difficulty protecting
your interests in connection with actions taken by our officers and directors or our principal shareholders than you would as a shareholder of a corporation
incorporated in the United States.
The laws of BVI provide limited protections for minority shareholders, so minority shareholders will not have the same options as to recourse in
comparison to the United States if the shareholders are dissatisfied with the conduct of our affairs.
Under the laws of the BVI there is limited statutory protection of minority shareholders other than the provisions of the BVI Act dealing with shareholder
remedies. The principal protections under BVI statutory law are derivative actions, actions brought by one or more shareholders for relief from unfair
prejudice, oppression and unfair discrimination and/or to enforce the BVI Act or the memorandum and articles of association. Shareholders are entitled to have
the affairs of the company conducted in accordance with the BVI Act and the memorandum and articles of association and are entitled to payment of the fair
value of their respective shares upon dissenting from certain enumerated corporate transactions. For more information, see “Item 10. Additional Information—
B. Memorandum and Articles of Association” and “Item 16G. Corporate Governance—Differences in Corporate Law” below.
There are common law rights for the protection of shareholders that may be invoked, largely dependent on English company law, since the common law of the
BVI is limited. Under the general rule pursuant to English company law known as the rule in Foss v. Harbottle, a court will generally refuse to interfere with
the management of a company at the insistence of a minority of its shareholders who express dissatisfaction with the conduct of the company’s affairs by the
majority or the board of directors. However, every shareholder is entitled to seek to have the affairs of the company conducted properly according to law and
the constitutional documents of the company. As such, if those who control the company have persistently disregarded the requirements of company law or the
provisions of the company’s memorandum and articles of association, then the courts may grant relief. Generally, the areas in which the courts will intervene
are the following: (i) a company is acting or proposing to act illegally or beyond the scope of its authority; (ii) the act complained of, although not beyond the
scope of the authority, could only be effected if duly authorized by more than the number of votes which have actually been obtained; (iii) the individual rights
of the plaintiff shareholder have been infringed or are about to be infringed; or (iv) those who control the company are perpetrating a “fraud on the minority.”
These rights may be more limited than the rights afforded to minority shareholders under the laws of states in the United States.
We have no current plans to pay any cash dividends on our ordinary shares.
We currently intend to retain our future earnings, if any, to fund the development and growth of our business. As a result, capital appreciation, if any, of our
ordinary shares are likely to be your sole source of gain for the foreseeable future. Consequently, in the foreseeable future, you will likely only experience a
gain from your investment in our ordinary shares if the trading price of our ordinary shares increases. While pursuant to our memorandum and articles of
association, our outstanding Series A Preferred Shares are entitled to semi-annual dividends and quarterly dividends, respectively, our memorandum and
articles of association do not require us to pay any dividends on our ordinary shares.
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Anti-takeover provisions in our memorandum and articles of association might discourage, delay or prevent acquisition or other change of control attempts
for us that you and/or other of our shareholders might consider favorable.
Certain provisions of our memorandum and articles of association may discourage, delay or prevent a change in control of our Company or management that
shareholders may consider favorable, including but not limited to the following provisions:
Pursuant to our memorandum and articles of association:
•
Our board of directors may without prior notice to shareholders, or obtaining any shareholder approval, amend our memorandum and articles of
association to authorize and subsequently issue an unlimited number of preferred shares in one or more classes and series and designate the issue
prices, rights, preferences, privileges, restrictions and terms of such preferred shares.
•
Our board of directors is currently made up of six members divided into three classes, with each class having a three-year term. Class I’s, Class II’s
and Class III’s terms will expire at the Company’s annual meetings in 2027, 2025 and 2026, respectively. The only circumstance in which
shareholders can elect new directors is at an annual meeting and in respect of those board seats whose term is expiring at the annual meeting. Elections
will take place by plurality voting. Shareholders do not have the power to increase or reduce the size of the board or fill a vacancy on the board, which
matters are the exclusive authority of our board of directors.
•
Our shareholders may only remove directors for cause and only by resolution approved by shareholders holding not less than two-thirds of the voting
rights at a meeting of shareholders called for the stated purpose of removing the director.
•
There are a number of restrictions, conditions and other requirements (including advance notice period requirements) that apply to our shareholders’
ability to (i) request special meetings of our shareholders; (ii) nominate persons for election as directors at annual meetings of our shareholders; and
(iii) propose other items of business or other matters for consideration at any annual or special meetings of our shareholders.
•
All resolutions of the shareholders must be adopted at a meeting of our shareholders convened in accordance with our memorandum and articles of
association. Shareholders are prohibited from adopting resolutions by written consent.
•
There are restrictions on amending our memorandum and articles of association. Certain provisions of our memorandum and articles of association
(including many of the provisions described above) may only be amended with the approval of both our shareholders and our board of directors.
Provisions that may be amended by the shareholders without board approval require the affirmative vote of holders of two-thirds of the shares entitled
to vote on the resolution.
For more information on our Shareholder Agreements, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.” For
more information on our memorandum and articles of association, see “Item 10. Additional Information—B. Memorandum and Articles of Association” and
“Item 16G. Corporate Governance—Differences in Corporate Law.”
These provisions and other provisions under BVI law could discourage, delay or prevent potential takeover attempts and other transactions involving a change
in control of our Company, including actions that our shareholders may deem advantageous. As such, these provisions may reduce the price that investors
might be willing to pay for our ordinary shares in the future and negatively affect the trading price of our ordinary shares.
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ITEM 4 INFORMATION ON THE COMPANY
A.
History and Development of the Company
Despegar was founded in 1999 as Decolar.com, Inc., as a pioneering online travel technology company, with the goal to empower travelers in Latin America by
offering them a seamless and comprehensive platform for planning and booking their trips. Despegar introduced a novel approach to travel, transitioning from
traditional, in-person travel bookings to a comprehensive online platform that offers extensive travel options including hotels, flights, and vacation packages
and built the only pan-regional leisure travel brand in Latin America.
Despegar.com, Corp. was formed as a business company incorporated in the BVI on February 10, 2017. On May 3, 2017, the shareholders of our predecessor,
Decolar.com, Inc., exchanged their shares for ordinary shares of Despegar.com, Corp. to create a BVI holding company. Following the exchange, Decolar.com,
Inc. became a wholly-owned subsidiary of Despegar.com, Corp. On September 19, 2017, Despegar.com, Corp. completed our initial public offering on the
New York Stock Exchange.
Our development over the years reflects a commitment to innovation and customer satisfaction, continuously evolving to meet the changing needs of travelers
and the dynamic nature of the travel industry. By leveraging technology, at first the internet, then mobile platforms and more recently technologies such as
artificial intelligence and machine learning, we aim to be at the forefront of travel innovation, providing personalized travel solutions and accessible and
affordable travel experiences to our customers.
On December 23, 2024, we entered into the Merger Agreement to be acquired by an affiliate of Prosus for $19.50 per ordinary share in an all cash transaction.
Upon completion of the transaction we will become a privately-held company, our ordinary shares will be delisted from the New York Stock Exchange, and we
will no longer be listed on any public market. Our board of directors approved the execution, delivery and performance by the Company of the Merger
Agreement and the consummation of the Merger. On March 4, 2025, at a special shareholders meeting, we received the required affirmative vote of
shareholders to approve the Merger. The Merger is subject to the receipt of required regulatory clearances [in Brazil and Mexico], and satisfaction or waiver
(where permissible) of other customary closing conditions. We received required regulatory clearances in Chile. For more information, see “Item 4.
Information on the Company—B. Business Overview—Merger with Prosus” and “Item 3. Key Information—D. Risk Factors—Risks Associated with the
Merger” for further information about the Merger and the risks related.
Our principal executive office is located at Commerce House, 4th Floor, Wickhams Cay 1, Road Town, Tortola (VG1110), British Virgin Islands, telephone: +1
284 852-1195. Our agent for service of process in the United States is Cogency Global Inc., located at 10 E. 40th Street, 10th Floor, New York, New York
10016.
Our History and Development
Our business was started to address the Latin America travel market using technology. Since its launch in 1999, it has grown substantially in revenue, products
and geographic scope. The following table shows the timeline of key milestones:
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1999
•
Launched site in Argentina.
2000
•
Launched sites in Brazil, Chile, Colombia, Mexico and Uruguay.
2001
•
Launched sites in the United States and Venezuela.
2007
•
Launched site in Peru.
2009
•
Expanded our offerings to include hotels.
•
Launched sites in Bolivia, Costa Rica, Dominican Republic, Ecuador, Guatemala, Nicaragua, Panama, Paraguay and Puerto Rico.
2010
•
Launched sites in El Salvador and Honduras, reaching our 20th market.
2012
•
Launched our mobile apps on Android and iOS.
•
Expanded offerings to include packages, rental cars and cruise products.
2013
•
Expanded our offerings to include destination services and vacation rentals.
2015
•
Cumulative 10 million travel customers served.
•
Reached 10 million downloads of our mobile app.
•
Deepened strategic partnership with Expedia, including its equity investment in our Company.
2016
• Awarded “E-commerce Leader in the Tourism Industry in LATAM” by the Latin American E-Commerce Institute.
2017
• Initial public offering and listing on the New York Stock Exchange.
2018
• Launched sales call centers in Peru, Ecuador, Mexico, Chile, Colombia, Argentina and Brazil.
2019
•
Acquired Viajes Falabella in Chile, Argentina, Peru and Colombia.
2020
•
Acquired Best Day, a leading travel agency in Mexico.
•
Acquired an 84% equity stake in Koin, an online payment platform in Brazil, to increase our payment options for customers
2021
•
Published our first corporate sustainability report as part of our ESG commitment.
2022
•
Acquired Viajanet, one of the leading online travel agencies in Brazil and the remainder 16% equity from minority shareholders of Koin.
•
Acquired a 51% ownership stake in Stays.net, Brazil’s leading vacation rental channel manager and a preferred software partner for leading
international booking platforms to offer vacation rentals.
2023
•
Reached 23 million customers in loyalty program “Pasaporte.”
2024
•
Divested destination management company BDExperience and formed a strategic alliance with World2Meet. See “Item 4. Information on
the Company—B. Business Overview—Divestment and Acquisitions.”
•
Enhanced partnership with Expedia through the Expedia Outsourcing Agreement.
•
Entered into the Merger Agreement to be acquired by an affiliate of Prosus.
•
Reached a total of 32.5 million customers in loyalty program “Pasaporte”.
•
Included in Russell 2000 and Russell 3000 equity indexes, on July 1, 2024.
•
Launched our AI-powered Travel Assistant “SOFIA”.
2025
•
Entered into a strategic partnership with HBX Group.
Capital Expenditures
For a further information on our recent and ongoing main capital expenditures and divestitures, distribution of these investments geographically and method of
financing, see “—B. Business Overview—Divestment and Acquisitions,” “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital
Resources” and “Item 5. Operating and Financial Review and Prospects—C. Research and Development, Patents and Licenses, etc.”
B. Business Overview
Overview
We are a premier travel technology company operating in the global $2.5 trillion travel market with a focus on Latin America. We have presence in 18 markets
and cover more than 80% of the region’s population, with a leading online
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presence in key markets like Brazil, Mexico, Argentina, Chile and Colombia. Operating for over two decades in the large and fragmented Latin America travel
market has solidified our understanding of local consumers, their purchasing behaviors, and travel preferences. This deep insight empowers us to deliver
personalized travel solutions, including bespoke travel packages, offering excellent value and competitive air and non-air fares.
We organize our product offering into three Business Segments: (1) Air, (2) Packages, Hotels and Other Travel Products, and (3) Financial Services; and we
distribute our products through our Business to Consumer (B2C), Business to Business (B2B), and Business to Business to Consumer (B2B2C) operations.
We combine industry-leading air and lodging inventory, a powerful technology platform, operational excellence, and travel expertise, along with payment and
financing solutions, to deliver travel opportunities to our customers across Latin America. This approach positions us as a leading travel brand in the region.
Our commitment to our customers extends beyond bookings. Our expert customer support teams are available to address inquiries, resolve issues, and provide
expert guidance throughout the travel experience. As we comprehend the objectives and challenges faced by Latin American travelers and suppliers, we are
well-positioned to facilitate business growth for travel suppliers, ultimately providing customers with a wider choice at attractive pricing.
As our market share grows, organically as well as inorganically, we are increasingly able to capture significant amounts of customer data including travel
history and preferences and serve personalized recommendations to drive higher customer conversion, further establishing our brand as the premier travel
brand in the region. As of December 31, 2024, our post trip net promoter score (NPS), which is a customer loyalty and satisfaction measurement, was 70.9%.
We are committed to continuous innovation, particularly in cutting edge domains, such as generative artificial intelligence (AI) and large language models,
which we begun developing in October 2023. This allows us to develop tools like our AI-powered Travel Assistant “SOFIA,” introduced to the market on
March 4, 2024 to enhance the travel experience, boost our internal capabilities and capture efficiencies and to enhance the existing chatbot functionalities of
our partners, as we seek to offer a new standard for digital engagement in the hospitality industry.
Travel Market Opportunity
Large Market Size. Latin America is one of the largest and most diverse regions in the world, comprising over 30 countries with a total population of over 650
million, the region encompasses multiple languages, currencies and regulatory regimes. The total addressable market is estimated to amount to $190 billion and
is almost equally divided between online and offline travel spend. We expect the market to materially expand in the coming years, given the long-term
favorable macroeconomic trends, the expansion of the middle class and increased consumption in the region.
Rapid Travel Market Growth. We believe that the online and offline travel market is expected to expand due to factors such as rising disposable income,
demographic shifts and a growing middle class with greater access to banking services and credit products, enabling a larger segment of the growing
population to travel both domestically and internationally. As per Euromonitor projections the online travel market is expected to expand at approximately
twice the rate of the offline market in the coming years. Specific factors driving the growth in online travel include:
Increasing adoption of mobile devices, including smartphones. The use of mobile devices in Latin America is expected to continue to grow. With the
proliferation of smartphones and tablets, mobile has become a prominent tool for travelers to search, discover and purchase travel services.
Superior user experience. While a significant part of the travel is booked offline, online travel booking channels, which include websites and mobile
apps, empower travelers to search products and user-generated reviews and easily compare real time availability and pricing options from multiple
travel providers simultaneously, which we believe leads to higher user engagement and customer conversion.
Growth in banked consumers and proliferation of credit products. With the continued development of the Latin American economy, a larger portion
of the population has been accessing new forms of banking products including digital wallets, credit cards and other financial products. This trend
promotes the financial capability of customers to make purchases online.
High Fragmentation. The Latin American travel market presents a significant degree of fragmentation, in both suppliers and competitors. Within this expansive
and diverse market, numerous local competitors predominantly concentrate on specific countries, tailoring their operations and targeting local customers. Their
focus tends to be more localized, and
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given their lack of scale, often fail to address the broader Latin American market as a cohesive entity. On the international front, our competitors exhibit a
different dynamic. Many of our competitors perceive Latin America more as a destination rather than a point of origination. In addition, the Latin American
travel industry is characterized by significant fragmentation in suppliers across airlines, hotels and other travel products. This fragmentation is compounded by
regional complexities, including differences in language, local customs, travel preferences, currencies and regulatory regimes across the region. These factors
create challenges for suppliers to reach customers directly, while competitors cater to specific countries or approach the market with a destination centric
perspective.
All these factors create opportunities for us to increase and expand our market share as well as to continue growing our customers and supplier’s portfolio,
given that we have the capability and knowledge of how to develop the business.
Our Competitive Strengths
As the leading travel technology company in Latin America, we believe we are well positioned to succeed as the main service provider to our final customers,
suppliers as well as online and offline travel agencies, as we leverage our technology platform to efficiently operate across the region.
We believe that our focus on the under penetrated Latin American travel market, our knowledge of the consumer and supplier landscape in the region, in
combination with our ability to manage the business successfully through economic cycles, as well as our leading technology platform and brands, will allow
us to consolidate our market position and continue to expand our industry leadership. We believe that the following competitive strengths in particular
distinguish us as a leading travel technology player in Latin America.
Industry Leader in Latin America
With our launch in 1999, we have benefited from an early mover advantage in Latin America, which has allowed us to achieve significant scale and brand
awareness. We also have established relationships with a large network of travel suppliers in Latin America and we have become the leading online air
ticketing provider in Latin America, selling airline tickets purchased through global distribution systems. Additionally, we believe we provide our travel
customers with the largest travel portfolio among Latin American OTAs, with access to over 250 airline carriers globally, over 400,000 hotels globally and over
850,000 vacation rentals globally, as well as more than 200 car rental agencies globally and over 700 destination services suppliers globally with more than
15,000 activities to offer. Our platform is also of increasing importance to airlines based outside of Latin America, which generally have a limited local
presence in the region, and which account for approximately 26% during 2024 of the outbound international travel booked on our platform. Such international
travel is more attractive because of its price point and higher commission structure.
We benefit from network effects: our large travel customer base helps us to attract additional travel suppliers, and in turn, a larger network of travel suppliers
helps us to attract new travel customers by enhancing our product offering. Furthermore, by growing our user base and aggregating different products from our
supplier base, we are able to offer attractive pricing and availability of travel products to our travel customers, as well as enhance the effectiveness of our
marketing strategy.
Technology Platform
Our one-stop shop travel platform provides us the flexibility to connect travel customers to a variety of products and services, and combine them to offer
attractive package deals through a variety of channels and brands both ours and of our partners.
We use our technology platform to improve the travel customer experience and optimize the efficiency of our business operations. Our platform is engineered
to provide a personalized and secure experience to our travel customers. We invest heavily in understanding our travel customers’ behavior and intentions
through a combination of detailed behavioral data collection and machine learning algorithms. We collect, maintain and analyze behavioral data from all the
devices our travel customers are using to interact with our platform. The insights derived from the analysis of this data form the basis of our enhanced
conversion strategies. We use email, social media marketing and retargeting campaigns to remind travel customers of their searches.
We believe our technology infrastructure is an important asset due to its robustness, cost-effectiveness and scalability. We continuously evaluate, research and
develop new services, platform infrastructure, and software to improve and solidify our technological systems further and provide a reliable, personalized, fast
and secure experience to our travel customers.
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Our large web and mobile audience and transaction volume generate a significant amount of data that allows us to better understand our travel customers and
provide personalized travel offerings and also helps us to drive our sales, marketing and operational strategy. To offer the most effective content and products
for each travel customer, we extensively analyze the data we collect to identify and highlight the most valuable products and destinations in each travel
customer interaction. By gathering and analyzing data in real time, we are quickly able to assess and react to changes in travel customer behavior, market
pricing and other market dynamics. Currently, the majority of visitors to our platform see a personalized landing page based on such factors as user account
information, past search and purchasing history and geolocation. We believe that this personalization of the user experience increases engagement and
likelihood of purchase.
Strong Brand Recognition and Effective Marketing Capabilities
Brand Awareness
We operate a portfolio of brands specifically Despegar, Decolar, Viajes Falabella, Best Day, Viajanet, Stays, HotelDo and Koin (for payment gateway and anti-
fraud services, as well as online payment and consumer lending services). These brands allow us to appeal to different clients in different geographies, allowing
us to tailor our offerings.
Through mobile, online and offline marketing, brand promotion and cross-marketing, we have created strong brand recognition among Latin America travelers,
which we view as one of our key competitive advantages and which we actively focus on by investing in marketing and branding initiatives promoting our
brand, which we believe combined with the quality of the service we have delivered over the years, has made us a trusted brand with our travel customers.
Marketing Capabilities
We have invested significant resources in our marketing team, which we believe is a meaningful driver of our business, as well as in our own creative,
production and media execution teams, who are quickly able to adapt our marketing strategy, while also leveraging our extensive data and analytics capabilities
for more precise audience targeting. We are able to control all aspects of our budget, marketing campaigns and market analytics, without the need for agencies
or external consultants. Our marketing team’s local knowledge and expertise in our key markets have allowed us to develop direct relationships with a broad
range of local and regional media providers and purchase media directly, avoiding more costly intermediaries.
Leading Mobile Offering
Mobile is an increasingly important part of our business, as consumers are quickly able to access and browse our real time travel offerings, compare prices and
make purchases through their mobile devices. Our mobile apps have had millions of downloads from the iOS App Store and Google Play. In addition, our iOS
App Store and Google Play apps were rated 4.7 and 4.8 stars as of December 31, 2024. During 2024, 2023 and 2022, mobile, which includes both mobile web
and our mobile apps, accounted for approximately 80%, 76% and 73% of all of our user visits, and approximately 61%, 53% and 49%, respectively, of our
transactions. Additionally, transactions via mobile increased by approximately 20% in 2024 compared to 2023 and increased by approximately 14% in 2023
compared to 2022. We continue to provide innovative features and functionality to consumers through our mobile apps, including push notifications, dynamic
updates, inventory alerts and personalized promotions as well as in-app customer service. Our travel customers using mobile devices have historically made
more repeat transactions than travel customers using desktop computers. Additionally, our mobile presence allows in-destination marketing, which facilitates
cross-selling of additional travel products, such as rental cars and destination services to travel customers, after they have arrived at their destination.
Distinctive Payment Solutions
As the leading Latin American travel technology, we have developed long-standing relationships with a wide range of local banks to offer installment payment
plans to their credit card holders as an alternative purchase option. We believe that local banks look to partner with us because of our scale, access to our online
audience and high transaction volume. Our agreements with local banks allow us to offer installment plans without assuming collection risk from the travel
customer. Furthermore, primarily in Brazil, our financial services segment provides us with an additional type of payment which allows us to extend our
product offering to a broader range of customers.
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Proven and Experienced Team
Our management team has been working with the Company or in the Latin American industry for a long time and has significant experience in the travel sector
and across a variety of industries in Latin America and the United States. Members of our management team have worked at organizations such as LATAM
Airlines, McKinsey, BCG, Uber, and PwC, among others. In addition, we have successfully built an innovative technology culture that we believe is unique in
Latin America and enables us to attract and retain some of the best talent in the region. By fostering a distinctive, collaborative and high-performance working
culture, we attract software developers with world-class talent and offer an engaging working environment for ongoing career development. We believe we are
perceived as a top talent recruiter for IT professionals in Latin America, allowing us to attract the highest quality professionals and specialists dedicated to the
enhancement of our platform.
Our Customers
We had approximately 4.8 million, 4.6 million and 3.9 million travel customers in the years 2024, 2023 and 2022, respectively, primarily in Latin America,
generating $756.5 million, $694.7 million and $533.5 million in revenue for the travel business and approximately $5.5 billion, $5.7 billion and $4.3 billion in
gross bookings, respectively. Most of our travel customers are traveling for leisure, although we do have some independent business travelers as well.
In addition, in our financial services segment, our total payment volume was $75.7 million, $78.0 million and $75.7 million during 2024, 2023 and 2022,
respectively. Our financial services segment generated revenues of $17.6 million in 2024, $11.4 million in 2023, and $4.4 million in 2022. In 2024, Koin
processed over 691,313 transactions, and had over 280,000 customers, as compared to over 340,000 transactions and over 210,000 customers in 2023. The
average amount of each loan was approximately $317 and $470 in 2024 and 2023, respectively.
Our Distribution Channels
In order to support the distribution of our travel products, we are integrated with several of the main global lodging inventory providers, car rental companies,
travel insurance and destination services providers across our key markets. Our travel technology enables us to offer these products dynamically across
multiple sales channels, either as stand-alone services or as part of dynamically bundled travel packages.
Through B2C we operate a diverse brand portfolio across the region, implementing effective marketing and pricing strategies geared towards capturing a
significant revenue share. In addition to operating several brands, we also implement an omnichannel approach, which allows our customers to transact with us
through multiple distribution channels. Employing an app-first strategy and an AI augmented agent we provide personalized travel advice for our customers
both online and offline. Our platform facilitates efficient integration of acquired B2C brands, supporting the Company’s strategic goal of market consolidation.
Our system’s inherent scalability allows us to achieve operating leverage, driving sustained margin expansion in the coming years and solidifying our
competitive position in the market.
Our B2B solution provides offline travel agencies with numerous distinct advantages. It serves as a comprehensive one-stop shop, streamlining several
operational aspects for these agencies. while also providing them with a cost-efficient gateway to Despegar’s extensive air and non-air inventory. Our platform
enables offline travel agencies to offer their customers a diverse range of compelling and affordable travel options. The flexibility ingrained in our solution is a
key feature, facilitating the efficient onboarding of new travel agencies to seamlessly connect with our inventory. This adaptability ensures that our technology
platform remains a dynamic and responsive tool, empowering offline travel agencies to thrive in an ever-evolving travel landscape.
White Label enables us to seamlessly integrate and launch tailored white-label solutions in record time for any of our partners, such as banks, credit cards,
airlines, hotels and retailers. The nimbleness of our flexible platform, coupled with our relatively smaller size compared to global players, positions us uniquely
in the market to deliver more personalized white-label solutions. Our white-label solutions fuel our expansion beyond Latin America, empowering us to serve
diverse markets with the adaptability of our technology platform.
Our Products and Services
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We offer a wide range of travel and travel-related products catering mostly to the needs of Latin Americans traveling domestically, to other countries in the
Latin American region and outside of Latin America. We provide these travelers with the comprehensive tools and information, in multiple languages, that they
need to research, plan, book and purchase travel products efficiently.
Our comprehensive product offering is organized into three segments: (1) Air, which consists of the sale of airline tickets, (2) Packages, Hotels, Vacation
Rentals and Other Travel Products, which consists of travel packages (which can include airline tickets, hotel rooms and other services bundled together), as
well as stand-alone sales of hotel rooms (including vacation rentals), car rentals, transfers, tours, and travel insurance, and (3) Financial Services, which
consists of fraud prevention and payment gateway services, as well as point-of-sale installment loans and “Buy Now, Pay Later” solutions, which enable our
customers as well as customers of third-party merchants to make online purchases and pay off interest-bearing debt in installments.
Air
Our Air segment consists of sales of airline tickets, primarily targeted at leisure travelers in Latin America, including domestic travel, to other countries in the
region and outside of Latin America. Our Air segment includes airline tickets purchased on a stand-alone basis but excludes airline tickets that are packaged
with other non-airline products. Our travel customers booked approximately 4.6 million, 4.4 million and 4.3 million transactions in our Air segment using our
platform in 2024, 2023 and 2022, respectively.
We provide our travel customers with access to more than 250 operating airlines carriers globally. We believe our platform provides comprehensive
information to our travel customers in a time efficient and transparent manner. Travel customers are quickly and easily able to evaluate a broad range of fares
and airline combinations, and may search for flights based on their preferred travel dates, destinations, number of passengers, number of stops, baggage
franchise, alliance programs, and class of travel, or they may use our more advanced search tool and include additional search parameters. Travel customers
can also filter and sort the results of their search easily according to their preferences.
Packages, Hotels and Other Travel Products
The total number of transactions in our Packages, Hotels and Other Travel Products segment was 5.0 million, 4.6 million, and 3.9 million in 2024, 2023 and
2022, respectively. In 2024, we strengthened our lodging supply strategy through the signing of a new 10-year amended agreement with Expedia, providing us
with the ability to expand our directly sourced non-Latin America hotel supply and establish new strategic partnerships, as well as enhanced flexibility to
pursue White Label, B2B and M&A among others. For more information on our relationships with Expedia, see “Item 7. Major Shareholders and Related Party
Transactions—B. Related Party Transactions—Relationship with Expedia.”
Packages
We offer travelers the opportunity to create custom packages by combining two or more travel products, such as airline tickets and hotel, airline tickets and car
rental or hotel and car rental, and booking them in a single transaction. Combining multiple products into a package with a single quoted price allows us to
offer travel customers lower prices than are available for individual products and helps us to cross-sell multiple products in a single transaction.
Hotels
Travel customers may search for hotels based on their destination and preferred dates for check-in and checkout, and may filter and sort our search results
easily by selecting star ratings, specific hotel chains and location.
Travel customers can also indicate amenity preferences such as business services, internet access, fitness centers, swimming pools and more. Travel customers
can also view hotel pictures and read hotel reviews from other travel customers on our platform, generating user-generated reviews.
As of December 31, 2024, approximately 30,600 of our hotel suppliers in Latin America were directly connected to our booking system. Through these direct
connections, our hotel suppliers allocate rooms to us either by managing their room inventory directly on an extranet supported by us, or on an extranet
supported by one of our 48 third-party channel managers.
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Expedia, the beneficial owner of 11.5% of our ordinary shares outstanding as of March 31, 2025, holds certain rights in its capacity as a shareholder. For more
information on our relationship with Expedia, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Relationship
with Expedia” and Note 23 to our consolidated financial statements.
We typically do not assume inventory risk as we do not pre-purchase hotel room inventory from our hotel suppliers. Hotel suppliers are paid by one of two
methods: “pre-pay” and “pay-at-destination.” Under the pre-pay model, our travel customer pays us at the time of booking, and we pay our hotel suppliers after
the travel customer checks out. Under the pay-at-destination model, the travel customer pays the hotel directly at checkout, and we either receive our
commission later from the hotel suppliers or from the travel customer, at the time of booking. For the year ended December 31, 2024, 95% of the hotels booked
on our platform were under the prepay model and 5% under the pay-at-destination model.
Vacation Rentals
Our Vacation Rentals products are available across all of our markets, brands, and distribution channels, as we strive to offer travelers a seamless experience
tailored to their needs. With an inventory of approximately 945,000 vacation rental units worldwide, we continue to expand our offerings. Our growth strategy
is driven by outsourcing agreements, our channel manager Stays, and our direct sourcing efforts, as we seek to strengthen our global presence and enhance the
variety of accommodations available to our customers.
Expedia Outsourcing Agreement
In September 2024, we further strengthened our commercial relationship with Expedia through the Expedia Outsourcing Agreement that enables us to further
optimize our lodging supply to pursue key growth initiatives, providing us with the ability to expand our directly sourced non-Latin America hotel supply and
enhanced flexibility to pursue our B2B, White Label, SaaS, and M&A strategies. The Expedia Outsourcing Agreement has a 10-year term and most of its terms
are effective as of January 1, 2025.
We understand that the Expedia Outsourcing Agreement unlocks several strategic advantages for both parties, such as: (i) enabling us to further optimize our
lodging supply to pursue key growth initiatives, including its B2B, White Label, SaaS, and M&A strategies and we are able to expand our own directly sourced
non-Latin American hotel supply and establish new strategic partnerships; (ii) providing Expedia a guaranteed percentage of Despegar’s global hotel bookings
and exclusive rights to distribute certain lodging supply in Latin America; and (iii) allowing us to grant to Decolar Partners the right to access and distribute
Expedia-sourced lodging inventory. We must ensure that each Decolar Partner remains subject to obligations at least equivalent to those imposed on us under
the Expedia Outsourcing Agreement. We remain solely responsible for our Decolar Partners, including for any liabilities or breaches arising from their
activities. The Expedia Outsourcing Agreement provides for certain termination rights by Expedia and by us. Under the original agreement, the previously
recorded perpetual $125 million liability on Despegar’s balance sheet should now, under the new Expedia Outsourcing Agreement, be amortized over 10 years,
subject to certain thresholds.
For more information on our relationship with Expedia and the Expedia Outsourcing Agreement, see “Item 7. Major Shareholders and Related Party
Transactions—B. Related Party Transactions—Relationship with Expedia.”
HBX Outsourcing Agreement
On January 27, 2025, we entered into a strategic partnership with HBX Group and executed a lodging outsourcing agreement with Hotelbeds USA Inc. (the
“HBX Outsourcing Agreement”). Under the terms of the HBX Outsourcing Agreement, (i) HBX Group undertook to provide an advance payment to Despegar;
and (ii) Despegar is required to meet certain booking targets for HBX Group originated products booked through Despegar’s platform over an anticipated term
of approximately eight and a half years. If Despegar fails to meet such booking targets during certain measurement periods, Despegar may be subject to certain
penalties, including the payment to HBX Group of a percentage of the shortfall amount. The HBX Outsourcing Agreement also contains other customary
covenants, representations and obligations.
We continue to expand our vacation rentals inventory, mainly through our Expedia Outsourcing Agreement, Stays, and our direct sourcing efforts in Latin
America.
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Other Travel Products
We also offer other travel products on our platform. We provide our travel customers access to more than 200 car rental agencies, over 700 destination services
suppliers with more than 15,000 activities to offer, and one travel insurance supplier. While we offer both pre-pay and pay-at-destination options for car rentals,
the other travel products that we offer must be prepaid.
Car Rentals: Currently, we offer car rentals worldwide, with a focus in Latin America and the United States.
Travel Insurance: We offer travel insurance through a third-party provider in Latin America, Universal Assistance, with whom we entered into an exclusivity
agreement in 2021. The agreement originally entered into in 2021 expired in March 2024; however, a new agreement was executed at that time to maintain the
exclusivity arrangement from March 2024 through March 2027. Travel customers can choose from a range of coverage options depending on their particular
needs, such as medical insurance and lost or damaged baggage. Typically, this product is requested in conjunction with a flight and hotel booking. Prior to
confirming and proceeding with the reservation of and payment for a flight or hotel booking or a package booking, our travel customers are offered the
opportunity to purchase travel insurance.
Financial Services
Koin specializes in offering three distinct financial technology products tailored to enhance the customers and merchants' e-commerce experience. The
portfolio includes:
Payment Gateway Services: This robust solution facilitates seamless payment processing for a diverse range of methods, optimizing the online checkout
experience for consumers throughout Latin America. This solution is tailored differently based on the market it is being offered.
Fraud Prevention Services: Our advanced system safeguards online transactions throughout Latin America, mitigating fraud risks and ensuring a secure
shopping environment for merchants and consumers. Trusted by leading merchants in Latin America, it streamlines payment processing for high conversion
rates and prioritizes digital security in every transaction.
Point-of-Sale Installment Loans (“Buy Now, Pay Later” Solution): Exclusively offered in Brazil and Mexico, this service enables customers to finance their
purchases via convenient installment loans at the point of sale on a user-friendly platform. By streamlining the financing process and minimizing bureaucratic
hurdles, it enhances customer purchasing power with minimal requirements. This strategic approach has significantly broadened Despegar’s addressable
market while also improving Koin’s take rate from 30% in 2023 to 34% in 2024, demonstrating notable market penetration and customer adoption.
Expanding beyond the travel industry, Koin has reached diverse sectors such as health-tech, ed-tech, home appliances, apparel, among others. To broaden its
reach, Koin has entered into agreements with major e-commerce platforms like Vtex and Magento. These partnerships aim to augment the merchant base and
facilitate the seamless commercialization of Koin’s products with minimal integration efforts.
While our focus in 2024 and 2023 remained primarily on serving Koin’s strategic expansion into various industries and collaborations with key e-commerce
platforms, we believe it underscores our commitment to diversification and growth.
In addition to the expansion of our financial services offering, our anti-fraud technology plays a critical role in supporting secure transactions for merchants and
consumers. As fraud techniques continue to evolve, we invest in adapting our proprietary algorithms and methodologies to enhance detection effectiveness. For
further discussion of the risks associated with our anti-fraud business, see “Item 3. Key Information—D. Risk Factors—We may incur financial and
reputational losses if our systems fail to accurately identify fraudulent transactions or if we experience false positives resulting in legitimate transactions being
declined.”
As another effort to grow the business helping diversification and enabling financial inclusion, Koin recently launched a mobile app solution to provide “Buy
Now, Pay Later” services directly to buyers without the need to integrate to merchants as the original “Buy Now, Pay Later” service requires. This solution
allows selected customers to purchase in installments at preferred merchants, which Koin evaluates as desired based on their reputation, market size, product
quality, and the value that installment purchases can add, such as Amazon, Americanas and Magalu.
In 2024, Koin processed over 691,313 transactions, and had over 280,000 customers, as compared to over 340,000 transactions and over 210,000 customers in
2023. The average amount of each loan was approximately $317 and $470 in 2024 and 2023, respectively. For the year ended December 31, 2024, our total
purchased volume (TPV) decreased (3)%
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year over year $75.7 million in line with Koin’s conservative approach to loan origination. Most of our loans receivable are short-term in nature with an
average duration below 5 months, thus being fully repaid in a period ranging between seven and ten months, while a minor portion of loans are repaid within
twenty-four months.
Koin closely monitors credit quality for all loans receivable on a recurring basis. To evaluate a consumer seeking a loan, Koin uses, among other indicators, a
risk model that was developed internally, as a credit quality indicator to help predict the consumer’s ability to repay the principal and interests of the credit. The
risk model uses multiple variables as predictors of the consumer’s ability to repay the credit, including external and internal indicators. Internal indicators
consider the customer’s history with Koin, credit scoring and risk profile, among others. In addition, Koin considers external information to enhance the
scoring model and the decision-making process. The internal indicators and the external credit score are combined in a risk matrix, which is also used to price
the loans based on the risk profile.
Our Payment Options
In addition to the payment options provided by our financial services segment, we also offer additional payment options.
Credit cards are the primary means of payment for products on our platform. We allow for the use of more than one credit card in a single transaction,
permitting travel customers with lower credit limits to make larger purchases. We also offer other payment alternatives including debit cards as well as several
localized payment options available in the markets in which we operate.
We generally partner with banking institutions to allow our customers the ability to purchase the product of their choice through established financing plans
offered and administered by banks, which we believe differentiates us from other companies in the financial sector that do not offer installment plans or offer
them from a more limited selection of financing providers or in a more limited selection of countries. Local banks look to partner with us because of our scale,
access to our online audience, and high transaction volume.
Credit card customers can choose from a range of installment plan offers and terms from different financial institutions with which the travel customer holds or
obtains a credit card. Many of these installment offers are interest-free for the customer. Installment plans allow customers to make larger purchases than they
can otherwise make in a single payment. Approximately 48%, 49% and 43% of our prepaid transactions in 2024, 2023 and 2022 were paid in installments.
Banks bear the risk of fraud, delinquency or default by customers. When customers choose to finance their purchases, we typically receive payment under two
scenarios: (i) full (complete) payment for our services within a short period of time after completion and confirmation of the purchase, regardless of the
payment plan selected by the customer; or (ii) we receive payment as installments become due, regardless of when the customer actually makes the scheduled
payments.
Loyalty Program
Our Loyalty Program plays a pivotal role in fostering customer loyalty, exemplified by the success of our rewards programs, “Pasaporte Despegar” and
“Pasaporte Decolar” as transactions with points redemptions grew from 4.4% in 2022, to 9.1% in 2023 and 12.3% in 2024. Customers accrue points when
making purchases of travel-related products across all our sales channels. These accumulated points can be redeemed in future transactions, providing
customers with valuable benefits and discounts.
Our loyalty program stands as a testament to our commitment to enhancing the customer experience. Through “Pasaporte Despegar” and “Pasaporte Decolar,”
we not only incentivize repeat business but also ensure that our customers feel appreciated and valued. The attractive benefits and discounts offered through
our loyalty program serve as a compelling incentive for customers to choose our platform for their travel-related needs. This approach not only contributes to
customer retention but also solidifies our position as a customer-centric brand dedicated to providing ongoing value to our loyal patrons.
Promotions and Sales
We employ a proactive approach in our marketing strategy, placing a strong emphasis on promotions that encompass discounts, holiday campaigns, and various
financing options. By leveraging our technology-driven marketing initiatives, coupled with our extensive customer data and profound understanding of our
clientele, we can dynamically optimize promotions on a daily basis. This proactive approach allows us to swiftly adapt to market trends and customer
preferences as we continually refine our promotions, responding to real time data insights. This integration of technology, customer knowledge, and strategic
promotional tactics positions us as a market leader consistently enhancing our conversion rates.
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Security, Privacy and Anti-Fraud
We are committed to operating a secure online business. We use various security methods in an effort to protect the integrity of our networks and the
confidential data collected and stored on our servers. For example, we use firewalls to protect access to our networks and to the servers and databases on which
we store confidential data; we restrict access to our network by virtual private network (VPN) with two-factor authentication and conduct periodic audits of
data access and modifications of our network; and we use password-protected encryption technology to protect our communication channels and sensitive
travel customer data. In addition, we have developed and use internal policies and procedures to protect the personal information of our travel customers, and
we comply with the Payment Card Industry Data Security Standard (PCI DSS). To enforce our security framework we have a dedicated cybersecurity team that
conducts penetration testing and application security analysis, develops policies and standards, and ensures compliance with those policies and standards.
We believe that issues relating to privacy and the use of personally identifiable information are becoming increasingly important as the internet and its
commercial use continue to grow. We have adopted what we believe is a detailed privacy policy that complies with local legal requirements in each of the Latin
American countries in which we operate and outlines the information that we collect concerning our users and how we use it. Users must acknowledge and
expressly agree to this policy when registering with our platform, signing up for our newsletters, or making a purchase.
Although we periodically send marketing communications to our users, we use our best efforts to ensure that we respect users’ communication preferences. For
example, when users register with us, they can opt out of receiving marketing e-mails from us. Users can modify their communication preferences at any time
in the “My Account” section of our sites.
We use information about our users for internal purposes in order to improve marketing and promotional efforts and in order to improve our content, product
offerings and site layout. We may also disclose information about our users in response to legal requirements. Our information is stored on our servers located
in Miami, Florida and on third-party cloud services providers.
Moreover, we are committed to detecting and deterring possible instances of fraudulent transactions before they are completed. The key components of our
fraud-prevention strategy include: (1) a dedicated and specialized fraud prevention team that works closely with our IT staff; (2) engagement with key actors in
the online travel industry, such as banks and airlines, which strengthens our early-detection capabilities, thereby reducing the exposure period to potential fraud
events; and (3) machine learning systems that analyze multiple factors, including intelligence gathered from our industry relationships, to help us adapt better
to changing market conditions and detect and address fraudulent transactions. Our in-house team works with third-party vendors, allowing us to leverage best
practices and scale quickly.
Divestment and Acquisitions
Our approach to acquisitions is strategically aligned with three key objectives that shape our vision and drive our expansion efforts:
Expansion of geographic reach: We prioritize acquisitions in key Latin American geographies, like Brazil, Mexico, and Colombia, to solidify our presence in
high-growth markets.
Enhancement of service offerings: We target companies with complementary capabilities that broaden our service portfolio and strengthen our value
proposition to customers.
Unlocking synergies: We actively pursue acquisitions that generate meaningful revenue and cost synergies by leveraging our technology platform to create a
unified and advanced ecosystem.
Our successful past integrations demonstrate our ability to effectively integrate acquired companies into our platform, and we plan to continue this approach in
the future.
In 2019, we acquired Viajes Falabella, a leading travel brand in Chile, Colombia and Peru and part of Falabella Group. With this transaction, we acquired not
only a business specialized in travel packages, but also signed a strategic commercial alliance for 10 years with CMR Card and Falabella group. Our
technology platform, travel content and marketing experience, allowed us during the last five years, to aggressively accelerate growth, while migrating sales to
online and improving profits of this operation.
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In 2020, we acquired Best Day, a leading travel agency in Mexico, with operations in other countries in Latin America. Best Day provides travelers with
several product offerings, primarily travel packages, hotels and other travel-related products, through its online platforms, call centers and offline presence, and
provides travel suppliers a technology platform for managing the distribution of their travel products and access to traveler customers. Best Day offers these
travel products and services through its brands “Best Day” and “Hotel Do.” As part of the purchase price, we will be required to make a payment of an earnout
for the benefit of certain sellers ranging from $0 to $20 million, based solely on the performance of our share price during a measurement period of six months
prior to the fourth anniversary of the closing date. As of September 25, 2024, we have applied the indemnity credit to the total earnout remaining to date.
In January 2022, we completed the acquisition of Koin. Koin is specialized in the consumer lending sector through its “Buy Now, Pay Later” solution, which
offers financing to merchants’ customers, predominantly in the travel sector in Brazil. Koin, a pioneer in the “Buy Now, Pay Later” landscape in Latin America
provides, through one single integration, a solution that allows customers to finance their transactions in installments, on a simple to use platform, with
accessible interest rates and no bureaucracy, thereby allowing them to have a higher purchasing power with limited requirements. Our acquisition of Koin adds
to our value proposition as we expand the alternatives for our customers to purchase travel products with a payment option that doesn’t require a credit card or
bank account.
In June 2022, we acquired TVLX Viagens e Turismo S.A. (“Viajanet”), one of the leading online travel agencies in Brazil. Viajanet operates in Brazil and the
acquisition of Viajanet constitutes another step in our regional consolidation strategy to enable us to deploy more of Despegar’s higher-margin non-air
inventory through a new brand and its customer base while strengthening the team in Brazil.
In July 2022, we completed the acquisition of a 51% ownership stake in Stays.net (“Stays”), Brazil’s leading vacation rental channel manager. Created in 2016,
Stays currently offers a complete all-in-one solution (Channel Manager, Property Management System, ERP and integrated E-Commerce booking system) to
vacation property managers and owners in Latin America, giving us the opportunity to grow our vacation rental offering within Brazil as well as other key
geographies in Latin America. In 2024, we made an additional capital contribution under the original arrangement, which increased our controlling interest in
Stays to 52.72%. This ongoing commitment further strengthens our presence in the vacation rental market both in Brazil and throughout the region.
In July 2024, we formed a strategic alliance with World2Meet, leading to the divestiture of the Destination Management Company (DMC) business in México
and the Dominican Republic, which was operated by the legal entities Transporturist, S.A. de C.V., Dominicana Experience DMC, S.R.L., and Gray Line
Excursiones y Transporte Turístico Dominicano, S.R.L. The DMC business offered ground transportation services and destination services, among others,
through the BDExperience brand. The transaction included the transfer of nearly 600 employees to World2Meet.
In October 2024, we announced our first major SaaS partnership with Karisma Hotels & Resorts, licensing Despegar’s AI travel assistant, SOFIA, to provide a
personalized travel planning experience and unlock a new revenue stream. We believe this initiative underscores our commitment to innovation and customer-
centric services, and can reinforce our leadership in the travel technology space.
Merger with Prosus
On December 23, 2024, we entered into the Merger Agreement to be acquired by an affiliate of Prosus for $19.50 per ordinary share in an all-cash transaction.
The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, at the time the Merger becomes
effective (the “Effective Time”), each ordinary share, no par value, of the Company issued and outstanding immediately prior to the Effective Time, other than
ordinary shares (a) held in the treasury of the Company or owned by any direct or indirect wholly owned subsidiary of the Company, (b) owned by Merger Sub,
Parent or any direct or indirect wholly owned subsidiary of Parent, or (c) held by holders who (i) are entitled to demand appraisal rights under Section 179 of
the BVI Business Companies Act (Revised Edition 2020), as amended (the “BVI Act”), (ii) have properly exercised and perfected their demands for appraisal
of such ordinary shares in the time and manner provided in Section 179 of the BVI Act and (iii) as of the Effective Time, have neither effectively withdrawn
nor lost their rights to such appraisal and payment under the BVI Act, will be automatically cancelled and converted into the right to receive $19.50 in cash,
without interest (the “Ordinary Share Consideration”). For avoidance of doubt, the ordinary shares in clauses (a), (b) and (c) will be cancelled.
In addition, at the Effective Time, each Series A Preferred Share will be converted automatically into the right to receive a cash amount equal to the product of
(a) 110.0% and (b) the sum of (i) $1,000 per share and (ii) any Accrued Dividends (as defined in the Merger Agreement) per Series A Preferred Share, plus (c)
without duplication, any accrued and unpaid Dividends (as defined in the Merger Agreement) to, but excluding, the Closing Date.
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In addition, at the Effective Time, and in each case subject to the terms and conditions of the Merger Agreement:
(a) each outstanding and unexercised option to purchase ordinary shares granted under any Company Stock Plan (as defined in the Merger Agreement)
(each, a “Company Option”), whether vested or unvested, with an exercise price per share that is less than the Ordinary Share Consideration will be
cancelled and converted into the right to receive an amount in cash, without interest, equal to the product of (i) the amount by which the Ordinary
Share Consideration exceeds the applicable exercise price per Share of such Company Option and (ii) the aggregate number of shares remaining
issuable upon exercise of such Company Option, less applicable taxes and authorized deductions;
(b) each Company Option, whether vested or unvested, that has an exercise price per share that is equal to or greater than the Ordinary Share
Consideration will be cancelled without the payment of consideration;
(c) each outstanding restricted stock unit award in respect of shares granted under any Company Stock Plan or otherwise, including any such restricted
stock unit award that is settled in shares and any such phantom restricted stock unit award that is settled in cash (each, a “Company RSU”) that is
vested but not settled as of immediately prior to the Effective Time (each, a “Vested RSU”), will be cancelled and converted into the right to receive
an amount in cash, without interest, equal to the product of (a) the Ordinary Share Consideration and (b) the aggregate number of shares subject to
such Vested RSU, less applicable taxes and authorized deductions;
(d) each Company RSU that is not a Vested RSU or a Continued RSU (as defined below) (each, an “Other RSU”), will be cancelled and converted into a
contingent right to receive from the Surviving Company (without interest and subject to the same vesting terms and conditions and settlement
schedule as the corresponding Other RSU immediately prior to the Effective Time) an amount in cash equal to the product of (i) the Ordinary Share
Consideration and (ii) the aggregate number of shares subject to such Other RSU, less applicable taxes and authorized deductions; and
(e) each outstanding Company RSU that was granted on or following the date of the Merger Agreement (each, a “Continued RSU”) will remain
outstanding as a restricted stock unit in respect of shares, without par value, of the Surviving Company, on substantially the same terms and conditions
as in effect immediately prior to the Effective Time, subject to certain adjustments, less applicable taxes and authorized deductions.
Therefore, upon completion of the transaction we will become a privately-held company, our ordinary shares will be delisted from the New York Stock
Exchange, and we will no longer be listed on any public market.
Our board of directors and our shareholders have approved the execution, delivery and performance by the Company of the Merger Agreement and the
consummation of the Merger. The Merger is currently expected to close in the second quarter of 2025, subject to the receipt of required regulatory clearances in
Brazil and Mexico, and satisfaction or waiver (where permissible) of other customary closing conditions. We received required regulatory clearances in Chile.
See “Item 3. Key Information—D. Risk Factors—Risks Associated with the Merger” for further information about risks related to the Merger.
Intellectual Property
We regard our intellectual property as critical to our future success and rely on a combination of trademark laws and contractual restrictions to establish and
protect our proprietary rights in our products. Our intellectual property includes trademarks and domain names associated with the names “Despegar,”
“Despegar.com,” “Decolar,” “Decolar.com,” “Best Day,” “HotelDo,” “Viajanet,” “Stays” and “Koin.” To protect our platform and technology, we have entered
into confidentiality and invention assignment agreements with our employees and certain contractors and suppliers. We own our technology platform, which
consists of applications that we develop in-house using primarily open source software. We have not registered our technology, however, because we believe it
would be difficult to replicate and that it is adequately protected by the agreements we have in place. Additionally, our technology is constantly evolving and
any registration may run the risk of protecting outdated technology. We cannot assure you that all our intellectual property is fully protected and enforceable
vis-à-vis third parties under all applicable laws in Latin America. For more information, see “Item 3. Key Information—D. Risk Factors—Certain Risks
Related to our Business—We may not be able to adequately protect and enforce our intellectual property rights; and we could potentially face claims alleging
that our technologies infringe the property rights of others.”
Competition
We operate in a highly competitive and evolving market. Travelers have a range of options, both online and offline, to research, find, compare, plan and book
air, packages, hotels and other travel products.
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Our competitors include global OTAs with presence in Latin America, as well as travel metasearch sites; search websites and apps, and e-commerce and group
buying websites and apps; alternative accommodation and vacation rental businesses; local offline travel agency chains and tour operators; and smaller online
travel agencies lacking a pan-regional presence.
In addition, our travel customers have the option to book travel directly with travel suppliers, including airlines, hotels and other travel suppliers via online and
offline channels. See “Item 3. Key Information—D. Risk Factors—Certain Risks Related to Our Business—We operate in a highly competitive and evolving
market, and pressure from existing and new companies may adversely affect our business and results of operations” for more information.
We believe that the primary competitive factors in the travel industry, in particular as consumers increasingly research, plan and book travel online, are, among
other things, brand recognition, price, availability and breadth of choice of travel services and products, customer service, ease of use, fees charged to travelers,
accessibility, reliability and adoption of e-commerce by travelers in the markets in which we operate. We believe our brands, scale, operational and
technological capabilities, including our local knowledge, marketing expertise and technology platform, provide us with a sustainable competitive advantage.
Seasonality
See “Item 5. Operating and Financial Review and Prospects—A. Operating Results.”
Human Capital Management
People, Company Culture and Total Rewards
Despegar is driven by a mission to broaden horizons and create lasting memories through unforgettable travel experiences. We achieve this by attracting and
nurturing top talent across Latin America and the United States, fostering a diverse team of, as of December 31, 2024, approximately 4,000 professionals.
Leveraging vast data and cutting-edge technology to design unparalleled travel experiences, we design unparalleled travel experiences.
We are committed to exceeding expectations. We support our team’s growth through opportunities, benefits that ignite their passion for travel and well-being,
and competitive salaries. We stand out in the intense competition for talent by offering a unique chance to enhance lives through travel, connecting cultures,
and making exploration accessible. Our commitment to this vision fuels our dedication to attracting and retaining exceptional individuals by providing
competitive salaries, comprehensive healthcare, wellness initiatives, generous parental leave, volunteer time off, a transportation program, onsite medical
services, and more.
Acknowledging the shift towards more flexible work arrangements, we continually adapt to foster a dynamic, effective, and satisfying work environment. Our
transition to a hybrid model has been met with enthusiasm, underpinned by popular programs like our work-from-anywhere policy, which embodies our belief
in the transformative power of travel.
To attract the market’s top talent, we've implemented several enduring recruiting initiatives. A prime example is our “Jovenes de Alto Vuelo” (JAV) Program,
which has been successfully running for over 16 years. This initiative targets high-potential, IT-savvy candidates, offering them extensive in-house training
before they join our developer team. The JAV Program’s reputation for excellence is well-established, marked by its rigorous selection process. In 2024, we
had an applicant pool of approximately 5,500 candidates, with an acceptance rate of 0.5%, which we believe reflects the highly selective nature of the program.
Diversity, Equity and Inclusion
Our organization thrives on diversity. We believe a rich tapestry of diverse individuals, each with unique perspectives, fuels innovation, excellence, and
empathetic, agile decision-making. Our mission goes beyond coexistence. We actively promote creativity, inclusivity, and innovation by fostering an
environment where diverse practices and behaviors flourish. We are committed to equal opportunities for all, grounded in meritocratic principles.
Diversity: We celebrate a broad spectrum of diversity, including ethnicity, sexuality, age, gender identity, religious beliefs, nationality, physical abilities,
socioeconomic backgrounds, and more. These differences are our strength, fueling innovation and enriching our team.
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Equal Opportunities: We champion equal opportunities for growth and development for every member of our organization. Meritocracy is at our core,
ensuring advancement and recognition based solely on individual achievements and contributions.
Non-Discrimination: Respect and awareness are our cornerstones. We foster a culture that appreciates diverse backgrounds and perspectives that enrich our
team. Our dialogue and interactions are marked by an appreciation for this diversity, fostering a workplace where discrimination has no place.
Environmental Matters
We are dedicated to the sustainable management of our environmental footprint and engaging our users and ecosystem partners to create synergy. As a
responsible corporate citizen, we recognize our role in combating the global challenge of climate change. To strategically manage the environmental impacts
arising from our operations, we are committed to promoting sustainable tourism and introducing carbon mitigation measures and will continue to explore ways
to further improve energy efficiency. We are always looking for opportunities to decrease our carbon footprint, and our carbon reduction measures currently are
focused mainly on reducing energy consumption and improving energy efficiency at our headquarters.
User Privacy and Data Security
Data security is crucial to our business operations. We have internal rules and policies to govern how we may use and share personal information, as well as
protocols, technologies and systems in place to ensure that such information will not be accessed or disclosed improperly. Users must acknowledge the terms
and conditions of the user agreement before accessing our products and services, under which they consent to our collection, use, and disclosure of their data in
compliance with applicable laws and regulations, and we will only use the data of our users under the conditions agreed by our users.
From an internal policy perspective, we limit access to our servers that store our user and internal data on a “need-to-know” basis. Our internal control
protocols cover the full lifecycle of data processing including data collection, data quality management, data encryption and transportation, data storage
security, data backup and recovery, data processing and analytics, proper use of data, and data destruction and disposition. We adopt a data encryption system
intended to ensure the secured storage and transmission of data, and prevent any unauthorized member of the public or third parties from accessing or using our
data in any unauthorized manner. We also deploy a variety of detection mechanisms, including machine learning technology and other automated tools that
help us independently identify certain misleading information on our platform to remove, suppress, or forward the content for human review. As we continue to
develop these tools, content is reviewed by our trained specialists to comply with applicable laws and regulations. Furthermore, we implement comprehensive
data masking of user data for the purpose of fending off potential hacking or security attacks.
Regulation
Regulations Related to the Travel Industry
We are subjected to some specific laws and regulations, which affect the travel industry and our travel suppliers in the jurisdictions in which: (i) we operate;
and (ii) our travel customers reside and/or their trip destinations. And, to promote and sell tickets for international airlines companies, we are also required to be
accredited by the International Air Transport Association (“IATA”). Below are some of the laws and regulations that we are currently subject to.
Brazil
As an Online Travel Agency (“OTA”), we are obliged to be registered before the Ministry of Tourism (CADASTUR) and we are subjected to the: (i) Law No.
11,771/2008, which regulates the National Tourism Policy and defines the responsibilities of the federal government in planning, developing and stimulating
the tourism sector; (ii) Decree No. 7,381/2010, which regulates Law No. 11,771/2008; (iii) Ordinance No. 38/2021 from the Ministry of Tourism, which
establishes the CADASTUR, the CADASTUR’s consulting committee and regulates other measures; and, (iv) Law No. 12,974/2014, which regulates the
activities of tourism agencies.
As an OTA, we are also subjected to the (i) Law No. 12.965/2014, which regulates and establishes principles, guarantees, rights and duties for the use of the
Internet in Brazil; and (ii) Decree No. 8,771/2016, which sets forth security standards to be complied with by internet connection and application providers
(online platform operators) when storing personal data.
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Since August 2018, when the Brazilian General Data Protection Law (Law No. 13,709/2018 – “LGPD”) was enacted, we have been subjected to the LGPDs
proceedings (though it was only in 2020 that LGPD entered into force). The LGPD is applicable to any individual or legal entity governed by public or private
law processing personal data (i) in the Brazilian territory; or (ii) for the purposes of offering or supplying goods or services or treating information of data
subjects located in Brazil; or (iii) if personal data has been collected in the Brazilian territory. In this scenario, additional regulation issued by the Brazilian
National Data Protection Authority (ANPD) will also apply to Decolar, which includes complementary data protection obligations in connection to matters
such as (i) data breach notification, (ii) DPO appointment, and (iii) the international transfer of personal data.
We are also subjected to the (i) the Brazilian Federal Constitution; (ii) Law No. 10,406/2002 (Brazilian Civil Code); and, (iii) Law 8.078/90, which provides for
consumer protection and other measures. Those laws rule the commercial, civil and consumer relationships, as well as the agreements related to them.
Regarding the regulations related to taxation, we are beneficiaries of the tax benefit of the Law No. 14,537/23, which withholding income tax on remittances to
cover travel expenses of Brazilian individuals abroad. The withholding income tax rate levied on the amounts paid, credited, delivered, employed or remitted to
an individual or legal entity residing or domiciled abroad, destined to cover personal expenses, abroad, of individuals residing in Brazil, on tourist, business,
service or training trips or on official missions, up to the limit of R$20,000.00 (approximately $3,800) per month, was reduced to: (i) 6%, from January 1, 2023
to December 31, 2024; (ii) 7%, from January 1, 2025 to December 31, 2025; (iii) 8%, from January 1, 2026 to December 31, 2026; and (iv) 9%, from January
1, 2027 to December 31, 2027.
We are also beneficiaries of the tax benefit of the Law No. 14,148/2021, which established several emergency actions by the government to offset the economic
effects of the COVID-19 pandemic for the tourism and events sector (“Programa Emergencial de Retomada do Setor de Eventos y Turismo” or “PERSE”).
Benefits include for a 60-month period a 0% rate for corporate income taxes (Corporate Income Tax “IRPJ” and Social Contribution on Net Income “CSLL”)
and a 0% rate on federal gross revenue taxes (Contribution to the Social Integration “PIS” and Contribution to Social Security Financing “COFINS”). Benefits
established by Law No. 14,859/2024 can be extinguished as soon as the global limit of R$15.0 billion (approximately $2.6 billion) of exemption for the
program is reached, considering all Brazilian taxpayers that are subject to PERSE.
On March 24, 2025, the Official Gazette of the Union published Executive Declaratory Act No. 2, officially announcing the public hearing and the termination
of the PERSE program as it reached the R$15.0 billion threshold. The Special Secretariat of the Federal Revenue of Brazil confirmed that the limit set by
Article 4-A of Law No. 14.148/2021 was met, as presented during the National Congress public hearing on March 12, 2025. On March 28, 2025, we filed a
writ of mandamus to compel discussions aimed at safeguarding our rights.
Brazil enacted indirect tax reform establishing new consumption taxes:
Tax Reform in Brazil started with Constitutional Amendment No. 132, at the end of 2023, which introduced new taxes on goods and services to replace
existing consumption taxes at the municipal and federal levels, including PIS, COFINS, and ISS. To regulate these changes, the Brazilian House of
Representatives introduced bill No. 68/2023, outlining the tax framework for a new Tax on Goods and Services (IBS) and a new Contribution on Goods and
Services (CBS). In 2024, based on bill No. 68/2023, companies and associations engaged in discussions with the government and tax authorities to review and
refine the proposed rules, ensuring that the tax burden would be fairly distributed across different sectors. In parallel, the government introduced bill No.
108/2024, which defined the framework for state and municipal authorities to manage the collection and internal distribution of the IBS. These discussions
culminated with the approval of Supplementary bill No. 214, on January 16, 2025, which established a standard rate for goods and services while providing
specific reductions for certain sectors to minimize economic disruption during the transition from 2026 to 2033. Since 2026 a new Tax on goods and services
(IBS) and a new contribution on goods and services (CBS) will be implemented. The initial rates are set at 0.9% for the CBS and 0.1% for the IBS. However,
according to article 348, paragraph 1, of Supplementary Law No. 214/25, if a company complies with certain parameters that are yet to be established by the
Federal Government, no charges will be applicable in 2026, with charges beginning in subsequent years, as the rates gradually increase until the full amounts
are applied in 2033.
Mexico
We are obliged to be registered before the National Tourism Registry, as ruled by the Decree dated June 26, 2015. The local regulations are comprised of: (i)
General Tourism Law and its regulations, which regulate tourism, as well as the processes derived from the activities carried out by the people during their trips
and temporary stays in places other than their usual environment, with leisure purposes and other reasons; (ii) the resolutions issued by the Ministry of
Tourism; and
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(iii) the Federal Consumer Protection Law and its regulations, which promote and protect consumer rights and culture and seek the equity, certainty and legal
security between suppliers and consumers.
We are also subjected to the Federal Law on Protection of Personal Data Held by Private Parties, which was published in the Official Gazette of the Federation
on July 5, 2010. This law regulates, among other things, the type of information that can be collected, and how such information can be used. In addition, the
Federal Consumer Protection Law includes various rights and obligations regarding transactions carried out through electronic and other means. Although it is
not mandatory, we also implemented the Mexican Standard NMX-COE-001-SCFI-2018, which provides a list of recommendations with the best electronic
commerce practices, including data security and protection.
Regarding tax and labor laws and regulations, we are also subjected to: (i) a decree, enacted on April 23, 2021, which has a purpose of banning the
subcontracting regime (“outsourcing services”) and in case of failure to comply with it could result in significant penalties, including the potential
characterization of tax fraud; and (ii) the Income Tax Law, Value Added Tax Law and Federal Fiscal Code, which became effective as of September 1, 2021.
Those laws implemented significant modifications to outsourcing services: (i) the Federal Labor Law generally prohibits outsourcing services; (ii) an exception
is created to allow for the rendering of specialized services or the execution of special projects that are not within the corporate purpose stated in the
incorporation documents or are not part of the primary economic activity of the service recipient (“specialized services”) so long as the service provided is duly
registered; and (iii) entities that provide specialized services must comply with a new registration procedure with the Ministry of Labor and Social Welfare.
Uruguay
We operate as a free trade zone user of the Zonamerica Free Trade Zone in Montevideo, Uruguay (the “Free Trade Zone”), under Law No. 15,921 and its
corresponding regulations. No domestic Uruguayan tax applies in the Free Trade Zone, except for social security contributions for any Uruguayan employees.
No social security contributions are required for non-Uruguayan employees, so long as they do not exceed 25% of the personnel working in the facility located
in the Free Trade Zone. In addition, the inflow of goods and services to the Free Trade Zone, as well as their outflow abroad, are tax exempt. The movement of
goods and services into a Free Trade Zone from a non-Free Trade Zone Uruguayan territory is treated as an export and therefore also exempt from VAT and the
Specific Internal Tax (Impuesto Específico Interno or “IEI”). On the other hand, if goods are introduced into a non-Free Trade Zone Uruguayan territory from a
Free Trade Zone, the corresponding import tax will apply. Exporting services from a Free Trade Zone to a non-Free Trade Zone Uruguayan territory is
generally prohibited with certain exceptions for operations with related parties. By law, the Uruguayan state is liable for damages if the tax exemptions,
benefits and rights of users of Free Trade Zones granted pursuant to the law are not fulfilled during the term of their contracts.
Argentina
Travel agencies in Argentina are currently undergoing a recent regulatory change due to the amendments implemented by the Administration through Decree
No. 70/2023. Through the decree, the Administration repealed Law No. 18,829 which regulated the activities of travel agencies, affecting mainly the need for a
license to operate and certain penalties.
Travel agencies remain subjected to the: (i) Law No. 25,997 and its applicable regulation which governs the development and promotion of tourism in
Argentina; (ii) resolutions issued by the Secretariat of Tourism and Sports; and (iii) Law No. 24,240 (the “Consumer Protection Law” or “CPL”) as amended,
which sets forth the provisions for the protection of consumers.
Regarding the e-commerce laws, we are subject to the: (i) Resolution No. 104/05 adopted by the former Secretary of Technical Coordination under the former
ministry of Production and the Argentine Consumer Protection Agency, which establishes certain information requirements for internet providers; (ii) Law No.
25,326, which mandate the registration of databases with the Data Protection Agency and regulate, among other things, the type of information that can be
collected, and how such information can be used; and, (iii) the Consumer Protection Law sets forth certain rules and principles designed to protect consumers,
with the goal of mitigating the asymmetry between consumers and companies.
Regarding the regulations related to taxation, since 2013 we have been the beneficiary of a partial tax exemption, applicable until January 31, 2029, under
Buenos Aires Municipal Laws No. 2,972 and 6,392, which include, among others, the turnover tax reduction. This benefit implies the reduction, from the
turnover tax, of any revenue directly connected to services performed through software applied to e-commerce that are performed within the designated
technology district located in Parque Patricios in the city of Buenos Aires.
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We are also beneficiaries of the Knowledge-based Economy Promotional Regime, established by Law No. 27,506, enacted on June 10, 2019 (also known as the
“Knowledge Law”), and its regulatory Decree No. 1034/2020 (as amended and supplemented). The Knowledge Law allows companies that were already
benefiting from the software development law to apply for tax benefits under the law. This tax benefit will be in place from January 1, 2020 through December
31, 2029, and shall grant (i) a reduction of the income tax up to 60% (60% for micro and small enterprises, 40% for medium-sized enterprises and 20% for
large enterprises) over the promoted activities for each fiscal year, applicable to both Argentine source income and foreign source income; (ii) stability of the
benefits established by the Knowledge-based Economy Promotional Regime (as long as the beneficiary is registered and in good standing) and (iii) a non-
transferable tax credit bond generally amounting to 70% (up to 80% in certain specific cases) of the company’s contribution to the social security regime of
every employee whose job is related to the promoted activities (caps on the number of employees are applicable). The tax credit may be used within 24 months
from its issuance date (this period can be extended for an additional 12 months in certain cases) to offset federal taxes, such as VAT (excludes income tax).
On January 14, 2022, the Under Secretariat of Knowledge Economy issued the Disposition 33/2022 by which our Argentine subsidiary Despegar.com.ar S.A.
obtained the registration in the National Registry of Beneficiaries of the Knowledge-based Economy Promotional Regime, created by Article 3 of Law No.
27,506, as amended. Tax benefits granted pursuant to the promotional regime to Despegar.com.ar S.A. were retroactive to January 1, 2020.
Considering that the “Impuesto PAIS” (created by Law No. 27,541) expired on December 22, 2024, General Resolution No. 5617/2024 abrogated General
Resolution No 4815/2020. Instead, the Argentine tax authorities enacted the Reverse Withholding Tax related to Income Tax and Personal Assets Tax through
General Resolution No. 5617/2024, which is imposed at a rate of 30% on: (i) the purchases by Argentinean residents of foreign services through credit and
debit cards; (ii) services to be provided outside Argentina, contracted through Argentine travel and tourism agencies (wholesale or retailers); and (iii) the
acquisition of international passenger transport services (by land, air, and water), among others.
Regulations Related to Foreign Currency and Exchange Rates
There are also laws and regulations that address foreign currency and exchange rates in many of the countries in which we operate. In some of them, we need
governmental authorization to pay invoices to a foreign supplier or send money abroad due to foreign exchange restrictions. See “Item 3. Key Information—D.
Risk Factors—Certain Risks Related to Latin America—We are subject to foreign currency exchange controls in certain countries in which we operate.” and
“Item 10. Additional Information—D. Exchange Controls.”
Legal Proceedings
We are party to various lawsuits, claims and disputes mainly with customers arising out of the ordinary course of business. We estimate the range of our
liability related to pending litigation when we believe the amount or range of loss can be estimated. We record our best estimate of a loss when the loss is
considered probable. When a liability is probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated
liability related to the lawsuits or claims. As additional information becomes available, we assess the potential liability related to our pending litigation and
claims and revise our estimates. Due to uncertainties related to the resolution of lawsuits and claims, the ultimate outcome may differ significantly from our
estimates. In the opinion of management and based on liability accruals provided, our ultimate exposure with respect to these pending lawsuits and claims is
not expected to have a material adverse effect on our consolidated financial position or cash flows, although they could have a material adverse effect on our
results of operation for a particular reporting period.
As of December 31, 2024 and 2023, we have reserved an amount of approximately $9.4 million and $8.5 million to cover for probable losses, respectively.
We are not currently party to any legal, arbitration or administrative proceedings that, in the opinion of our management, is likely to have a material and
adverse effect on our business, financial condition and results of operation, other than as set forth below.
Brazil
Between May and July 2016, Booking.com filed several complaints against us alleging that (i) we offered higher prices to Brazilian consumers than those
offered to foreign consumers for the same accommodation during the same period of time (“geopricing”) and (ii) we made accommodations unavailable for
Brazilian consumers whereas foreign consumers were allowed to book the same accommodations (“geoblocking”). Based on these allegations, Booking.com
requested that the public prosecution offices order us to pay penalties and/or prohibit the alleged practices. As a consequence of the complaints, we have
pending lawsuits from Booking.com disputing the allegations made by Booking.
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In January 2018, the Public Prosecutor’s Office of the State of Rio de Janeiro filed a public civil action against us in the Rio de Janeiro court. This complaint
also refers to the alleged geopricing and geoblocking practices in detriment to Brazilian consumers and seeks the cessation of the practice and payment of
damages. We filed our defense on March 20, 2018 and provided evidence that we weren’t engaging in those alleged practices. However, the Rio de Janeiro
Public Attorney Office requested to the court the suspension of the injunction granted to Decolar, not to seal (classify) Decolar’s defense, and make public
available Decolar’s defense documentation. Decolar appealed and the court kept its defense sealed and private; however the court decided to start the phase of
“expert examination,” which has not started yet.
In June 2018 the Consumer Defense Office of the Department of Justice issued a decision against Decolar and condemned it to pay a fine in the amount of
R$7.5 million (approximately $1.5 million), on the grounds of alleged geopricing and geoblocking practices and obligated Decolar to cease such practices.
Although we received an unfavorable decision at the administrative level, we have filed a claim seeking to declare the fine null and void. In 2024, the Lower
Court granted the relief sought by Decolar and annulled the administrative decision. The Consumer Defense Office of the Department of Justice appealed the
decision and the case is currently awaiting judgment by the Appeal Court.
In addition, in January, 2022, the Consumer Defense Office of the State of São Paulo issued another fine against Decolar in the amount of R$1.2 million.
Decolar disputed the fine in the administrative level and received an unfavorable decision. Decolar then filed a claim against that Office to declare the fine null
and void. The first instance decision was favorable to Decolar, which has declared null and void the fine imposed. The Consumer Defense Office filed an
appeal against the first instance decision, but the Appeal Court rejected their arguments. Subsequently, the Consumer Defense Office filed a special appeal with
the Superior Court of Justice and an extraordinary appeal with the Supreme Court. Both appeals were deemed inadmissible due to non-fulfillment of formal
requirements. The Consumer Defense Office of the State of São Paulo can still challenge such inadmissibility decision.
Although we believe our Brazilian subsidiary has meritorious defenses to these proceedings, and the recent decisions granted are favorable to us, we cannot
assure what the ultimate outcome of this matter will be, particularly in relation to the public civil action filed by Public Prosecutor’s Office of the State of Rio
de Janeiro, as it is still on the evidentiary phase. The final resolution of these claims, which could take several years, is not likely to have a material effect on
our financial position or results of operation.
Chile
The Chilean National Consumer Office (SERNAC) filed a class action against Despegar and Viajes Falabella on behalf of all consumers who bought tourist
services during the period between December 25, 2019 and December 10, 2021. The allegations include that customers were limited to cancel or reschedule
their trips or had to pay fines in connection therewith; there was a delay in the reimbursement of amounts due to customers and that Despegar and Viajes
Falabella have abusive clauses in their contracts. SERNAC is looking for the immediate suspension of the alleged conduct, and to declare null all contracts
entered into within that period, the fines imposed and the compensation to be paid to all customers. The proceeding is currently awaiting judgement. Currently
we cannot assess our risk of loss.
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C. Organizational Structure
Despegar.com, Corp. is a holding company organized in the British Virgin Islands, which owns, directly or indirectly, all of our operating subsidiaries. The
diagram below depicts the organizational structure of our key subsidiaries as of April 7, 2025:
For more details about our organizational structure please refer to note 2 to our audited consolidated financial statements.
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D. Property, Plants and Equipment
The following table shows the location of our significant leased offices and customer service centers, and the term of the leases agreements under which they
operate.
City, Country
Facility
Address
Approximate
Square
Meters
Agreement
Expiration
Date
Tortola, British Virgin Islands
Headquarter of Despegar.com,
Corp.
Commerce House, Wickhams Cay
1, Road Town
20
12/31/2025
Buenos Aires, Argentina
Argentina operation and regional
functions
Av. Corrientes 800, City of Buenos
Aires
1,240
04/18/2026
Santiago, Chile
Chile operation
Cerro El Plomo 6000, office 401,
Las Condes
440
09/25/2027
Bogotá, Colombia
Colombia operation and customer
service center
Calle 26 No. 92 – 32, Bogotá D.C.
485
01/18/2026
Bogotá, Colombia
Colombia operation and customer
service center
Carrera 11B # 99 - 25 oficina 1601
23 memberships in
coworking space
05/01/2026
Montevideo, Uruguay
International Hotels, Packages and
Other Travel Products operations
and Shared service center
Ruta 8 Km. 17,500, local 318,
edificio 300, Zonamerica
1,392
03/31/2031
Sao Paulo, Barueri, Brazil
Brazil operation
Alameda Grajaú 219
2,862
05/14/2028
Sao Paulo, Brazil
Brazil operation (Koin)
Av. Paulista 2421, 13th floor, Bela
Vista
538
12/31/2028
Ciudad de Mexico, Mexico
Mexico operation
Av de los Insurgentes Sur 1457,
17th floor, office 17-2, Insurgentes
Mixcoac, Benito Juarez, Ciudad de
Mexico
255
09/30/2025
Ciudad de Cancún, Mexico
Quintana Roo
Av. Bonampak Sm 10 Mz 2 Lote 7
2,333
03/31/2027
Playa del Carmen, México
Quintana Roo
Lote 11, Manzana 318, Zona 1,
Playa del Carmen, Quintana Roo
88
03/31/2025
Lima, Peru
Peru operation
Av. Jorge Basadre 349 San Isidro,
Lima
47 memberships
08/31/2026
We also own an approximately 2,077 square meter facility at Avenida Jujuy 2013 in the Parque Patricios technology district of Buenos Aires, Argentina, which
houses part of our Argentina operations.
As part of our Mexican operations, Best Day rents approximately 112 small kiosks, mainly in shopping centers, which house part of our sales operations As
part of our Viajes Falabella operation, we rent approximately 92 locations under our Viajes Falabella brand. As part of our Brazilian and Argentine expansion
strategy, in 2023 and 2024, we entered into leasing agreements for our new stores under the Despegar and Decolar brands.
Our properties are geographically distributed to meet our regional operating requirements, and none of our properties are individually material to our business
operations. Many of our leases have an option to renew, and we believe that we will be able to successfully renew expiring leases agreements on terms
satisfactory to us if needed. We believe that our facilities
56
Table of Contents
are adequate for our operations and that suitable additional space will be available when needed. We continue to review the location of our offices and from
time to time may change locations to a place where we better address the needs of our employees, customers and business. In 2024, we terminated or did not
renew certain lease agreements as we sought to reduce expenses related to our lease space and drive space efficiency. Regarding the Playa del Carmen lease, it
was assigned on August 28, 2024, as part of the sale of the DMC business.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS
A.
Operating Results
Overview
We are the leading online travel company in Latin America, mainly known by our two brands, Despegar, our global brand, and Decolar, our Brazilian brand. In
Mexico we are also known by our brands Best Day and HotelDo, which we acquired in October 2020. In Chile, we are also known by the brand Viajes
Falabella, an offline travel agency with online presence, acquired in June 2019, for which we currently have a license. Koin is our online payment and
consumer lending services platform mainly operating in Brazil, which we acquired in August 2020. During 2022, as part of our regional consolidation strategy,
we acquired Viajanet and a 51% ownership stake in Stays, further enhancing our B2C and B2B offerings.
We have a comprehensive product offering, including airline tickets, packages, hotels and other travel-related products, which enables consumers to find,
compare, plan and purchase travel products easily through our marketplace. We provide our network of travel suppliers a technology platform for managing the
distribution of their travel products and access to our travel customers.
Segment Information
We determine our operating segments based on how our chief operating decision makers (“CODM”) manage our business, make operating decisions and
evaluate operating performance. Effective for our fiscal year 2022, our CODM changed their internal reporting to refine the way they view our financial
services business and its interaction with our travel business. Additionally, we started allocating certain expenses to our segments which were previously
considered part of our corporate structure and were unallocated. These changes resulted in revisions to the financial information provided to the CODM on a
recurring basis in their evaluation of our financial performance and the decision-making process.
Accordingly, we changed our segment reporting under ASC 280 “Segment Reporting” to report three reportable segments: “Air,” “Packages, Hotels and Other
Travel Products” and “Financial Services.”
Our segment reporting is as follows:
Travel Business:
Our travel business is comprised of two reportable segments: “Air” and “Packages, Hotels and Other Travel Products.”
•
Our “Air” segment primarily consists of facilitation services for the sale of airline tickets on a stand-alone basis and excludes airline tickets that are
packaged with other non-airline flight products.
•
Our “Packages, Hotels and Other Travel Products” segment primarily consists of facilitation services for the sale of travel packages (which can
include airline tickets and hotel rooms), as well as stand-alone sales of hotel rooms (including vacation rentals), car rentals, bus tickets, cruise tickets,
travel insurance and destination services. Both segments also include the sale of advertisements and incentives earned from suppliers.
Financial Services Business:
Our financial services business is comprised of one reportable segment:
•
Our “Financial Services” segment primarily consists of loan origination to our travel business’ customers and to customers of other merchants in
various industries. Our “Financial” segment also consists of payments processing, fraud identification, credit scoring and IT services to our travel
business and to third-party merchants.
For the years ended December 31, 2024 and 2023, all of our loans receivable were originated to consumers in Brazil. As of December 31, 2024 and 2023, 85%
and 88% of loans receivable, respectively, were originated to consumers seeking to buy travel products and services in our Brazilian travel subsidiary, Decolar,
and the remaining comprised loan receivable originated to consumers seeking to buy products with other merchants. See Note 9 to our consolidated financial
statements for additional information.
Generally, our segment disclosure does not include intersegment revenues related to intra-group invoicing for the use of trademarks and various management
services which are eliminated from the operating results of each segment. Intersegment transactions are conducted according to our transfer pricing policy.
However, our segment disclosure does include intersegment revenue consisting mainly of credit card processing and fraud prevention services provided by
Koin to our travel business’ subsidiaries. These intersegment transactions are recorded by each segment at amounts that approximate fair value as if the
transactions were between third parties, and therefore, impact segment performance. However, the revenue and corresponding expense are eliminated in
consolidation. The elimination of such intersegment transactions is included within the “Intersegment eliminations” column.
In 2024, 33.9%, 63.8% and 2.3% of our total consolidated revenue was derived from our Air, our Packages, Hotels and Other Travel Products and our Financial
Services segments, respectively. In 2023, 36.5%, 61.9% and 1.6% of our total consolidated revenue was derived from our Air, our Packages, Hotels and Other
Travel Products and our Financial Services segments, respectively. In 2022, 40.1%, 59.1% and 0.8% of our total consolidated revenue was derived from our
Air, our Packages, Hotels and Other Travel Products and our Financial Services segments, respectively.
For the years ended December 31, 2024, 2023 and 2022, we generated:
•
consolidated net revenue of $774.1 million, $706.0 million, and $538.0 million;
•
consolidated operating income/(loss) of $123.1 million, $64.2 million and $(1.8) million;
•
consolidated net income/(loss) attributable to Despegar.com, Corp. of $27.9 million, $24.5 million and $(68.5) million, respectively;
•
Adjusted Segment EBITDA attributable to our Air segment of $41.6 million, $13.2 million and $18.0 million;
•
Adjusted Segment EBITDA attributable to our Packages, Hotels and Other Travel Products segment of $129.5 million, $103.2 million and $42.3
million;
•
Adjusted Segment EBITDA positive / (negative) attributable to our Financial Services segment of $4.2 million, $(0.8) million and $(18.3)
million; and
•
Consolidated Adjusted EBITDA of $175.2 million, $115.5 million and $41.9 million.
Trends
We believe that our results of operations and financial performance will be driven primarily by the following trends:
•
Growth in and Retention of our Traveler Customer Base: A key driver of our revenue will be the number of customer transactions and the growth
in our customer base. One important driver of growth in our travel customer base is consumer awareness of our brand which we foster via our
online and offline marketing throughout our target markets in Latin America. We also benefit from network effects, in that a larger customer base
helps us to attract additional travel suppliers and, in turn, a larger network of travel suppliers helps us to attract new travel customers as well as
drive retention and repeat purchases. We focus on maintaining strong customer satisfaction to build long-term customer relationships. During the
2024, 2023 and 2022, approximately 51.4%, 50.4% and 49.6%, respectively, of our travel customers had completed previous purchases on our
platform.
•
Cross-Selling: Our financial results are also driven by our ability to cross-sell and increase the number of products that we are able to sell in
connection with each trip, which allows us to increase our revenue from each transaction without incurring the costs of acquiring additional travel
customers.
•
Changes in Product Mix and New Product Offerings: In addition to the total volume of transactions, our operating results also vary depending on
product mix. In particular, packages and hotels tend to have higher margins than air travel. In addition, we continually seek to expand our product
offerings, whether by adding
new product categories, such as our introduction of our local concierge and vacation rentals products, which may have higher or lower margins
than our overall business, or by the expansion of our travel supplier base.
•
Shift to Mobile Transactions and Technology Development: At its inception Despegar led the travel industry in Latin America by enabling
convenient, secure, and credit-based ticket purchases from the comfort of one’s home, a service previously unavailable through traditional
agencies or directly from the airlines. In essence, Despegar was first in Latin America to bring accessibility to the forefront and later extended this
business concept to other travel verticals and geographies in the ensuing years. Later as travel websites became increasingly common and as
smart phone penetration in Latin America continues to increase, Latin American consumers have begun to make greater use of mobile devices to
transact online. Mobile is an increasingly important part of our business, as consumers are quickly able to access and browse our real time travel
offerings, compare prices and make purchases through their mobile devices. During 2024, 2023 and 2022, mobile accounted for approximately
80%, 76% and 73%, respectively, of all of our user visits, and approximately 61%, 54% and 50% of our transactions were completed on our
mobile platform for 2024, 2023 and 2022, respectively, complementing our desktop website traffic. Our strategic focus on mobile enables us to
remain connected to travel customers and provides the opportunity for travel customers to access our platform after they have arrived at their
destination to purchase additional products, such as rental cars, destination services and travel insurance, or make last-minute hotel or air travel
bookings. In addition, as technology keeps advancing, we continue to lead through innovation and technology, most recently leveraging Large
Language Models to launch the regions first travel assistant powered generative Artificial Intelligence.
•
Selling and Marketing Expenditures: Our number of transactions and gross bookings, and consequently our revenue and results of operations, are
impacted by the level of our selling and marketing expenditures. We monitor our selling and marketing expenditures and their impact on our
revenue in many cases virtually in real time, as a significant amount of our selling and marketing expenditures relate to online advertising for
which we can obtain real time click-through data. As a result, we are able to adjust our selling and marketing expenditures to respond rapidly to
changing market conditions. During 2023, our selling and marketing expenditures increased $55.2 million, or 33.4% as compared to 2022. In
2024, our selling and marketing expenditures increased $30.4 million, or 13.8%, as compared to 2023.
The above includes forward-looking statements regarding our expectations and beliefs about key business trends that may impact our operations. These
statements are based on our current assumptions and are subject to known and unknown risks, uncertainties and other factors that may cause actual results to
differ materially. These forward-looking statements speak only as of the date of this report, and we undertake no obligation to update them. For a discussion of
the risks that could cause actual results to differ, please see “Item 3. Key Information—D. Risk Factors” and “Introduction—Forward-Looking Statements.”
Recent Acquisitions and Divestment
The comparison of our results of operations for 2024, 2023 and 2022 is affected by the timing and size of our consolidated acquisitions and divestitures.
We did not complete any acquisitions during our fiscal years 2024 and 2023. From time to time, we may consider acquisition or disposition of assets as may be
decided by management.
On January 31, 2022, we finalized the purchase of the remainder 16% of Koin and on June 1, 2022, we acquired Viajanet which we consolidated for seven
months in our fiscal year 2022. On July 1, 2022, we completed the acquisition of a 51% ownership stake in Stays, which we accounted for as an equity
investment.
On July 31, 2024, we sold our DMC business in México and the Dominican Republic. see “Item 4. Information on the Company—B. Business Overview—
Divestment and Acquisitions.”
Seasonality
We generally experience seasonal fluctuations in the demand for our travel services. Our most significant markets in the Southern hemisphere are Brazil and
Argentina, where summer runs from December 1 to February 28 and winter runs from June 1 to August 31. Our most significant market in the Northern
hemisphere is Mexico, where summer runs from June 1 to August 31 and winter runs from December 1 to February 28. Accordingly, traditional leisure travel
bookings in the Southern hemisphere are generally the highest in the third and fourth quarters of the year as travelers plan and book their winter and summer
holiday travel. The number of bookings typically decreases in the first quarter of the year. In the
Northern hemisphere, bookings are generally the highest in the first three quarters as travelers plan and book their spring, summer and winter holiday travel.
The continued growth of our international operations or a change in product mix may influence the typical trend of the seasonality in the future, and there may
also be business or market-driven dynamics that result in short-term impacts to revenue or profitability that differ from the typical seasonal trends.
Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in this Annual Report may not be the same
as those for any subsequent quarter or full year.
Significant Accounting Policies and Estimates
Significant accounting policies and estimates are those that we believe are important in the preparation of our consolidated financial statements because they
require that we use judgment and estimates in applying those policies. We prepare our consolidated financial statements and accompanying notes in accordance
with generally accepted accounting principles in the United States (“GAAP”). Preparation of the consolidated financial statements and accompanying notes
requires that we make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities as
of the date of the consolidated financial statements, as well as revenue and expenses during the periods reported. We base our estimates on historical
experience, where applicable, and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from our estimates under
different assumptions or conditions. There are certain significant estimates that we believe require significant judgment in the preparation of our consolidated
financial statements. We consider an accounting estimate to be critical if:
•
it requires us to make an assumption because information was not available at the time or it included matters that were highly uncertain at the
time we were making the estimate; and
•
changes in the estimate or different estimates that we could have selected may have had a material impact on our financial condition or results of
operations.
See Note 3 to our consolidated financial statements for additional information on each of these policies. We discuss information about the nature and rationale
for our significant accounting estimates below.
Significant accounting estimates as of December 31, 2024
For the year ended December 31, 2024, significant estimates underlying our consolidated financial statements include (i) recoverability of deferred tax assets
and uncertain tax positions, and (ii) loss contingencies.
Significant accounting estimates as of December 31, 2023 and 2022
For the year ended December 31, 2023 and 2022, significant estimates underlying our consolidated financial statements include (i) recoverability of deferred
tax assets and uncertain tax positions, (ii) loss contingencies, (iii) recoverability of indefinite-lived intangible assets, goodwill and disposal group classified as
held for sale, and (iv) acquisition purchase price allocations.
Recoverability of Goodwill, Indefinite Lived Intangible Assets and Disposal group classified as held for sale
Goodwill. We assign goodwill to reporting units that are expected to benefit from the synergies of the business combination as of the acquisition date. We
assess goodwill and indefinite-lived intangible assets, neither of which is amortized, for impairment annually as of December 31, 2023 and 2022 or more
frequently, if events and circumstances indicate impairment may have occurred. In the evaluation of goodwill for impairment, we typically perform a
quantitative assessment and compare the fair value of the reporting unit to it carrying value. An impairment charge is recorded based on the excess of the
reporting unit’s carrying amount over its fair value. Periodically, we may choose to perform a qualitative assessment, prior to performing the quantitative
analysis, to determine whether the fair value of the goodwill is more likely than not impaired.
We compared the fair value of the reporting units to their carrying values. The fair value estimates for all reporting units were based on a weighted-probability
analysis of the present value of future discounted cash flows, Level 3 inputs (income approach). The income approach estimates fair value utilizing long-term
growth rates and discount rates applied to the cash flow projections. The significant assumptions used in the discounted cash flows model included our
forecasted gross bookings; forecasted revenues, net of significant costs and expenses; and the discount rate. Our assumptions were based on
the actual historical performance of the reporting units and considered operating result trends, and implied risk premiums based on market prices of our equity
and debt as of the assessment dates. We believe the discounted cash flows is the best method for determining the fair value of our reporting units because it is
one of the most common valuation methodologies used within the travel and internet industries.
Indefinite-Lived Intangible Assets. In our evaluation of our indefinite-lived intangible assets, we typically first perform a quantitative assessment, and an
impairment charge is recorded for the excess of the carrying value of indefinite-lived intangible assets over their fair value, if necessary. We base our
measurement of fair value of indefinite-lived intangible assets, which primarily consist of trademarks and domains, using the relief-from-royalty method. Our
significant assumptions include: our forecasted revenues and the royalty rate method assumes that the trademarks and domains have value to the extent that
their owner is relieved of the obligation to pay royalties for the benefits received from them. As with goodwill, periodically, we may choose to perform a
qualitative assessment, prior to performing the quantitative analysis, to determine whether the fair value of the indefinite-lived intangible asset is more likely
than not impaired.
Goodwill Impairment Testing
As of December 31, 2024, we had an aggregate amount of goodwill of $125.8 million, of which $26.2 million relates to our Air segment, $94.6 million relates
to our Packages, Hotels and Other Travel Products segment and $5.1 million to our Financial Services segment.
The ASC 350 also provides for an optional qualitative assessment for testing goodwill for impairment (qualitative assessment) that may allow companies to
skip the annual quantitative impairment test. The qualitative assessment permits companies to assess whether it is more likely than not that the fair value of a
reporting unit is less than its carrying amount. If a company concludes based on the qualitative assessment that it is more likely than not that the fair value of a
reporting unit is less than its carrying amount, the company is required to perform the quantitative impairment test. If a company concludes based on the
qualitative assessment that it is less likely that the fair value of a reporting unit is less than its carrying amount, it has completed its goodwill impairment test
and does not need to perform the quantitative impairment test.
In 2024, there were no transactions or events that affected the carrying value of goodwill. However, in December 2024, Prosus offered to buy the shares of
Despegar, such offer representing an enterprise value of approximately $1.7 billion for Despegar, which we understand underscores the fair market values
estimated by our management when we conducted the goodwill impairment test in 2023, which was $1.57 billion.
As of December 31, 2024, we performed our annual goodwill impairment based on a qualitative test and concluded that there was no impairment of goodwill.
2023 and 2022 Impairment Assessments
As of December 31, 2023, we had an aggregate amount of goodwill of $150.8 million, of which $32.4 million relates to our Air segment, $111.9 million relates
to our Packages, Hotels and Other Travel Products segment and $6.4 million to our Financial Services segment.
As of December 31, 2023, we performed our annual goodwill impairment test and concluded that there was no impairment of goodwill.
Based on our analysis, we concluded that the estimated fair value for each of our reporting units, as of December 31, 2023, was reasonable. In each case, the
estimated fair value exceeded the respective carrying value. We concluded that the goodwill assigned to each reporting unit, as of December 31, 2023, was not
impaired and that neither reporting unit was at risk of failing the goodwill impairment test as prescribed under U.S. GAAP.
As of December 31, 2022, we had an aggregate amount of goodwill of $138.6 million, of which $29.5 million relates to our Air segment, $103.3 million relates
to our Packages, Hotels and Other Travel Products segment and $5.9 million to our Financial Services segment.
As of December 31, 2022, we performed our annual goodwill impairment test and concluded that there was no impairment of goodwill.
Based on our analysis, we concluded that the estimated fair value for each of our reporting units, as of December 31, 2022, was reasonable. In each case, the
estimated fair value exceeded the respective carrying value. We concluded that the goodwill assigned to each reporting unit, as of December 31, 2022, was not
impaired and that neither reporting unit was at risk of failing the goodwill impairment test as prescribed under U.S. GAAP.
The estimation of fair value reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding expected
growth (gross bookings and net revenues), the shape and timing of the subsequent recovery, as well as other key assumptions with respect to matters outside of
our control, such as the discount rate. It requires significant judgments and estimates, and actual results could be materially different than the judgments and
estimates used to estimate fair value. Future events and changing market conditions may lead us to re-evaluate the assumptions reflected in the current
forecasts, which may result in a need to recognize goodwill impairment charges that could have a material adverse effect on our results of operations.
Disposal group classified as held for sale assets
We have recognized a $0.6 million non-cash loss on disposal as of December 31, 2024 (presented within “Other operating expenses, net” in the Consolidated
Statement of Operations) after comparing the carrying amount of net assets held for sale and its corresponding fair value less cost to sell at year-end. Goodwill
allocated to the disposal group has been written-off. See Note 31 to our consolidated financial statements for additional information).
Business Combinations
We assign the value of the consideration transferred to acquire a business to the tangible assets and identifiable intangible assets acquired and liabilities
assumed on the basis of their fair values at the date of acquisition. Any excess purchase price over the fair value of the net tangible and intangible assets
acquired is allocated to goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and
assumptions, in particular with respect to valuation of intangible assets acquired. Critical estimates in valuing certain intangible assets include but are not
limited to future expected cash flows from customer relationships and trade names, and discount rates. Management’s estimates of fair value are based upon
assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.
Legal, Labor and Non-Income Tax Contingencies
Periodically, we review the status of all significant outstanding matters to assess the potential financial exposure. When (i) it is probable that an asset has been
impaired or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, we record the estimated loss in our consolidated statements
of operations. We provide disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both of these conditions if
there is a reasonable possibility that a loss may have been incurred that would be material to the consolidated financial statements. Significant judgment is
required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We base accruals made on the best
information available at the time which can be highly subjective. The final outcome of these matters could vary significantly from the amounts included in the
accompanying consolidated financial statements.
Income Taxes
We account for income taxes under the asset and liability method that requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in our financial statements or tax returns. Judgment is required in assessing the future tax consequences of
events that have been recognized in our financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially
impact our financial position, results of operations or effective tax rate.
Significant judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions
and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of revenue sharing and cost reimbursement
arrangements among related entities, the process of identifying items of revenues and expenses that qualify for preferential tax treatment, and segregation of
foreign and domestic earnings and expenses to avoid double taxation. Although we believe that our estimates are reasonable, the final tax outcome of these
matters could be different from that which is reflected in our historical income tax provisions
and accruals. Such differences could have a material effect on our income tax provision and net income in the period in which such determination is made.
In estimating future tax consequences, all expected future events are considered other than enactments of changes in tax laws or rates. Valuation allowances are
established when necessary to reduce deferred tax assets to amounts which are more likely than not to be realized. We consider future growth, forecasted
earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate, historical earnings, the carryforward periods available for tax
reporting purposes and prudent and feasible tax planning strategies in determining the need for a valuation allowance. In the event we were to determine that
we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets valuation allowance would be
charged to earnings in the period in which we make such a determination, or goodwill would be adjusted at our final determination of the valuation allowance
related to an acquisition within the measurement period. If we later determine that it is more likely than not that the net deferred tax assets would be realized,
we would reverse the applicable portion of the previously provided valuation allowance as an adjustment to earnings at such time.
As of December 31, 2024, we had a valuation allowance on certain foreign net operating losses and foreign tax credits based on our assessment that it is more
likely than not that the deferred tax asset will not be realized. To the extent we establish a valuation allowance or change the allowance in a period, we reflect
the change with a corresponding increase or decrease in our “Income tax expense” line in our consolidated statement of operations.
The amount of income tax we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Our
estimate of the potential outcome for any uncertain tax issue is highly judgmental. We account for these uncertain tax issues pursuant to ASC 740, Income
taxes, which contains a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return.
The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit,
including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50%
likely to be realized upon ultimate settlement. Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given with
respect to the final outcome of these matters. We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of
a tax audit, judicial rulings, refinement of estimates or realization of earnings or deductions that differ from our estimates. To the extent that the final outcome
of these matters is different than the amounts recorded, such differences generally will impact our provision for income taxes in the period in which such a
determination is made. Our provisions for income taxes include the impact of reserve provisions and changes to reserves that are considered appropriate and
also include the related interest and penalties.
We treat taxes on global intangible low-taxed income (GILTI) introduced by the U.S. Tax Cuts and Jobs Act (the “Tax Act”) as period costs. See Note 20 to our
consolidated financial statements for further additional information related to our income taxes.
Recently Issued and Not Yet Adopted Accounting Pronouncements under U.S. GAAP
For information on recently issued accounting pronouncements under U.S. GAAP, see Note 3 to our consolidated financial statements.
Operating and Financial Metrics
Our operating results are affected by certain operating metrics, such as number of transactions and gross bookings, which we believe are necessary for
understanding and evaluating our company. We also regularly review the following key financial metrics to evaluate our business, measure our performance,
identify trends in our business, prepare financial projections and make strategic decisions:
Year Ended December 31,
2024
2023
% of Change
In thousands
Operational Metrics
Number of transactions
By country
Brazil
4,753
4,006
18.6
Mexico
1,513
1,628
(7.1)
Argentina
1,293
1,433
(9.8)
Other
2,160
1,992
8.4
Total number of transactions
9,719
9,059
7.3
By segment
Air
4,629
4,379
5.7
Packages, Hotels and Other Travel Products
4,959
4,648
6.7
Financial Services
131
32
309.4
Total number of transactions
9,719
9,059
7.3
Gross Bookings
By country
Brazil
2,276,400
2,142,972
6.2
Mexico
1,002,710
1,022,208
(1.9)
Argentina
883,056
1,268,331
(30.4)
Other
1,344,800
1,280,850
5.0
Total gross bookings
$
5,506,966
$
5,714,361
(3.6)
Gross Bookings, net
By country
Brazil
2,276,400
2,142,972
6.2
Mexico
1,002,623
1,022,011
(1.9)
Argentina
828,954
886,688
(6.5)
Other
1,344,800
1,280,851
5.0
Total gross bookings, net
$
5,452,777
$
5,332,522
2.3
Total Payment Volume
By country
Brazil
74,614
77,070
(3.2)
Mexico
1,052
954
10.3
Total payment volume
$
75,666
$
78,024
(3.0)
Financial Metrics
Consolidated revenues
$
774,061
$
706,040
9.6
Consolidated operating income
$
123,129
$
64,239
91.7
Consolidated net income attributable to Despegar.com, Corp.
$
27,905
$
24,490
13.9
Consolidated Adjusted EBITDA (unaudited)
$
175,195
$
115,547
51.6
Adjusted Segment EBITDA:
Air
$
41,561
$
13,172
215.5
Packages, Hotels and Other Travel Products
$
129,477
$
103,172
25.5
Financial Services
$
4,157
$
(797)
NM
Year Ended December 31,
2023
2022
% of Change
In thousands
Operational Metrics
Number of transactions
By country
Brazil
4,006
2,992
33.9
Mexico
1,628
1,614
0.9
Argentina
1,433
1,157
23.9
Other
1,992
2,551
(21.9)
Total number of transactions
9,059
8,314
9.0
By segment
Air
4,379
4,293
2.0
Packages, Hotels and Other Travel Products
4,648
3,938
18.0
Financial Services
32
83
(61.4)
Total number of transactions
9,059
8,314
9.0
Gross Bookings
By country
Brazil
$
2,142,972
$
1,383,550
54.9
Mexico
1,022,208
836,236
22.2
Argentina
1,268,331
845,415
50.0
Other
1,280,850
1,209,405
5.9
Total gross bookings
$
5,714,361
$
4,274,606
33.7
Gross Bookings, net
By country
Brazil
2,142,972
1,383,550
54.9
Mexico
1,022,011
836,236
22.2
Argentina
886,688
641,930
38.1
Other
1,280,851
1,209,405
5.9
Total gross bookings, net
$
5,332,522
$
4,071,121
31.0
Total Payment Volume
By country
Brazil
77,070
75,686
1.8
Mexico
954
—
NM
Total payment volume
$
78,024
$
75,686
3.1
Financial Metrics
Consolidated revenues
$
706,040
$
537,972
31.2
Consolidated operating loss
$
64,239
$
(1,753)
(3764.5)
Consolidated net income (loss) attributable to Despegar.com, Corp.
$
24,490
$
(68,521)
(135.7)
Consolidated Adjusted EBITDA (unaudited)
$
115,547
$
41,932
175.6
Adjusted Segment EBITDA positive/(negative):
Air
$
13,172
$
17,953
(26.6)
Packages, Hotels and Other Travel Products
$
103,172
$
42,257
144.2
Financial Services
$
(797)
$
(18,278)
(95.6)
______________
Note: “NM” denotes not meaningful.
Number of Transactions
The number of transactions for a period is an operating measure that represents the total number of travel customer orders completed on our platform or the
financing merchant customers (excluding Decolar) of the “Buy Now, Pay Later” solution. We monitor the total number of transactions, as well as the number
of transactions in each of our segments and the number of transactions with travel customers in each of the countries where we operate. The number of
transactions is an important
metric because it is an indicator of the level of engagement with our travel customers and the scale of our business from period to period but, unlike gross
bookings and our financial metrics, the number of transactions is independent of the average selling price of each transaction, which can be significantly
influenced by fluctuations in currency exchange rates.
Gross Bookings
Gross bookings is an operating measure that represents the aggregate purchase price of all travel products booked by our travel customers through our platform
during a given period. We generate substantially all of our revenue from commissions and other incentive payments paid by our travel suppliers and service
fees paid by our travel customers for transactions through our platform, and, as a result, we monitor gross bookings as an important indicator of our ability to
generate revenue.
Gross Bookings, net
Gross Bookings. net is an operating measure that represents our gross bookings net of withholding taxes on international trips in Argentina.
Total Payment Volume
Total payment volume is an operating measure that represents the US dollar loan volume processed by “Buy Now, Pay Later” financing solution during a
specific period of time.
Adjusted Segment EBITDA
We measure our segment’s performance by our Adjusted Segment EBITDA. We use Adjusted Segment EBITDA for purposes of making decisions about
allocating resources to our segments and to internally evaluate their financial performance because we believe Adjusted Segment EBITDA reflects current core
operating performance of each segment and provides an indicator of each segment’s ability to generate cash.
We calculate Adjusted Segment EBITDA with respect to each segment, as our net income (loss) for the year adjusted for (1) income tax expense/(benefit); (2)
financial results, net; (3) stock-based compensation expense; (4) acquisition transaction costs; (5) depreciation and amortization; (6) impairment charges; and
(7) restructuring, reorganization and other exit activities charges. See “—Comparison of Results of Operations 2024 to 2023,” “—Comparison of Results of
Operations 2023 to 2022” and Note 21 to our audited consolidated financial statements for our Adjusted Segment EBITDA information and segment
information.
Non-GAAP Financial Measures
We report Consolidated Adjusted EBITDA as a non-GAAP financial measure. Consolidated Adjusted EBITDA is among the primary metrics by which
management evaluates the performance of the business and on which internal budgets are based. Management believes that investors should have access to the
same set of tools that management uses to analyze our results. This non-GAAP measure should be considered in addition to results prepared in accordance with
U.S. GAAP but should not be considered a substitute for other measures of our financial performance prepared in accordance with U.S. GAAP. Our
Consolidated Adjusted EBITDA has certain limitations as an analytical tool, including that it does not consider the impact of certain expenses to our
consolidated statements of operations.
We endeavor to compensate for the limitation of the non-GAAP measure presented by also providing a reconciliation to the most directly comparable U.S.
GAAP measure and a description of the reconciling items and adjustments to derive the non-GAAP measure. Our Consolidated Adjusted EBITDA also
excludes certain items related to transactional tax matters, which may ultimately be settled in cash, and we urge investors to review the detailed disclosure
regarding these matters included elsewhere in this Annual Report, as well as in the notes to our audited consolidated financial statements. Our Consolidated
Adjusted EBITDA may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
We calculate Consolidated Adjusted EBITDA as net income for the year adjusted for (1) provision for income tax expense (benefit); (2) financial results, net;
(3) stock-based compensation expense; (4) acquisition transaction costs; (5) depreciation and amortization; (6) impairment charges; and (7) restructuring,
reorganization and other exit activities charges.
The above items are excluded from our Consolidated Adjusted EBITDA measure because these items are noncash in nature, or because the amount and timing
of these items is unpredictable, or not driven by core operating results and renders comparisons with prior periods and competitors less meaningful. We believe
our Consolidated Adjusted EBITDA is a useful measure for analysts and investors to evaluate our future ongoing performance as this measure allows a more
meaningful comparison of our performance and projected cash earnings with our historical results from prior periods and to the results of our competitors.
Moreover, our management uses this measure internally to evaluate the performance of our business as a whole and our individual business segments. In
addition, we believe that by excluding certain items, such as stock-based compensation and acquisition-related impacts, Consolidated Adjusted EBITDA
corresponds more closely to the cash operating income generated from our business and allows investors to gain an understanding of the factors and trends
affecting the ongoing cash earnings capabilities of our business.
The table below provides a reconciliation of our consolidated net income (loss) to Consolidated Adjusted EBITDA.
Year Ended December 31,
2024
2023
2022
(in thousands)
Consolidated net income/(loss)
$
27,905
$
24,490
$
(68,521)
Add (deduct):
Financial results, net
89,072
36,633
45,459
Income tax expense
6,152
3,116
21,309
Depreciation and amortization expense
38,795
36,510
36,003
Stock-based compensation expense
9,901
3,454
7,292
Restructuring, reorganization and other exit activities charges
3,370
11,344
—
Acquisition-related expenses
—
—
390
Consolidated Adjusted EBITDA (unaudited)
$
175,195
$
115,547
$
41,932
Components of Results of Operations
Revenue
We generate revenue from our travel and financial services businesses. The majority of our revenues relates to our travel business for all years presented. We
offer traditional travel services on a stand-alone and package basis generally either through the pre-pay/merchant or the pay-at-destination/agency business
models. We primarily generate revenue as a result of facilitation services, either directly or through the use of affiliated travel agencies. We consider both the
traveler and the travel supplier as our customers.
Under the pre-pay/merchant model, we provide travelers access to book hotel rooms, airline seats, car rentals and destination services through our network of
travel suppliers. Our travelers pay us for merchant transactions generally when they book the reservation. We pay our travel suppliers later, generally when the
travelers use the travel service. Under these transactions, we generally earn a commission from travel suppliers and service fees from travelers. Travel suppliers
generally bill us for travel products sold within a 12-month period from the check-out date. We recognize breakage incremental revenue from unbilled amounts
when the period expires. Our revenues under the prepay/merchant model represented 85.0%, 87.8% and 85.0% of our total consolidated revenues for the years
ended December 31, 2024, 2023 and 2022, respectively.
Under the pay-at-destination/agency model, travelers pay the travel supplier directly at the destination and travel suppliers pay us our earned commissions at a
later date, generally after checkout. Our revenues under the pay-at-destination model represented approximately 1.3%, 1.8% and 2.1% of our total consolidated
revenues for the years ended December 31, 2024, 2023 and 2022, respectively.
We seek to develop and maintain long-term relationships with travel suppliers, GDSs and other intermediaries. Our travel supplier management personnel work
directly with travel suppliers to optimize access to their travel products for visitors to our platform, including through promotional activity, and maximize our
revenue. In most cases, we enter into non-exclusive contracts with our travel suppliers, although in the case of some travel suppliers we may have informal
arrangements without written contracts. Typically, supplier payment terms are negotiated on a regular basis. We have a contract with Expedia and its affiliates
to offer through our platform hotel and other lodging products. The contract establishes agreed payment terms. For more information about our relationship
with Expedia, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Relationship with Expedia” and Note 23 of
our audited consolidated financial statements. Given the fragmentation in travel suppliers in our markets, the frequency of
negotiations of payment terms and competitive conditions, we have experienced what we consider to be limited volatility related to our arrangements with
travel suppliers; however, we cannot assure you that we will not experience more volatility in the future.
We also earn revenues as a result of offering financing to our travel customers and certain non-travel customers, primarily in Brazil. Revenues from interest
earned on loans granted to consumers are recognized over the period of the loan and are based on effective interest rate. Our revenues represented
approximately 1.9%, 1.3% and 0.8% of our total consolidated revenues for the years ended December 31, 2024, 2023 and 2022, respectively.
Major Sources of Revenue
Commissions and Service Fees
We facilitate the sale of travel products and services from our travel suppliers to travelers and travel agencies. We generally receive commissions in
consideration for these facilitation services. Generally, we charge a service fee to travelers, although this may vary depending on marketing strategies. We do
not provide significant post-booking services to travelers. We consider any post-booking services beyond minor inquiries or minor administrative changes to
the reservation (i.e., modifications to the original terms of the reservations) as new bookings. Accordingly, we may charge a new booking fee and
administrative fees for these services. Also, if the requested change results in an incremental price of the reservation to the traveler set by the travel supplier, we
receive an incremental commission from the travel supplier.
We recognize revenue upon the transfer of control of the promised facilitation services to our customers in an amount that reflects the consideration we expect
to be entitled to in exchange for those facilitation services. Generally, we recognize revenue when the booking is completed, paid and confirmed, less a reserve
for cancellations based on historical experience.
Given that the travel supplier is primarily responsible for providing the underlying travel services, we do not control the service or travel product provided by
the travel supplier to the traveler and we do not bear inventory risk, we present revenue on a net basis for these transactions.
We partner with banks to allow our travelers the possibility of purchasing the product of their choice through financing plans established, offered and
administered by such banks. Participating banks bear full risk of fraud, delinquency or default by travelers. When travelers elect to finance their purchases, we
typically receive full payment for our services within a short period of time after booking is completed and confirmed, regardless of the payment plan selected
by the traveler. However, in certain countries, we receive payment from the bank as installments become due regardless of when traveler actually makes the
scheduled payments. In most cases, we receive payment before travel occurs or during travel and the period between completion of booking and reception of
scheduled payments is typically one year or less. We have made use of the practical expedient in ASC 606-10-32-18 and we do not adjust the amount of
consideration for the effects of a significant financing component. In Brazil, through our financial services company solution, we offer financing to certain
travel customers, generally on terms not exceeding 12 months.
Our revenue from commissions and service fees represented 84.3%, 86.0% and 84.7% of our total consolidated revenues for 2024, 2023 and 2022,
respectively.
Incentive fees
We may receive incentive fees from our travel suppliers or Global Distribution Services providers when we meet certain performance conditions, for example
contractually agreed volume thresholds. We recognize revenue on an accrual basis in accordance with the achievement of contractual thresholds on a case-by-
case basis.
Incentive fee revenues represented 5.1%, 6.1% and 7.4% of our total consolidated revenues for 2024, 2023 and 2022, respectively.
Advertising
We record advertising revenue ratably over the advertising period or upon delivery of advertising material, depending on the terms of the advertising
agreement.
Advertising revenues represented approximately 3.4%, 2.9% and 3.0% of our total consolidated revenues for 2024, 2023 and 2022, respectively.
Destination Services
We offer tours, activities and transportation services to travelers through a fleet of dedicated vans. We recognize revenue as services are provided. We present
revenue on a net basis for most of destination services transactions.
Our destination services represented approximately 2.0%, 3.6% and 2.6% of our total consolidated revenues for 2024, 2023 and 2022, respectively.
On July 31, 2024, we recognized a loss of $0.6 million for this transaction (presented within “Other operating expenses, net” in the Consolidated Statement of
Operations) related to the transfer of this non-air business segment.
Interest Revenue and other financial services
We earn revenues as a result of offering financing to our travel customers and certain non-travel customers, through our financial intermediation processing
service and fraud prevention service. Revenues from interest earned on loans granted to consumers are recognized over the period of the loan and are based on
effective interest rates. In addition, during 2024 we continuously expanded our fraud prevention services.
Interest revenue and other financial services represented approximately 1.9%, 1.3% and 0.8% of our total consolidated revenues for 2024, 2023 and 2022,
respectively.
Others
Others includes breakage and loyalty revenues.
We operate a loyalty program through which we award loyalty points to travelers who complete purchases on our websites or use the services of other program
participants, such as bank co-branded credit cards. Loyalty points can be redeemed for free or discounted travel products.
For loyalty points earned through travel product purchases, we apply an estimated stand alone selling price approach whereby the total amount collected from
each travel product sale is allocated between the travel product and the loyalty points earned. The portion of each travel product sale attributable to loyalty
points is initially deferred and then recognized in loyalty revenue when the points are redeemed. In 2023, we started to apply an estimated future breakage rate
of rewards points generated to calculate the relative standalone selling price for loyalty points based on our historical data of twelve months feedback.
For loyalty points earned through co-branded credit card partners, consideration received from the sale of loyalty points is variable and payment terms typically
are within thirty days after the month of sale of loyalty points. Sales of loyalty points to business partners are comprised of two components: loyalty points and
marketing (i.e., the use of intellectual property, including our brand and access to customer lists and databases, which is the predominant element in the
agreements, as well as advertising, collectively, the marketing component). We allocate the consideration received from these sales of loyalty points based on
the relative selling price of each product or service delivered. The loyalty points component is initially deferred and then recognized in revenue when points are
redeemed.
Cost of Revenue
Cost of revenue consists of: (1) credit card processing fees; (2) fees that we pay to banks relating to the travel customer financing installment plans that we
offer; (3) costs of operating our fulfillment center, customer service and risk management; (4) costs borne by us as a result of credit card chargebacks, including
those related to fraud; (5) specific costs related to funding our financial services business; (6) claims against us under consumer protection laws; (7) certain
transaction-based taxes, other than income taxes (which are included under income tax expense) and sales taxes (which are deducted from our revenue); (8) a
portion of overhead expenses distributed based on the percentage of our employees attributable to cost of revenue; (9) depreciation of property and equipment
related to our operation; (10) credit loss expense; and (11) other various costs.
Selling and Marketing
Selling and marketing expense is comprised of direct costs, including online marketing such as search engine and social media marketing, and offline
marketing, such as television and print advertising. It also includes expenses of our selling and marketing personnel and related overhead usually distributed
based on the percentage of our employees attributable to
selling and marketing (for example, rent, facilities, depreciation, etc.). Selling and marketing expense also includes offline channel agent commissions, as well
as commissions paid to certain third-party affiliates for sales that they generate through our systems. In addition, selling and marketing expense includes stock-
based compensation expense related to senior manager level of selling and marketing personnel. Reductions on a per transaction basis are expected to continue
as the economy scales. However, the impact on operating contribution will vary with the level of activity and average selling prices.
General and Administrative
General and administrative expense consists primarily of personnel expenses for management, including both senior management and local managers, and
employees involved in general corporate functions, including finance, accounting, tax, legal, human resources and commercial analysts, our stock-based
compensation expenses for grants to members of our management team and professional and consulting fees. General and administrative expense also includes
a portion of the overhead distributed based on the percentage of our employees attributable to general and administrative (for example, rent, facilities and
depreciation). In addition, general and administrative expense includes transaction costs related to our acquisitions, change in fair value of contingent earnout
payments, if any, and changes to indemnity assets, if any.
Technology and Product Development
Technology and product development expense includes the costs of developing our platform, as well as information technology costs to support our
infrastructure, back-office operations and overall monitoring and security of our networks. This expense is principally comprised of personnel, and depreciation
and amortization of technology assets, including hardware, and purchased and internally developed software. Technology and product development expense
also includes a portion of the overhead expense for our facilities, based on the percentage of our employees attributable to technology and product
development.
Furthermore, Technology and product development expense includes stock-based compensation expense related to senior manager level of technology and
product development personnel.
We classify our supplier relationships as a component of the products that we offer to our travel customers and, accordingly, our costs of acquiring and
maintaining supplier relationships, including the costs of our personnel engaged in supplier relationships, are included as a component of technology and
product development expense.
Other operating expense, net
Other operating expense, net for the year ended December 31, 2024 primarily include general and administrative expenses, professional services fees and other
miscellaneous expenses that are not directly attributable to revenue-generating activities. It also includes the non-cash loss on disposal after comparing the
carrying amount of net assets held for sale and its corresponding fair value less cost to sell at year-end.
Gain (Loss) from Equity Investments
We use the equity method to account for investments in companies if our investment provides us with the ability to exercise significant influence, but not
control, the operating and financial policies of the investee.
Financial Results, Net
Our functional currency and the functional currency of certain of our subsidiaries, including our U.S., Uruguay, Ecuador and Argentina subsidiaries, is the U.S.
dollar. The functional currency of our other subsidiaries is their respective local currency. Gains and losses resulting from transactions by each subsidiary in
non-functional currency are included in financial income/(expense). Financial income/(expense) also includes gains and losses on certain derivative financial
instruments that we use from time to time to manage our exposure to foreign exchange volatility, as well as gains and losses related to blue chip swap
transactions in Argentina.
In addition, our assets and liabilities are translated from local currencies into dollars at the end of each period. However, any gains and losses resulting from
such translations are reflected in our consolidated statement of comprehensive income/(loss) and are not reflected in our consolidated statements of operations.
See “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk.”
Our financial income and expense also include interest expense on our financial liabilities, interest income on our investments and gains and losses on
derivative financial instruments.
Income Tax (Expense) Benefit
We are organized as a British Virgin Islands corporation. However, under the “anti-inversion” rules of Section 7874 of the U.S. Internal Revenue Code, we are
treated as a U.S. corporation for tax purposes. Accordingly, we are subject to federal and state income tax in the United States, as well as foreign taxes in the
multiple jurisdictions where we operate. We are subject to foreign income taxes in the jurisdictions where we operate in accordance with the respective local
tax laws.
Comparison of Results of Operations 2024 to 2023
Year Ended December 31,
2024
2023
(in thousands)
% of
Revenue
% of
Revenue
% of
change
Total revenue
$
774,061
100.0
$
706,040
100.0
9.6
Cost of revenue
(208,142)
(26.9)
(228,938)
(32.4)
(9.1)
Gross profit
$
565,919
73.1
$
477,102
67.6
18.6
Operating expenses
Selling and marketing
$
(250,741)
(32.4)
$
(220,361)
(31.2)
13.8
General and administrative
(80,309)
(10.4)
(77,766)
(11.0)
3.3
Technology and product development
(107,958)
(13.9)
(109,130)
(15.5)
(1.1)
Other operating expense, net
(2,940)
(0.4)
(4,546)
(0.6)
NM
Total operating expenses
$
(441,948)
(57.1)
$
(411,803)
(58.3)
7.3
Loss from equity investments
(842)
(0.1)
(1,060)
(0.2)
(20.6)
Operating income
123,129
15.9
64,239
9.1
91.7
Financial results, net
(89,072)
(11.5)
(36,633)
(5.2)
143.1
Income before income taxes
$
34,057
4.4
$
27,606
3.9
23.4
Income tax expense
(6,152)
(0.8)
(3,116)
(0.4)
97.4
Net income for the year
$
27,905
3.6
$
24,490
3.5
13.9
Net income attributable to redeemable non-controlling
interest
—
—
—
—
—
Net income attributable to Despegar.com, Corp.
$
27,905
3.6
$
24,490
3.5
13.9
Note: “NM” denotes not meaningful.
Consolidated Revenues
The following table presents our consolidated revenues by business segment:
Year Ended December 31,
2024
2023
(in thousands)
% of
Revenue
% of
Revenue
% of
change
Revenue
Air
$
262,534
33.9
$
257,649
36.5
1.9
Packages, Hotels and Other Travel Products
493,950
63.8
437,010
61.9
13.0
Financial Services
51,127
6.6
40,912
5.8
25.0
Intersegment eliminations
(33,550)
(4.3)
(29,531)
(4.2)
13.6
Total revenue
$
774,061
100.0
$
706,040
100.0
9.6
The following table presents our consolidated revenues by type of revenue:
Year Ended December 31,
2024
2023
(in thousands)
Commissions and service fees
$
652,750
$
607,251
Incentives
39,832
42,998
Advertising
26,200
20,594
Destination services
15,638
25,116
Interest revenue
14,870
9,272
Financial services
2,707
2,109
Others
22,064
(1,300)
Total revenue
$
774,061
$
706,040
______________
(1) Financial services include Financial Intermediation Processing fee, fraud prevention services and others.
(2) Others includes incentive fees, advertising, breakage, loyalty revenue and financial services.
Our total number of transactions, gross bookings and gross bookings, net increased/(decreased) 7.3%, (3.6)% and 2.3%, respectively, in 2024 as compared to
2023. This increase in transactions and gross bookings resulted in higher travel revenues of $756.5 million in 2024, a 8.9% increase as compared to $694.7
million in 2023. In addition, in 2024 we generated consolidated financial services revenues of $17.6 million compared to $11.4 million in 2023.
Revenue from our Air segment increased $4.9 million, or 1.9%, in 2024 compared to 2023. Revenue from our Packages, Hotels and Other Travel Products
segment increased $56.9 million, or 13.0%, in 2024 compared to 2023. Revenue from our Financial Services segment, including inter-segment operations,
increased $10.2 million, or 25.0%, in 2024 compared to 2023.
Our commissions and service fee revenue increased $45.5 million, or 7.5%, in 2024 compared to 2023, comprising an increase of 2%, or $4.6 million in 2024
compared to 2023, in our Air segment and an increase of 11.1%, or $40.9 million in 2024 compared to 2023, in our Packages, Hotels and Other Travel Products
segment, primarily as a result of the overall increase in travel demand. As compared to 2023, incentive revenue decreased $(3.2) million, or (7.4)%, in 2024,
mainly due to a decrease of (23.1)%, or $(5.2) million, in our Air segment, primarily due to a decline in GDS incentive fees as a result of an increase in NDC
transactions. The decline was partially offset by an increase of 10.1%, or $2.1 million, in our Packages, Hotels and Other Travel Products segment due to a
better performance in sales commissions.
Advertising revenue increased $5.6 million, or 27.2%, in 2024 compared to 2023, mainly driven by an increase of 29.7%, or $5.1 million, in our Packages,
Hotels and Other Travel Products segment, due to an increase in advertising campaigns and improved commercial performance of alliances in Despegar’s main
markets.
Destination services decreased $(9.5) million, or (37.7)%, in 2024 compared to 2023 as a result of the sale of the DMC business unit in July 2024.
Interest revenue increased $5.6 million, or 60.4% in 2024 compared to 2023, while financial services revenue increased $0.6 million, or 28.4%, in the same
period, primarily due to the expansion in Koin’s operations, mainly due to the launch of App Koin and fraud prevention services respectively.
Other revenues increased $23.4 million in 2024, primarily due to breakage in customer travel coupons as well as an increase in loyalty revenues in line with
travel demand growth.
Our consolidated revenue by business model is as follows:
Year Ended December 31,
2024
2023
(in thousands)
Pre-pay model
$
658,128
$
619,658
Pay-at-destination model
10,260
12,709
Interest revenue
14,870
9,272
Others
90,803
64,401
Total revenue
$
774,061
$
706,040
______________
(1)
Others includes incentive fees, income from outsourced services, advertising, breakage and loyalty.
Cost of revenue
Our cost of revenue decreased by ($20.8) million during 2024 mainly due to lower cost of installment derived from a decline in average installments and a
decrease in credit card processing fees.
Gross Profit
As a result of the factors described above, our gross profit was $565.9 million in 2024 as compared to $477.1 million in 2023. As a percentage of revenue,
gross profit represented 73.1% and 67.6% in 2024 and 2023, respectively.
Selling and Marketing
(1)
(2)
(1)
Selling and marketing expense increased 13.8% to $250.7 million in 2024, as compared to $220.4 million in 2023. In 2024, our brand and performance
marketing expenses increased given the overall demand growth across the region, as well as an increase in expenses related to our offline sales channel growth
and our B2B expansion.
General and Administrative
General and administrative expenses increased 3.3% to $80.3 million in 2024, as compared to $77.8 million in 2023, mainly due to the impact of tax
settlements and closing of tax audits in Mexico in 2023, as well as higher stock-based compensation expenses driven by an increase in stock price. These
effects were partially offset by cost savings from the restructuring plan implemented towards the end of 2023, particularly in payroll and outsourced services.
Technology and Product Development
Technology and product development expenses decreased (1.1)% to $108.0 million in 2024, as compared to $109.1 million in 2023 mainly due to operating
efficiencies and headcount reductions implemented towards the year end of 2023.
Other operating expenses, net
Other operating expenses decreased to $1.6 million in 2024, as compared to $4.5 million in 2023. This reduction was primarily driven by the recognition in
2023 of a non-cash loss on disposal, recorded after comparing the carrying amount of net assets held for sale with its fair value less costs to sell at year-end. In
contrast, the 2024 figure mainly reflects costs related to economic analyses and evaluations associated with the sale of Despegar to Prosus.
Impairment Charges
During 2024 and 2023, we did not recognize any impairment charge related to our goodwill, indefinite-lived and finite-lived intangible assets or other long-
lived assets.
Loss from Equity Investments
During 2024, we recorded a loss in our equity investments of $0.8 million as compared to a loss of $1.1 million in 2023. Our results from equity investments
are not significant.
Operating income
In 2024, we had an operating income of $123.1 million compared to an operating income of $64.2 million in 2023, primarily caused by a significant increase in
travel activity compared to 2023.
Financial Results, Net
In 2024, we had a net financial expense of $89.1 million as compared to a net financial expense of $36.6 million in 2023. The increase in financial performance
was driven by a net foreign exchange loss from the impact of monetary devaluation in Brazil and Mexico and blue chip swap expense in Argentina.
Income Tax Expense
Our effective tax rate is defined as income tax expense as a percentage of net income before income tax expense.
The following table summarizes the changes in our effective tax rate for the years ended December 31, 2024 and 2023:
Year ended December 31,
2024
2023
(in percentages)
Effective Tax Rate
18.1 %
11.3 %
Income taxes are determined by each subsidiary on a stand-alone basis according to income tax law of each jurisdiction.
Our effective tax rate for the year ended December 31, 2024 was 18.1%, which was higher than the effective tax rate of 11.3% for the year ended December 31,
2023 mainly due to the effect of the valuation allowance arising from the increase in net operating losses in Mexico. The variation is also driven by the
reduction of withholding taxes applicable to intercompany transactions and the effect of the tax holiday in Brazil due to PERSE Regime. See Note 20 to our
consolidated financial statements for additional information.
Net Income
In 2024, we had a net income of $27.9 million as compared to a net income of $24.5 million in 2023 as a result of the factors described above.
Net income Attributable to Despegar.com Corp.
In 2024, we had a net income of $27.9 million compared to a net income of $24.5 million in 2023 as a result of the factors described above.
Adjusted Segment EBITDA
Year Ended December 31,
2024
2023
(in thousands)
Air
$
41,561
$
13,172
Packages, Hotels and Other Travel Products
$
129,477
$
103,172
Financial Services
$
4,157
$
(797)
Adjusted Segment EBITDA is our primary segment operating metric. See Note 21 — Segment Information in the notes to the consolidated financial statements
for additional information.
Our Air Adjusted Segment EBITDA increased to $41.6 million in 2024 compared to $13.2 million in 2023, mainly due to an increase in take rate and
improving operating leverage.
Our Packages, Hotels and Other Travel Products Adjusted Segment EBITDA increased to $129.5 million in 2024, compared to $103.2 million in 2023,
resulting from significantly higher revenues due to the overall increase in travel demand and increased take rates.
Our Financial services Adjusted Segment EBITDA increased to $4.2 million in 2024, compared to negative $(0.8) million in 2023, primarily resulting from the
investments related to our plans to develop the financial services of anti-fraud and payments businesses both in Brazil and Latin America.
Comparison of Results of Operations 2023 to 2022
Year Ended December 31,
2023
2022
(in thousands)
% of
Revenue
% of
Revenue
% of
change
Total revenue
$
706,040
100.0
$
537,972
100.0
31.2
Cost of revenue
(228,938)
(32.4)
(182,898)
(34.0)
25.2
Gross profit
477,102
67.6
355,074
66.0
34.4
Operating expenses
Selling and marketing
(220,361)
(31.2)
(165,150)
(30.7)
33.4
General and administrative
(77,766)
(11.0)
(101,521)
(18.9)
(23.4)
Technology and product development
(109,130)
(15.5)
(89,992)
(16.7)
21.3
Impairment of long-lived assets and goodwill
—
—
—
—
—
Other operating expense, net
(4,546)
(0.6)
—
NM
Total operating expenses
(411,803)
(58.3) 0
(356,663)
(66.3)
31.3
Loss from equity investments
(1,060)
(0.2)
(164)
0.0
546.3
Operating gain / (loss)
64,239
9.1
(1,753)
(0.3)
(3764.5)
Financial results, net
(36,633)
(5.2)
(45,459)
(8.5)
(19.4)
Gain / (Loss) before income taxes
27,606
3.9
(47,212)
(8.8)
(158.5)
Income tax expense
(3,116)
(0.4)
(21,309)
(4.0)
NM
Net gain / (loss) for the year
$
24,490
3.5
$
(68,521)
(12.7)
(135.7)
Net gain / (loss) attributable to Despegar.com, Corp.
$
24,490
3.5
$
(68,521)
(12.7)
(135.7)
Note: “NM” denotes not meaningful.
Consolidated Revenues
The following table presents our consolidated revenues by business segment:
Year Ended December 31,
2023
2022
(in thousands)
% of
Revenue
% of
Revenue
% of
change
Revenue
Air
$
257,649
36.5
$
215,782
40.1
19.4
Packages, Hotels and Other Travel Products
437,010
61.9
317,748
59.0
37.5
Financial services
40,912
5.8
12,247
2.3
234.1
Intersegment eliminations
(29,531)
(4.2)
(7,805)
(1.5)
278.4
Total revenue
$
706,040
100.0
$
537,972
100.0
31.2
The following table presents our consolidated revenues by type of revenue:
Year Ended December 31,
2023
2022
(in thousands)
Commissions and service fees
$
607,251
$
455,790
Incentive fees
42,998
39,859
Advertising
20,594
16,166
Destination services
25,116
14,071
Interest revenue
9,272
4,114
Financial services
2,109
328
Others
(1,300)
7,644
Total Revenue
$
706,040
$
537,972
______________
(1) Financial services include financial intermediation processing fees for merchant transactions, fraud prevention services and others.
(2)
Others includes breakage and loyalty revenue.
Our total number of transactions, gross bookings and gross bookings, net increased 9.2%, 33.7% and 29.7%, respectively, in 2023 as compared to 2022. This
increase in transactions and gross bookings resulted in higher travel revenues of $694.7 million in 2023, a 31.2% increase as compared to $533.5 million in
2022. In addition, in 2023 we generated consolidated financial services revenues of $11.4 million compared to $4.4 million in 2022.
Revenue from our Air segment increased $41.9 million, or 19.4%, in 2023 compared to 2022. Revenue from our Packages, Hotels and Other Travel Products
segment increased $119.3 million, or 37.5%, in 2023 compared to 2022. Revenue from our Financial Services segment, including inter-segment operations,
increased $28.7 million, or 234.1%, in 2023 compared to 2022.
Our commissions and service fee revenue increased $151.5 million, or 33.2%, in 2023, comprising an increase of 27%, or $49.7 million, in our Air segment
and an increase of 37.9%, or $101.71 million, in our Packages, Hotels and Other Travel Products segment, primarily as a result of the overall increase in travel
demand.
As compared to 2022, incentive revenue increased $3.1 million, or 7.9%, in 2023, comprising a decrease of (8.5)%, or $(2.1) million, in our Air segment, and
an increase of 35.0%, or $5.3 million, in our Packages, Hotels and Other Travel Products segment, primarily as a result of higher threshold incentives received
from hotels and other travel suppliers, partially offset by a decrease in airline incentive due to lower GDS issuances.
Advertising revenue increased $4.4 million, or 27.4%, in 2023, comprising a decrease of 18.3%, or $0.8 million, in our Air segment, and an increase of 44.2%,
or $5.3 million, in our Packages, Hotels and Other Travel Products segment. Advertising revenue increased due to better negotiations and performance of
alliances.
Destination services increased $11.0 million, or 78.5%, in 2023 as a result of the increase in travel demand.
Interest revenue increased $5.2 million, or 125.4% in 2023, while financial services revenue increased $1.8 million, or 543.0%, in the same period, primarily
due to the expansion in Koin’s operations, mainly due to an increase in intermediation processing fees and fraud prevention services.
Other revenues decreased $8.9 million, or (117.0)%, in 2023, mainly driven by higher sales volume that generated an increase in the issuance of loyalty points
in comparison with loyalty points redeemed.
Our consolidated revenue by business model is as follows:
Year Ended December 31,
2023
2022
(in thousands)
Pre-pay model
$
619,658
$
457,335
Pay-at-destination model
12,709
11,364
Interest revenue
9,272
4,114
Others
64,401
65,159
Total revenue
$
706,040
$
537,972
______________
(1)
Others includes income from outsourced services, incentive fees, advertising, breakage and loyalty.
Cost of revenue
Our cost of revenue increased $46.0 million during 2023 mainly due to a $20.7 million increase in credit card processing fees as a result of higher transaction
volumes due to a strong demand environment in combination with the execution of commercial strategies. Further, our cost of installments increased $21.5
million due to the increase in overall sales levels. In line with sales growth, other transactional taxes increased $9.1 mainly due to taxes related to sales
collections in Argentina and higher service import taxes in Brazil. These increases were partially offset by a recovery of $(11.7) million in fulfillment center
fees mainly driven by efficiencies in call center operations due to increases in productivity as well as renegotiation of BPO ('Business Process Outsourcing')
contracts in Brazil.
Gross Profit
As a result of the factors described above, our gross profit was $477.1 million in 2023 as compared to $355.1 million in 2022. As a percentage of revenue,
(1)
(2)
(1)
gross profit represented 67.6% and 66.0% in 2023 and 2022, respectively.
Selling and Marketing
Selling and marketing expense increased 33.4% to $220.4 million in 2023, as compared to $165.2 million in 2022. In 2023, our brand and performance
marketing expenses increased $28.9 million year over year given the overall demand growth across the region. In addition, expenses related to sales
commissions increased $10.7 million year over year as we continued to invest in our offline sales channel. Further, we invested $14.5 million throughout the
year in line with new store openings under our Despegar / Decolar brand in Argentina and Brazil, as well as Viajes Falabella stores in Chile, Colombia and
Peru.
General and Administrative
General and administrative expenses decreased (23.4)% to $77.8 million in 2023, as compared to $101.5 million in 2022, mainly explained by a favorable
settlement with the Mexican fiscal authority (SAT) on tax contingencies related to tax audits for the years 2014 to 2017. This impact was partially offset by
restructuring charges as we implemented headcount reductions in line with operating efficiencies (See Note 20 to our consolidated financial statements for
additional information).
Technology and Product Development
Technology and product development expense increased 21.3% to $109.1 million in 2023, as compared to $90.0 million in 2022. The increase was primarily
due to $11.0 million increase in headcount related expenses. In addition, an increase in restructuring charges for $4.1 million as we implemented headcount
reductions in line with operating efficiencies (See Note 20 to our consolidated financial statements for additional information). These two impacts generated an
increase in service import taxes in Brazil.
Other operating expenses
Other operating expenses increased to $4.5 million in 2023, as compared to none in 2022. The increase was primarily due to the recognition of a non-cash loss
on disposal after comparing the carrying amount of net assets held for sale and its corresponding fair value less cost to sell at year-end.
Impairment Charges
During 2023 and 2022, we did not recognize any impairment charge related to our goodwill, indefinite-lived and finite-lived intangible assets or other long-
lived assets.
Loss from Equity Investments
During 2023, we recorded a loss in our equity investments of $1.1 million as compared to a loss of $0.2 million in 2022. Our results from equity investments
are not significant.
Operating income (loss)
In 2023, we had an operating income of $64.2 million compared to an operating (loss) of $(1.8) million in 2022, primarily caused by a significant increase in
travel activity compared to 2022.
Financial Results, Net
In 2023, we had a net financial expense of $36.6 million as compared to a net financial expense of $45.5 million in 2022. Stronger financial performance was
driven by a blue chip swap gain in Argentina of $11.7 million and a lower foreign exchange losses of $15.1 million. This gain was primarily the outcome of an
enhanced hedging strategy, coupled with the year-over-year appreciation of the Brazilian real and the Mexican peso. Additionally, this impact was partially
offset by an increase in travel activity, particularly within the Brazilian market, resulted in a $13.8 million increase in factoring expenses.
Income Tax Expense
Our effective tax rate is defined as income tax expense as a percentage of net income before income tax expense.
The following table summarizes the changes in our effective tax rate for the years ended December 31, 2023 and 2022:
Year ended December 31,
2023
2022
(in percentages)
Effective Tax Rate
11.3 %
45.1 %
Income taxes are determined by each subsidiary on a stand-alone basis according to income tax law of each jurisdiction.
Our effective tax rate for the year ended December 31, 2023 was 11.3%, which was lower than the effective tax rate of 45.1% for the year ended December 31,
2022 mainly due to the impact of the tax settlement and closing of tax audits in Mexico and tax inflation adjustment related to accumulated net operating losses
in Argentina. The variation is also driven by the effect of incremental withholding taxes applicable to intercompany transactions. See Note 20 to our
consolidated financial statements for additional information.
Net Income (Loss)
In 2023, we had a net income of $24.5 million as compared to a net loss of $(68.5) million in 2022 as a result of the factors described above.
Net income (Loss) Attributable to Despegar.com Corp.
In 2023, we had a net income of $24.5 million compared to a net loss of $(68.5) million in 2022 as a result of the factors described above.
Adjusted Segment EBITDA
Year Ended December 31,
2023
2022
(in thousands)
Air
$
13,172
$
17,953
Packages, Hotels and Other Travel Products
$
103,172
$
42,257
Financial Services
$
(797)
$
(18,278)
Adjusted Segment EBITDA is our primary segment operating metric. See Note 21 — Segment Information in the notes to the consolidated financial statements
for additional information.
Our Air Adjusted Segment EBITDA decreased to $13.2 million in 2023,compared to $18.0 million in 2022, resulting from an increase in headcount related
expenses due to the overall increase in travel demand.
Our Packages, Hotels and Other Travel Products Adjusted Segment EBITDA increased to $103.2 million in 2023, compared to $42.3 million in 2022, resulting
from significantly higher revenues due to the overall increase in travel demand.
Our Financial services Adjusted Segment EBITDA improved to a negative ($0.8) million in 2023, compared to negative ($18.3) million in 2022, primarily
resulting from the investments related to our plans to develop the financial services and the anti-fraud and payments businesses both in Brazil and in Latin
America.
B.
Liquidity and Capital Resources
Our principal sources of liquidity were typically cash flows generated from operations, cash available under credit facilities and loan agreements as well as our
cash and cash equivalents and short-term investment balances. Considering our available cash and cash equivalents balance as of December 31, 2024, we
anticipate that based on our current operating plan we have sufficient cash and cash equivalents to fund our operations and comply with our commitments for at
least the next 12 months as from the issuance of these consolidated financial statements.
In our travel business, our typical cash cycle provides us with a positive source of working capital for our operations. Our pre-pay model allows us to collect
cash amounts from transactions with our travel customers well before we are required to make payments to our travel suppliers, which allows us to use the cash
for other business purposes in the interim and reduces our need to use external sources of financing. Under our pre-pay model, we receive cash payments
through credit card companies used by travel customers at or near the time of booking, and we are required to make payments related to the booking to the
relevant travel suppliers generally two to three months afterwards, typically, after the travel customer uses the reservation and the travel supplier invoices us.
We place collateralized amounts related to operations with our travel suppliers and service providers and the International Air Transport Association (“IATA”).
We are required to be accredited by IATA to sell international airlines tickets of IATA-affiliated airlines. We, therefore, as part of our operations, maintain
restricted cash in the form of time deposits or bank or insurance guarantees. Restricted cash amounted to $23.7 million and $25.9 million as of December 31,
2024 and 2023, respectively. In addition, restricted cash non-current amounted to $0.7 million as of December 31, 2024.
Regarding our financial services business, our model normally works with positive working capital. Our loan customers typically pay the first installment of
their loans within two days and we make the first payment to merchants in 30 days, providing us with 28 days of positive cash flow, which can be considered
as another very short-term funding source. We offer a factoring service through our securitization program to discount future loans receivables in order to be
able to anticipate the future cash flow to the merchant, as needed. For the medium and long term funding, we have traditional credit lines with banks that
provide us funding with maturities going from three up to five years. We have all our external funding at variable local interest rates.
As of December 31, 2024, our payables (including travel accounts payable plus related party payable plus accounts payable and accrued expenses) minus our
receivables (including trade accounts receivable net of credit expected losses plus loans receivable net of credit expected losses plus related party receivables)
amounted to a net payable of $230.2 million as compared to a net payable of $272.4 million as of December 31, 2023.
As of December 31, 2023, our payables (including travel accounts payable plus related party payable plus accounts payable and accrued expenses) minus our
receivables (including trade accounts receivable net of credit expected losses plus related
party receivables) amounted to a net payable of $272.4 million as compared to a net payable of $208.3 million as of December 31, 2022.
As of December 31, 2024, within our travel accounts payable balance of $357.8 million, we recognized a liability of $14.3 million related to refund vouchers
issued to travelers due to canceled reservations, as compared to a liability of $44.5 million as of December 31, 2023.
As of December 31, 2023, within our travel accounts payable balance of $355.4 million, we recognized a liability of $44.5 million related to refund vouchers
issued to travelers due to canceled reservations, as compared to a liability of $44.7 million as of December 31, 2022.
Our negative working capital (calculated as current assets minus current liabilities, except short-term debt and contingent liabilities) was $51.1 million as of
December 31, 2024, as compared to $99.2 million as of December 31, 2023.
Our negative working capital (calculated as current assets minus current liabilities, except short-term debt and contingent liabilities) was $99.2 million as of
December 31, 2023, as compared to $61.4 million as of December 31, 2022.
In August 2020, we entered into an investment agreement with LCLA Daylight LP, an affiliate of L Catterton Latin America III, L.P. (“L Catterton”) and an
investment agreement with Waha LATAM Investments Limited, an affiliate of Waha Capital PJSC (“Waha Capital”), to raise $200 million in gross proceeds in
a private placement of shares of newly created series of preferred stock and warrants to purchase our ordinary shares. The transaction with L. Catterton closed
on September 18, 2020 and the transaction with Waha Capital closed on September 21, 2020. These transactions increased our cash position by $187.9 million
in 2020. During 2024, we paid an aggregate amount of $23.4 million in preferred dividends, $22.9 million related to Series A Preferred Shares of L Catterton
and $0.5 million related to Series B Preferred Shares of Waha Capital. During 2023 and 2022, we paid an aggregate amount of $17.8 million and $17.4 million,
respectively, in preferred dividends to L Catterton and Waha Capital. For more information about dividends payments to Series A Preferred Shares and Series B
Preferred Shares, see “Item 10. Additional Information—B. Memorandum and Articles of Association” and Note 5 to our consolidated financial statements.
On March 27, 2024, Waha Capital exercised its conversion rights and converted its 50,000 Series B into ordinary shares at a conversion price of $9.251 per
share, as determined in the terms of the Series B Preferred Shares, and a conversion rate of 108.1081 ordinary shares per Series B Preferred shares, obtaining
5,405,405 ordinary shares on an as-converted basis. On April 1, 2024, Waha Capital sold its entire equity stake in the Company. On June 11, 2024, L Catterton
exercised their warrants under the Catterton Investment Agreement as a result of which we issued 10,992,759 ordinary shares to LCLA Daylight LP.
On March 25, 2024, we disbursed $15.4 million covering accumulated dividends up to March 31, 2024. Subsequently, on September 26, 2024, we paid out an
additional $7.5 million for dividends accumulated through September 30, 2024. As of December 31, 2024, there remained $3.8 million in accrued but unpaid
dividends.
On March 21, 2023, we paid $7.9 million of accumulated dividends. On September 26, 2023, we paid $7.9 million of accumulated dividends. For the period
from April 1, 2023 until December 31, 2023, we accrued $11.5 million for unpaid dividends recorded as a charge to additional paid-in-capital.
Cash flows for the year ended December 31, 2024 compared to 2023
Our cash flows for the years ended December 31, 2024 and 2023 are as follows:
Year Ended December 31,
2024
2023
(in thousands)
Net cash flows provided by operating activities
$
66,113 $
102,730
Net cash flows used in investing activities
(36,217)
(52,558)
Net cash flows used in financing activities
(6,726)
(38,224)
Effect of exchange rate changes on cash and cash equivalents
(26,743)
(6,205)
Net (decrease) increase in cash and cash equivalents
$
(3,573) $
5,743
In 2024, we generated lower positive cash flows from operations of $66.1 million compared to $102.7 million in 2023, mainly driven by a deceleration in year-
over-year gross booking growth and an increase in days sales outstanding and the losses related to blue chip swap transactions in Argentina.
In 2024, our net cash flows used in investing activities were $36.2 million compared to $52.6 million in 2023 primarily due to lower current year capital
expenditures of $36.8 million, including lower spend on internal-developed software. Cash used in investing activities in 2024 primarily included a $30.3
million investment in intangible assets, including internal software and website development costs and $6.5 million in acquired property and equipment; and
also included $9.2 million origination of loans receivables due to sales increase of Koin. In 2023, our net cash flows used in investing activities were $52.6
million compared to $51.1 million in 2022 primarily due to higher current year capital expenditures of $41.0 million, including higher spend on internal-
developed software. Cash used in investing activities in 2023 primarily included a $31.1 million investment in intangible assets, including internal software and
website development costs and $9.8 million in acquired property and equipment; and also included $21.0 million origination of loans receivables due to sales
increase of Koin.
In 2024, our net cash flows used in financing activities were $6.7 million primarily due to a $23.4 million payment of dividends to preferred shareholders
partially offset by short-term debt collect by $18.9 million. In 2023, our net cash flows used in financing activities were $38.2 million primarily due to a $17.8
million payment of dividends to preferred shareholders and $16.6 million payment of the promissory notes related to Best Day acquisition.
Foreign exchange rate changes resulted in a decrease of our cash balances denominated in foreign currency in 2024 of $26.7 million, reflecting a net
devaluation in foreign currencies (mainly in Brazil and Mexico) related to the U.S. dollar during the year. In 2023, foreign exchange rate changes resulted in a
decrease of our cash balances denominated in foreign currency in 2023 of $6.2 million, reflecting a net devaluation in foreign currencies (mainly in Argentina)
related to the U.S. dollar during the year.
Cash flows for the year ended December 31, 2023 compared to 2022
Our cash flows for the years ended December 31, 2023 and 2022 are as follows:
Year Ended December 31,
2023
2022
(in thousands)
Net cash flows provided by operating activities
$
102,730 $
36,702
Net cash flows used in investing activities
(52,558)
(51,142)
Net cash flows used in financing activities
(38,224)
(25,301)
Effect of exchange rate changes on cash and cash equivalents
(6,205)
5,564
Net increase (decrease) in cash and cash equivalents
$
5,743 $
(34,177)
In 2023 we generated positive cash flows from operations of $102.7 million compared to $36.7 million in 2022, in line with a strong increase of sales related to
the demand recovery across the region.
In 2023, our net cash flows used in investing activities were $52.6 million compared to $51.1 million in 2022 primarily due to higher current year capital
expenditures of $41.0 million, including higher spend on internal-developed software. Cash used in investing activities in 2023 primarily included a $31.1
million investment in intangible assets, including internal software and website development costs and $9.8 million in acquired property and equipment; and
also included $21.0 million origination of loans receivables due to sales increase of Koin. In 2022, our net cash flows used in investing activities were $51.1
million; primarily due to capital expenditures of $30.7 million, including higher spend on internal-developed software. Cash used in investing activities in 2022
primarily included a $26.4 million investment in intangible assets, including software and website development costs and $4.3 million in acquired property and
equipment.
In 2023, our net cash flows used in financing activities were $38.2 million primarily due to a $17.8 million payment of dividends to preferred shareholders and
$16.6 million payment of the promissory notes related to Best Day acquisition. In 2022, our net cash flows used in financing activities were $25.3 million
primarily due to a $17.4 million payment of dividends to preferred shareholders and the repurchase of our stock of in the amount of $10.0 million. On January
31, 2022, we purchased the non-controlling interest of Koin for a total consideration of $3.2 million over eight installments of $0.4 million. On June 14, 2022,
we launched a share repurchase program which expired on August 12, 2022, of which we repurchased stock in the amount of approximately $10.0 million.
Foreign exchange rate changes resulted in a decrease of our cash balances denominated in foreign currency in 2023 of $6.2 million, reflecting a net devaluation
in foreign currencies (mainly in Argentina) related to the U.S. dollar during the year. In 2022, foreign exchange rate changes resulted in an increase of our cash
balances denominated in foreign currency in 2022 of $5.6 million, reflecting a net appreciation in foreign currencies related to the U.S. dollar during the year.
Indebtedness
Due to our positive cash cycle, we have historically maintained a low level of debt. Our debt was historically comprised of bank debt. As of December 31,
2024, we have outstanding short and long-term debt of $50.5 million as compared to $30.8 million as of December 31, 2023. As of December 31, 2024 and
2023, short-term debt is comprised of eight loans with four financial institutions and seven loans with two financial institutions, respectively. Our long-term
bank debt amounting to $0.9 million as of December 31, 2024 is primarily denominated in currencies other than the U.S. dollar and matures between 2025 and
2026. As of December 31, 2024, we were in compliance with all covenants. See Note 6 to our consolidated financial statements for additional information.
As of December 31, 2024, we have a securitization program with respect to our loans receivable related to our financial services business. In a securitization
transaction, assets from our balance sheet are transferred to a special purpose vehicle or “SPV” we establish, which typically meets the definition of a variable
interest entity or “VIE.” The SPV then issues various forms of interests in those assets to investors. We typically receive cash proceeds and/or other interests in
the securitization SPV for the assets we transfer. As of December 31, 2024, we had one SPV with collateralized debt in an aggregate amount of $5.9 million. As
of December 31, 2023, we had one SPV with collateralized debt in an aggregate amount of $7.5 million.
C.
Research and Development, Patents and Licenses, etc.
Our technology and product development activities are primarily focused on the development of software, which we view as an important element of the
investments we make in our technology and our business. Our primary software development activities have been focused on providing an effective and
engaging platform for our travel customers and on collecting and using data to better customize the user experience, pricing and marketing efforts for our travel
customers. In 2024, 2023 and 2022, we spent $108.0 million, $109.1 million and $90.0 million, respectively, on software and product development, as well as
other technology activities. See “Item 4. Information on the Company—D. Property, Plants and Equipment—Intellectual Property.”
D.
Trend Information
In addition to the information set forth in this section, additional information about the trends affecting our business can be found in “—A. Operating Results—
Trends.” You should also read our discussion of the risks and uncertainties that affect our business in “Item 3. Key Information—D. Risk Factors.”
Macroeconomic and Political Conditions in the Countries in which we Operate
Our travel customers are primarily located in Latin America, particularly in Brazil, Mexico and Argentina, and to a lesser extent, in other countries in the
region. Our results of operations and financial condition are significantly influenced by political and economic developments in the countries in which our
travel customers reside and, to a lesser extent, in the countries to which our travel customers may travel, and the effect that these factors may have on the
availability of credit, employment rates, disposable income, average wages and demand for travel in those countries. In the mid- to long-term, we believe that
macroeconomic changes in the region will generally benefit us due to an expanding middle class, increasing disposable income, reduced unemployment and
lower interest rates, among other factors.
Currency Exchange Rates
We report our financial results in dollars, but most of our revenue and expenses are denominated in local currencies. Any changes in the exchange rates of any
such currencies against the dollar will affect our reported financial results as translated into dollars. Furthermore, many of our travel customers travel
internationally and any changes in the exchange rate between their home currency and the currency of their destination may influence their travel purchases.
Extensive exchange controls implemented by the Argentine government control and restrict the ability of companies and individuals to exchange Argentine
Pesos for foreign currencies and their ability to remit foreign currency out of Argentina. An entity’s authorization request to the Central Bank of Argentina to
access the official exchange market to make foreign
currency payments may be denied depending on the circumstances. As a result of these exchange controls, markets in Argentina developed trading mechanisms
in which an entity or individual buys U.S. dollar denominated securities in Argentina (e.g. shares, sovereign debt) using Argentine peso, and subsequently sells
the securities for U.S. dollars, in Argentina, to access U.S. dollars locally, or outside Argentina, by transferring the securities abroad, prior to being sold (the
latter commonly known as the “Blue Chip Swap Rate”). The Blue Chip Swap Rate has diverged significantly from Argentina’s official exchange rate
(commonly known as exchange spread). In recent years, the Blue Chip Swap Rate has been higher than Argentina’s official exchange rate. As of December 31,
2024, 2023 and 2022, the spread of the Blue Chip Swap Rate was 15.0%, 20.4%, and 94.2%, respectively. See Note 2 to our consolidated financial statements
for additional information.
Inflation
Historically, certain countries in Latin America, such as Argentina, have experienced high rates of inflation. Changes in inflation rates can affect our pricing as
well as our expenses, including employee salaries, and the inflation rates in the countries where we generate revenue in any period may be higher or lower than
the inflation rates in the countries where we incur expenses. In addition, higher inflation may lead our travel customers to make more purchases using
installments or other financing options, which may result in an increase in the costs associated with offering such financing options to our travel customers.
Below is a summary of certain macroeconomic data for Brazil, Mexico and Argentina, our three largest markets, for 2024, 2023 and 2022:
Brazil
2024
2023
2022
Real GDP growth
3.4 %
2.4 %
2.9 %
Population (in millions)
212.6
203.1
207.8
Inflation
4.8 %
4.6 %
5.8 %
Exchange rate
6.17
4.85
5.29
____________
(1)
Source: Instituto Brasileiro de Geografia e Estatistica (IBGE), measured in local currency.
(2)
Source: Instituto Brasileiro de Geografia e Estatistica (IBGE). (i) population forecast (July 2024); (ii) 2022 census as of December 22, 2023.
(3)
Source: Instituto Brasileiro de Geografia e Estatistica (IBGE), measured in local currency.
(4)
Source: Banco Central do Brasil. Data as of December 31 of each year.
Mexico
2024
2023
2022
Real GDP growth
1.2 %
3.2 %
3.1 %
Population (in millions)
129.7
129.0
126.0
Inflation
4.2 %
4.7 %
7.8 %
Exchange rate
20.83
16.97
19.50
____________
(1)
Source: Instituto Nacional de Estadística y Geografía (INEGI), measured in local currency.
(2)
Source: Instituto Nacional de Estadística y Geografía (INEGI). Preliminary information as of October report. Census information is updated every five years. Latest census was conducted in
2020.
(3)
Source: Instituto Nacional de Estadística y Geografía (INEGI), measured in local currency.
(4)
Source: Banco de México. Data as of December 31 of each year.
Argentina
2024
2023
2022
Real GDP growth
(3.0)%
(1.6)%
5.2 %
Population (in millions)
47.1
46.7
46.0
Inflation
117.8 %
211.4 %
94.8 %
Exchange rate
1,030.98
808.48
177.13
___________
(1)
Source: Instituto Nacional de Estadistica y Censos (INDEC), measured in local currency. Preliminary information as of September 30, 2023.
(2)
Source: Instituto Nacional de Estadistica y Censos (INDEC), measured in local currency. (i) population forecast (July 2024); (ii) 2022 census as of December 22, 2023.
(3)
Source: Instituto Nacional de Estadistica y Censos (INDEC), measured in local currency.
(4)
Source: Banco de la Nación Argentina. Data as of December 31 of each year.
E.
Significant Accounting Policies and Estimates
See “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Significant Accounting Policies and Estimates.” In addition, see Note 3 to
our consolidated financial statements for additional information on our accounting policies.
ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
Directors and Senior Management
Board of Directors
Our business and affairs are managed by, or under the direction or supervision of, our board of directors. Our board of directors has all the powers necessary for
managing, and for directing and supervising, our business and affairs and may exercise all our company powers and do all such lawful acts and things as are
not by applicable law or our memorandum and articles of association required to be exercised or done by our shareholders. Without limiting the generality of
the foregoing, our board of directors may exercise all powers of the Company to borrow money. Accordingly, our board of directors has significant discretion
(and, regarding the vast majority of management and governance matters, exclusive discretion) in the management and control of our business and affairs.
Our memorandum and articles of association authorize us to have up to eight directors or such other number of directors as is from time to time fixed by
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
resolution of the board. Our board of directors currently consists of six members.
Our board of directors is divided into three classes designated as the “Class I Directors,” “Class II Directors” and “Class III Directors” plus a director appointed
by L Catterton (the “L Catterton Director”). Pursuant to our memorandum and articles of association, each of our directors (other than the L Catterton Director)
is appointed at an annual meeting of shareholders for a period of three years, with each director serving until the third annual meeting of shareholders following
his or her election (except that the terms of the current Class I Directors, Class II Directors and Class III Directors will expire at our annual meetings in 2027,
2025 and 2026, respectively). Upon the expiration of the term of a class of directors, candidates will be elected (or re-elected, as the case may be) as directors
of that particular class for three-year terms at the annual meeting of shareholders in the year of such expiration. Our Class I, II and III Directors are divided
among the three classes as follows:
•
the Class I Directors are Alfonso Paredes and Michael James Doyle II, and their terms will expire at the annual meeting of shareholders to be held
in 2027;
•
the Class II Director is Martín Rastellino, and his term will expire at the annual meeting of shareholders to be held in 2025; and
•
the Class III Directors are Nilesh Lakhani and Damián Scokin, and their terms will expire at the annual meeting of shareholders to be held in
2026.
The L Catterton Director is Ramiro Lauzan.
On August 8, 2024, we announced the unexpected passing of Mr. Mario Eduardo Vázquez, a member of the Company’s board of directors and chairman of the
audit committee. The Company appointed (i) Nilesh Lakhani, who currently serves as the Chairman of Despegar’s board of directors as an interim member of
our audit committee and (ii) Michael James Doyle II to chair our Audit Committee until the next election.
Elections for Class I, II and III Directors will take place by a plurality of the votes of the shares present in person or represented by proxy at the annual meeting
and entitled to vote on the election of directors. No Class I, II or III Director may be elected or re-elected at any special meeting of our shareholders.
L Catterton has the right to appoint the L Catterton Director so long as L Catterton and its permitted transferees continue to beneficially own (a) (i) at least
75,000 Series A Preferred Shares and (ii) warrants and/or ordinary shares issued upon exercise of the warrants (as occurred on June 10, 2024) or (b) if the
Company shall have redeemed the Series A Preferred Shares in full, warrants and/or ordinary shares issued upon exercise of the warrants (as occurred on June
10, 2024).
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The L Catterton Director is Ramiro Lauzan. At the Effective Time of our Merger, each Series A Preferred Share will be converted automatically into the right to
receive a cash amount and accrued dividends as defined in the Merger Agreement. See “Item 4. Information on the Company—B. Business Overview—Merger
with Prosus.”
The following table presents the names and ages of the members of our board of directors:
Name
Age
Position
Nilesh Lakhani
65
Chairman of the Board and Director
Damián Scokin
58
Chief Executive Officer and Director
Alfonso Paredes
49
Director
Martín Rastellino
54
Director
Michael James Doyle II
54
Director
Ramiro Lauzan
51
Director
Our board of directors has the exclusive power to fill any vacancy arising on the board from time to time and to increase the size of the board of directors from
time to time and appoint additional directors in connection therewith. Our shareholders may not vote to fill any vacancy or to change the size of our board.
There are no share ownership qualifications for directors.
A director of the Company may only be removed: (i) with cause, by a resolution approved by shareholders holding not less than two-thirds of the voting rights
at a meeting of shareholders called for the stated purpose of removing the director or for stated purposes including the removal of the director, or (ii) with
cause, by a resolution approved by directors holding not less than two-thirds of the voting rights of all of those directors entitled to vote on the resolution at a
meeting of directors or by way of unanimous written consent of those directors entitled to vote on the removal. See “Item 16G. Corporate Governance—
Differences in Corporate Law” for further information. Our memorandum and articles of association do not require that directors retire by a certain age.
The following is a brief summary of the business experience of our directors. The current business addresses for our directors is Commerce House, 4th Floor,
Wickhams Cay 1, Road Town, Tortola (VG1110), British Virgin Islands.
Nilesh Lakhani has over 25 years of operating experience and has served on the boards of a number of emerging market consumer internet companies. He has
been a member of our board of directors since October 2012 and Chairman of our board since March 2019. Mr. Lakhani was a director and member of the
Audit Committee of Ozon (Nasdaq: OZON) from December 2021 to August 2024. He also served as an independent director on the boards of Netshoes
(NYSE: NETS) from 2013 to 2019 and QIWI (Nasdaq: QIWI) from 2013 to 2014. Additionally, Mr. Lakhani was an Operating Partner at Lumia Capital, a
technology-focused venture capital fund specializing in emerging markets, from 2015 to 2018. Prior to this, Mr. Lakhani held key executive roles with growth
companies in the technology, media and financial services sectors. He served as Chief Financial Officer of oDesk Corporation (now Upwork, Nasdaq: UPWK)
and previously as Chief Financial Officer of Yandex (Nasdaq: YNDX) and CTC Media (Nasdaq: CTCM). Before this, he was Vice President of Global
Operations at Electronic Arts and Senior Vice President at Transamerica Corporation. He began his career with the merchant banking arm of GE Capital. Mr.
Lakhani holds a bachelor’s degree in Economics from the University of Manchester and an MBA from the University of San Francisco.
Damián Scokin joined Despegar in December 2016 and has served as our CEO since February 2017 and as a member of our board of directors since April
2017. Prior to becoming our CEO, Mr. Scokin was the CEO of Ultrapetrol, where he continues to be a member of the company’s board of directors. Mr. Scokin
held several positions within the LATAM Airlines Group. Mr. Scokin served as CEO for LATAM’s International Business Unit. Mr. Scokin started his career as
an associate of McKinsey & Company in Boston, where he eventually became partner. Mr. Scokin holds a bachelor’s degree in Economics, a bachelor’s degree
in Industrial Engineering from the University of Buenos Aires and a Master of Business Administration from Harvard Business School.
Alfonso Paredes is the president of Expedia Group’s Private Label Solutions, responsible for powering the industry with Expedia Group’s technology and
supply. Mr. Paredes has been working in the Expedia Group for over 14 years. Mr. Paredes leads the global commercial operation, establishing partnerships in
a broad range of sectors from financial institutions to travel companies, powering their sites through Rapid API and template solutions. He also leads the
Expedia Travel Agency Affiliate Program (TAAP), Expedia Group’s global travel advisor business. Mr. Paredes previously served as the Senior Vice President
of Private Label Solutions and Commercial Partnerships driving significant growth in B2B. Throughout his tenure, he has led numerous global teams and more
recently, secured the expansion of Expedia Group’s
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industry-leading technology with major partners across multiple sectors and regions. Prior to joining the Expedia Group, Mr. Paredes held management roles at
Fexco, IATA, Bookassist and Accor. Mr. Paredes graduated from Ecole Hôtelière de Lausanne and holds an Executive MBA from the Instituto de Empresa.
Martín Rastellino has served as a member of our board of directors since June 2017. Mr. Rastellino is a co-founder of the Company and was extensively
involved in the management of the Company since its inception in 1999, until June 2017. He actively participated in crafting the Company’s business and
strategy in its early stage, led the regional expansion of operations across Latin America and Spain and then led its local teams. Mr. Rastellino has also served
as our Chief Operating Officer, where he was responsible for implementing the overall strategy of the Company, and engineered the structure and processes
which enabled a rapid and sustainable growth throughout the years. He has led several turnaround, merger and restructuring processes of the Company. Among
other key managerial roles, Mr. Rastellino was also in charge of business processing, customer service, and fraud prevention. Mr. Rastellino has also served as
head of our hotels business for several years. Mr. Rastellino continues to apply his entrepreneurial skills and expertise as an e-commerce pioneer in Latin
America. He is an active mentor, advisor and investor in several technology startups across the region. He is currently supporting several startups, including a
fintech company in South America and a retail business. Mr. Rastellino also serves as a member of the Latin America Advisory Board of the Duke University’s
Fuqua School of Business, and as an advisor to the board of directors at different retail and B2B companies. Prior to joining the Company, Mr. Rastellino
worked as Business Development Manager at an internet and telecommunications startup of Bell Canada in the United States (Teleglobe). Mr. Rastellino also
worked as an auditor for Arthur Andersen in Argentina. Mr. Rastellino holds a bachelor’s degree in Public Accounting from the University of Buenos Aires and
an M.B.A. from Duke University. Mr. Rastellino brings significant knowledge of the Company being a co-founder and having served in several key roles in
areas such as business development, operations, and commercial head. He also brings unique industry expertise, being one of the e-commerce pioneers in Latin
America with more than 20 years of experience in online travel. In addition, Mr. Rastellino’s background combines a proven accounting, financial and risk
management expertise, with in-depth understanding of local regulations.
Michael James Doyle II has served as a member of our board of directors since September 2018. Mr. Doyle has been the Chief Financial Officer of AllTrails, a
leading digital outdoors platform, since March 2024. He was previously the Chief Financial Officer of Nextdoor Holdings, a neighborhood social network
based in San Francisco, California from 2018 through 2023. Prior to Nextdoor, he was Chief Financial Officer of Despegar from 2013 to 2018. Mr. Doyle
served as the Chief Financial Officer of eLong, Inc, a formerly Nasdaq-listed, online travel company in China. Prior to eLong, Mr. Doyle was the Chief
Financial Officer of Expedia Asia Pacific, a division of Expedia, based in Hong Kong and Seattle. He also worked as Chief Financial Officer of Teledesic, a
Seattle-based broadband communications company. Mr. Doyle started his career in the investment banking division of Morgan Stanley & Company in New
York and Singapore, and he worked in the private equity direct investment group of GIC, Singapore’s sovereign wealth fund. Mr. Doyle holds a bachelor’s
degree in Finance from Southern Methodist University and an MBA from Harvard Business School.
Ramiro Lauzan is a Partner and the Head of the Miami Office at L Catterton, focused in Latin America. Mr. Lauzan has over 15 years of experience in private
equity and principal investing across multiple consumer categories, most notably food & beverage, financial services, travel & leisure, and pharmaceuticals.
Previously, Mr. Lauzan spent over 8 years at McKinsey & Company, where he served clients in Latin America, Asia and Australia. Mr. Lauzan also worked as
an investment banker at Lehman Brothers, and in venture capital at L.I.D. Group. Mr. Lauzan is a member of the board of directors of several L Catterton
portfolio companies, including Despegar (NYSE: DESP), NotCo, Rapsodia and Luigi Bosca. He also serves on the board of Biosidus Group. Mr. Lauzan holds
a Business Economics degree with honors from Universidad Torcuato Di Tella in Argentina, and an MBA from Columbia Business School (Yosaji Morita
scholar).
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Executive Officers
The following table lists the current executive officers of our group:
Name
Age
Position
Damián Scokin
58
Chief Executive Officer
Monica Alexandra Soares da Silva
51
General Counsel
Amit Singh
47
Chief Financial Officer
Gonzalo García Estebarena
45
Chief Technology Officer
Sebastián Mackinnon
53
Chief Travel Partners & Corporate Affairs
Maximiliano Gonzalez Costa
44
Chief Corporate Development and HR Officer
Marcelo Amadeo Grether
49
Chief Commercial Officer
The following is a brief summary of the business experience of our executive officers who are not also directors. Unless otherwise indicated, the current
business addresses for our executive officers is Commerce House, 4th Floor, Wickhams Cay 1, Road Town, Tortola (VG1110), British Virgin Islands.
Damián Scokin. See “—Board of Directors.”
Monica Alexandra Soares da Silva has served as our General Counsel since January 16, 2023. From May 2021 through December 2022, Ms. Silva served as
Legal Director at Uber do Brasil Tecnologia Ltda. From May 2015 through May 2021, she was the Legal Managing Director at FedEx Brasil Logística e
Transporte Ltda. Prior to that, she worked at Panalpina Inc. from March 2012 to May 2015 and at Tokio Marine Group from October 2009 to July 2011. Prior
to that, Ms. Silva worked at Shearman & Sterling. Ms. Silva holds a JD degree from the University of São Paulo and an LLM degree from the University of
Michigan.
Amit Singh has served as our Chief Financial Officer since August 21, 2023. He is responsible for overseeing Despegar’s Accounting, Planning & Control, Tax,
Treasury and Investor Relations. From May 2022 through August 2023, Mr. Singh served as the CFO of Nasdaq-listed AgileThought, a global provider of
digital transformation services and custom software development. Previously, from 2019 through 2022, Mr. Singh was Head of Finance, U.S. & Global Head
of Investor Relations at NYSE-listed Globant S.A., a leading global technology service provider. From 2017 through 2019, Mr. Singh was an equity research
analyst at Bank of America Merrill Lynch, and from 2011 through 2017 an equity research analyst at Jefferies. Prior to that, from 2009 through 2011, he
worked at Rochdale Investment Management, and from 2008 until 2009 at J.P. Morgan Investment Bank. He has also worked as an engineer at Ensco from
2003 through 2006. Mr. Singh holds a Master of Business Administration from the Kellogg School of Management at Northwestern University, and a Master of
Science in aerospace engineering from the University of Maryland. He also completed an executive education program for chief financial officers at Harvard
Business School.
Gonzalo García Estebarena has served as our Chief Technology Officer since August 2022 and is responsible for establishing our information, technology and
data strategies as well as leading our IT team. Before that, he served as our Chief Commercial Officer, overseeing marketing, digital product design, revenue
management and our B2C brands, since he joined Despegar in September 2017. Prior to joining us, he held several positions at LATAM Airlines Group from
2011 to 2017, including Vice President of International Revenue Management and Global Head of Sales. Prior to that, Mr. García Estebarena was a
management consultant with McKinsey & Company from 2003 to 2011. Mr. García Estebarena holds a bachelor’s degree in electronic engineering from the
Instituto Tecnológico de Buenos Aires (ITBA) and an MBA with Distinction from Harvard business administration from Pontificia Universidad Católica
Argentina and an MBA from CEMA University.
Sebastián Mackinnon has served as our Chief Officer, B2B and Travel Partners since March 2020. From March 2018 to March 2020 he served as Executive VP
Travel Partners & Corporate Affairs, from March until October 2018, he served as interim Country Manager for Brazil Operations, and from December 2015
until March 2018, he served as our Head of Air, with a regional scope. From October 2001 to December 2015, Mr. Mackinnon served in various positions at
Diageo plc, an international alcoholic beverages company, mostly recently as General Manager covering Peru, Bolivia and Ecuador. Prior to that, Mr.
Mackinnon held various positions at Mondeléz International and Kimberly-Clark Corporation. Mr. Mackinnon holds a bachelor’s degree in Business
Administration and an MBA.
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Maximiliano Gonzalez Costa has served as our Chief Corporate Development & HR Officer since August 2023. Prior to this, he was the VP Marketing &
Loyalty since November 2022. His extensive experience in e-commerce and travel tech includes significant roles within Despegar, such as VP Product
Management, Head of Non-Air Travel Partners and General Manager for the Packages Business. Internationally, he served as Director of Category
Management at Wayfair in Germany. His background also features a tenure as Revenue Management Director at LATAM Airlines and as a Project Leader at
The Boston Consulting Group across Latin America and the United States. Earlier in his career, Mr. Gonzalez Costa held Brand Management positions in both
Nestlé and Johnson & Johnson. Mr. Gonzalez Costa holds an MBA from Harvard Business School and a bachelor’s degree in business administration from
Pontificia Universidad Católica Argentina.
Marcelo Amadeo Grether has served as our Chief Commercial Officer since July 2022, leading our Marketing, Product, Revenue and Sales team globally. Prior
to this role, from 2017 to 2022, he served as Chief M&A and Business Development, leading the acquisition, integration and operations of Viajes Falabella,
Best Day, Koin, Stays and Viajanet. Marcelo has more than 25 years of experience in multinational, pan-regional and local companies in Argentina and Latin
America. Prior to Despegar he served as CCO in Avantrip.com from 2014 to 2017. From 2001 to 2014 served in various positions in Latam Airlines, and
Commercial VP in Latin America as his latest role. Mr. Grether holds a bachelor’s degree in business administration from the Pontificia Universidad Católica
Argentina.
Family Relationships
There are no family relationships among any of our executive officers or directors.
B.
Compensation
Compensation of Executive Officers and Directors
For the years ended December 31, 2024, 2023 and 2022, the aggregate compensation provided to the officers and members of our board of directors amounted
to $11,213,912, $9,521,344 and $6,874,824, respectively. Our officers receive comparable benefits generally provided to our employees, such as pension,
retirement and health insurance coverage, with some variations with regard to levels of health insurance coverage. For information regarding share options and
RSUs granted to our current officers and directors, see “Item 6. Directors, Senior Management And Employees—B. Compensation—Equity Incentive Plans.”
Equity Incentive Plans
Our board of directors has adopted two stock incentive plans, namely, the 2015 Stock Option Plan (the “2015 Plan”) and the Amended and Restated 2016 Stock
Incentive Plan (the “2016 Plan” and, together with the 2015 Plan, the “Plans”). The terms of the 2015 Plan and the 2016 Plan are substantially similar, although
no further awards are being granted under the 2015 Plan. The purpose of these plans is to attract and retain the best available personnel for positions of
substantial responsibility, to provide additional incentive to employees, outside directors and consultants, and to promote the success of our business. Our board
of directors believes that our Company’s long-term success is dependent upon our ability to attract and retain superior individuals who, by virtue of their ability
and qualifications, make important contributions to our business.
Pursuant to the 2016 Plan, we may grant RSUs and stock options to our officers, directors and/or employees up to a total of 6,411,777 ordinary shares, out of
which, on December 31, 2024, 787,310 ordinary shares were available for new stock-based awards. We issue new shares to satisfy the exercise or release of
stock-based awards.
During 2024, we continued issuing RSUs as our primary form of stock-based compensation. In connection with the years 2024, 2023 and 2022 we granted an
aggregate of 788,556, 892,367 and 622,781 RSUs to certain of our directors, senior management and other personnel. During 2024, 2023 and 2022, we did not
grant any stock options. All granted stock options are fully vested. For more information about our equity-based compensation, see “Item 6. Directors, Senior
Management and Employees—B. Compensation.”
Administration. The Plans are administered by our board of directors or a committee designated by our board of directors constituted to comply with applicable
laws. In each case, our board of directors or the committee it designates will determine the provisions, terms and conditions of each award.
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Eligibility. Only employees, outside directors and consultants are eligible for the grant of non-incentive stock options (“NSOs”), and the direct award or sale of
shares or RSUs or other share-based awards, in the case of the 2016 Plan. Only employees are eligible for the grant of incentive stock options (“ISOs”). The
term “option” as used in this section refers to both NSOs and ISOs.
Moreover, a person who owns more than 10% of the total combined voting power of all classes of our outstanding share capital is not eligible for ISO grants
unless (i) the exercise price is at least 110% of the fair market value of a share on the date of the grant and (ii) such ISO by its terms is not exercisable after the
expiration of five years from the date of the grant.
Vesting Schedule. Options, other share-based awards and RSUs may be subject to vesting requirements, as set forth in the applicable award agreement. In 2020,
we started issuing RSUs as our primary form of stock-based compensation. RSUs vest in thirds on the first, second and third anniversary of issuance.
Beginning in 2024, new RSU grants vest quarterly, the first vesting in December of the granting year and subsequent vestings in December over the subsequent
3 years.
Award Agreement. Awards granted under the Plans are evidenced by an award agreement providing for the number of ordinary shares subject to the award, and
the terms and conditions of the award.
Transfer Restrictions. Options, other share-based awards and RSUs may not be transferred other than by will or the laws of succession or by gift or domestic
relations order to an immediate family member of the optionee or, in the case of options under the 2016 Plan, a trust established by the optionee for the benefit
of the optionee and/or one or more of the optionee’s immediate family, and are exercisable during the lifetime of the optionee only by the optionee or by the
optionee’s guardian or legal representative.
Exercise of Awards. The term of options may not exceed ten years from the date of grant. The consideration to be paid for our ordinary shares upon exercise of
an option will be determined by the stock option plan administrator and may include cash or cash equivalents, a promissory note, ordinary shares, delivery of
an irrevocable direction to a securities broker appointed by us to sell the shares and deliver all or part of the proceeds to us, consideration received by us under
a cashless exercise program implemented by us, or any other form of payment permitted by applicable law. No cash consideration is required of the recipient in
connection with the grant of the RSUs.
Termination of Awards. Where the option agreement permits the exercise of the options granted for a certain period of time following the recipient’s
termination of service with us, or the recipient’s disability or death, the options will terminate to the extent not exercised on the last day of the specified period
or the last day of the original term of the options, whichever occurs first. Unvested RSUs are forfeited to us upon the recipient’s termination of service with us.
Treatment of other share-based awards upon a termination of service are as set forth in the award agreement.
Third-Party Acquisition. If a third-party acquires us through the purchase of all or substantially all of our assets, a merger or other business combination, all
outstanding awards will be treated in the manner described in the definitive transaction agreement (or in the event the transaction does not entail a definitive
agreement to which we are party, in the manner determined by our board of directors in its capacity as administrator of the Plans, with such determination
having final and binding effect on all parties), which agreement or determination need not treat all awards (or all portions of an award) in an identical manner.
Acceleration: If a third party acquires us through the purchase of all or substantially all of our assets, a merger or other business combination, and an employee
is subject to an involuntary termination without cause within twelve months following the acquisition, all of such employee’s then outstanding RSUs become
fully vested.
Amendment, Suspension or Termination. Our board of directors has the authority to amend, suspend or terminate the Plans at any time and for any reason,
without shareholder approval, except to the extent required by applicable law.
Unless terminated earlier, the Plans will terminate automatically ten years from the later of (i) the date when the Plan was adopted or (ii) the date when our
board of directors approved the most recent increase in the number of shares reserved for issuance; provided that the ability to grant ISOs under the 2016 Plan
will terminate on the tenth anniversary of the date when the maximum number of shares reserved for ISOs was approved by our shareholders. As noted above,
no further awards will be granted under our 2015 Plan.
Retention and Transaction Bonuses
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In connection with the Merger, Prosus agreed that following the Closing, the Company will enter into cash transaction and retention bonus agreements with
certain of the Company’s executive officers in the amounts and pursuant to the terms set forth below:
Name
Transaction Bonus Amount ($)
Retention Bonus Amount ($)
Damián Scokin
—
1,500,000
Amit Singh
600,000
—
Gonzalo García Estebarena
100,546
653,550
Monica A. S. da Silva
—
200,000
Maximiliano Gonzalez Costa
79,112
461,486
Marcelo Amadeo Grether
90,403
602,686
The retention bonuses (the “Retention Bonuses”) will vest 50% on the first anniversary of the Closing and 50% 18 months following the Closing, subject to the
Closing and the Retention Bonus recipient’s continued employment with the Company through each vesting date. Vested Retention Bonuses will be payable
less applicable taxes and authorized deductions as soon as reasonably practicable following each vesting date. Notwithstanding the foregoing, if a Retention
Bonus recipient’s employment with the Company is terminated without cause, the Retention Bonus will accelerate and any unvested portion will vest as of the
date of such recipient’s termination of employment without cause. Retention Bonus amounts may be reduced to the extent necessary to avoid adverse tax
consequences under Sections 280G and 4999 of the Code.
The transaction bonuses (the “Transaction Bonuses”) will vest in full upon the Closing, subject to the Closing and the Transaction Bonus recipient’s continued
employment with the Company through the Closing, and be paid less applicable taxes and authorized in a single lump-sum payment as soon as reasonably
practicable following the Closing. Transaction Bonus amounts may be reduced to the extent necessary to avoid adverse tax consequences under Sections 280G
and 4999 of the Code.
In recognition of her critical role in ensuring the success of the Transactions, Monica A. S. da Silva, Despegar’s Vice President of Legal and General Counsel,
has entered into a Transaction Bonus Agreement, dated as of November 22, 2024, by and between Ms. da Silva and Despegar (the “Transaction Bonus
Agreement”) pursuant to which, subject to the Closing and her continued employment with Despegar through the Closing, she is entitled to receive payment of
a transaction bonus in the amount of $75,000 (without interest), less applicable taxes and authorized deductions, payable within 30 business days following the
Closing. Notwithstanding the foregoing, if Ms. da Silva’s employment with Despegar is terminated without Cause (as defined in the Transaction Bonus
Agreement) prior to payment of the transaction bonus, the right to payment of the transaction bonus will remain outstanding and will vest and become payable
upon the Closing.
Arrangements with Parent
Except with respect to the Retention Bonuses and the Transaction Bonuses, as more particularly described under “—Retention and Transaction Bonuses”
above, none of our executive officers has entered into any agreement with Parent or any of its affiliates regarding employment with, or the right to purchase or
participate in the equity of, the Surviving Company or one or more of its affiliates and no discussions regarding employment or compensation arrangements for
executive officers following the Merger have occurred. Prior to and following the Closing, however, certain of our executive officers, may have discussions
and may enter into agreements with Parent, the Surviving Company or their respective subsidiaries or affiliates regarding service with the Surviving Company
or one or more of its affiliates on and after the Closing Date.
C.
Board Practices
For information about the date of expiration of the current term of office and the period during which each director and executive officer has served in such
office, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.” For information on our contracts with our senior
management and certain employees, see “Item 6. Directors, Senior Management and Employees—B. Compensation.”
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Board Committees
Our board of directors may establish committees from time to time with responsibilities determined by our board. Members will serve on these committees
until their resignation or until otherwise determined by our board. Our board of directors has established the committees, as described below.
Audit Committee
Our audit committee consists of Mr. Michael James Doyle II, Mr. Nilesh Lakhani, and Mr. Martín Rastellino, with Mr. Michael James Doyle II serving as chair.
Each of them satisfy the independence requirements of Rule 10A-3 under the Exchange Act. Our board of directors also has determined that each of Messrs.
Doyle, Lakhani and Rastellino qualify as audit committee financial experts within the meaning of the SEC rules. Our audit committee oversees our accounting
and financial reporting processes and the audits of our consolidated financial statements. Our audit committee is responsible for, among other things:
•
selecting our independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by our independent
auditors;
•
regularly reviewing the independence of our independent auditors;
•
reviewing all related party transactions on an ongoing basis;
•
discussing the annual and quarterly audited consolidated financial statements with management and our independent auditors;
•
periodically reviewing and reassessing the adequacy of our audit committee charter;
•
meeting separately and periodically with management and our internal and independent auditors;
•
reporting regularly to our full board of directors; and
•
such other matters that are specifically delegated to our audit committee by our board of directors from time to time.
Nomination and Compensation Committee
Our nomination and compensation committee is composed of three members, Mr. Nilesh Lakhani, Mr. Ramiro Lauzan and Mr. Martín Rastellino, with Mr.
Nilesh Lakhani serving as chair. The nomination and compensation committee is responsible for, among other things:
•
regarding compensation: carrying out the Board’s responsibilities in relation to compensation of the Company’s CEO and his direct reports
(including plans, policies and programs), overseeing the implementation of the Company’s compensation policy, and providing guidance with
respect to compensation matters as the committee deems appropriate;
•
regarding nomination: (i) identifying individuals to become Directors of the Company, (ii) nominating qualified individuals for election to the
Board at the annual meeting of shareholders, (iii) recommending to the Board the individual directors to serve on the committees of the Board,
and (iv) recommending the Board a set of corporate governance principles applicable to the Company; and
•
any such other duties as may be from time to time assigned to it by the Board or required by the rules and regulations of the SEC or the New York
Stock Exchange.
Strategy Committee
Our strategy committee is composed of four members, Mr. Nilesh Lakhani, Mr. Martín Rastellino, Mr. Michael James Doyle II and Mr. Ramiro Lauzan, with
Mr. Martín Rastellino serving as chair. The strategy committee is responsible for, among other things:
•
assist and consult with the board of directors on the objectives for the Company’s strategic plans, and review management’s recommendations
with respect to the strategic direction of the Company, oversee management’s implementation of the Company’s strategy and regularly report to
the board of directors with respect thereto;
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•
identify significant opportunities and challenges facing the Company, including potential transactions, the impact of external developments and
factors on the Company’s corporate strategy and its execution, such as the changes in economic and market conditions, competition in the
industry, regulations, among others; and
•
review and make recommendations to the board of directors, with respect to any mergers, acquisitions, joint ventures, minority investments, and
other strategic investments, as well as financing for those strategic investments in case they require approval of the board of directors.
D.
Employees
As of December 31, 2024, we had 3,956 employees. We also contracted with certain third-party providers to support our call center employees. The following
tables show a breakdown of our employees as of December 31, 2024, 2023 and 2022 by category of activity.
Number of Employees
as of December 31,
Division/Function
2024
2023
2022
Operations and customer service
969
1,002
1,061
Sales and marketing
1,416
2,084
1,644
Technology and content
1,117
1018
1203
General and administrative
454
489
635
Total
3,956
4,593
4,543
___________
(1)
Includes business development, administration, finance and accounting, legal and human resources.
As of December 31, 2024, all of our employees in Brazil and 385 of our employees in Argentina were represented by labor unions. We believe that our
relations with our employees are good and we implement a variety of human resources practices, programs and policies that are designed to hire, retain,
develop and compensate our employees.
We have attracted and retained outstanding individuals over the years and we strive to bring more talent by hiring individuals with internet-related experience.
We believe our future success will depend on our ability to attract and retain capable professionals.
E.
Share Ownership
The following table sets forth information regarding the beneficial ownership of our ordinary shares as of March 31, 2025 by (1) each of our executive officers
and directors and (2) all of our executive officers and directors as a group.
(1)
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In computing the number of ordinary shares beneficially owned by a person or entity and the percentage ownership of that person or entity, we deemed to be
outstanding all ordinary shares subject to options and RSUs held by that person or entity that are currently exercisable or that will become exercisable or
vested, as applicable, within 60 days of March 31, 2025. We did not deem these shares outstanding, however, for the purpose of computing the percentage
ownership of any other person or entity. Unless otherwise indicated, the address of each beneficial owner listed in the table below is Commerce House, 4th
Floor, Wickhams Cay 1, Road Town, Tortola (VG1110), British Virgin Islands.
Outstanding Ordinary Shares
as of March 31, 2025
Name of Beneficial Owner
Number
%
Executive Officers and Directors:
Nilesh Lakhani
70,744
*
Damián Scokin
377,753
*
Alfonso Paredes
—
—
Martín Rastellino
219,087
*
Michael James Doyle II
89,707
*
Ramiro Lauzan
—
—
Monica Alexandra Soares da Silva
8,136
*
Gonzalo García Estebarena
218,081
*
Amit Singh
5,331
*
Sebastián Mackinnon
286,775
*
Maximiliano Gonzalez Costa
41,232
*
Marcelo Amadeo Grether
158,097
*
Executive Officers and Directors as a Group (12 persons)
1,474,943
1.8
___________
*
Represents beneficial ownership of less than 1%.
(1)
Mr. Damián Scokin also holds 145,473 RSUs which will vest on December 1, 2025, June 1, 2026, December 1, 2026 and December 1, 2027, provided
that he remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6. Directors, Senior
Management and Employees—B. Compensation.”
(2)
Consists of 219,087 ordinary shares held directly by Birbey S.A. Mr. Martín Rastellino has sole voting and dispositive control over such shares and
directly or indirectly owns 100% of the share capital of Birbey S.A.
(3)
Ms. Monica Alexandra Soares da Silva also holds 20,647 RSUs which will vest on June 1, 2025, December 1, 2025, June 1, 2026, December 1, 2026
and December 1, 2027 provided that she remains in continuous service as an employee, director or consultant of the Company. See “Item 6. Directors,
Senior Management and Employees—B. Compensation.”
(4)
Mr. Gonzalo Garcia Estebarena also holds 85,401 RSUs which will vest on December 1, 2025, December 1, 2026, December 1, 2027 and March 1, 2028
provided that he remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6.
Directors, Senior Management and Employees—B. Compensation.”
(5)
Mr. Amit Singh also holds 101,250 RSUs which will vest on June 1, 2025, December 1, 2025, December 1, 2026 and December 1, 2027, provided that
he remains in continuous service as an employee, director or consultant of the Company. See “Item 6. Directors, Senior Management and Employees—
B. Compensation.”
(6)
Mr. Sebastián Mackinnon also holds 93,413 RSUs which will vest on December 1, 2025, June 1, 2026, December 1, 2026 and December 1, 2027,
provided that he remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6.
Directors, Senior Management and Employees—B. Compensation.”
(7)
Mr. Maximiliano Gonzalez Costa also holds 27,180 RSUs which will vest on December 1, 2025, December 1, 2026 and December 1, 2027, provided
that he remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6. Directors, Senior
Management and Employees—B. Compensation.”
(8)
Mr. Marcelo Amadeo Grether also holds 53,030 RSUs which will vest on December 1, 2025, June 1, 2026, December 1, 2026 and December 1, 2027,
provided that he remains in continuous service as an employee, director or consultant of the Company through each applicable date. See “Item 6.
Directors, Senior Management and Employees—B. Compensation.”
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
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In the first quarter of 2025, there have been no new grants for the Officers of the Company. For information regarding share options and RSUs held by the
persons listed above, see “Item 6. Directors, Senior Management and Employees—B. Compensation—Equity Incentive Plans.”
In connection with the Merger, Prosus agreed that following the Closing, the Company will enter into cash transaction and retention bonus agreements with
certain of the Company’s executive officers. For further information, see “Item 6. Directors, Senior Management And Employees—B. Compensation—
Compensation of Executive Officers and Directors—Retention and Transaction Bonuses.”
F. Disclosure of a registrant’s action to recover erroneously awarded compensation
We have adopted an incentive compensation clawback policy on August 10, 2023. Please see Exhibit 97 to this Annual Report. We have not been required to
prepare an accounting restatement at any time during or after our last completed fiscal year and no recovery of awarded compensation is required pursuant to
our compensation recoupment policy.
ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
Major Shareholders
The following table sets forth information regarding the beneficial ownership of our ordinary shares as of March 31, 2025 by each person known to us to
beneficially own more than 5% of any class of our outstanding voting securities.
In computing the number of ordinary shares beneficially owned by a person or entity and the percentage ownership of that person or entity, we deemed to be
outstanding all ordinary shares subject to conversion, warrants, options or RSUs held by that person or entity that are currently convertible or exercisable or
that will become convertible or exercisable or vested, as applicable, within 60 days of March 31, 2025. For the purpose of computing the percentage ownership
of any other person or entity, we used the total outstanding shares as of March 31, 2025 (83,572,285 shares), which exclude treasury shares and/or ordinary
shares subject to conversion, warrants, options or RSUs held by that person or entity that are currently convertible or exercisable or that will become
convertible or exercisable or vested.
Outstanding Ordinary Shares
as of March 31, 2025
Name of Beneficial Owner
Number
%
% Shareholders:
Expedia, Inc
9,590,623
11.5
LCLA Daylight LP
7,992,759
9.6
___________
(1)
This information is based on Schedule 13G filed with the SEC on February 14, 2018. Consists of ordinary shares held of record by Expedia, Inc., a
Washington corporation, which is a direct wholly owned subsidiary of Expedia Inc., a Delaware corporation. The principal business address for each
reporting person is 333 108th Avenue NE, Bellevue, WA 98004.
(2)
This information is based on Schedule 13D/A filed with the SEC on December 26, 2024. CALA2 Managers, Ltd. is the sole general partner of LCLA
Daylight LP. Scott A. Dahnke and Dirk Donath are members of the managing board of CALA2 Managers Ltd. Accordingly, such shares may be deemed
to be beneficially owned by CALA2 Managers Ltd., Mr. Dahnke and Mr. Donath. Mr. Dahnke and Mr. Donath disclaim beneficial ownership of such
ordinary shares, except to the extent of any pecuniary interest therein. The principal business address of each reporting person is c/o Catterton Latin
America Management, LLC, 30 Rockefeller Plaza, Suite 5405, New York, NY 10112.
Significant Changes in Percentage Ownership
Except as disclosed below, to our knowledge, there has been no significant changes in the percentages of ownership held by the major shareholders listed
above.
On August 20, 2020, Despegar entered into the Waha Investment Agreement with Waha LATAM Investments Limited, a Cayman Islands limited company
(“Waha Purchaser”), pursuant to which the Company agreed to issue and sell to the
(1)
.(2)
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Waha Purchaser 50,000 shares of the Company’s Series B Preferred Shares, without par value (the “Series B Preferred Shares”).
Subsequently, on June 13, 2022, the Company’s board of directors approved a new share repurchase (the “2022 Share Repurchase Program”), authorizing the
repurchase of up to $40 million of its ordinary shares. This repurchase program became effective on June 14, 2022, and expired on August 12, 2022. Under the
2022 Share Repurchase Program, the Company repurchased 1,251,659 ordinary shares in 2022 at a weighted average cost of $7.97 per share. As a result, these
shares were held in treasury and later became available for corporate purposes.
On March 27, 2024, Waha Purchaser decided to convert its Series B Preferred Shares into ordinary shares at a conversion price of $9.251 per share, as
determined by the terms of the Series B Preferred Shares, totaling 5,405,405 ordinary shares on an as-converted basis. For this conversion, the Company
delivered treasury shares it had previously repurchased. Finally, on April 1, 2024, Waha Purchaser sold its entire participation in the Company.
On June 11, 2024, LCLA Daylight LP, an affiliate of L Catterton, exercised in full its warrants to purchase ordinary shares under the Catterton Investment
Agreement, resulting in the issuance of 10,992,759 ordinary shares through a cashless exercise. On June 13, 2024, LCLA Daylight LP sold 3,000,000 of those
shares pursuant to Rule 144 under the Securities Act of 1933. Following these transactions, LCLA Daylight LP retained ownership of 7,992,759 ordinary
shares.
B.
Related Party Transactions
Relationship with Expedia
Expedia Outsourcing Agreement
On September 2024, we entered into the Expedia Outsourcing Agreement, whereby the parties agreed to terminate the then existing outsourcing agreement,
entered into on July 12, 2017 and amended and restated on November 15, 2019. Most of the terms of the Expedia Outsourcing Agreement are effective since
January 1, 2025, with a ten-year term. Expedia is the beneficial owner of 11.5% of our ordinary shares outstanding as of March 31, 2025.
A substantial number of the hotel and other lodging reservations that we offer through our platform for all countries outside Latin America are provided to us
by Expedia pursuant to the Expedia Outsourcing Agreement. Expedia is amongst the key providers to us of hotel and other lodging reservations inside Latin
America.
While the prior Expedia outsourcing agreement allowed us to source a limited percentage of our hotel bookings outside of Latin America, the Expedia
Outsourcing Agreement enables us to expand our own directly sourced non-Latin America hotel and accommodation supply, and further optimize our lodging
supply to pursue key growth initiatives, including its B2B, White Label, SaaS, and M&A strategies and establish new strategic partnerships.
Pursuant to the Expedia Outsourcing Agreement, Expedia pays monthly marketing fees to us, which are calculated as a percentage of the gross profit of
consumed bookings we sourced through Expedia during the month. We are required to maintain a level of bookings through Expedia such that those marketing
fees meet certain thresholds in a six-month period; otherwise, Expedia may terminate the agreement and require us to pay a $125.0 million termination fee.
From time to time, under the then existing outsourcing agreements with Expedia, our fees have been supplemented by one-time incentives paid to us for
reaching certain booking targets during a specified period.
Subject to the terms of the agreement, the Expedia Outsourcing Agreement allows us to grant to Decolar Partners the right to access and distribute Expedia-
sourced lodging inventory. We must ensure that each Decolar Partner remains subject to obligations at least equivalent to those imposed on us under the
Expedia Outsourcing Agreement. We remain solely responsible for our Decolar Partners, including for any liabilities or breaches arising from their activities. In
addition, Expedia has exclusive rights to distribute certain lodging supply in Latin America.
In the past, we have entered from time to time into amendments to the terms of the Expedia Outsourcing Agreement, and may continue to negotiate commercial
conditions with Expedia which may result in modifications to the Expedia Outsourcing Agreement. Expedia shall use good-faith efforts to make available
VRBO inventory, and we may participate in the accommodation sponsored listing advertising program known as TravelAds, pursuant to which we expect to
receive a revenue additional to the marketing fee.
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The initial term of the Expedia Outsourcing Agreement is ten years, expiring on December 31, 2034, and it automatically renews annually unless otherwise
terminated by either party upon thirty days’ written notice. The Expedia Outsourcing Agreement may be terminated: (1) by mutual consent, for convenience
and subject to the $125.0 million termination fee during the Initial Term if terminated by us for convenience, (2) unilaterally by us and not subject to the $125.0
million termination fee under specific circumstances, such as (a) if Expedia ceases to hold the Transactions Shares (as defined in the Expedia Outsourcing
Agreement), subject to exceptions listed in the Expedia Outsourcing Agreement, (b) if Expedia materially breaches its obligations under the Investors' Rights
Agreement (as defined in the Expedia Outsourcing Agreement), without curing such breach within 60 days’ written notice, (c) if the minimum service level
regarding the Expedia API is not observed, or (d) if Expedia materially breaches the Expedia Outsourcing Agreement and does not remedy such default within
30 days of the receipt of written notice from us, (3) unilaterally by Expedia, and triggering a payment obligation for Despegar of the $125.0 million termination
fee if the termination occurs during the Initial Term and under specific circumstances such as, (a) if we materially breach the Expedia Outsourcing Agreement
or the Transaction Agreements (as defined in the Expedia Outsourcing Agreement) or (b) if the minimum booking or marketing fee requirements are not met,
and (4) unilaterally by Expedia, but not subject to the termination fee, in the case of a “Change of Control” or a “Bankruptcy Event” (as each of these are
defined in the Expedia Outsourcing Agreement).
The foregoing description of the Expedia Outsourcing Agreement, as amended and restated by means of document executed in September 2024, is qualified in
its entirety by reference to the full text of Expedia Outsourcing Agreement filed as Exhibit 4.8 to this Annual Report.
Despegar Outsourcing Agreement
We entered into the Despegar Outsourcing Agreement with certain affiliates of Expedia on August 17, 2016. Under the Despegar Outsourcing Agreement, we
are required to make our hotel inventory available to certain affiliates of Expedia. The relevant Expedia affiliate receives compensation equal to a percentage of
the revenue earned by us from the property owner.
The agreement has a three-year term that automatically renews for one-year periods, unless either party elects not to renew. We are required to indemnify
Expedia and/or its affiliates for losses derived from end user claims. However, if during any contract year Expedia and/or its affiliates suffer losses derived
from end user claims exceeding 1% of the annual aggregate room price of the bookings made by the Company during such year, we may terminate the
agreement.
The foregoing description of the Despegar Outsourcing Agreement is qualified in its entirety by reference to the full text of the Despegar Outsourcing
Agreement, which is filed as Exhibit 4.3 to this Annual Report.
Under the Expedia Outsourcing Agreement and the Despegar Outsourcing Agreement, combined, we maintained (i) a receivable position of $18.6 million and
$16.4 million recognized under “Related party receivable” in our consolidated balance sheets as of December 31, 2024 and 2023, respectively, and (ii) a
payable position of $101.4 million and $87.7 million recognized under “Related party payable” in our consolidated balance sheets as of December 31, 2024
and 2023, respectively. We generated revenue of $59.6 million and $40.3 million and $24.2 million for the years ended December 31, 2024, 2023 and 2022,
respectively, representing 8%, 6% and 5% of our total consolidated revenues for the years ended December 31, 2024, 2023 and 2022, respectively.
Shareholder Agreements
We are party to the following agreements with certain of our shareholders: (i) the Sixth Amended and Restated Investors’ Rights Agreement, dated as of August
29, 2017, by and among the Company, Birbey S.A., Expedia and the other parties thereto (the “Sixth Amended and Restated Investors’ Rights Agreement”) and
(ii) the Fourth Amended and Restated Voting Agreement dated as of August 29, 2017, by and among the Company, Expedia and the other parties thereto. For
purposes of this Annual Report, we refer to the Sixth Amended and Restated Investors’ Rights Agreement and the Fourth Amended and Restated Voting
Agreement as the “Shareholder Agreements.” The Shareholder Agreements provide Expedia with the rights and obligations described below.
Expedia Preemptive Rights
As long as Expedia beneficially owns at least 5% of our share capital (calculated on a fully-diluted basis), it has preemptive rights to purchase newly issued
shares to maintain its percentage ownership in all future offerings by us of our shares or of securities convertible into, or exchangeable or exercisable for, any
of our shares, subject to certain limited exceptions.
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Expedia Put Right
On March 6, 2015, Expedia purchased 9,590,623 shares of common stock (the “2015 Expedia Shares”) from our predecessor, Decolar.com, Inc. We are
required to buy back from Expedia, or in certain circumstances facilitate the sale of, the 2015 Expedia Shares for fair market value, if we exercise our right to
terminate the Expedia Outsourcing Agreement and pay the required termination fee to Expedia in connection therewith. If we remain a public company with
securities traded on a recognized securities exchange at the time we receive notice that Expedia is exercising its put right, then we are required to (1) use our
best efforts to prepare and file with the SEC a registration statement covering the 2015 Expedia Shares, (2) request, in conjunction with Expedia, quotes from
five internationally-recognized underwriting banks for a firm and fully underwritten sale of the 2015 Expedia Shares and (3) assist Expedia in its sale of the
2015 Expedia Shares on a recognized securities exchange or market or otherwise. If the 2015 Expedia Shares cannot be sold in this manner, we are required to
purchase the 2015 Expedia Shares at the highest quoted price then available from the aforementioned underwriting banks. If we are no longer a public
company with securities traded on a recognized securities exchange, fair market value will be a price agreed upon by the Company and Expedia or, if the
parties cannot agree, a price determined through the assistance of third-party valuation experts.
Expedia Non-Solicitation Restriction
Expedia is also prohibited from soliciting certain of our employees, and vice versa, until one year after Expedia beneficially owns less than 10% of our share
capital. A similar non-solicitation covenant applies during the term of the Expedia Outsourcing Agreement and for a period of one year thereafter.
Expedia Director Business Opportunities
Subject to applicable confidentiality obligations, directors who have or currently serve as officers, directors, employees or agents of Expedia (the “Expedia
Directors”) are not precluded from referring potential business opportunities in which we could have an interest to Expedia. If the Expedia Directors do so, we
would be considered to have renounced our interest in such opportunity, unless the opportunity in question was presented to the director solely in his or her
capacity as our director or for our benefit, in which case it can only be referred to Expedia if a majority of our board of directors (excluding the Expedia
Directors) has formally declined the opportunity pursuant to a resolution.
Expedia Director Potential Conflicts of Interest
The Expedia Directors may be excluded from the relevant portion of any board or committee meeting or relevant resolutions of directors relating to any
transaction, agreement or arrangement with respect to which (1) Expedia or any of its affiliates is a counterparty or has a material economic interest in the
counterparty or (2) in the reasonable opinion of a majority of the members of the board that are not designated or nominated by, or employed by, Expedia or
any of its affiliates, there would exist a conflict of interest between the interests of Expedia or its affiliates, on the one hand, and our interests, on the other
(conflict of interest is defined for such purpose as a specific material economic or competitive interest of Expedia or any of its affiliates in a potential
transaction, agreement or arrangement of the Company would be reasonably likely to materially impair the independence or objectivity of the Expedia
Directors in the discharge of their responsibilities and duties to the Company, in light of their affiliation to Expedia).
Registration Rights
Expedia is entitled to two demand registrations as long as it owns 5% or more of our outstanding ordinary shares (calculated on a fully-diluted basis).
Moreover, any other party to our Shareholder Agreements that owns 10% or more our outstanding ordinary shares (calculated on a fully-diluted basis) is also
entitled to two demand registrations. We are also required to effect up to two registrations on Form F-3 in any twelve-month period, upon the request of any
such shareholders that own 10% or more of our outstanding ordinary shares (calculated on a fully-diluted basis). The Shareholder Agreements also provide the
shareholders party thereto with customary piggyback registration rights. Moreover, we are required to pay certain expenses relating to such registrations and
indemnify such shareholders against certain liabilities that may arise under the Securities Act. In addition, as previously described, we may also be required to
facilitate the sale by Expedia of the 2015 Expedia Shares. In connection with an amendment to the Expedia Outsourcing Agreement, executed on August 20,
2020 the Company and Expedia entered into a letter agreement with Expedia (the “Letter Agreement”), extending Expedia’s registration rights for a period of
two years beyond the expiration date of September 22, 2022. On September 13, 2024, we entered into a letter agreement with Expedia to further extend
Expedia’s registration rights for two (2) years, until September 22, 2026.
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The foregoing description of the Sixth Amended and Restated Investors’ Rights Agreement is qualified in its entirety by reference to the full text of the Sixth
Amended and Restated Investors’ Rights Agreement, which is filed as Exhibit 4.1 to this Annual Report. The foregoing description of the Fourth Amended and
Restated Voting Agreement is qualified in its entirety by reference to the full text of the Fourth Amended and Restated Voting Agreement, which is filed as
Exhibit 4.3 to this Annual Report. The foregoing description of the Letter Agreement is qualified in its entirety by reference to the full text of the Letter
Agreement, which is filed as Exhibit 4.2 to this Annual Report.
Expedia Nominating Agreement
In connection with an amendment to the Expedia Outsourcing Agreement, executed on August 20, 2020, and waivers granted by Expedia of certain rights set
forth in the Sixth Amended and Restated Investors’ Rights Agreement, on October 21, 2020 we entered into a Nominating Agreement with Expedia (the
“Nominating Agreement”) that grants Expedia the right to designate one individual to be a nominee for election to the board of directors of the Company.
As of the date of this Annual Report, one of the members of the board of directors of the Company, Mr. Alfonso Paredes, whose term expires at the annual
meeting of the Company’s shareholders to be held in 2027, was nominated by Expedia. Therefore, Expedia is not entitled to nominate a director under the
Nominating Agreement until Mr. Alfonso Paredes no longer serves on our board of directors.
The foregoing description of the Nominating Agreement is not complete and is qualified in its entirety by reference to the full text of the Nominating
Agreement, which is filed as Exhibit 4.4 to this Annual Report.
Catterton Registration Rights Agreement
In connection with and concurrently with the closing of the transactions contemplated by the Catterton Investment Agreement, we and LCLA Daylight LP
entered into a Registration Rights Agreement (the “Catterton Registration Rights Agreement”), pursuant to which LCLA Daylight LP is entitled to customary
registration rights with respect to the Common Stock for which the Warrants may be exercised.
The foregoing description of the Catterton Registration Rights Agreement is not complete and is qualified in its entirety by reference to the full text of the
Catterton Registration Rights Agreement, which is filed as Exhibit 4.5 to this Annual Report.
Statement of Policy Regarding Transactions with Related Persons
Our board of directors has adopted a written statement of policy regarding transactions with related persons, which we refer to as our “related person policy.”
Our related person policy requires that a “related person” (as defined as in paragraph (a) of Item 404 of Regulation S-K) must promptly disclose to our general
counsel any “related person transaction” (defined as any transaction that is anticipated would be reportable by us under Item 404(a) of Regulation S-K in which
we were or are to be a participant and the amount involved exceeds $120,000 and in which any related person had or will have a direct or indirect material
interest) and all material facts with respect thereto. Our general counsel will then promptly communicate that information to our board of directors. No related
person transaction will be executed without the approval or ratification of our board of directors. It is our policy that directors interested in a related person
transaction will recuse themselves from any vote of a related person transaction in which they have an interest. Our policy does not specify the standards to be
applied by directors in determining whether or not to approve or ratify a related person transaction and we accordingly anticipate that these determinations will
be made in accordance with principles of the laws of the BVI generally applicable to directors of a BVI company.
C.
Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION
A.
Consolidated Statements and Other Financial Information
We have appended our audited consolidated financial statements filed pursuant to “Item 18. Financial Statements” as part of this annual report.
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Legal Proceedings
See “Item 4. Information on the Company—B. Business Overview—Legal Proceedings.”
Dividend Policy
In 2024, 2023 and 2022, no dividends were declared or paid on our ordinary shares or on the common stock of our predecessor, Decolar.com, Inc. We currently
intend to retain our available funds and future earnings, if any, to finance the development and growth of our business and operations as well as expand our
business and do not currently anticipate paying dividends on our ordinary shares in the near future.
The declaration, amount and payment of any future dividends will be at the sole discretion of our board of directors, subject to compliance with applicable BVI
laws regarding solvency. Our board of directors will take into account general economic and business conditions, our financial condition and results of
operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and other
implications on the payment of dividends by us to our shareholders or by our subsidiaries to us, and such other factors as our board of directors may deem
relevant.
As we are a holding company, we rely on dividends paid to us by our subsidiaries for our cash requirements, including funds to pay any dividends and other
cash distributions to our shareholders, service any debt we may incur and pay our operating expenses. Our ability to pay dividends to our shareholders will
depend on, among other things, the availability of dividends from our subsidiaries.
Under BVI law, our board of directors may authorize payment of a dividend to shareholders at such time and of such an amount as they determine if they are
satisfied on reasonable grounds that immediately following the dividend the value of our assets will exceed our liabilities and we will be able to pay our debts
as they become due. There is no further BVI statutory restriction on the amount of funds which may be distributed by us by dividend.
Pursuant to our memorandum and articles of association:
•
Subject to the Company satisfying the solvency test described above, our board of directors may authorize payment of a dividend or other
distribution at such time and of such an amount and pursuant to such method or methods of payment or other distribution as it thinks fit. A
dividend or other distribution may be paid wholly or partly by the distribution of specific assets (which may consist of our shares or securities of
any other entity) and our board of directors may settle all questions concerning such distribution. Without limitation, our board of directors may
fix the value of such specific assets, may determine that cash payments shall be made to some shareholders in lieu of specific assets and may vest
any such specific assets in a liquidating or other trust on such terms as our board of directors thinks fit.
•
Our board of directors may deduct from any dividend or other distribution payable to any shareholder any or all monies then due from such
shareholder to us.
•
All dividends and other distributions unclaimed for three years after having been declared may be forfeited by a resolution of directors for the
benefit of the Company. All unclaimed dividends and other distributions may be invested or otherwise made use of by our board of directors for
the benefit of the Company pending claim or forfeiture as aforesaid. No dividend or other distribution shall bear interest against the Company.
•
A dividend or other distribution made to a shareholder at a time when, immediately after the dividend or other distribution, the value of the
Company’s assets did not exceed its liabilities and the Company was not able to pay its debts as they fell due, is subject to recovery in accordance
with the provisions of the BVI Act.
Each Series A Preferred Share confers on the holder the right to dividends on each Series A Preferred Share, accruing at a rate of 10.0% per annum and payable
semi-annually in arrears. Prior to their conversion, each Series B Preferred Share conferred on the holder the right to dividends on each Series B Preferred
Share, accruing at a rate of 4.0% per annum and payable quarterly in arrears. For more information about dividends payments to Series A Preferred Shares and
Series B Preferred Shares, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.”
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B.
Significant Changes
Other than as disclosed in this Annual Report and Note 32 to our audited consolidated financial statements, there has not been significant subsequent event
following the close of the last financial year up to the date of this Annual Report that is known to us and requires disclosure in this Annual Report.
ITEM 9 THE OFFER AND LISTING
A.
Offer and Listing Details
Our ordinary shares trade on the New York Stock Exchange since September 19, 2017 under the symbol “DESP.”
B.
Plan of Distribution
Not applicable.
C.
Markets
Our ordinary shares trade on the New York Stock Exchange under the symbol “DESP.”
D.
Selling Shareholders
Not applicable.
E.
Dilution
Not applicable.
F.
Expenses of the Issue
Not applicable.
ITEM 10 ADDITIONAL INFORMATION
A.
Share Capital
Not applicable.
B.
Memorandum and Articles of Association
We are a BVI business company incorporated with limited liability and our affairs are governed by the provisions of our memorandum and articles of
association, as amended and restated from time to time, and by the provisions of applicable BVI law, including the BVI Act.
Our company number in the BVI is 1936519. As provided in regulation 4 of our memorandum of association, subject to BVI law, we have full capacity to carry
on or undertake any business or activity, do any act or enter into any transaction and, for such purposes, full rights, powers and privileges. Our registered office
is at Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands and our registered agent is Conyers Trust Company (BVI)
Limited of Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands.
The transfer agent and registrar for our ordinary shares is Computershare Trust Company, N.A., which maintains the register of members of the Company at
480 Washington Boulevard, Jersey City, NJ 07310, USA. The shares of the Company are held in uncertificated (book-entry) form, and no shareholder has the
right to require issuance or provision to it at any time of any share certificate.
The following is a summary of the material provisions of our share capital and our memorandum and articles of association. This discussion does not purport to
be complete and is qualified in its entirety by reference to our memorandum and articles of association filed as Exhibit 3.1 hereto.
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Ordinary Shares
The following summarizes the rights of holders of our ordinary shares. Each ordinary share confers on the holder:
a)
the right to one vote at a meeting per share on all matters to be voted on by shareholders generally, including the election of directors at an
annual meeting of the shareholders;
b)
the right to an equal share in any dividend paid by the Company and payable in respect of our ordinary shares and as may be declared from time
to time by our board of directors out of funds legally available for that purpose, if any; and
c)
upon our liquidation, dissolution or winding up, the right to an equal share in the distribution of the surplus assets of the Company available to
the ordinary shareholders, but subject in each case to the rights attaching to any additional class or classes of shares (including any preferred
shares) that may be authorized and issued after the closing date of our initial public offering. Our ordinary shares do not confer cumulative
voting rights.
Series A Preferred Shares
The following summarizes the rights of holders of our Series A Preferred Shares. Each Series A Preferred Share confers on the holder:
a)
the right to dividends on each Series A Preferred Share, accruing at a rate of 10.0% per annum and payable semi-annually in arrears;
b)
the right to one vote per share on any matter on which holders of Series A Preferred Shares are entitled to vote separately as a class, whether at
a meeting or by written consent; and
c)
upon our liquidation, dissolution or winding up, a preferential right to the distribution of the surplus assets of the Company.
The prior written approval of the holders of a majority of the Series A Preferred Shares outstanding at such time, acting together as a separate class, is required
in order for the Company to (i) amend the memorandum and articles of association in a manner that adversely affects the holders of Series A Preferred Shares,
(ii) create or issue any shares ranking senior or pari passu to the Series A Preferred Shares, or any securities convertible or exchangeable into, or exercisable for
shares, ranking senior or pari passu to the Series A Preferred Shares or issue any additional Series A Preferred Shares or increase the authorized number of
Series A Preferred Shares, other than as permitted in the memorandum and articles of association, (iii) declare or pay any dividend or distribution, or
repurchase or redeem any shares, subject to certain exceptions, including with respect to the Series A Preferred Shares, (iv) make any fundamental change in
the nature of the business in which the Company is primarily engaged, (v) initiate, engage in or permit to occur (to the extent within the control of the
Company), any liquidation, dissolution or winding up of the Company, (vi) continue or re-domicile the Company in any jurisdiction other than the British
Virgin Islands, or (vii) take or permit certain of the foregoing with respect to the significant subsidiaries of the Company.
So long as the L Catterton Purchaser holds any Series A Preferred Shares, the prior written consent of the L Catterton Purchaser is required in order for the
Company to (i) incur any indebtedness for borrowed money in excess of the greater of (x) $60 million, and (y) an amount equal to 1.0x the Company’s
Consolidated Adjusted EBITDA for the twelve-month period ending at the end of the last quarter for which the Company has publicly reported financial
results, subject to certain exceptions, (ii) sell, dispose of or enter into any exclusive license for any material asset (or group of related assets) of the Company or
with a fair market value equal or greater to 10% of the Company’s consolidated total assets and (iii) enter into certain affiliate transactions, in each case subject
to certain exceptions.
At any time on or after September 18, 2025, each holder of Series A Preferred Shares may, at its election, cause the Company to redeem all or part of such
holder’s then outstanding Series A Preferred Shares in cash at a price equal to the liquidation preference, plus, without duplication, accrued and unpaid
distributions to, but excluding, the redemption date. In addition, if the Company undergoes a qualifying change of control, each holder of Series A Preferred
Shares may, at its election, cause the Company to redeem all of such holder’s then outstanding Series A Preferred Shares in cash at a price equal to 110.0% of
the liquidation preference, plus, without duplication, accrued and unpaid distributions to, but excluding, the redemption date.
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Additional Shares
Our board of directors may determine the rights, privileges, restrictions and conditions attaching to each such class of preferred shares (which may be more
favorable than those attaching to the ordinary shares), as the board of directors may determine in its sole and absolute discretion (subject always to obtaining
any approval required in respect of the consent, veto or approval rights assigned to the holders of Series A Preferred Shares in the memorandum and articles of
association), including without limitation:
•
the number of shares constituting the additional class of preferred shares;
•
the dividend and other distribution rights of the class of preferred shares (which may be payable in preference to, or in relation to, the dividends
payable on our ordinary shares or any other class or classes of shares);
•
whether the class of preferred shares shall have voting rights and, if so, whether they shall vote separately or together as a single class with the
ordinary shares and/or any other class of shares;
•
whether the class of preferred shares shall have conversion and/or exchange rights and privileges and, if so, the terms and conditions of such
conversion and/or exchange;
•
whether the class of preferred shares shall impose conditions and restrictions upon the business and affairs of the Company and/or any of its
subsidiaries or the right to approve and/or veto certain matters and/or to appoint and/or remove one or more directors of the Company; and
•
the rights of the preferred shares in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, including,
without limitation, any liquidation preference and whether such rights shall be in preference to, or in relation to, the comparable rights of the
ordinary shares or any other class or classes of shares.
Limitation on Liability and Indemnification Matters
Under BVI law, each of our directors, in exercising his powers or performing his duties, is required to act honestly and in good faith and in what the director
believes to be in our best interests, is required to exercise his powers as a director for a proper purpose, may not act, or agree to us acting, in a manner that
contravenes the BVI Act or our memorandum or articles of association, and is required to exercise the care, diligence and skill that a reasonable director would
exercise in the same circumstances (taking into account, but without limitation, the nature of the company; the nature of the decision; and the position of the
director and the nature of the responsibilities undertaken by him).
Our memorandum and articles of association provide that, to the fullest extent permitted by law, the Company is authorized to provide indemnification of (and
advancement of expenses to) officers, directors and agents of the Company (and any other persons to which the Company is permitted to provide
indemnification under applicable law) through provisions in the memorandum and articles of association, agreements with such officers, directors, agents or
other persons, vote of disinterested directors or otherwise, subject only to limits created by the BVI Act.
Our memorandum and articles of association provide that the Company shall indemnify against all expenses, including legal fees, and against all judgments,
fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who: (a) is or
was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by
reason of the fact that the person is or was a director, an officer or a liquidator of the Company; or (b) is or was, at the request of the Company, serving as a
director, officer or liquidator of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise;
provided that such indemnification shall not apply unless the person claiming such indemnification acted honestly and in good faith and in what he believed to
be the best interests of the Company and, in the case of criminal proceedings, the person had no reasonable cause to believe that his conduct was unlawful.
We may pay any expenses, including legal fees, incurred by any such person in defending any legal, administrative or investigative proceedings in advance of
the final disposition of the proceedings. If a person to be indemnified has been successful in defense of any proceedings referred to above, the person is entitled
to be indemnified against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by the
person in connection with the proceedings.
We may purchase and maintain insurance in relation to any person who is or was a director, an officer or a liquidator of the Company, or who at the request of
the Company is or was serving as a director, an officer or a liquidator of, or in any other
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capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise, against any liability asserted against the person and
incurred by the person in that capacity, whether or not we have or would have had the power to indemnify the person against the liability as provided in
memorandum and articles of association.
Shareholders’ Meetings and Consents
The following summarizes certain relevant provisions of BVI laws and our memorandum and articles of association in relation to our shareholders’ meetings:
•
Our memorandum and articles of association contemplate two types of shareholders’ meetings, namely:
•
an annual meeting of shareholders (each an “annual meeting”); and
•
any meeting of shareholders which is not an annual meeting (each a “special meeting”).
•
Only the board of directors may convene an annual meeting. All annual meetings shall be held at such date, time and place, either within or
outside the BVI, as shall be determined from time to time by the board of directors. The business of an annual meeting shall be the election and
re-election of directors for those board seats whose terms expire at such meeting and any other items of business proposed by the board of
directors and/or otherwise duly proposed by eligible shareholders in accordance with the memorandum and articles of association.
•
Special meetings may only be called: (i) by the board of directors at its own initiative; or (ii) by the board of directors upon receiving a compliant
written request from a shareholder or shareholders entitled to exercise at least 30% of the voting rights in respect of the matter for which the
meeting is requested. Upon receipt of a compliant requisition notice, the board of directors shall convene the requested special meeting for a date
not later than 90 days after the date of receipt of the requisition notice, provided the various restrictions, conditions and provision of information
and other procedural requirements set out in the memorandum and articles of association have been met by the requisitioning. A special meeting
may be held at such date, time and place, within or outside the BVI, as shall be stated in the notice of the meeting.
•
Director elections and re-elections by shareholders may occur only at annual meetings (not special meetings) and then only in respect of those
board seats whose terms expire at such meeting. Nominations of persons for election or re-election as directors of the Company at an annual
meeting may only be made by (i) the board of directors; or (ii) any shareholder (or shareholders collectively) other than any holder of Series A
Preferred Shares (for so long as such holder has the right to appoint the L Catterton Director) holding not less than 3% of the voting rights that
may be exercised at the annual meeting entitled to attend and vote at such meeting, provided the various restrictions, conditions and provision of
information and other procedural requirements set out in the memorandum and articles of association have been met by the nominating
shareholders. The board of directors also retains discretion to veto inappropriate candidates nominated by shareholders for election as a director in
certain enumerated circumstances, including (a) where the candidate is not qualified, does not have the necessary experience, has a conflict of
interest or is otherwise unsuitable or unfit for office; and (b) where an appointment may adversely affect the Company’s (and/or its subsidiaries’
respective) reputation or business; or would result in the Company not having the required number of independent directors for its audit
committee; or would result in the Company losing its “foreign private issuer” status.
•
Written notice of any shareholder meeting shall be given to each shareholder entitled to vote at such meeting and each director not fewer than 10
nor more than 120 days before the date of the meeting. The inadvertent failure or accidental omission to give notice of a meeting to, or the non-
receipt of a notice of a meeting by, any person entitled to receive notice shall not invalidate the shareholder meeting or the proceedings at that
meeting. A meeting of shareholders held in contravention of such notice requirements is valid if shareholders holding at least 90% of the total
voting rights on all the matters to be considered at the meeting have waived notice of the meeting and, for this purpose, the presence of a
shareholder at the meeting shall be deemed to constitute waiver on his part.
•
A shareholder may be represented at a meeting of shareholders by a proxy who may speak and vote on behalf of the shareholder.
•
A meeting of shareholders is duly constituted and quorate if, at the commencement of the meeting, there are present in person or by proxy holders
of not less than a simple majority of the votes of the shares entitled to vote on the resolutions to be considered at the meeting. If within two hours
from the time appointed for the meeting a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved;
in any other case it shall stand adjourned to such other date, time and place as the chairman may
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determine and announce at the meeting (without the need for any further notice to shareholders). At any such adjourned meeting, a quorum shall
be present if there are present in person or by proxy not less than one-third of the votes of the shares entitled to vote on the resolutions to be
considered at the meeting and any business may be transacted that might have been transacted at the meeting as originally notified. If the
adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder of record entitled to vote at the meeting.
•
A resolution of shareholders is valid only if approved at a duly constituted and quorate meeting of shareholders by the affirmative vote of a simple
majority (or such greater majority as may be specified in respect of a particular matter in the memorandum and articles of association) of the votes
of those shareholders present at the meeting and entitled to vote and voting on the resolution. Shareholders are prohibited from adopting
resolutions by written consent and all resolutions of the shareholders need to be adopted at a meeting of our shareholders convened in accordance
with our memorandum and articles of association.
•
In addition, in order to nominate candidates for election as a director at an annual meeting or propose topics for consideration at an annual
meeting or special meeting of shareholders, shareholders must notify the Company in writing prior to the meeting at which directors are to be
elected or the proposals are to be acted upon, and such notice must contain the documentation and information specified in our memorandum and
articles of association. To be timely, notice with respect to an annual meeting of shareholders must be received by not later than the close of
business on the 90th day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual
meeting (provided that if the Company did not have an annual meeting the preceding year not later than the close of business on June 30 of the
calendar year in which the annual meeting is to be held or such other date notified to shareholders by the board of directors). In the case of any
business or other matter to be considered at a special meeting of shareholders, notice of such business or other matter must be included with the
original requisition notice. Various other restrictions, conditions and provision of information and other procedural requirements set out in the
memorandum and articles of association shall also apply. Such advance notice requirements and other provisions may preclude or limit the ability
of shareholders to nominate candidates for election as a director or propose topics for consideration at a meeting of shareholders. Furthermore,
our board of directors may in certain circumstances veto candidates proposed by shareholders (as described in the fourth bullet point in this
section).
C.
Material Contracts
For information regarding material contracts, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”
D.
Exchange Controls
The following paragraphs summarize the exchange controls. See “Item 3. Key Information—D. Risk Factors—Certain Risks Related to Latin America—
Exchange rate fluctuations against the dollar in the countries in which we operate could negatively affect our results of operations” and “Item 3. Key
Information—D. Risk Factors—Certain Risks Related to Latin America—We are subject to foreign currency exchange controls in certain countries in which
we operate” for more information.
Argentina
On September 1, 2019, due to various factors that impacted the evolution of the Argentine economy and the uncertainty caused in the financial markets by the
presidential election that took place in 2019, by Emergency Decree No. 609/2019 (as amended by Decree No. 91/2019) federal government re-implemented the
foreign exchange controls setting forth certain controls and restrictions on the acquisition, sale, and transfer of foreign currency, applicable to both individual
persons and legal entities in Argentina. This decree also enabled the Argentine Central Bank (“BCRA” for its Spanish acronym Banco Central de la República
Argentina) to establish, through regulations, the necessary measures to avoid “practices and operations aimed at avoiding, through public titles or other
instruments” the restrictions set forth by the decree. In furtherance of such decree, since its date of implementation the BCRA has adopted a series of measures
that regulate the official foreign exchange market (the “FX Market”), which are all included in the Amended and Restated Text on Foreign Exchange rules (the
“FX Regulatory Framework”).
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Recently, on April 11, 2025, the BCRA issued Communication “A” 8226, introducing significant changes to the FX Regulatory Framework, effective from
April 14, 2025. These changes primarily benefit individuals, allowing them to purchase foreign currency for savings or deposit purposes without prior BCRA’s
approval.
However, restrictions remain in place for legal entities concerning access to the FX Market for payments of imports of goods and services, payment of
dividends, repayment of foreign indebtedness, and for purchase of foreign currency for holding or depositing purposes. The measures set forth by
Communication “A” 8226 are part of a broader economic reform and include a shift to a managed floating exchange rate regime. While some controls remain
in place (see below), this marks a significant relaxation of the FX Regulatory Framework compared to previous regulations.
Among other provisions, recitals and exceptions set forth in such legislation, the FX Regulatory Framework provide certain restrictions applicable to the
following transactions: (i) collection of exports and payment of imports of goods and services; (ii) payments of profits and dividends; (iii) sales collections of
non-produced non-financial assets; (iv) repayment of external financial loans disbursed as of September 1, 2019 (including those that involves offshore related
counterparties); (v) repayment of local notes offerings in dollars; (vi) payments in foreign currency among residents; (vii) payments of external financial
indebtedness by the collateral trustees; (viii) purchase of foreign currency by local entities, and non-residents (both entities and individuals); (ix) funding of
debt services reserve accounts on external indebtedness, among others.
In summary, among other matters, as of the date of this report the FX Regulatory Framework establishes the following provisions:
Inflow of funds: the FX Regulatory Framework establishes the obligation to enter into Argentina through the FX Market, convert into local currency at the
official foreign exchange rate, and to deposit into local bank accounts-within some specific terms-the funds obtained from (i) export of goods operations; (ii)
export of services operations; (iii) selling of non-financial non-produced assets to foreign parties.
Funds obtained from offshore financial indebtedness should be converted into Pesos through the FX Market if the local resident needs to repay principal and
interest services of the financing through the FX Market. The lack of such conversion constitutes no violation to the FX Regulatory Framework, although it
will preclude local resident from paying, at maturity, the offshore financial indebtedness at the official foreign exchange rate through the FX Market.
Outflow of funds: the FX Regulatory Framework establishes certain limitations and regulations to access to the FX Market at the official foreign exchange rate
in relation to the import of goods, payment of offshore services, payment of dividends and earnings, repayment of loans, etc. The necessary requirements will
depend on each particular transaction. BCRA's prior authorization will be required when the necessary applicable requirements are not met (in practice, this
requirement of prior authorization operates as a restriction, since the Argentinian Central Bank does not usually grant this type of approval). The ability to
access the FX Market for cross-border payments will depend on the terms and conditions established by the BCRA at the time of the execution of each specific
transaction. At the time of the filing of this Annual Report, both general requirements as well as specific requirements that depend on the nature of the
transaction to be executed need to be complied with.
As a general rule, in order to grant access to the FX Market for the acquisition of foreign currency or its remittance abroad financial institutions must require
their clients certain affidavits indicating compliance with the FX Regulatory Framework. This requirement applies exclusively to local legal entities and is not
applicable to individuals. In this regard, legal entities seeking access to the FX Market for the outflow of funds must submit certain affidavits which sets forth
the following:
i.
Local entity must state that, on the day it requests access to the FX Market (i.e., on the day a given payment is to be executed), it has all its foreign
currency holdings in the country deposited in accounts in financial institutions, and that it does not have “available liquid foreign assets” (including
Argentine certificates of deposit representing foreign shares known as “CEDEARs”) for an amount in excess of $100,000. In the event that local client
has available liquid foreign assets for an amount in excess of the threshold, it will have to file before the bank (through which a given payment is
being executed) an affidavit stating that such amount in excess is subject to any of the exceptions established under the FX Regulatory Framework
(Section 3.16.2.1 of the FX Regulatory Framework).
ii.
Local entity must undertake to convert into Pesos though the FX Market, within 20 business days of its availability, any funds received abroad arising
from collections of (a) loans; (b) term deposits; or (c) sales of any type of assets (e.g., shares, securities, goods, etc.); in case such loans, deposits or
assets were granted, constituted, or acquired after May 28, 2020 (Section 3.16.2.2 of the FX Regulatory Framework).
iii. Local entity must state that, on the day on which it requests access to the FX Market, and in the previous 90 calendar days, it has not: (a) arranged
sales in the country for securities with settlement in foreign currency; (b)
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carried out swaps of securities issued by residents for foreign assets; (c) carried out transfers of securities to foreign depositories; (d) acquired in the
country securities issued by non-residents using pesos; (e) acquired CEDEARs; (f) acquired securities representing private debt issued in foreign
jurisdiction; (g) delivered funds in local currency or other local assets (except funds in foreign currency deposited in local financial institutions) to any
human or legal person, resident or non-resident, related or not, to receive as prior or subsequent consideration, directly or indirectly, by itself or
through a related, controlled or controlling entity, foreign assets, crypto-assets or securities deposited abroad (Section 3.16.3.1 of the FX Regulatory
Framework). In addition, the declaring party must also undertake not to carry out these operations on that day and for the following 90 days calendar
days (Section 3.16.3.2 of the FX Regulatory Framework).
Likewise, local entity must include a list of the persons who exercise a direct control relationship over it, and legal entities that are part of the same economic
group, in accordance with Sections 1.2.1.1 and 1.2.2.1 of the “Large Exposures to Credit Risk” standards of the BCRA rules (Section 3.16.3.3 of the FX
Regulatory Framework).
.
Additionally, local entity must state that, on that day and in the previous 180 calendar days, it has not delivered funds in local currency or other liquid local
assets to them (except funds in foreign currency deposited in local financial institutions), except those directly associated with regular transactions between
residents for the acquisition of goods and/or services. This obligation may be deemed fulfilled if local client, and in specific scenarios, individuals informed by
local client, submit certain additional affidavits (Section 3.16.3.4 of the FX Regulatory Framework).
Notwithstanding the provisions set forth above, through Communication “A” 8226 dated April 11, 2025, the BCRA established that transactions carried out up
to April 11, 2025 shall not be taken into account for the purposes of the affidavits required under Sections 3.16.3.1 and 3.16.3.4 of the FX Regulatory
Framework.
Specific requirements vary and are contingent on the particulars of each transaction. According to current regulations, local entities must seek prior approval
from the BCRA for the acquisition and/or transfer of foreign currency abroad, including but not limited to: (i) import of goods and services transactions
completed before December 13, 2023; (ii) repayment of offshore financial indebtedness to offshore related counterparts, to the extent that the transaction does
not fulfill certain requirements; (iii) payment of dividends and earnings, to the extent that the transaction does not fulfill certain requirements; (iv) acquisition
of foreign currency by legal persons, local governments, investment funds, trusts, and other entities within the country, as well as non-Argentine residents (with
certain exceptions), for any amount, among others.
Conversely, individuals are exempt from the requirement to obtain prior approval from the BCRA for the purchase of foreign currency through the FX Market,
whether for holding purposes or for the placement of deposits.
E.
Taxation
British Virgin Islands Tax Considerations
We are not liable to pay any form of taxation in the BVI. There are currently no taxation, withholding taxes or exchange control regulations in the BVI
applicable to us or our shareholders. The BVI is not party to any double tax treaties that are applicable to any payments made to or by us.
All kind of payments by us to persons who are not residents in the BVI are exempt from all forms of taxation in the BVI and any capital gains realized with
respect to any shares, debt obligations, or other securities of ours by persons who are not residents in the BVI are exempt from all forms of taxation in the BVI.
No charge is payable by persons who are not residents in the BVI with respect to any shares, debt obligation or other securities of ours.
U.S. Federal Income Taxation
The following is a summary of certain material U.S. federal income tax consequences of the purchase, ownership and disposition of our ordinary shares. This
summary deals only with our ordinary shares that are held as capital assets within the meaning of Section 1221 of the Code (as defined below) (generally, for
investment purposes) by a beneficial owner.
As used herein, a “U.S. holder” means a beneficial owner of our ordinary shares that is, for U.S. federal income tax purposes, any of the following:
•
an individual citizen or resident of the United States;
•
a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia;
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•
an estate the income of which is subject to U.S. federal income taxation regardless of its source; or
•
a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to
control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United
States person.
As used herein, the term “non-U.S. holder” means a beneficial owner of our ordinary shares (other than a partnership or other pass-through entity for U.S.
federal income tax purposes) that is not a U.S. holder.
This summary is based upon provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions as of
the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in U.S. federal income tax consequences different from those
summarized below.
This discussion does not represent a detailed description of the U.S. federal income tax consequences applicable to you if you are subject to special treatment
under the U.S. federal income tax laws, including if you are:
•
a dealer or broker in securities or currencies;
•
a financial institution;
•
a regulated investment company;
•
a real estate investment trust;
•
an insurance company;
•
a tax-exempt organization;
•
a person holding our ordinary shares as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle;
•
a trader in securities that has elected the mark-to-market method of accounting for your securities;
•
a person liable for alternative minimum tax;
•
a partnership or other pass-through entity for U.S. federal income tax purposes;
•
a person required to accelerate the recognition of any item of gross income with respect to our ordinary shares as a result of such income being
recognized on an applicable financial statement;
•
a U.S. holder whose “functional currency” is not the dollar;
•
a foreign pension fund;
•
a “controlled foreign corporation”;
•
a “passive foreign investment company”; or
•
a U.S. expatriate.
If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) holds our ordinary shares, the tax treatment of a
partner will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our ordinary
shares, you should consult your tax advisors.
Notwithstanding our corporate reincorporation in the BVI, under Section 7874 of the Code, the Company is treated for U.S. federal tax purposes as a U.S.
corporation and, among other consequences, is subject to U.S. federal income tax on its worldwide income. This discussion assumes that Section 7874 of the
Code continues to apply to treat us as a U.S. corporation for all purposes under the Code. If, for some reason (e.g., future repeal of Section 7874 of the Code),
we were no longer treated as a U.S. corporation under the Code, the U.S. federal income tax consequences described herein could be materially and adversely
affected.
This discussion does not contain a detailed description of all the U.S. federal income tax consequences to you in light of your particular circumstances and does
not address the Medicare tax on net investment income, U.S. federal estate and gift taxes or the effects of any state, local or non-U.S. tax laws. If you are
considering the purchase of our ordinary shares, you should consult your own tax advisors concerning the particular U.S. federal income tax consequences to
you of the purchase, ownership and disposition of our ordinary shares, as well as the consequences to you arising under other U.S. federal tax laws and the laws
of any other taxing jurisdiction.
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Consequences to U.S. Holders
Dividends
In the event that we make a distribution of cash or other property (other than certain pro rata distributions of our stock) in respect of our ordinary shares, the
distribution generally will be treated as a dividend for U.S. federal income tax purposes to the extent it is paid from our current or accumulated earnings and
profits, as determined under U.S. federal income tax principles. Subject to the discussion below, any such dividend will generally be taxable as U.S. source
ordinary income. Any portion of a distribution that exceeds our current and accumulated earnings and profits generally will be treated first as a tax-free return
of capital, causing a reduction in the adjusted tax basis of a U.S. holder’s ordinary shares, and to the extent the amount of the distribution exceeds a U.S.
holder’s adjusted tax basis in our ordinary shares, the excess will be treated as gain from the disposition of our ordinary shares (the tax treatment of which is
discussed below under “Item 10. Additional Information—E. Taxation—Consequences to U.S. Holders—Gain on Disposition of Ordinary Shares”). Subject to
certain holding period and other requirements, (a) any dividends received by a U.S. holder that is a corporation will be eligible for the dividends received
deduction and (b) any dividends received by a non-corporate U.S. holder (including an individual) will be eligible for the reduced tax rates that apply to
“qualified dividend income.”
The amount of any dividend paid in foreign currency will equal the dollar value of the foreign currency received calculated by reference to the exchange rate in
effect on the date the dividend is actually or constructively received by a U.S. holder, regardless of whether the foreign currency is converted into dollars. Any
gain or loss realized on a subsequent conversion or other disposition of the foreign currency will be treated as U.S. source ordinary income or loss.
Gain on Disposition of Ordinary Shares
U.S. holders of our ordinary shares will recognize capital gain or loss on any sale, exchange, or other taxable disposition of our ordinary shares in an amount
equal to the difference between the amount realized for the ordinary shares and the U.S. holder’s tax basis in the ordinary shares. Such gain or loss generally
will be long-term capital gain or loss if the ordinary shares have been held for more than one year. Long-term capital gains of non-corporate U.S. holders
(including individuals) are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.
Information Reporting and Backup Withholding
In general, information reporting will apply to dividends in respect of our ordinary shares and the proceeds from the sale, exchange or other disposition of our
ordinary shares that are paid to a U.S. holder within the United States (and in certain cases, outside the United States), unless the U.S. holder establishes that it
is an exempt recipient. A backup withholding tax may apply to such payments if the U.S. holder fails to provide a taxpayer identification number and a
certification that it is not subject to backup withholding or if the U.S. holder fails to report in full dividend and interest income.
Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a U.S.
holder’s U.S. federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service (“IRS”).
Consequences to Non-U.S. Holders
Dividends
The rules applicable to non-U.S. holders for determining the extent to which distributions on our ordinary shares, if any, constitute dividends for U.S. federal
income tax purposes are the same as for U.S. holders. See “Item 10. Additional Information—E. Taxation—Consequences to U.S. Holders—Dividends.”
Dividends paid to a non-U.S. holder generally will be subject to withholding of U.S. federal income tax at a 30% rate or such lower rate as may be specified by
an applicable income tax treaty. However, dividends that are effectively connected with the conduct of a trade or business by the non-U.S. holder within the
United States (and, if required by an applicable income tax treaty, are attributable to a U.S. permanent establishment) are not subject to the withholding tax,
provided certain certification and disclosure requirements are satisfied. Instead, such dividends are subject to U.S. federal income tax on a net income basis
generally in the same manner as if the non-U.S. holder were a United States person as defined under the Code. Any such effectively connected dividends
received by a foreign corporation may be subject to an additional “branch profits tax” at a 30% rate or such lower rate as may be specified by an applicable
income tax treaty.
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A non-U.S. holder who wishes to claim the benefit of an applicable treaty rate and avoid backup withholding, as discussed below, for dividends will be
required (a) to provide the applicable withholding agent with a properly executed IRS Form W-8BEN or Form W-8BEN-E (or other applicable form) certifying
under penalty of perjury that such holder is not a United States person as defined under the Code and is eligible for treaty benefits or (b) if our ordinary shares
are held through certain foreign intermediaries, to satisfy the relevant certification requirements of applicable U.S. Treasury regulations. Special certification
and other requirements apply to certain non-U.S. holders that are pass-through entities rather than corporations or individuals.
A non-U.S. holder eligible for a reduced rate of U.S. federal withholding tax pursuant to an income tax treaty may obtain a refund of any excess amounts
withheld by timely filing an appropriate claim for refund with the IRS.
Gain on Disposition of Ordinary Shares
Subject to the discussion of backup withholding below, any gain realized by a non-U.S. holder on the sale or other disposition of our ordinary shares generally
will not be subject to U.S. federal income tax unless:
•
the gain is effectively connected with a trade or business of the non-U.S. holder in the United States (and, if required by an applicable income tax
treaty, is attributable to a U.S. permanent establishment of the non-U.S. holder);
•
the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain
other conditions are met; or
•
we are or have been a “United States real property holding corporation” for U.S. federal income tax purposes and certain other conditions are met.
A non-U.S. holder described in the first bullet point immediately above will be subject to tax on the gain derived from the sale or other disposition in the same
manner as if the non-U.S. holder were a United States person as defined under the Code. In addition, if any non-U.S. holder described in the first bullet point
immediately above is a foreign corporation, the gain realized by such non-U.S. holder may be subject to an additional “branch profits tax” at a 30% rate or such
lower rate as may be specified by an applicable income tax treaty. An individual non-U.S. holder described in the second bullet point immediately above will
be subject to a 30% (or such lower rate as may be specified by an applicable income tax treaty) tax on the gain derived from the sale or other disposition, which
gain may be offset by U.S. source capital losses even though the individual is not considered a resident of the United States.
Generally, a U.S. corporation is a “United States real property holding corporation” if the fair market value of its U.S. real property interests equals or exceeds
50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business (all as determined
for U.S. federal income tax purposes). We believe we are not and do not anticipate becoming a “United States real property holding corporation” for U.S.
federal income tax purposes.
Information Reporting and Backup Withholding
Distributions paid to a non-U.S. holder and the amount of any tax withheld with respect to such distributions generally will be reported to the IRS. Copies of
the information returns reporting such distributions and any withholding may also be made available to the tax authorities in the country in which the non-U.S.
holder resides under the provisions of an applicable income tax treaty.
A non-U.S. holder will not be subject to backup withholding on distributions received if such holder certifies under penalty of perjury that it is a non-U.S.
holder (and the payor does not have actual knowledge or reason to know that such holder is a United States person as defined under the Code), or such holder
otherwise establishes an exemption.
Information reporting and, depending on the circumstances, backup withholding will apply to the proceeds of a sale or other disposition of our ordinary shares
made within the United States or conducted through certain U.S.-related financial intermediaries, unless the beneficial owner certifies under penalty of perjury
that it is a non-U.S. holder (and the payor does not have actual knowledge or reason to know that the beneficial owner is a United States person as defined
under the Code), or such owner otherwise establishes an exemption.
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Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against a non-
U.S. holder’s U.S. federal income tax liability, if any, provided the required information is timely furnished to the IRS.
Additional Withholding Requirements
Under Sections 1471 through 1474 of the Code (such Sections commonly referred to as “FATCA”), a 30% U.S. federal withholding tax may apply to any
dividends paid on our ordinary shares to (i) a “foreign financial institution” (as specifically defined in the Code and whether such foreign financial institution is
the beneficial owner or an intermediary) which does not provide sufficient documentation, typically on IRS Form W-8BEN-E, evidencing either (x) an
exemption from FATCA, or (y) its compliance (or deemed compliance) with FATCA (which may alternatively be in the form of compliance with an
intergovernmental agreement with the United States) in a manner which avoids withholding, or (ii) a “non-financial foreign entity” (as specifically defined in
the Code and whether such non-financial foreign entity is the beneficial owner or an intermediary) which does not provide sufficient documentation, typically
on IRS Form W-8BEN-E, evidencing either (x) an exemption from FATCA, or (y) adequate information regarding certain substantial U.S. beneficial owners of
such entity (if any). If a dividend payment is both subject to withholding under FATCA and subject to the withholding tax discussed above under “Item 10.
Additional Information—E. Taxation—Consequences to Non-U.S. Holders—Dividends,” an applicable withholding agent may credit the withholding under
FATCA against, and therefore reduce, such other withholding tax. While withholding under FATCA would also have applied to payments of gross proceeds
from the sale or other disposition of our ordinary shares, proposed U.S. Treasury regulations (upon which taxpayers may rely until final regulations are issued)
eliminate FATCA withholding on payments of gross proceeds entirely. You should consult your own tax advisors regarding these requirements and whether
they may be relevant to your ownership and disposition of our ordinary shares.
F.
Dividends and Paying Agents
Not applicable.
G.
Statement by Experts
Not applicable.
H.
Documents on Display
We are subject to the informational requirements of the Exchange Act. Accordingly, required to file reports and other information with the SEC, including
annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy the reports and other information to be filed with the SEC at the public
reference facilities maintained by the SEC at 100 F Street, N.E., Washington D.C. 20549. Copies of the materials may be obtained from the Public Reference
Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The public may obtain information on the operation of the SEC’s Public
Reference Room by calling the SEC in the United States at 1-800-SEC-0330. In addition, the SEC maintains an Internet website at www.sec.gov, from which
you can electronically access this annual report.
I.
Subsidiary Information
Not applicable.
J. Annual Report to Security Holders
If we are required to provide an annual report to security holders in response to the requirements of Form 6-K, we will submit the annual report to security
holders in electronic format in accordance with the EDGAR Filer Manual.
ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our business activities are exposed to a variety of market risks, including foreign currency risk and inflation and interest rate risk.
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Foreign Exchange Risk
We report our financial results in dollars, but most of our revenue and expenses are denominated in other currencies, particularly the Argentine peso, the
Brazilian real and the Mexican peso. Any changes in the exchange rates of any such currencies against the dollar will affect our reported financial results as
translated into dollars. Furthermore, many of our travel customers travel internationally and any changes in the exchange rate between their home currency and
the currency of their intended destination may influence their travel purchases. We also use derivative financial instruments in some cases to manage our
foreign exchange risk.
Our supplier arrangements often result in significant balances of both accounts payable and accounts receivable denominated in various currencies. To the
extent that the timing of such payments is within our control, we often attempt to accelerate or delay such payments to minimize the disparity between our
accounts payable and accounts receivable denominated in each currency, which reduces the effect of exchange rate fluctuations on our reported financial
results. In addition, we can be exposed to foreign exchange risk with respect to international travel if we accept upfront payment at the time of booking in a
travel customer’s home currency and are later required to pay the supplier in the supplier’s home currency.
Inflation and Interest Rate Risk
Brazil, Mexico, Argentina and many other countries in Latin America have historically experienced high rates of inflation. Inflationary pressures persist, and
actions taken in an effort to curb inflation, coupled with public speculation about possible future governmental actions, have in the past contributed to
economic uncertainty in Brazil, Mexico, Argentina and other Latin America countries and heightened volatility in the Latin America financial markets.
Changes in inflation rates can affect our pricing as well as our expenses, and the inflation rates in the countries where we generate revenue in any period may
be higher or lower than the inflation rates in the countries where we incur expenses. In addition, higher inflation may lead our travel customers to make more
purchases using installment or other financing options and may make such financing options more expensive for us.
The inflation rate in Brazil, as reflected by the IPCA, was 5.8% in 2022, 4.6% in 2023 and 4.8% for 2024. In Mexico, the inflation rate was 7.8% in 2022, 4.7%
in 2023 and 4.2% in 2024. The inflation rate in Argentina was 94.8% in 2022, 211.4% in 2023 and 117.8% in 2024.
Interest rates are highly sensitive to many factors, including fiscal and monetary policies to combat inflation and economic, political and other factors beyond
our control. From time to time, we factor our receivables to receive cash more quickly. The costs of factoring are driven primarily by interest rates which, in
turn, are influenced significantly by inflation and expectations for future inflation. In addition, we maintain revolving credit facilities in certain countries, and
the interest rates payable with respect to those facilities also vary based on local market interest rates.
ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A.
Debt Securities
Not applicable.
B.
Warrants and Rights
Pursuant to the Catterton Investment Agreement, we have issued to the L Catterton Purchaser warrants to purchase 11 million ordinary shares at an exercise
price of $0.01 per share, subject to certain customary anti-dilution adjustments provided under the warrants, including for stock splits, reclassifications,
combinations and dividends or distributions made by the Company on the ordinary shares. On June 11, 2024, L Catterton exercised their warrants under the
Catterton Investment Agreement, and we have issued 10,992,759 ordinary shares to LCLA Daylight LP. The foregoing description of the Warrants is qualified
in its entirety by reference to the full text of the Ordinary Shares Purchase Warrant (Penny Warrant), dated September 18, 2020 issued by Despegar.com, Corp.
in favor or LCLA Daylight LP, which is filed as Exhibit 2.6 to this Annual Report.
C. Other Securities
Not applicable.
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D. American Depositary Shares
Not applicable.
PART II.
ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
A.
Material Modifications to the Rights of Security Holders
None.
B.
Material Modifications to the Rights of any Class of Registered Securities
None.
C.
Withdrawal or Substitution of a Material Amount of the Assets Securing any Class of Registered Securities
None.
D.
Changes in the Trustee or Paying Agents for any Registered Securities
None.
E.
Use of Proceeds
Initial public offering in September 2017
On September 19, 2017, we completed our initial public offering on the New York Stock Exchange. The registration statement on Form F-1 (File No. 333-
219973) filed by us in connection with the initial public offering was declared effective on September 19, 2017.
The net proceeds to us from the offering, after deducting underwriting discounts and commissions and offering expenses, amounted to $253.5 million. We have
not allocated our net proceeds from our initial public offering to any particular purpose. Rather, our management has considerable discretion in the application
of the net proceeds that we received.
As of the date hereof, a substantial portion of the net proceeds from our initial public offering have been allocated to acquisitions, investments and general
corporate purposes, including share repurchases, working capital and certain growth initiatives. No amount of the net proceeds has been paid to officers,
directors, general partners or their associates nor to persons owning 10% or more of any class of our equity securities nor to any of our other affiliates.
ITEM 15 CONTROLS AND PROCEDURES
A.
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of our disclosure controls
and procedures pursuant to 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as of December 31, 2024.
We have established disclosure controls and procedures to ensure that the information required to be disclosed by us in the reports that we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such information is accumulated
and made known to the officers who certify our financial reports and to other members of senior management and the Disclosure Committee as appropriate to
allow timely decisions regarding required disclosure.
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There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the
circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable
assurance of achieving their control objectives. Based upon our evaluation, we, with the participation of our Chief Executive Officer and our Chief Financial
Officer, concluded that as of December 31, 2024, our disclosure controls and procedures were not effective to provide reasonable assurance that information
required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the applicable rules and forms, and that it is communicated to our management, including our Chief Executive Officer and our Chief
Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, because of the material weakness described below under
“Management’s Annual Report on Internal Control over Financial Reporting.”
B.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f)
under the Securities Exchange Act of 1934. Our internal control over financial reporting was designed to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the
United States of America. Our internal control over financial reporting includes those policies and procedures that:
(i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles in the United States of America, and that our receipts and expenditures are being made only in accordance with
authorizations of management of the Company; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of our internal control over
financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations
of the Treadway Commission in the Internal Control-Integrated Framework (2013).
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that
a material misstatement of the Company’s annual financial statements will not be prevented or detected on a timely basis.
Based on this evaluation, management identified a deficiency in internal control over financial reporting with respect to the design of effective controls over the
authorization process of certain pricing policies associated with revenue transactions in the Company’s air segment. We believe that these control deficiencies
were a result of inadequate policies and procedures in our internal controls over the authorization process of certain pricing policies across our geographies.
Management has determined that this deficiency constituted a material weakness as of December 31, 2024.
Based on our assessment and the identification of the material weakness described above, management concluded that the Company did not maintain effective
internal control over financial reporting as of December 31, 2024.
Notwithstanding such material weakness in internal control over financial reporting, our management, including our Chief Executive Officer and Chief
Financial Officer, has concluded that our consolidated balance sheets as of December 31, 2024 and 2023, the related consolidated statements of operations,
comprehensive income (loss), shareholders’ (deficit) equity, and cash flows for each of the years in the period ended December 31, 2024, present fairly, in all
material respects, our financial position as of December 31, 2024 and 2023 and the results of our operations and our cash flows for each of the three years in
the three-year period ended December 31, 2024 in conformity with accounting principles generally accepted in the United States of America.
In addition, we are in the process of implementing a remediation plan to ensure that control deficiencies contributing to the material weakness are remediated,
such that these controls are designed, implemented, and operating effectively.
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We believe that these actions will remediate the material weakness. The material weakness will not be considered remediated, however, until the applicable
controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. Additionally, this
control deficiency, if not remediated, could result in a misstatement of the aforementioned account balance that would result in a material misstatement to the
2025 annual consolidated financial statements. While there can be no assurance that our efforts will be successful, we expect that the remediation of these
material weaknesses will be completed prior to the end of fiscal 2025.
C.
Attestation Report of the Registered Public Accounting Firm
The effectiveness of the Company’s internal control over financial reporting as of December 31, 2024 has been audited by Price Waterhouse & Co. S.R.L., an
independent registered public accounting firm, as stated in their report which is included in our audited consolidated financial statements.
D.
Changes in Internal Control over Financial Reporting
Management has evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, whether any changes in our internal control
over financial reporting that occurred during our last fiscal year have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting. Based on the evaluation we conducted, management concluded that no such changes have occurred.
ITEM 16 [RESERVED]
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our audit committee consists of Mr. Nilesh Lakhani and Mr. Martín Rastellino, with Mr. Michael James Doyle II serving as chair. Each of them satisfy the
independence requirements of Rule 10A-3 under the Exchange Act. Our board of directors also has determined that Each of them qualify as audit committee
financial experts within the meaning of the SEC rules.
ITEM 16B. CODE OF ETHICS
We have adopted a written code of business conduct and ethics that provides that our officers and directors are expected to avoid any action, position or interest
that conflicts with the interests of our company or gives the appearance of a conflict. Officers and directors have an obligation under our code of business
conduct and ethics to advance our company’s interests when the opportunity to do so arises. The full text of our code of business conduct and ethics is available
on our website, https://investor.despegar.com/governance/governance-documents/default.aspx
We intend to disclose future amendments to our code of ethics, or any waivers of such code, on our website or in public filings. The information on our website
is not incorporated by reference into this Annual Report, and you should not consider information contained on our website to be a part of this Annual Report.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our consolidated financial statements prepared in accordance with U.S. GAAP are audited by Price Waterhouse & Co. S.R.L., a firm registered with the Public
Company Accounting Oversight Board in the United States.
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The following table shows the aggregate fees for services rendered by Price Waterhouse & Co. S.R.L. and other PwC firms to us, including our subsidiaries, in
fiscal years 2024 and 2023.
Year Ended December 31,
2024
2023
(in thousands)
Audit fees (audit of financial statements)
$
1,619
$
2,395
Audit-Related Fees
17
160
Tax fees (other certifications and tax advisory services)
334
411
All other fees (advisory services)
—
354
Total
$
1,971
$
3,321
___________
(1)
Includes fees related to the audit of the consolidated financial statements as of December 31, 2024 and 2023, respectively, and for the years then ended.
(2)
Includes fees for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of the
registrant’s financial statements and other permitted services over other financial information and non-financial information. These fees are not reported
under the audit fees item above.
(3)
Includes fees for permitted tax compliance and tax advisory services.
(4)
Includes fees for permitted due diligence transactions.
Audit Committee Pre-approval Process
Our audit committee reviews and pre-approves the scope and the cost of audit services related to us and permissible non-audit services performed by the
independent auditors, other than those for de minimis services which are approved by the audit committee prior to the completion of the audit.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
No exemptions from the listing standards for our Audit Committee.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
None.
ITEM 16G. CORPORATE GOVERNANCE
As a foreign private issuer, we are permitted under NYSE rules to follow home country corporate governance practices instead of the NYSE requirements,
except that we must maintain an audit committee of the board of directors that meets the requirements of Exchange Act Rule 10A-3 and disclose in our annual
reports on Form 20-F any significant ways in which our corporate governance practices differ from those followed by U.S. domestic listed companies under
NYSE listing standards.
As a foreign private issuer, we follow the corporate governance practices of our home country, the British Virgin Islands (“BVI”) instead of nearly all of the
NYSE’s corporate governance requirements, as described in more detail below. See “Item 6. Directors, Senior Management and Employees—C. Board
Practices.”
Differences in Corporate Law
(1)
(2)
(3)
(4)
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Requirement
NYSE Requirement FOR US
Listed Companies
BVI Law
Despegar Practice
Executive Sessions of Independent
Directors
Independent directors of a NYSE-listed
company must have meetings at which
only the independent directors are present.
BVI law does not require us to hold
independent meetings of the board of
directors.
We do not hold independent directors’
meetings.
Audit Committee
Must have an audit committee with a
written charter and the specific
responsibilities and authority to comply
with SEC rules. Minimum of three
members must meet all of the
independence requirements of the NYSE,
as well as the SEC Rule 10A-3
independence requirements (subject to any
available exemptions) and must be
financially literate.
BVI law does not require an
independent audit committee.
Our board of directors has established
an audit committee that complies with
SEC Rule 10A-3 independence
requirements only, and not other
general NYSE independence
standards.
Internal Audit Function
Must have an internal audit function. This
function may be performed by a third
party.
BVI law does not require an internal
audit function.
We do not have an internal audit
function.
Compensation of Executive Officers
Must have a compensation committee
consisting solely of independent directors.
Must satisfy the additional independence
requirements specific to compensation
committee membership.
BVI law does not require an
independent compensation
committee.
The board of directors has established
a nomination and compensation
committee. However, its members are
not all independent in accordance
with NYSE listing standards.
Nomination of Directors
Must have a nominating/corporate
governance committee consisting solely of
independent directors.
BVI law does not require an
independent nominating committee.
The board of directors has established
a nomination and compensation
committee. However, its members are
not all independent in accordance
with NYSE listing standards.
Corporate Governance Guidelines
Company must adopt and disclose
corporate governance guidelines
BVI law does not require corporate
governance guidelines.
We do not have corporate governance
guidelines.
Shareholder Approval of Equity
Compensation Plans and Certain
Other Share Issuances
Shareholders must approve all equity-
compensation plans and material revisions
thereto, with limited exemptions.
Shareholder approval also required for
certain other dilutive and related party
equity issuances.
BVI law does not require shareholder
approval of equity compensation
plans or such other share issuances.
We have not and do not intend to
submit for shareholder approval any
equity-compensation plans or the
other dilutive and related party equity
issuances covered by NYSE rules.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
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ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES
On August 28, 2017, we approved our insider trading policy that governs the trading of our securities by the members of our board, our senior management and
employees who due to their job, profession or function, may have access to material non-public information concerning Despegar or its subsidiaries. Moreover,
it forbids these individuals from disclosing such sensitive information to others who might be influenced or encouraged to trade securities based on this
undisclosed information. Our insider trading policy and related procedures are reasonably designed to promote compliance with applicable insider trading laws.
A copy of our insider trading policy is included as Exhibit No. 11.1 to this Annual Report. We intend to disclose future amendments to our insider trading
policy on our website or in public filings. Information contained on, or that can be accessed through, our website is not part of, or incorporated by reference
into, this Annual Report, and inclusions of our website address herein are inactive textual references provided only for your informational reference. The
information on our website is not incorporated by reference into this Annual Report, and you should not consider information contained on our website to be a
part of this Annual Report.
ITEM 16K. CYBERSECURITY
We have a cybersecurity strategy designed to identify and manage material risks from cybersecurity threats. Our cybersecurity risk management program and
strategy is aligned to our governance and oversight and prioritizes both the corporate information technology environment and customer-facing products.
Risk management and strategy
Our cybersecurity risk management program is based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF), and on
recognized best practices and standards for cybersecurity and information technology. We believe that our processes provide us with a comprehensive
assessment of potential cyber threats, and we are working towards achieving a level of maturity in all relevant dimensions. We conduct regular scans,
penetration tests, and vulnerability assessments to identify potential threats or vulnerabilities in our systems.
The Company’s cybersecurity risk management program is composed of the following key elements:
•
Governance. As discussed in more detail under the heading “Item 16K. Cybersecurity—Cybersecurity Governance” below, as part of its general
oversight duties, the Board is supported in its oversight of cybersecurity risks by the Audit Committee, which regularly interacts with the Company’s
Internal Audit function, the Company’s VP of Security Engineering (“CISO”) and the Company’s Chief Technology Officer (“CTO”).
•
Risk Assessment and Management. The Company’s cybersecurity risk management program is based on industry standard information security
principles and best practices, specifically the NIST Cybersecurity Framework and the Payment Card Industry Data Security Standard (PCI DSS). The
program uses a proactive approach to regularly identify and assess cybersecurity threats, vulnerabilities and risks, and to evaluate the effectiveness of
implemented security controls through internal audits, external threat intelligence, and periodic external independent assessments. Risks identified and
assessed through the cybersecurity risk management program are then communicated to our senior leadership team and used to prioritize risks based
on their potential impact and likelihood as part of our dynamic risk response strategy.
•
Incident Response. We have developed a cyber-crisis response plan which provides a documented framework for handling high severity security
incidents and facilitates coordination across multiple parts of the company. Our incident response team constantly monitors threat intelligence feeds,
handles vulnerability management and responds to incidents.
•
Third-Party Risk Management. Our external service provider management program requires third-party service providers who manage sensitive
information to comply with our security standards, including notification procedures in the event of an incident involving Company confidential
information.
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•
Education and Awareness. The Company’s mandatory annual cybersecurity employee training program covers critical aspects of digital security,
including phishing prevention, threat awareness and safe data-handling practices. The annual training program is regularly refreshed based on the
evolving security landscape and secure code development. It is also supplemented by awareness initiatives to keep Company personnel updated on
cybersecurity threats and the latest security policies and instill a culture of security mindfulness across the organization.
We have experienced, and are continually subject to, cyber-attacks in the normal course of our business. While these past cyber-attacks have not materially
affected or, in our belief, are reasonably likely to materially affect us, future cybersecurity incidents and threats may materially affect us, including by affecting
our business strategy, results of operations, or financial condition. See “Item 3. Key Information—D. Risk Factors—Certain Risks Related to Our Business—
Any system interruption, security breaches, or lack of sufficient redundancy in our information systems may harm our businesses.”
Cybersecurity Governance
The Board, in coordination with the Audit Committee, oversees the Company’s risk management program, which includes risks arising from cybersecurity
threats. The Company’s CISO and/or the Company’s CTO quarterly meet with the Audit Committee to discuss information security and cybersecurity
programs, progress updates on the Company's key cybersecurity initiatives and related priorities and controls. Additionally, the Audit Committee is promptly
apprised of any cybersecurity incident that meets established reporting thresholds, and receives ongoing updates regarding any such incident until it has been
resolved. At each regularly scheduled Board meeting, the audit committee chairperson provides the full Board with an update on all significant matters
discussed, reviewed, considered and approved by the committee since the last regularly scheduled Board meeting.
The Company’s CISO, in coordination with the Chief Executive Officer (“CEO”) and CTO, works collaboratively across the Company to implement and
monitor a program designed to protect the Company’s information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents
in accordance with the Company’s cybersecurity incident response plan and its security policy. To facilitate the success of the Company’s cybersecurity risk
management program, multidisciplinary teams throughout the Company are deployed to address cybersecurity threats and to respond to cybersecurity
incidents. Through ongoing communications with these teams, the CISO, the CTO and other executive leadership team members are informed about and
monitor the prevention, detection, mitigation and remediation of cybersecurity threats and incidents in real time, and report risks from cybersecurity threats and
cybersecurity incidents to the Audit Committee when appropriate.
The CISO has extensive information technology and program management experience, including serving in similar roles leading and overseeing cybersecurity
programs at other public companies, and has cybersecurity certifications, such as the Certified Information Systems Security Professional certification. The
CISO holds a Bachelor of Science in Computer Science and is a Certified Information Systems Security Professional (CISSP) and a Certified Ethical Hacker
(CEH). The Company’s CTO holds an undergraduate degree in electronic engineering. The Company’s CEO, CFO and CLO each hold undergraduate and
graduate degrees in their respective fields, and each have extensive experience managing risks at the Company and at similar companies, including risks arising
from cybersecurity threats.
PART III.
ITEM 17 FINANCIAL STATEMENTS
We have responded to Item 18 in lieu of this item.
ITEM 18 FINANCIAL STATEMENTS
See our consolidated financial statements beginning at page F-1.
ITEM 19 EXHIBITS
The agreements and other documents filed as exhibits to this Annual Report are not intended to provide factual information or other disclosure other than with
respect to the terms of the agreements or other documents themselves, and you should
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not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within
the specific context of the relevant agreement or document and for the benefit of the other parties to the agreements and they may not describe the actual state
of affairs as of the date they were made or at any other time.
The exhibit index attached hereto is incorporated herein by reference.
EXHIBIT INDEX
Exhibit
No.
Description
1.1
Memorandum of Association and Articles of Association of Despegar.com, Corp., Amended and Restated on December 11, 2023
(incorporated by reference to Exhibit 3.1 to the Current Report filed on Form 6-K (File No. 001-38209), filed on December 14, 2023)
2.1
Sixth Amended and Restated Investors’ Rights Agreement, dated as of August 29, 2017, by and among the Company and the shareholders
named therein (incorporated by reference to Exhibit 4.1 to the Registration Statement filed on Form F-1 (File No. 333-219973), filed on
August 31, 2017)
2.2
Letter Agreement, dated as of August 20, 2020, relating to the Sixth Amended and Restated Investors’ Rights Agreement, dated as of August
29, 2017 by Despegar.com, Corp. and the shareholders named therein (incorporated by reference to Exhibit 4.4 to the Current Report filed on
Form 6-K (File No. 001-38209), filed on August 21, 2020)
2.3
Fourth Amended and Restated Voting Agreement, dated as of August 29, 2017, by and among the Company and the shareholders named
therein (incorporated by reference to Exhibit 4.3 to the Registration Statement filed on Form F-1 (File No. 333-219973), filed on August 31,
2017)
2.4
Nominating Agreement, dated as of October 21, 2020, by and among Despegar.com, Corp. and Expedia, Inc. (incorporated by reference to
Exhibit 4.1 to the Current Report filed on Form 6-K (File No. 001-38209), filed on August October 21, 2020)
2.5
Registration Rights Agreement, dated as of September 18, 2020 by and among Despegar.com, Corp. and LCLA Daylight LP (incorporated by
reference to Exhibit 4.5 to the Annual Report on Form 20-F (File No. 001-38209) filed on April 30, 2021)
2.6
Ordinary Shares Purchase Warrant (Penny Warrant), dated September 18, 2020 issued by Despegar.com, Corp. in favor or LCLA Daylight
LP (incorporated by reference to Exhibit 4.7 to the Annual Report on Form 20-F (File No. 001-38209) filed on April 30, 2021)
2.7*
Letter Agreement, dated as of September 13, 2024, relating to the Sixth Amended and Restated Investors’ Rights Agreement, dated as of
August 29, 2017 by Despegar.com, Corp. and the shareholders named therein.
2.8*
Description of Securities Registered under Section 12(b) of the Exchange Act.
4.1##
Amended and Restated Expedia Outsourcing Agreement dated as of November 14, 2019, among Expedia, Inc. and Decolar.com Inc., Travel
Reservations S.R.L., Despegar.com.ar S.A., Decolar.com Ltda., Despegar.com Mexico S.A. de C.V., Despegar.com Peru SAC, Despegar.com
Chile SpA., Despegar Colombia S.A.S., Viajes Despegar.com O.N.L.I.N.E. S.A., Despegar Ecuador S.A., Despegar.com USA, Inc.,
Despegar.com Panama S.A., and Holidays S.A. (incorporated by reference to Exhibit 4.1 to the Annual Report filed on Form 20-F (File No.
001-38209), filed on April 10, 2020)
4.2##
Amendments to the Amended and Restated Lodging Outsourcing Agreement, dated as of October 21, 2021, June 7, 2022, October 27, 2022,
November 18, 2022, June 12, 2023 and September 29, 2023, among Expedia, Inc., Travel Reservations S.R.L, Decolar.com, Inc., and each of
the subsidiaries of Decolar.com, Inc. parties thereto (incorporated by reference to Exhibit 4.2 to the Annual Report filed on Form 20-F (File
No. 001-38209), filed on April 26, 2024).
4.3#
Amended and Restated Despegar Outsourcing Agreement dated as of July 12, 2017, among Expedia, Inc., Travelscape, LLC, Vacation Spot
S.L., Hotels.com L.P., AAE Travel Pte., Ltd., Expedia Lodging Partner Services, Sarl and Hotwire, Inc. and Travel Reservations S.R.L.
(incorporated by reference to Exhibit 10.2 to the Registration Statement filed on Form F-1 (File No. 333-219973), filed on August 31, 2017)
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4.4
Investment Agreement, dated as of August 20, 2020, by and between Despegar.com, Corp. and LCLA Daylight LP (incorporated by
reference to Exhibit 4.1 to the Current Report filed on Form 6-K (File No. 001-38209), filed on August 21, 2020)
4.5
Investment Agreement, dated as of August 20, 2020, by and between Despegar.com, Corp. and Waha LATAM Investment Limited
(incorporated by reference to Exhibit 4.2 to the Current Report filed on Form 6-K (File No. 001-38209), filed on August 21, 2020)
4.6
Decolar.com, Inc. 2015 Stock Plan (incorporated by reference to Exhibit 10.3 to the Registration Statement filed on Form F-1 (File No. 333-
219973), filed on August 15, 2017)
4.7
Despegar.com, Amended and Restated 2016 Stock Incentive Plan, as amended through April 26, 2023 (incorporated by reference to Exhibit
4.9. to the Registration Statement filed on Form S-8 (File No. 333-271577), filed on May 2, 2023).
4.8*##
Second Amended and Restated Lodging Outsourcing Agreement, dated as of September 13, 2024, among Expedia, Inc., Travel Reservations
S.R.L., Decolar.com, Inc., and Despegar.com, Corp.
4.9*##
Agreement and Plan of Merger, dated as of December 23, 2024, by and among MIH Internet Holdings B.V., MIH Investments Merger Sub
Limited, and Despegar.com, Corp. (incorporated by reference to Exhibit 99.1 to the current report on Form 6-K/A (File No. 001-38209)
furnished on December 30, 2024).
4.10*##
Despegar.com HBX Outsourcing Agreement, dated January 27, 2025, between Decolar.com, Inc. and Hotelbeds USA Inc.
4.11*##
Amendment to the Amended and Restated Lodging Outsourcing Agreement, dated as of December 13, 2024, among Expedia, Inc. Travel
Reservations S.R.L., Decolar.com, Inc. and each of the subsidiaries of Decolar.com, Inc. parties thereto.
8.1*
List of Subsidiaries of Despegar.
11.1*
Insider Trading Policy.
12.1*
Certification by Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2*
Certification by Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1*
Certification by Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2*
Certification by Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
23.1*
Consent of Price Waterhouse & Co. S.R.L., Independent Registered Public Accounting Firm.
97*
Incentive Compensation Clawback Policy.
101. INS*
Inline XBRL Instance Document
101. SCH*
XBRL Taxonomy Extension Schema Document With Embedded Linkbase Documents
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
___________
* Filed herewith.
# Confidential treatment requested granted with respect to portions of this exhibit.
## Portions of this exhibit have been omitted because they are both (i) not material and (ii) customarily and actually treated as private or confidential.
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SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign
this Annual Report on its behalf.
DESPEGAR.COM, CORP.
By:
/s/Damián Scokin
Name:
Damián Scokin
Title:
Chief Executive Officer
Date: April 30, 2025
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INDEX TO FINANCIAL STATEMENTS
Consolidated Financial Statements as of December 31, 2024 and 2023 and for the three years ended December 31, 2024:
Report of Independent Registered Public Accounting Firm - PCAOB - ID 1349
F-2
Consolidated Balance Sheets as of December 31, 2024 and 2023
F-7
Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022
F-8
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2024, 2023 and 2022
F-9
Consolidated Statements of Changes in Shareholders’ (Deficit) Equity for the years ended December 31, 2024, 2023 and 2022
F-10
Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022
F-11
Notes to the Consolidated Financial Statements
F-13
F-1
Table of Contents
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Despegar.com, Corp.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying Consolidated Balance Sheets of Despegar.com, Corp. and its subsidiaries (the “Company”) as of December 31, 2024 and
2023, and the related Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Changes
in Shareholders’ (Deficit) Equity and Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2024, including the
related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting
as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of
December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024 in
conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company did not maintain, in all material
respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to the design of effective
controls over the authorization process of certain pricing policies associated with revenue transactions in the Company’s air segment.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that
a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness referred to
above is described in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15B. We consider this material
weakness in determining the nature, timing and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and our opinion
regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and
for its assessment of the effectiveness of internal control over financial reporting, included in management’s report referred to above. Our responsibility is to
express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We
are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent
with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial
statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
F-2
Table of Contents
statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits
also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over
financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated
or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements
and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Audit of Commissions and Service Fee Revenues
As described in Notes 3 and 21 to the consolidated financial statements, the Company’s revenues derived from commissions and service fees were $652.7
million for the year ended December 31, 2024, representing 84% of the Company’s total consolidated revenues. These revenues are generated by providing
online travel reservation services, which principally allow travellers to book travel reservations with travel service providers through the Company’s platforms.
The principal considerations for our determination that performing procedures relating to the audit of revenues derived from commissions and service fees is a
critical audit matter are (i) the significant complexity of the Company’s processes for calculating and recording commissions and service fee revenue
transactions, which in turn led to (ii) a significant effort in performing procedures and evaluating audit evidence related to such processes; and (iii) the audit
effort involved the use of professionals with specialized skill and knowledge.
F-3
Table of Contents
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated
financial statements. These procedures included testing the effectiveness of controls relating to management’s processes for calculating and recording
commissions and service fee revenue transactions. These procedures also included, among others (i) performing detailed commissions and service fee revenue
transactions testing by agreeing the amounts recognized to source documents; and (ii) testing the mathematical accuracy of the recorded commissions and
service fee revenue transactions. Professionals with specialized skill and knowledge were used to assist in the testing of the effectiveness of controls relating to
management’s processes for calculating and recording commissions and service fee revenue transactions.
/s/ PRICE WATERHOUSE & CO. S.R.L.
/s/ Walter Rafael Zablocky (Partner)
Walter Rafael Zablocky
Buenos Aires, Argentina
April 30, 2025
We have served as the Company’s auditor since 2007.
F-4
Table of Contents
Despegar.com, Corp.
Consolidated Balance Sheets as of December 31, 2024 and 2023
The accompanying notes are an integral part of these consolidated financial statements.
F-5
Table of Contents
(In thousands of U.S. dollars)
As of December 31,
As of December 31,
2024
2023
ASSETS
Current assets
Cash and cash equivalents
$
222,793
$
214,575
Restricted cash
$
23,681
$
25,947
Trade accounts receivable, net of allowances of $5,608 and $6,809
$
251,948
$
183,393
Loans receivable, net of allowances of $14,934 and $13,111
$
16,567
$
21,385
Related party receivable
$
18,595
$
16,646
Other assets and prepaid expenses
$
57,264
$
52,287
Assets held for sale
$
—
$
23,019
Total current assets
$
590,848
$
537,252
Non-current assets
Restricted cash
$
742
$
932
Other assets and prepaid expenses
$
74,161
$
78,886
Loans receivable, net of allowances of $418 and $472
$
374
$
1,741
Lease right-of-use assets
$
15,590
$
21,950
Property and equipment, net
$
14,190
$
16,400
Intangible assets, net
$
83,050
$
90,421
Goodwill
$
125,832
$
150,752
Total non-current assets
$
313,939
$
361,082
TOTAL ASSETS
$
904,787
$
898,334
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued expenses
$
58,460
$
51,932
Travel accounts payable
$
357,817
$
355,387
Related party payable
$
101,365
$
88,248
Short-term debt and other financial liabilities
$
49,625
$
28,530
Deferred revenue
$
35,492
$
31,804
Other liabilities
$
83,657
$
94,693
Contingent liabilities
$
7,416
$
6,080
Lease liabilities
$
5,205
$
6,035
Liabilities held for sale
$
—
$
8,370
Total current liabilities
$
699,037
$
671,079
Non-current liabilities
Other liabilities
$
7,313
$
12,631
Contingent liabilities
$
10,335
$
14,738
Long-term debt and other financial liabilities
$
904
$
2,262
Lease liabilities
$
11,062
$
16,970
Related party liability
$
125,000
$
125,000
Deferred revenue
$
3,500
$
—
Total non-current liabilities
$
158,114
$
171,601
TOTAL LIABILITIES
$
857,151
$
842,680
Series A non-convertible preferred shares, no par value, 150,000 shares authorized, issued and outstanding
$
142,044
$
134,773
Series B convertible preferred shares, no par value, 50,000 shares authorized, issued and outstanding
$
—
$
46,700
TOTAL MEZZANINE EQUITY
$
142,044
$
181,473
SHAREHOLDERS’ DEFICIT
Common stock (1)
$
302,270
$
292,226
Additional paid-in capital
$
239,915
$
291,440
Other reserves
$
(728)
$
(728)
Accumulated other comprehensive loss
$
(34,150)
$
(11,658)
Accumulated losses
$
(590,927)
$
(618,832)
Treasury Stock
$
(10,788)
$
(78,267)
Total Shareholders’ Deficit
$
(94,408)
$
(125,819)
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ DEFICIT
$
904,787
$
898,334
(1)
Represents 84,426 shares (in thousands) issued as of December 31, 2024 and 72,908 shares (in thousands) issued as of December 31, 2023. See Note 26.
Table of Contents
Despegar.com, Corp.
Consolidated Statements of Operations
for the years ended December 31, 2024, 2023 and 2022
(In thousands of U.S. dollars, except per share data in U.S. dollars)
For the year ended December 31,
2024
2023
2022
Revenue (1)
$
774,061
$
706,040
$
537,972
Cost of revenue
(208,142)
(228,938)
(182,898)
Gross profit
$
565,919
$
477,102
$
355,074
Operating expenses
Selling and marketing
$
(250,741)
$
(220,361)
$
(165,150)
General and administrative
(80,309)
(77,766)
(101,521)
Technology and product development
(107,958)
(109,130)
(89,992)
Other operating expense, net
(2,940)
(4,546)
—
Total operating expenses
$
(441,948)
$
(411,803)
$
(356,663)
Loss equity investments
(842)
(1,060)
(164)
Operating income / (loss)
$
123,129
$
64,239
$
(1,753)
Financial results, net
(89,072)
(36,633)
(45,459)
Income / (Loss) before income taxes
$
34,057
$
27,606
$
(47,212)
Income tax expense
(6,152)
(3,116)
(21,309)
Net income / (loss) for the year
$
27,905
$
24,490
$
(68,521)
Net income / (loss) attributable to Despegar.com, Corp.
$
27,905
$
24,490
$
(68,521)
(1)
Includes $59,554, $40,288 and $24,220 for related party transactions for the years 2024, 2023 and 2022, respectively. See Note 23.
Losses per share available to common shareholders (Note 25):
Basic
$
(0.03)
$
(0.09)
$
(1.28)
Diluted
$
(0.03)
$
(0.09)
$
(1.28)
Shares used in computing losses per share (in thousands):
Basic
81,748
77,170
76,823
Diluted
81,748
77,170
76,823
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Table of Contents
Despegar.com, Corp.
Consolidated Statements of Comprehensive Income (Loss)
for the years ended December 31, 2024, 2023 and 2022
(In thousands of U.S. dollars)
For the year ended December 31,
2024
2023
2022
Net income / (loss) for the year
$
27,905
$
24,490
$
(68,521)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment
(22,492)
4,434
1,973
Comprehensive income / (loss) for the year
$
5,413
$
28,924
$
(66,548)
Comprehensive income / (loss) attributable to Despegar.com, Corp.
$
5,413
$
28,924
$
(66,548)
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Table of Contents
Despegar.com, Corp.
Consolidated Statements of Changes in Shareholders’ (Deficit) Equity
for the years ended December 31, 2024, 2023 and 2022
(In thousands of U.S. dollars)
Common stock
Additional
paid-in
capital
Other
reserves
Accumulated
other
comprehensive
income / (loss)
Accumulated
losses
Treasury Stock
Total equity /
(deficit)
Number of
shares issued
(in
thousands)
Amount
Balance as of January 01, 2022
71,246
$
279,932
$
350,200
$
(728)
$
(18,065)
$
(574,801)
$
(68,267)
$
(31,729)
Stock – based compensation expense
—
—
7,292
—
—
—
—
7,292
Foreign currency translation adjustment
—
—
—
—
1,973
—
—
1,973
Exercise of stock-based awards
1,070
7,621
(7,254)
—
—
—
—
367
Net loss for the year
—
—
—
—
—
(68,521)
—
(68,521)
Treasury Stock
—
—
—
—
—
—
(10,000)
(10,000)
Accretion of Series A non-convertible preferred shares
—
—
(11,884)
—
—
—
—
(11,884)
Accrual of cumulative dividends of Series A non-convertible preferred
shares
—
—
(15,375)
—
—
—
—
(15,375)
Accretion of redeemable non-controlling interest
—
—
(473)
—
—
—
—
(473)
Accrual of dividends of Series B convertible preferred shares
$
—
$
—
$
(2,000)
$
—
$
—
$
—
$
—
$
(2,000)
Redemption of non-controlling interest
$
—
$
—
$
3,200
$
—
$
—
$
—
$
—
$
3,200
Balance as of December 31, 2022
72,316
$
287,553
$
323,706
$
(728)
$
(16,092)
$
(643,322)
$
(78,267)
$
(127,150)
Stock – based compensation expense
—
—
3,454
—
—
—
—
3,454
Foreign currency translation adjustment
—
—
—
—
4,434
—
—
4,434
Exercise of stock-based awards
592
4,673
(4,646)
—
—
—
—
27
Net income for the year
—
—
—
—
—
24,490
—
24,490
Treasury Stock
—
—
—
—
—
—
—
—
Accretion of Series A non-convertible preferred shares
—
—
(13,324)
—
—
—
—
(13,324)
Accrual of cumulative dividends of Series A non-convertible preferred
shares
—
—
(15,750)
—
—
—
—
(15,750)
Accrual of dividends of Series B convertible preferred shares
—
—
(2,000)
—
—
—
—
(2,000)
Balance as of December 31, 2023
72,908 $
292,226 $
291,440 $
(728) $
(11,658) $
(618,832) $
(78,267) $
(125,819)
Stock – based compensation expense
—
—
9,901
—
—
—
—
9,901
Foreign currency translation adjustment
—
—
—
—
(22,492)
—
—
(22,492)
Exercise of stock-based awards
525
10,044
(9,937)
—
—
—
—
107
Net income for the year
—
—
—
—
—
27,905
—
27,905
Accretion of Series A non-convertible preferred shares
—
—
(14,982)
—
—
—
—
(14,982)
Accrual of cumulative dividends of Series A non-convertible preferred
shares
—
—
(15,229)
—
—
—
—
(15,229)
Exercise of convertible preferred stock
—
—
(20,779)
—
—
—
67,479
46,700
Accrual of dividends of Series B convertible preferred shares
—
—
(499)
—
—
—
—
(499)
Issuance of stock in cashless exercise of warrants
10,993
—
—
—
—
—
—
—
Balance as of December 31, 2024
84,426 $
302,270 $
239,915 $
(728) $
(34,150) $
(590,927) $
(10,788) $
(94,408)
The accompanying notes are an integral part of these consolidated financial statements.
F-9
Table of Contents
Despegar.com, Corp.
Consolidated Statements of Cash Flows
for the years ended December 31, 2024, 2023 and 2022
(In thousands of U.S. dollars)
For the year ended
December 31,
2024
2023
2022
Cash flows from operating activities:
Net income / (loss)
$
27,905
$
24,490
$
(68,521)
Adjustments to reconcile net income / (loss) to net cash flows from operating activities:
Unrealized foreign currency loss
4,006
50,068
11,937
Changes in fair value of earnout liability
(2,409)
1,598
(2,113)
Changes in seller indemnification
2,409
(1,598)
2,113
Loss from equity investments
842
1,060
164
Depreciation expense
7,210
8,535
7,018
Amortization expense
31,585
27,975
28,985
Other operating expenses, net (including loss from sale of non-air segment line of business)
613
4,546
—
Stock-based compensation expense
9,901
3,454
7,292
Amortization of lease right-of-use assets
6,942
6,930
5,095
Interest and penalties
3,707
4,207
2,428
Income tax (benefit) / expense
(2,784)
(14,143)
11,981
Allowance for credit expected losses
15,664
12,044
12,747
Provision for contingencies
(1,259)
1,795
18,060
Changes in assets and liabilities, net of non-cash transactions:
Increase in trade accounts receivable, net of credit expected loss
(113,182)
(70,196)
(16,690)
Increase in loans receivable, net of allowance
(13,533)
(7,137)
(10,179)
Decrease / (Increase) in related party receivable
599
(8,440)
9,610
(Increase) / Decrease in other assets and prepaid expenses
(25,464)
(47,719)
28,069
Increase in accounts payable and accrued expenses
11,900
7,250
4,398
Increase in travel accounts payable
71,853
61,945
837
(Decrease) / Increase in other liabilities
3,081
2,750
(750)
Decrease in contingent liabilities
2,173
(22,052)
(22,587)
Increase in related party payable
20,946
50,243
1,900
Decrease in lease liabilities
(9,359)
(7,647)
(4,589)
Increase in deferred revenue
12,767
12,772
9,497
Net cash flows provided by operating activities
$
66,113 $
102,730
$
36,702
Cash flows from investing activities:
Origination of loans receivable
(9,204)
(21,048)
(17,562)
Collection of loans receivable
7,736
9,456
7,289
Payments for acquired business, net of cash acquired
—
—
(7,019)
Payment for other assets
—
—
(3,190)
Acquisition of property and equipment
(6,488)
(9,820)
(4,288)
Capital expenditures, including internal-use software and website development
(30,330)
(31,146)
(26,372)
Proceeds from financed sale of held-for-sale assets
$
2,069
$
—
$
—
Net cash flows used in investing activities
$
(36,217) $
(52,558)
$
(51,142)
Cash flows from financing activities:
Net (decrease) / increase of short-term debt
(5,170)
4,725
(57)
Proceeds from issuance of short-term debt
67,652
29,145
31,572
Payment of short-term debt
(43,544)
(33,277)
(26,970)
Payment of long-term debt
(1,307)
(6,168)
(4,156)
Payment of promissory notes of Best Days acquisition
—
(16,648)
—
Purchase of treasury stock
—
—
(10,000)
Payments of debenture issuance by securitization program
(1,046)
(5,789)
—
Payments for acquired non-controlling interest
—
—
(3,200)
Collect on debenture issuance by securitization program
—
7,534
4,545
Exercise of stock-based awards
126
4
340
Payment of dividends to stockholders Series A and Series B convertible preferred shares
(23,437)
(17,750)
(17,375)
Net cash flows used in financing activities
$
(6,726)
$
(38,224)
$
(25,301)
Effect of exchange rate changes on cash and cash equivalents
(26,743)
(6,205)
5,564
Net (decrease) / increase in cash and cash equivalents
$
(3,573)
$
5,743
$
(34,177)
Cash and cash equivalents and restricted cash as of beginning of the year
250,789
245,046
279,223
Cash and cash equivalents and restricted cash as of end of the year
247,216
250,789
245,046
The accompanying notes are an integral part of these consolidated financial statements.
F-10
Table of Contents
Despegar.com, Corp.
Consolidated Statements of Cash Flows
for the years ended December 31, 2024, 2023 and 2022 (Continued)
(In thousands of U.S. dollars)
For the year ended December 31,
2024
2023
2022
Supplemental cash flow information
Cash paid for income tax
$
9,119
$
17,347
$
8,550
Interest paid
$
41,207
$
43,411
$
8,484
Conciliation of Cash and cash equivalents:
As of December 31, 2023
Cash and cash equivalents as of end of the year
$
250,789
Cash and cash equivalents related to business classified as held for sale (Note 32)
$
9,335
Cash and cash equivalents as of end of the year, net of business held for sale
$
241,454
The accompanying notes are an integral part of these consolidated financial statements.
F-11
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements
(In thousands of U.S. dollars, except per share data in U.S. dollars)
1. Business
Despegar.com, Corp. and its subsidiaries provide travel products and services to leisure and corporate travelers in several countries in Latin America and the
United States, as well as advertising and media solutions to advertisers. We offer these travel products and services through our portfolio of key trademarks:
“Despegar,” “Despegar.com”, “Decolar”, “Decolar.com”, “Best Day”, “HotelDo”, “Viajanet” and “Stays”. Through Koin, the financial services company
solution, we extend loans to our travel customers and certain consumers of other merchants. We refer to Despegar.com, Corp. and its subsidiaries collectively
as the “Despegar Group”, the “Company”, “us”, “we” and “our”, as the context requires, in these consolidated financial statements. We continuously monitor
our business performance, revenue and costs, our current and projected liquidity and operating plans. These assessments require the use of various internal and
external information to build projections, including estimates from industry associations, such as the International Air Transport Association (“IATA”), which is
expecting that travel will continue to improve during the coming years. We have taken and continue to take actions to improve our liquidity, including
managing our cost structure and spending where possible to mitigate any anticipated loss of revenue. The principal assumptions used in our cash flow analyses
to estimate future liquidity requirements consisted of forecasting gross bookings and revenues, net of our most significant costs and expenses, forecasting
working capital requirements and commitments, including but not limited to our preferred dividends, debt payments and acquisition commitments. Based on
these actions and assumptions and considering our available cash and cash equivalents balance as of December 31, 2024, we anticipate that based on our
current operating plan we have sufficient cash and cash equivalents to fund our operations and comply with our commitments for at least the next 12 months as
from the issuance of these consolidated financial statements.
2. Basis of consolidation and presentation
Basis of presentation
We prepared these consolidated financial statements in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
Our consolidated financial statements include the accounts of Despegar.com, Corp., our wholly owned subsidiaries, and entities in which we have a variable
interest, and we are the primary beneficiary as 'K-FIDC', please see Note 10.
We consolidate our subsidiaries from the date on which we obtain control. We deconsolidate any subsidiary from the date we lose control.
We record our investments in entities that we do not control, but over which we have the ability to exercise significant influence, using the equity method. We
have eliminated intercompany transactions and accounts. We change the accounting policies of subsidiaries where necessary to ensure consistency with our
accounting policies. All of our subsidiaries have the same year-end.
We believe that the assumptions underlying our consolidated financial statements are reasonable. However, these consolidated financial statements do not
present our future financial position, the results of our future operations and cash flows.
The accompanying notes are an integral part of these consolidated financial statements.
F-12
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
The following are our subsidiaries as of the end of the years presented:
Name of the subsidiary
(in alphabetical order)
Type
Country of
incorporation
As of
December 31,
2024
As of
December 31,
2023
% Owned
Badurey S.A.
Holding
Uruguay
100 %
100 %
Click Hoteles.com, LLC
Holding
United States
100 %
100 %
Decolar.com Ltda.
Operating
Brazil
100 %
100 %
Decolar.com, Inc.
Holding
United States
100 %
100 %
Despegar Colombia S.A.S.
Operating
Colombia
100 %
100 %
Despegar Ecuador S.A.
Operating
Ecuador
100 %
100 %
Despegar.com Chile SpA
Operating
Chile
100 %
100 %
Despegar.com México S.A. de C.V.
Operating
Mexico
100 %
100 %
Despegar.com Peru S.A.C.
Operating
Peru
100 %
100 %
Despegar.com USA, Inc.
Operating
United States
100 %
100 %
Despegar.com.ar S.A.
Operating
Argentina
100 %
100 %
DFinance Holding Ltda.
Holding
Brazil
100 %
100 %
Holidays S.A.
Operating
Uruguay
100 %
100 %
Jamiray International S.A. (1)
Operating
Uruguay
100 %
100 %
Koin (BVI) Limited
Holding
British Virgin Islands
100 %
100 %
Xirex Contigo Sapi De CV Sofom ENR
Operating
Mexico
100 %
100 %
Ruselmy S.A.
Operating
Uruguay
100 %
100 %
Koin Administradora de Cartões e Meios de Pagamento S.A.
Operating
Brazil
100 %
100 %
Rivamor S.A.
Holding
Uruguay
100 %
100 %
Ruotej S.A.
Operating
Uruguay
100 %
100 %
Satylca S.C.A.
Holding
Uruguay
100 %
100 %
Servicios Online 3351 de Venezuela C.A.
Operating
Venezuela
100 %
100 %
South Net Chile, SpA (2)
Operating
Chile
— %
100 %
South-Net Turismo S.A.U.
Operating
Argentina
100 %
100 %
Transporturist, S.A. de C.V. (3)
Operating
Mexico
— %
100 %
Travel Reservations S.R.L.
Operating
Uruguay
100 %
100 %
Viajes Beda, S.A. de C.V.
Operating
Mexico
100 %
100 %
(1)
In process of dissolution
(2)
Dissolved entity on July 9, 2024.
(3)
Entity sold on July 31, 2024.
Reclassifications
We have reclassified prior period financial statements to conform to the current period presentation.
Accounting estimates
We use estimates and assumptions in the preparation of our consolidated financial statements in accordance with U.S. GAAP. Our estimates and assumptions
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our consolidated financial statements.
These estimates and assumptions also affect the reported amount of net income or loss during any period. Our actual financial results could differ significantly
from these estimates. For the year ended December 31, 2024, significant estimates underlying our consolidated financial statements include (i) recoverability of
deferred tax assets and uncertain tax positions, and (ii) loss contingencies. In 2023, significant estimates also included the recoverability of indefinite-lived
intangible assets, goodwill, disposal group classified as held for sale and acquisition purchase price allocations.
The accompanying notes are an integral part of these consolidated financial statements.
F-13
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Foreign currency translation
We have selected the U.S. dollar as our reporting currency. For local functional currency locations, assets and liabilities are translated at end-of-period rates
while revenues and expenses are translated at average rates in effect during the period. Equity is translated at historical rates and the resulting cumulative
translation adjustments are included as a component of accumulated other comprehensive income / (loss).
For U.S. dollar functional currency locations, foreign currency assets and liabilities are remeasured into U.S. dollars at end-of-period exchange rates, except for
non-monetary balance sheet accounts, which are remeasured at historical exchange rates. Revenue and expenses are remeasured at average exchange rates in
effect during each period, except for those expenses related to the non-monetary balance sheet amounts, which are remeasured at historical exchange rates.
Gains or losses from foreign currency remeasurement are included in “Financial results, net” in our consolidated statements of operations.
Argentine currency status and exchange regulations
As of July 1, 2018, we transitioned our Argentinian operations to highly inflationary status in accordance with U.S. GAAP, and changed the functional currency
for Argentine subsidiaries from Argentine Pesos to U.S. dollars, which is the functional currency of their immediate parent company.
In the second half of 2019, the Argentine government instituted exchange controls restricting the ability of companies and individuals to exchange Argentine
Pesos for foreign currencies and their ability to remit foreign currency out of Argentina. An entity’s authorization request to the Central Bank of Argentina to
access the official exchange market to make foreign currency payments may be denied depending on the circumstances. As a result of these exchange controls,
markets in Argentina developed trading mechanisms, in which an entity or individual buys U.S. dollar denominated securities in Argentina (i.e., shares,
sovereign debt) using Argentine Peso, and subsequently sells the securities for U.S. dollars, in Argentina, to access U.S. dollars locally, or outside Argentina, by
transferring the securities abroad, prior to being sold (the latter commonly known as Blue Chip Swap Rate). The Blue Chip Swap Rate has diverged
significantly from Argentina’s official exchange rate (commonly known as exchange spread). In recent years, the Blue Chip Swap Rate has been higher than
Argentina’s official exchange rate. As of December 31, 2024, the spread of the Blue Chip Swap Rate was 15.0%.
However, the only exchange rate available for external commerce is the official exchange rate, which as of December 31, 2024 was $1,031 Argentine Pesos per
US dollar. We use Argentina’s official exchange rate to record the accounts of Argentine subsidiaries.
On April 11, 2025, the Argentine government announced the removal of most foreign exchange restrictions. The measures are part of a broader economic
reform and include a shift to a managed floating exchange rate regime. While some controls remain in place, the new framework is expected to improve access
to the official foreign exchange market.
Concentration of credit risk
Cash and cash equivalents, restricted cash and cash equivalents, accounts receivable and loans receivable are potentially subject to credit risk. However, there
are not significant concentrations of credit risk arising from these financial instruments. We place our cash and cash equivalents and restricted cash and cash
equivalents with several financial institutions in different countries and financial instruments that are highly liquid and highly rated. Our Brazilian, Mexican
and Argentinian operations concentrate around 29%, 19% and 19%, respectively, of our cash and cash equivalents balance as of December 31, 2024. Cash and
cash equivalents balances in other countries do not exceed 15% of the total cash and cash equivalents as of December 31, 2024.
Accounts receivable are derived from revenue earned from customers located internationally and are settled through customer credit cards, debit cards and
other means of payment, with the majority of accounts receivable collected upon processing of credit card transactions. Due to the relatively small dollar
amount of individual accounts receivable, we generally do not require collateral on these balances.
We have also substantial credit risk primarily in our consumer loans held for investment. We are exposed to default risk on loans receivable. The ultimate
collectability of a substantial portion of the loan portfolio is susceptible to changes in economic and market conditions. Loans receivable are concentrated in
Brazil. Due to the relatively small dollar amount of individual loans receivable, we generally do not require collateral on these balances.
The accompanying notes are an integral part of these consolidated financial statements.
F-14
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
We maintain an allowance for doubtful accounts based on management’s evaluation of various factors, including the credit risk of customers, historical trends,
and other information. Furthermore, we utilize a simplified roll rate method to calculate the allowance for expected credit losses of our loans receivable. See
Notes 8 and 9 for details.
In addition, our business is subject to certain risks and concentrations including our dependence on relationships with travel suppliers, primarily airlines and
Expedia, Inc. (“Expedia”, a subsidiary of Expedia Group, Inc., a Delaware corporation, is a shareholder of record of the Company – see Note 23). A substantial
part of the hotel and other lodging products that we offer through our platform for all countries outside Latin America are provided to us by affiliates of
Expedia, and Expedia is amongst the key providers of such products in Latin America pursuant to a lodging outsourcing agreement, as amended from time to
time. If Expedia’s affiliates were to discontinue providing us with their hotel and other lodging products, we could experience temporary and partial limitations
in the availability of these products. While we would seek alternative providers, replacing this supply in the short term might present some challenges, which
could have an adverse impact on our business, financial condition, and results of operations. We are also dependent on third-party technology providers, and we
are exposed to risks associated with online commerce security and payment-related fraud. In addition, we rely on global distribution systems (“GDS”)
providers and other third-party service providers for certain fulfillment services.
Seasonality
We generally experience seasonal fluctuations in the demand for our travel services. Our most significant markets in the Southern hemisphere are in Brazil and
Argentina where summer runs from December 1 to February 28 and winter runs from June 1 to August 31. Our most significant market in the Northern
hemisphere is Mexico where summer runs from June 1 to August 31 and winter runs from December 1 to February 28. Accordingly, traditional leisure travel
bookings in the Southern hemisphere are generally the highest in the second and fourth quarters of the year as travelers plan and book their winter and summer
holiday travel. The number of bookings typically decreases in the first quarter of the year. In the Northern hemisphere, bookings are generally the highest in the
first three quarters as travelers plan and book their spring, summer, and winter holiday travel. The seasonal revenue impact is exacerbated with respect to
income by the nature of variable cost of revenue and direct sales and marketing costs, which is typically realized in closer alignment to booking volumes, and
the more stable nature of fixed costs. The continued growth of international operations or a change in product mix may influence the typical trend of the
seasonality in the future, and there may also be business or market driven dynamics that result in short-term impacts to revenue or profitability that differ from
the typical seasonal trends. Revenues, expenses, assets, and liabilities can vary during each quarter of the year. Therefore, the results and trends in these
consolidated financial statements may not be the same as those for any subsequent quarter or the full year.
3. Summary of significant accounting policies
Revenue recognition
We generate revenue from our travel and financial services businesses. The majority of our revenues relates to our travel business for all years presented.
Travel business:
We offer traditional travel services on a stand-alone and package basis generally either through the pre-pay/merchant business model (“Prepay Model”) or the
pay-at-destination/agency business model (“PAD Model”). We primarily generate revenue from facilitation services, either directly or using affiliated travel
agencies. We consider both the traveler and the travel supplier as our customers.
Under the Prepay Model, we provide travelers with access to book hotel rooms, airline seats, car rentals and destination services through our contracts with our
network of travel suppliers. Our travelers pay us for merchant transactions generally when they book the reservation. We pay our travel suppliers later,
generally when the travelers use the travel service. Under these transactions, we generally earn a commission from travel suppliers and service fees from
travelers. Travel suppliers generally bill us for travel products sold within a 12-month period from check-out date. We recognize breakage as incremental
revenue from unbilled amounts when the period expires.
Under the PAD Model, travelers pay the travel supplier directly at destination and travel suppliers pay us our earned commissions later, generally after
checkout.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Revenues under the Prepay Model represented 87%, 89%, and 86% of our consolidated travel revenues for the years ended December 31, 2024, 2023, and
2022, respectively.
The primary sources of our travel business revenues are commissions and service fees, incentive fees and advertising.
•
Commissions and service fees:
We facilitate the sale of travel products and services from our travel suppliers to our travelers and travel agencies.
We generally receive commissions in consideration of our facilitation services. Generally, we charge a service fee to our travelers, although this may vary
depending on marketing strategies. We do not provide significant post-booking services to travelers. We consider any post-booking services beyond minor
inquiries or administrative changes to the reservation (i.e., modifications to the original terms of the reservations) as new bookings. We may charge a new
booking fee and administrative fees for these services. Also, if the requested change results in an incremental price of the reservation to the traveler set by the
travel supplier, we receive an incremental commission from the travel supplier.
We recognize revenue upon the transfer of control of the promised facilitation services to our customers in an amount that reflects the consideration we expect
to be entitled to in exchange for those facilitation services. Generally, we recognize revenue when the booking is completed, paid and confirmed, less a reserve
for cancellations based on historical experience.
We present revenue on a net basis for most of our transactions because the travel supplier is primarily responsible for providing the underlying travel services,
we do not control the service or travel product provided by the travel supplier to the traveler and we do not bear inventory risk.
Generally, we partner with banks to allow our travelers the possibility of purchasing the product of their choice through financing plans established, offered and
administered by such banks. Participating banks bear full risk of fraud, delinquency, or default by travelers. When travelers elect to finance their purchases, we
typically receive full payment for our services within a short period of time after booking is completed and confirmed, regardless of the payment plan selected
by the traveler. However, in certain countries, we receive payment from the bank as installments become due regardless of when traveler actually makes the
scheduled payments. In most cases, we receive payment before travel occurs or during travel and the period between completion of booking and reception of
scheduled payments is typically one year or less. We have made use of the practical expedient in ASC 606-10-32-18 and we do not adjust the amount of
consideration for the effects of a significant financing component. In Brazil, through our financial services company solution, we offer financing to certain
travel customers, generally on terms not exceeding 12 months.
Our revenue from commissions and service fees represented 86%, 87% and 85% of our total consolidated travel revenues for the years ended December 31,
2024, 2023, and 2022, respectively.
•
Incentive fees:
We may receive incentive fees from our travel suppliers or Global Distribution Systems (“GDS”) providers if we meet certain performance conditions, for
example contractually agreed volume thresholds. We recognize revenue on an accrual basis in accordance with the achievement of contractual thresholds on a
case-by-case basis.
Our revenues from incentive fees represented 5%, 6% and 7% of our total consolidated travel revenues for the years ended December 31, 2024, 2023, and
2022, respectively.
•
Advertising:
We record advertising revenue ratably over the advertising period or upon delivery of advertising material, depending on the terms of the advertising
agreement.
Our revenues from advertising represented 3% of our total consolidated travel revenues for all the years presented.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
•
Destination services:
We offer tours, activities and transportation services to travelers through service providers. We recognize revenue as services are provided. We present revenue
on a net basis for most of destination services transactions.
Our destination services represented more than 2% of our total consolidated travel revenues for all years presented.
•
Other revenue:
We also derive revenue from other sources including breakage from expired coupons. Also, we operate a loyalty program through which we award loyalty
points to travelers who complete purchases on our websites or use the services of other program participants, such bank co-branded credit cards. Loyalty points
can be redeemed for free or discounted travel products.
For loyalty points earned through travel product purchases, we apply a estimated stand alone selling price approach whereby the total amount collected from
each travel product sale is allocated between the travel product and the loyalty points earned. The portion of each travel product sale attributable to loyalty
points is initially deferred and then recognized in loyalty revenue when the points are redeemed. In 2023, we started to apply an estimated future breakage rate
of rewards points generated to calculate the relative standalone selling price for loyalty points based on our historical data of twelve months feedback.
For loyalty points earned through co-branded credit card partners, consideration received from the sale of loyalty points is variable and payment terms typically
are within thirty days after the month of sale of loyalty points. Sales of loyalty points to business partners are comprised of two components: loyalty points and
marketing (i.e., the use of intellectual property, including our brand and access to customer lists and databases, which is the predominant element in the
agreements, as well as advertising, collectively, the marketing component). We allocate the consideration received from these sales of loyalty points based on
the relative selling price of each product or service delivered. The loyalty points component is initially deferred and then recognized in revenue when points are
redeemed.
•
Financial services business
In Brazil, We earn revenues as a result of offering financing to our travel customers and certain non-travel customers and revenues of fraud prevention services.
Revenues from interest earned on loans granted to consumers are recognized over the period of the loan and are based on effective interest rates. We charge
merchants processing fees on financing transactions which we recognize as services are provided.
Our revenues from interest income were 85%, 81% and 92% of our total consolidated financial services for the years ended December 31, 2024, 2023 and
2022, respectively.
Our revenues from financial intermediation processing fees and fraud prevention services revenues were 15%, 19% and 7% of our total consolidated financial
services for the years ended December 31, 2024, 2023 and 2022, respectively.
Cash and cash equivalents and restricted cash
Cash and cash equivalents and restricted cash include cash on hand, deposits held with banks and other short-term liquid investments with original maturities of
three months or less. Gains or losses are recognized in “Financial results, net” when incurred.
In addition, our restricted cash are primarily deposits related to operations with our travel suppliers and service providers and the International Air Transport
Association (“IATA”). Also included within the restricted cash balance related to cash and cash equivalents balances of the securitization VIEs.
See Notes 7 and 10 for further information.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Trade accounts receivable, net
Trade accounts receivable are generally due within thirty days and are recorded net of an allowance for expected credit losses.
We applied ASC 326 for the measurement of expected credit losses, which requires us to estimate lifetime expected credit losses upon recognition of the
financial assets. We consider accounts outstanding longer than the contractual payment terms as past due. We have identified the relevant risk characteristics of
our customers and the related receivables, which include the following: size, type or geographic location of the customer, or a combination of these
characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, we make estimates of expected credit losses for our
allowance by considering a several factors, including the length of time trade accounts receivable are past due, previous loss history continually updated for
new collections data, the credit quality of our customers, current economic conditions, reasonable and supportable forecasts of future economic conditions and
other factors that may affect our ability to collect from customers. This is assessed at each quarter based on our specific facts and circumstances. See Note 8 for
additional information.
The provision for expected credit losses is recorded as cost of revenue in our consolidated statements of operations.
Loans receivable, net
Loans receivable represent loans granted to customers through our financial services business. Loans receivable are reported at their outstanding principal
balances plus estimated collectible interest, net of allowances for uncollectible accounts. We typically place loans on non-accrual status as soon as the customer
is due on its payments. Penalties and late interest fees are recognized as amounts are received. Accrual is restored when all overdue payments are settled by the
customer.
Most of our loans receivable are short-term in nature, accrue fixed interest rates and repaid in a period ranging between seven and ten months, while a minor
portion of loans are repaid within twenty-four months.
We closely monitor credit quality for all loans receivable on a recurring basis. To evaluate a consumer seeking a loan, we use, among other indicators, a risk
model internally developed, as a credit quality indicator to help predict the consumer’s ability to repay the principal balance and interest related to the credit.
The risk model uses multiple variables as predictors of the consumer’s ability to repay the credit, including external and internal indicators. Internal indicators
consider customer’s history with us, credit scoring and risk profile, among others. In addition, we consider external information to enhance the scoring model
and the decision-making process. The internal indicators and the external credit score are combined in a risk matrix, which is also used to price the loans based
on the risk profile.
Securitization of loans receivable
In connection with securitization programs, we may sponsor and establish trusts (deemed to be variable interest entities “VIEs”) to ultimately purchase certain
of our loans receivable. Securities issued by securitization trusts are senior or subordinated, based on the criteria established by each trust. Generally, the
subordinated residual interests issued from these transactions are first to absorb credit losses in accordance with the waterfall criteria. For these VIEs, generally
the creditors have no recourse to our general credit and the liabilities of the VIEs can only be settled by the respective VIEs’ assets. Additionally, the assets of
the VIEs can be used only to settle obligations of the VIEs. We consolidate securitization VIEs when we are deemed to be the primary beneficiary and therefore
have the power to direct the activities that most significantly affect the VIEs’ economic performance and a variable interest that could potentially be significant
to the VIE. Management assesses whether we are the primary beneficiary of the VIEs on an ongoing basis. See Note 10 for details.
Property and equipment, net
We record property and equipment at acquisition cost, net of accumulated depreciation. We compute depreciation using the straight-line method over the
estimated useful lives of the assets. Land is not depreciated. We depreciate leasehold improvement using the straight-line method, over the shorter of the
estimated useful life of the improvement or the remaining term of the lease.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
The estimated useful lives (in years) of the main categories of our property and equipment are as follows:
Asset
Estimated useful
life (in years)
Computer hardware and
software
3
Vehicles
5
Office furniture and fixture
10
Buildings
50
Expenditures for repairs and maintenance are charged to expense as incurred. The cost of significant renewals and improvements is added to the carrying
amount of the respective asset and it is depreciated over the remaining life of the fixed asset.
When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is
reflected in our consolidated statements of operations.
Business combinations
We use the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair
value of the assets transferred, the liabilities incurred, and the equity interests issued, if any. The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. We assign the value of the consideration
transferred to acquire a business to the tangible assets and identifiable intangible assets acquired and liabilities assumed on the basis of their fair values at the
date of acquisition. Any excess purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill. When determining
the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.
Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from customer relationships and trademarks and
tradenames, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain
and unpredictable and, as a result, actual results may differ from estimates.
We have a period of 12 months as from the date of acquisition (the “measurement period”) to finalize the accounting for a business combination. We report
provisional amounts when the accounting for a business combination is not complete by the end of the reporting period in which the business combination
occurred. Any changes to provisional amounts identified during the measurement period are recognized in the reporting period in which the adjustment
amounts are determined.
Goodwill
We record goodwill as the amount by which the aggregate of the fair value of consideration, transferred the acquisition date fair value of any previously held
interest and any non-controlling interest exceeds the fair value of the assets and liabilities acquired. Goodwill is not subject to amortization and is tested at least
annually for impairment, or earlier if an event occurs or circumstances change and there is an indication of impairment.
Intangible assets, net
We initially record intangible assets acquired in business combinations at fair value. We determine the fair value of intangible assets using standard valuation
techniques, including the income approach (discounted cash flows) and/or market approach, as appropriate, and based on market participant assumptions.
Indefinite-lived intangible assets such as certain trademarks and tradenames are not subject to amortization and are tested at least annually for impairment, or
earlier if an event occurs or circumstances change and there is an indication of impairment.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Finite-lived intangible assets such as customer relationships, licenses and certain trademarks and domains are amortized over their respective estimated useful
lives.
We also capitalize certain direct development costs associated with website and internal use developed technology and include external direct costs of services
and payroll costs for employees devoting time to the software projects principally related to platform development, including support systems, software coding,
designing system interfaces and installation and testing of the software. These costs are recorded as finite-lived intangible assets and are generally amortized
over a period of 3 to 5 years beginning when the asset is substantially ready for use. Costs incurred for enhancements that are expected to result in additional
features or functionalities are capitalized and amortized over the estimated useful life of the enhancements. Costs incurred during the preliminary project stage,
as well as maintenance and training costs, are expensed as incurred.
Recoverability of goodwill and indefinite-lived intangible assets
We assign goodwill to reporting units that are expected to benefit from the synergies of the business combination as of the acquisition date. We assess goodwill
and indefinite-lived intangible assets, neither of which is amortized, for impairment annually as of December 31, or more frequently, if events and
circumstances indicate impairment may have occurred. In the evaluation of goodwill for impairment, we typically perform a quantitative assessment and
compare the fair value of the reporting unit to it carrying value. An impairment charge is recorded based on the excess of the reporting unit’s carrying amount
over its fair value. Periodically, we may choose to perform a qualitative assessment, prior to performing the quantitative analysis, to determine whether the fair
value of the goodwill is more likely than not impaired.
We assess qualitative factors such as industry and market conditions, overall financial performance of the reporting unit, and other specific information related
to the operations to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If a qualitative assessment
identifies a possible impairment or we believe that the assets of a reporting unit are impaired, a quantitative goodwill impairment test is performed. If the
carrying value of the reporting unit is above fair value, an impairment loss is recognized in an amount equal to the excess.When we perform the quantitative
assessment, we generally base our measurement of fair value of reporting units on an analysis of the present value of future discounted cash flows. The
discounted cash flows model indicates the fair value of the reporting units based on the present value of the cash flows that we expect the reporting units to
generate in the future. Our significant assumptions in the discounted cash flows model include: our forecasted gross bookings; forecasted revenues, net of
significant costs and expenses; and the discount rate. We believe the discounted cash flows is the best method for determining the fair value of our reporting
units because it is one of the most common valuation methodologies used within the travel and internet industries.
In addition to measuring the fair value of our reporting units as described above, we consider the combined carrying and fair values of our reporting units in
relation to our total fair value of equity plus debt as of the assessment date. Our equity value assumes our market capitalization, using either the stock price on
the valuation date or the average stock price over a range of dates around the valuation date, plus an estimated acquisition premium which is based on
observable transactions of comparable companies. The debt value is based on the highest value expected to be paid to repurchase the debt, which can be fair
value, principal or principal plus a premium depending on the terms of each debt instrument. In our evaluation of our indefinite-lived intangible assets, we
typically first perform a quantitative assessment, and an impairment charge is recorded for the excess of the carrying value of indefinite-lived intangible assets
over their fair value, if necessary. We base our measurement of fair value of indefinite-lived intangible assets, which primarily consist of trademarks and
domains, using the relief-from-royalty method. Our significant assumptions include: our forecasted revenues and the royalty rate method assumes that the
trademarks and domains have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits received from them. As with
goodwill, periodically, we may choose to perform a qualitative assessment, prior to performing the quantitative analysis, to determine whether the fair value of
the indefinite-lived intangible asset is more likely than not impaired. We assess qualitative factors such as industry and market conditions, macroeconomic
conditions, overall financial performance of cash flows, and other specific information related to the operations to determine whether it is more likely than not
that the fair value of the assets is less than its carrying amount. If a qualitative assessment identifies a possible impairment or we believe that the assets are
impaired, a quantitative impairment test is performed.
See Notes 13 and 14 for further information.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Recoverability of intangible assets with finite lives and other long-lived assets
Intangible assets with definite lives and other long-lived assets are carried at cost and are amortized on a straight-line basis over their estimated useful lives of 3
to 10 years and 50 years for buildings. We review the carrying value of long-lived assets or asset groups, including property and equipment, to be used in
operations whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that would necessitate
an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or
the business climate that could affect the value of the asset, or a significant decline in the observable market value of an asset, among others. If such facts
indicate a potential impairment, we assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the
projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset
in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, we estimate the fair value of the asset group
using appropriate valuation methodologies which would typically include an estimate of discounted cash flows. Any impairment would be measured as the
difference between the asset groups carrying amount and its estimated fair value.
Assets held for sale, to the extent we have any, are reported at the lower of cost or fair value less costs to sell.
See Notes 12 and 13 for further information.
Equity method investments
We use the equity method to account for investments in companies, if our investment provides us with the ability to exercise significant influence, but not
control, over operating and financial policies of the investee. Our judgment regarding the level of influence over each equity method investment includes
considering key factors such as our ownership interest, representation on the board of directors, participation in policy-making decisions and material
intercompany transactions. We include the total of our investments in equity-method investees, including identifiable intangible assets, deferred tax liabilities,
and goodwill, if any, within “Non-current other assets” in our consolidated balance sheets. We include our proportionate share of earnings and/or losses of our
equity method investees in “Gain / (loss) from equity investments” in our consolidated statements of operations.
In the event that net losses of the investee reduce our equity-method investment carrying amount to zero, additional net losses may be recorded if we have
committed to provide financial support to the investee. We regularly evaluate these investments, which are not carried at fair value, for other-than-temporary
impairment. We also consider whether our equity-method investments generate sufficient cash flows from their operating or financing activities to meet their
obligations and repay their liabilities when they come due. When our share in the net assets of associates is negative, we include the balance within “Non-
current other liabilities” in our consolidated balance sheets. In the event we no longer have the ability to exercise significant influence over an equity-method
investee, we would discontinue accounting for the investment under the equity method.
Travel accounts payable
Travel accounts payable comprises trade accounts payable to airlines, hotels and other travel suppliers for products and services offered. Airline suppliers are
generally due within thirty days of a confirmed air booking reservation. Under the Prepay model, hotels and other travel suppliers are generally paid after
traveler checks out. Generally, our contracts with hotels and other travel suppliers provide for a 12-month period for invoicing us for past services. If an invoice
is not received after that period, we recognize breakage revenue for the unbilled payable.
Severance payments
We recognize a liability for severance payments if the following criteria are met: (a) management, having the authority to approve the action, commits to a plan
of termination; (b) the plan identifies the number of employees to be terminated, their job classifications or functions and their locations, and the expected
completion date; (c) the plan establishes the terms of the benefit arrangement, including the benefits that employees will receive upon termination, in sufficient
detail to enable employees to determine the type and amount of benefits they will receive if they are involuntarily terminated; (d) actions
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn; and (e) the plan has
been communicated to employees. See Note 19 for details.
Pension information
We do not maintain any pension plans. Certain countries in which we operate provide for pension benefits to be paid to retired employees from government
pension plans and/or private pension plans. Amounts payable to such plans are accounted for on an accrual basis.
Contingent liabilities
We have several tax, regulatory and legal matters outstanding, as discussed further in Note 22.
Periodically, we review the status of all significant outstanding matters to assess the potential financial exposure. When (i) it is probable that an asset has been
impaired or a liability has been incurred and (ii) the amount of the loss can be reasonably estimated, we record the estimated loss in our consolidated statements
of operations. We provide disclosure in the notes to the consolidated financial statements for loss contingencies that do not meet both of these conditions if
there is a reasonable possibility that a loss may have been incurred that would be material to the consolidated financial statements. Significant judgment is
required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We base accruals made on the best
information available at the time which can be highly subjective. The final outcome of these matters could vary significantly from the amounts included in the
accompanying consolidated financial statements.
Derivative financial instruments
We carry derivative instruments at fair value on our consolidated balance sheets. The fair values of the derivative financial instruments generally represent the
estimated amounts we would expect to receive or pay upon termination of the contracts as of the reporting date. As of December 31, 2024 and 2023, our
derivative instruments primarily consisted of foreign currency forward contracts. We are exposed to various market risks that may affect our consolidated
results of operations, cash flows and financial position. These market risks include, but are not limited to, fluctuations in foreign currency exchange rates. Our
primary foreign currency exposures are to the currencies of Latin American countries, including Argentina, Brazil and Mexico, in which we conduct a
significant portion of our business operations. As a result, we face exposure to adverse movements in foreign currency exchange rates as our results of
operations are translated from local currencies into U.S. dollars upon consolidation. Additionally, foreign currency exchange rate fluctuations on transactions
denominated in currencies other than the functional currency of an entity result in gains and losses that are reflected in net income / (loss).
We may use foreign currency forward contracts to economically hedge these exposures. Our goal in managing our foreign exchange risk is to reduce, to the
extent practicable, our potential exposure to the changes that exchange rates might have on our earnings, cash flows and financial position. Our foreign
currency forward contracts are typically short-term and, as they do not qualify for hedge accounting treatment, we classify the changes in their fair value in
“Financial results, net” in our consolidated statements of operations in the period that the changes occur and are classified within “Net cash flows (used in) /
provided by operating activities” in our consolidated statements of cash flows. We do not hold or issue financial instruments for speculative or trading
purposes. We report the fair value of our derivative assets and liabilities on a gross basis in our consolidated balance sheets in “Other assets and prepaid
expenses” and “Other liabilities”, respectively.
Leases
We determine if an arrangement is a lease, or contains a lease, at inception. Operating leases are primarily for office space, customer service centers and a fleet
of dedicated vans, and, as of January 1, 2019 with the adoption of the new guidance for leasing arrangements, are included in operating “Lease right-of-use
(“ROU”) assets” and operating “Lease liabilities” on our consolidated balance sheets. Lease ROU assets represent our right to use an underlying asset for the
lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and lease liabilities are
recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we
use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The
operating lease ROU asset also
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably
certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
For operating leases with a term of one year or less, we have elected to not recognize a lease liability or ROU asset on our consolidated balance sheets. Instead,
we recognize the lease payments as expense on a straight-line basis over the lease term. Short-term lease costs are immaterial to our consolidated statements of
operations and consolidated statements of cash flows.
Our lease agreements have insignificant non-lease components and accordingly we have elected the practical expedient to combine and account for lease and
non-lease components as a single lease component.
Financial results, net
We incur in financial results such as factoring interest, gains or losses on derivative financial instruments, interest income from financial investments, interest
accrued on financial liabilities and foreign exchange gains or losses.
Stock-based compensation
We measure and amortize the fair value of restricted stock units and stock options as follows:
Restricted Stock Units (“RSUs”). Our RSUs consist of service-based awards. RSUs are stock awards that are granted to employees entitling the holder to
shares of common stock as the award vests, typically over a 3 or 4-year period, but may accelerate in certain circumstances. During the year ended
December 31, 2024, we issued RSUs as our primary form of stock-based compensation. The majority of these RSUs vest 25% on the year of granting, with the
remaining shares vesting 25% annually over the following 3 years, as appropriate. We measure the value of RSUs at fair value based on the number of shares
granted and the quoted price of our common stock at the date of grant. We amortize the fair value as stock-based compensation expense over the vesting term
on a straight-line basis.
Stock Options. Our employee stock options consist of service-based awards. We measure the value of stock options issued or modified, including unvested
options assumed in acquisitions, if any, on the grant date (or modification or acquisition dates, if applicable) at fair value, using appropriate valuation
techniques, including the Black-Scholes and Monte Carlo option pricing models. The Black-Scholes valuation models incorporate various assumptions
including expected volatility, expected term and risk-free interest rates. The expected volatility is based on historical volatility of our common stock and other
relevant factors. We base our expected term assumptions on our historical experience and on the terms and conditions of the stock awards granted to
employees. We amortize the fair value over the remaining explicit vesting term in the case of service-based awards.
Since December 31, 2022, all stock options are fully vested. Estimates of fair value are not intended to predict actual future events or the value ultimately
realized by employees who receive these awards, and subsequent events are not indicative of the reasonableness of our original estimates of fair value.
Marketing and advertising expenses
We incur advertising expense consisting of offline costs, including television and radio advertising, and online advertising expense to promote our business. We
expense the production costs associated with advertisements in the period in which the advertisement first takes place. We expense the costs of advertisement
in the period during which the advertisement space or airtime is consumed. Internet advertising expenses are recognized based on the terms of the individual
agreements, which is generally over the greater of (i) the ratio of the number of clicks delivered over the total number of contracted clicks, on a pay-per-click
basis, or (ii) on a straight-line basis over the term of the contract. Our advertising expenses were $144,469, $131,887 and $102,962 for the years ended
December 31, 2024, 2023 and 2022, respectively.
The accompanying notes are an integral part of these consolidated financial statements.
F-23
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Accounting for income taxes
We are organized as a British Virgin Islands corporation. However, under the “anti-inversion” rules of Section 7874 of the U.S. Internal Revenue Code, we are
treated as a U.S. corporation for U.S. federal tax purposes. Accordingly, we are subject to U.S. federal income tax and state income tax in the United States. We
are subject to foreign income taxes in the jurisdictions where we operate in accordance with the respective local tax laws.
We account for income taxes under the asset and liability method that requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in our consolidated financial statements or tax returns. Judgment is required in assessing the future tax
consequences of events that have been recognized in our consolidated financial statements or tax returns.
Variations in the actual outcome of these future tax consequences could materially impact our financial position, results of operations or effective tax rate.
Significant judgment is required in determining our worldwide income tax provision. In the ordinary course of a global business, there are many transactions
and calculations where the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of revenue sharing and cost reimbursement
arrangements among related entities, the process of identifying items of revenues and expenses that qualify for preferential tax treatment, and segregation of
foreign and domestic earnings and expenses to avoid double taxation. Although we believe that our estimates are reasonable, the final tax outcome of these
matters could be different from that which is reflected in our historical income tax provisions and accruals. Such differences could have a material effect on our
income tax provision and net income in the period in which such determination is made.
In estimating future tax consequences, all expected future events are considered other than enactments of changes in tax laws or rates. Valuation allowances are
established when necessary to reduce deferred tax assets to amounts which are more likely than not to be realized. We consider future growth, forecasted
earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate, historical earnings, the carryforward periods available for tax
reporting purposes and prudent and feasible tax planning strategies in determining the need for a valuation allowance. In the event we were to determine that
we would not be able to realize all or part of our net deferred tax assets in the future, an adjustment to the deferred tax assets valuation allowance would be
charged to earnings in the period in which we make such a determination, or goodwill would be adjusted at our final determination of the valuation allowance
related to an acquisition within the measurement period. If we later determine that it is more likely than not that the net deferred tax assets would be realized,
we would reverse the applicable portion of the previously provided valuation allowance as an adjustment to earnings at such time.
The amount of income tax we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Our
estimate of the potential outcome for any uncertain tax issue is highly judgmental. We account for these uncertain tax issues pursuant to ASC 740, Income
Taxes, which contains a two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is
to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained on audit, including resolution of
any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon
ultimate settlement. Although we believe we have adequately reserved for our uncertain tax positions, no assurance can be given with respect to the final
outcome of these matters. We adjust reserves for our uncertain tax positions due to changing facts and circumstances, such as the closing of a tax audit, judicial
rulings, refinement of estimates or realization of earnings or deductions that differ from our estimates. To the extent that the final outcome of these matters is
different than the amounts recorded, such differences generally will impact our provision for income taxes in the period in which such a determination is made.
Our provisions for income taxes include the impact of reserve provisions and changes to reserves that are considered appropriate and also include the related
interest and penalties.
We treat taxes on global intangible low-taxed income (“GILTI”) introduced by the U.S. Tax Cuts and Jobs Act (the “Tax Act”) as period costs. See Note 20 for
further information.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Government grants and other assistance
We recognize government grants in our consolidated financial statements when it is probable that the grant will be received and we will comply with the
conditions of the grant. Government grants are recorded as a reduction in the related operating expense or the cost of the asset that they are intended to defray.
The government grants we received have principally been granted to defray personnel costs. We have not received government grants in 2024 and 2023.
Earnings / (losses) per share
We compute basic earnings / (losses) per share by dividing our net income or loss for the year attributable to Despegar.com, Corp. common shareholders, as
adjusted for preferred stock accretion and dividends accrued, by our weighted-average outstanding common shares during the year on a basic and diluted basis.
Since we issue warrants for nominal consideration which vest and are exercisable as from the issuance date, we include the shares of common stock underlying
the outstanding warrants when calculating our basic earnings per share.
We compute diluted earnings per share using our weighted-average outstanding common shares including the dilutive effect of stock options and convertible
preferred stock. The dilutive effect of stock-based compensation is calculated using the treasury method. The dilutive effect of convertible preferred stock is
calculated using the if-converted method. In periods when we recognize a net loss, we exclude the impact of outstanding stock awards and convertible
preferred stock from the diluted loss per share calculation as their inclusion would have an antidilutive effect.
We present basic and diluted earnings per share using the two-class method required for participating securities. We consider that our Series B preferred stock
(while they were in issue) to be participating securities and, in accordance with the two-class method, earnings allocated to participating securities and the
related number of outstanding shares of participating securities are excluded from the computation of basic and diluted net loss per common share. If a
dividend is paid on common stock, the holders of Series B preferred stock (while they were in issue)are entitled to a proportionate share of any such dividend
as if they were holders of common stock (on an if-converted basis). As the holders of our Series B preferred stock do not have contractual obligation to share in
the losses of the Company, the net loss attributable to common shareholders for each period is not allocated between common stock and participating securities.
Accordingly, preferred stock is excluded from the calculation of basic and diluted net loss per share as the effect would have been antidilutive.
For additional information on how we compute earnings per share, see Note 25.
Fair value recognition, measurement and disclosure
The carrying amounts of cash and cash equivalents and restricted cash reported on our consolidated balance sheets approximate fair value as we maintain them
with various high-quality financial institutions. Accounts receivable and accounts payable are generally short-term in nature and their carrying amount
approximate fair values.
We disclose the fair value of our financial instruments based on the fair value hierarchy using the following three categories:
Level 1 — Valuations based on quoted prices for identical assets and liabilities in active markets.
Level 2 — Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active
markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by
observable market data.
Level 3 — Valuations based on unobservable inputs reflecting the Company’s own assumptions, consistent with reasonably available assumptions made by
other market participants. These valuations require significant judgment.
For additional information on items measured at fair value on a recurring or non-recurring basis, see Note 24.
Assets and Liabilities Held for Sale
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Our Company classifies long-lived assets or disposal groups to be sold as held for sale in the period in which all of the following criteria are met: (1)
management, having the authority to approve the action, commits to a plan to sell the asset or disposal group; (2) the asset or disposal group is available for
immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups; (3) an active program to
locate a buyer and other actions required to complete the plan to sell the asset or disposal group have been initiated; (4) the sale of the asset or disposal group is
probable, and transfer of the asset or disposal group is expected to qualify for recognition as a completed sale within one year, except if events or circumstances
beyond our control extend the period of time required to sell the asset or disposal group beyond one year; (5) the asset or disposal group is being actively
marketed for sale at a price that is reasonable in relation to its current fair value; and (6) actions required to complete the plan indicate that it is unlikely that
significant changes to the plan will be made or that the plan will be withdrawn.
We initially measure a long-lived asset or disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell.
Any loss resulting from this measurement is recognized in the period in which the held-for-sale criteria are met. Conversely, gains are not recognized on the
sale of a long-lived asset or disposal group until the date of sale. We assess the fair value of a long-lived asset or disposal group less any costs to sell each
reporting period it remains classified as held for sale and report any subsequent changes as an adjustment to the carrying value of the asset or disposal group, as
long as the new carrying value does not exceed the carrying value of the asset at the time it was initially classified as held for sale.
Upon determining that a long-lived asset or disposal group meets the criteria to be classified as held for sale, the Company ceases depreciation and reports
long-lived assets and/or the assets and liabilities of the disposal group, if material, in the line items assets held for sale and liabilities held for sale, respectively,
in our consolidated balance sheet. See Note 31 for further information.
Recently adopted accounting policies
Accounting Standards Update (ASU) 2023-07, “Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures”: In November 2023, the
FASB issued new guidance, which expands public entities' segment disclosures primarily by requiring disclosure of significant segment expenses that are
regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its
composition for other segment items, and interim disclosures of a reportable. We adopted this standard in the current period retrospectively to all prior periods
presented on our financial statements, see Note 21.
.
Recent accounting policies not yet adopted
Accounting Standards Update (ASU) 2023-09, “Income Taxes (Topic 740)—Improvements to Income Tax Disclosures”: In December 2023, the FASB issued
new guidance, which is intended to enhance the transparency and decision-usefulness of income tax disclosures. The amendments address investor requests for
enhanced income tax information primarily through changes to disclosure regarding rate reconciliation and income taxes paid both in the U.S. and in foreign
jurisdictions. The amendments are effective for annual periods beginning after December 15, 2024, on a prospective basis. Early adoption is permitted. We are
assessing the effects that the adoption of these accounting standards may have on our financial statements and disclosures.
Accounting Standards Update (ASU) ASU 2024-01, “Compensation—Stock Compensation (Topic 718)”: In March 2024, the FASB issued new guidance, the
amendments in the ASU are expected to improve generally accepted accounting principles (GAAP) by adding an illustrative example to demonstrate how an
entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether profits interest and similar awards (“profits interest awards”) should be
accounted for in accordance with Topic 718, Compensation—Stock Compensation. We are in the process of evaluating the impact of the amended guidance,
but we currently expect that the adoption will not have a material impact, if any, on our consolidated financial statements.
Accounting Standards Update (ASU) 2024-02, “Codification Improvements—Amendments to Remove References to the Concepts Statements An Amendment”:
In March 2024, the FASB issued new guidance, which contains amendments to the
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Codification that remove references to various FASB Concepts Statements. The Board has a standing project on its agenda to address suggestions received
from stakeholders on the Accounting Standards Codification and other incremental improvements to generally accepted accounting principles (GAAP). This
effort facilitates Codification updates for technical corrections such as conforming amendments, clarifications to guidance, simplifications to wording or the
structure of guidance, and other minor improvements. The resulting amendments are referred to as Codification improvements. We are in the process of
evaluating the impact of the amended guidance, but we currently expect that the adoption will not have a material impact, if any, on our consolidated financial
statements.
Accounting Standards Update (ASU) 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures”: In November
2024, the FASB issued new guidance, which improve the disclosures about a public business entity’s expenses and address requests from investors for more
detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in
commonly presented expense captions (such as cost of sales, SG&A, and research and development). The amendments in this Update are effective for annual
reporting periods beginning after December 15, 2026. We are in the process of evaluating the impact it may have on our consolidated financial statements.
Accounting Standards Update (ASU) 2024-04, “Debt—Debt with Conversion and Other Options (Subtopic 470-20)”: In November 2024, the FASB issued
new guidance, which clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an
induced conversion. Under the amendments, to account for a settlement of a convertible debt instrument as an induced conversion, an inducement offer is
required to provide the debt holder with, at a minimum, the consideration (in form and amount) issuable under the conversion privileges provided in the terms
of the instrument. We are in the process of evaluating the impact of the amended guidance, but we currently expect that the adoption will not have a material
impact, if any, on our consolidated financial statements.
4. Acquisitions
2024 Acquisition Activity
We did not complete any acquisitions during the year ended December 31, 2024.
2023 Acquisition Activity
We did not complete any acquisitions during the year ended December 31, 2023.
2022 Acquisition Activity
During the year ended December 31, 2022, we completed one business combination, as follows:
Acquisition of Viajanet
On June 1, 2022 (the “Closing Date”), we consummated the acquisition of a 100% equity interest of TVLX Viagens e Turismo S.A. (“Viajanet”), a company
organized under the laws of Brazil (the “Viajanet Acquisition”), pursuant to a Share Purchase Agreement dated May 5, 2022 (the “Acquisition Agreement”).
Viajanet is an online travel agency primarily focused on air travel in Brazil.
The purchase price was fixed at $13,971 after net debt and working capital adjustments, of which $9,355 was paid on June 30, 2022 and the remaining amount
will be payable in June 2025.
Under the Acquisition Agreement, the sellers contractually agreed to indemnify us for certain contingent matters up to $20.0 million. We recognized and
measured the seller indemnification based on the same basis as the indemnified items. Changes in the amount recognized for the seller indemnification which
are not the result of qualifying measurement-period adjustments, are recognized in earnings in the same period as changes in the indemnified items are
recognized.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
We allocated the purchase price to identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at acquisition
date. The estimated fair value of assets acquired and liabilities assumed was determined with the assistance of a third-party valuer. Goodwill was recognized as
the excess of the aggregate of the fair values of consideration transferred over the fair value of assets acquired and liabilities assumed.
The purchase price allocation at the acquisition date was as follows:
Consideration:
Purchase price paid on June 1, 2022
$
9,355
Fair value of deferred purchase price
4,616
Total consideration as of acquisition date
$
13,971
Recognized amounts of assets acquired and liabilities assumed:
Cash and cash equivalents and restricted cash
$
2,337
Trade accounts receivable
1,004
Intangible assets
7,868
Property and equipment
769
Seller indemnification
7,956
Other assets
1,070
Total assets acquired
$
21,004
Accounts payable and accrued expenses
$
2,054
Travel accounts payable
6,861
Contingent liabilities
8,139
Deferred tax liabilities
2,212
Other liabilities
490
Total liabilities assumed
$
19,756
Total net assets acquired
$
1,248
Goodwill
$
12,723
Intangible assets acquired consisted of the following:
Amount
Estimated useful
life (in years)
Trademarks and domains
$
4,601
20
Developed technology
2,165
3
Customer relationships
800
1
Domains
302
20
Total intangible assets acquired
$
7,868
The useful lives of the intangible assets for amortization purposes were determined considering the period of expected cash flows used to measure the fair
value of the intangible assets adjusted as appropriate for the entity-specific factors including legal, regulatory, contractual, competitive, economic, or other
factors that may limit the useful life of intangible assets.
We used an income approach to measure the fair value of trademarks based on the relief-from-royalty method. The relief-from-royalty valuation method
estimates the benefit of ownership of the intangible asset as the “relief” from the royalty expense that would need to be incurred in absence of ownership.
We used a market approach to measure the fair value of domains.
We used a cost approach to measure the fair value of developed technology based on the reproduction cost method, adjusted by a functional obsolescence
factor. An additional cross-check analysis based on income approach has also been performed.
We used a replacement cost method to measure the fair value of licenses.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
We used an income approach to measure the fair value of customer relationships based on the Multi-Period Excess Earnings Method. The excess earnings look
at projected discounted cash flows of the customer relationships, considering estimated attrition rates. These fair value measurements were based on significant
inputs not observable in the market and thus represent Level 3 measurements under the fair value hierarchy.
All other net tangible assets were valued at their respective carrying amounts, as we believe that these amounts approximate their current fair values.
Goodwill was primarily attributable to the synergistic value created from the opportunity for additional expansion in Brazil and is non-deductible for tax
purposes.
We incurred $390 of acquisition-related expenses which were included in “General and administrative” expenses in our consolidated statements of operations
for the year ended December 31, 2022. As from August, 2022, we fully integrated Viajanet’s operations into our platform and we merged this company on
January 1, 2023 with and into Decolar, our existing subsidiary in Brazil
The following table summarizes the revenue and net loss (including purchase accounting amortization and the impact of intercompany eliminations) of
Viajanet included in our consolidated statements of operations for the year ended December 31, 2022 since June 1, 2022, the date of acquisition:
Period from the date of acquisition to
December 31, 2022
Revenue
$
3,658
Net loss
$
(3,968)
The following pro forma summary presents certain consolidated information as if the Viajanet Acquisition occurred on January 1, 2021:
For the year ended
December 31,
2023
2022
Revenue
$
541,949
$
330,668
Net loss
$
(77,975)
$
(110,048)
These pro forma results include adjustments for purposes of consolidating the historical financial results of Viajanet for the periods indicated. These pro forma
results also include $134 and $268 for the years ended December 31, 2022 and 2021, respectively, to reflect the incremental depreciation and amortization as a
result of recording assets at fair value. These pro forma results do not represent results that would have been realized had the acquisition actually occurred on
January 1, 2021, nor are they intended to be a projection of future results.
5. Preferred Stock and Warrants
Non-Convertible Redeemable Series A Preferred Shares and Warrants
On September 18, 2020 (the “Catterton Closing Date”), we completed the issuance and sale of our Series A Preferred Shares (as defined below) and warrants
(the “Warrants”) to purchase our common stock (“Common Stock”) to LCLA Daylight LP, an affiliate of L Catterton Latin America III, L.P. (the “L Catterton
Purchaser”) pursuant to our previously announced Investment Agreement, dated as of August 20, 2020, with the L Catterton Purchaser (the “L Catterton
Investment Agreement”).
We issued and sold to the L Catterton Purchaser, pursuant to the L Catterton Investment Agreement, 150,000 shares of our newly created Series A Preferred
Shares, no par value per share (the “Series A Preferred Shares”) and Warrants to purchase 11,000,000 shares of our Common Stock, no par value, for an
aggregate purchase price of $150,000.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
On December 31, 2020, we paid certain fees in an aggregate amount of $2,250 to the L Catterton Purchaser.
On the terms and subject to the conditions set forth in the L Catterton Investment Agreement, from and after September 18, 2020, LCLA Daylight LP is entitled
to appoint one director to our Board of Directors (the “Board”) and one non-voting observer to the Board, in each case until such time as LCLA Daylight LP
and its permitted transferees no longer hold (a) (i) at least 50% of the Series A Preferred Shares purchased by LCLA Daylight LP under the L Catterton
Investment Agreement and (ii) Warrants and/or Common Stock for which the Warrants were exercised that represent, in the aggregate and on an as-exercised
basis, at least 50% of the shares underlying the Warrants purchased by LCLA Daylight LP under the L Catterton Investment Agreement or (b) if the Company
has redeemed the Series A Preferred Shares in full (pursuant to the Company’s redemption right with respect thereto), Warrants and/or Common Stock for
which the Warrants were exercised that represent, in the aggregate and on an as-exercised basis, at least 50% of the shares underlying the Warrants purchased
by LCLA Daylight LP under the L Catterton Investment Agreement.
The L Catterton Investment Agreement (including the forms of our amended Memorandum of Association and Articles of Association, the terms of the Series A
Preferred Shares, Warrants and Registration Rights Agreement) contains other customary covenants and agreements, including certain transfer restrictions,
standstill and voting provisions and preemptive rights.
In connection with and concurrently with the closing of the transactions contemplated by the L Catterton Investment Agreement, we issued to LCLA Daylight
LP Warrants to purchase 11,000,000 shares of our Common Stock at an exercise price of $0.01 per share, subject to certain customary anti-dilution adjustments
provided under the Warrants, including for stock splits, reclassifications, combinations and dividends or distributions made by us on the Common Stock. The
Warrants expire on September 18, 2030.
In connection with and concurrently with the closing of the transactions contemplated by the L Catterton Investment Agreement, we and LCLA Daylight LP
entered into a Registration Rights Agreement (the “Registration Rights Agreement”), pursuant to which LCLA Daylight LP is entitled to customary registration
rights with respect to the Common Stock for which the Warrants may be exercised.
Principal Terms of the Series A Preferred Shares
Dividends:
Dividends on each Series A Preferred Share accrue daily at a rate of 10.0% per annum and are payable semi-annually in arrears on September 30 and March 31,
beginning on March 31, 2021. Dividends are payable, either in cash or through an accrual of unpaid dividends (“Dividend Accrual”), at the Company’s option.
Dividends on each Series A Preferred Share accrue whether or not declared and whether or not we have assets legally available to make payment thereof. To
the extent that any dividends are declared but unpaid, or any dividends are not declared in any given year, (i) such accrued and unpaid dividends and/or (ii) an
amount equal to the dividend entitlement, shall compound semi-annually at the rate of 10.0% per annum (“Accumulating Dividends”). All Accumulating
Dividends shall be paid in full prior to any distribution, dividend or other payment in respect of any equity securities junior to the Series A Preferred Shares.
Ranking:
The Series A Preferred Shares rank senior to the Common Stock with respect to dividend rights and rights on the distribution of assets on any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the Company.
Company’s Redemption Rights:
At any time on or after the third anniversary of the Catterton Closing Date but prior to the fourth anniversary of the Catterton Closing Date, we may redeem all
or any portion of the Series A Preferred Shares in cash at a price equal to 105.0% of the sum of the liquidation preference of $1,000 per Series A Preferred
Share plus any Dividend Accruals per Series A Preferred Share (the “Liquidation Preference”), plus, without duplication, accrued and unpaid distributions to,
but excluding, the redemption date.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
At any time on or after the fourth anniversary of the Catterton Closing Date but prior to the fifth anniversary of the Catterton Closing Date, we may redeem all
or any portion of the Series A Preferred Shares in cash at a price equal to 102.5% of the Liquidation Preference, plus, without duplication, accrued and unpaid
distributions to, but excluding, the redemption date. At any time after the fifth anniversary of the Catterton Closing Date, we may redeem all or any portion of
the Series A Preferred Shares in cash at a price equal to the Liquidation Preference plus, without duplication, accrued and unpaid distributions to, but excluding,
the redemption date.
Holders’ Redemption Rights:
At any time on or after the fifth anniversary of the Catterton Closing Date, each holder of Series A Preferred Shares may, at its election, cause the Company to
redeem all or part of such holder’s then outstanding Series A Preferred Shares in cash at a price equal to the Liquidation Preference, plus, without duplication,
accrued and unpaid distributions to, but excluding, the redemption date. In addition, if the Company undergoes a qualifying change of control, each holder of
Series A Preferred Shares may, at its election, cause the Company to redeem all of such holder’s then outstanding Series A Preferred Shares in cash at a price
equal to 110.0% of the Liquidation Preference, plus, without duplication, accrued and unpaid distributions to, but excluding, the redemption date.
Conversion Rights:
The Series A Preferred Shares are not convertible into Common Stock.
Voting Rights:
Each holder of Series A Preferred Shares will have one vote per share on any matter on which holders of Series A Preferred Shares are entitled to vote
separately as a class, whether at a meeting or by written consent. The holders of Series A Preferred Shares do not otherwise have any voting rights at any
meetings of the Company’s shareholders or on any resolution of the Company’s shareholders.
The prior written approval of the holders of a majority of the Series A Preferred Shares outstanding at such time, acting together as a separate class, is required
in order for the Company to (i) amend the Memorandum and Articles of Association in a manner that adversely affects the holders of Series A Preferred Shares,
(ii) create or issue any shares, or any securities convertible or exchangeable into, or exercisable for shares, ranking senior or pari passu to the Series A Preferred
Shares or issue any additional Series A Preferred Shares or increase the authorized number of Series A Preferred Shares, other than an additional financing
meeting certain requirements, (iii) declare or pay any dividend or distribution, or repurchase or redeem any shares, subject to certain exceptions, including with
respect to the Series A Preferred Shares, (iv) make any fundamental change in the nature of the business in which the Company is primarily engaged, (v)
initiate, engage in or permit to occur (to the extent within our control), any liquidation, dissolution or winding up of the Company, (vi) continue or re-domicile
the Company in any jurisdiction other than the British Virgin Islands, or (vii) take or permit certain of the foregoing with respect to our significant subsidiaries.
So long as the Catterton Purchaser holds any Series A Preferred Shares, the prior written consent of the Catterton Purchaser is required in order for us to (i)
incur any indebtedness for borrowed money in excess of the greater of $60,000, and an amount equal to 1.0x the Company’s consolidated Adjusted EBITDA
for the twelve month period ending at the end of the last quarter for which we have publicly reported financial results, (ii) sell, dispose of or enter into any
exclusive license for any material asset (or group of related assets) of the Company or with a fair market value equal or greater to 10% of our consolidated total
assets and (iii) enter into certain affiliate transactions, in each case subject to certain exceptions.
Pursuant to the L Catterton Investment Agreement, on September 18, 2020, Mr. Dirk Donath was appointed as a member of the Board and Mr. Ramiro Lauzan
was appointed as a non-voting observer. Mr. Donath has also been appointed to serve on the Strategy Committee and Nomination and Compensation
Committee of the Board. Mr. Donath resigned on June 24, 2022, in connection with a rotation by L Catterton Purchaser of its appointed directors. Mr. Donath
will continue to serve as an observer of the Board. Mr. Ramiro Lauzan has been appointed to the Board of Directors and to the Nomination and Compensation
Committee and Strategy Committee of the Board, effective as of June 24, 2022.
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Principal Terms of the Warrants to Purchase Common Stock
Pursuant to the L Catterton Investment Agreement, we issued to the Catterton Purchaser Warrants to purchase 11,000,000 Common Shares at an exercise price
of $0.01 per share (“Penny Warrants”), subject to certain customary anti-dilution adjustments provided under the Warrants, including for stock splits,
reclassifications, combinations and dividends or distributions made by the Company on the Common Shares. The Penny Warrants expire ten years after the
Catterton Closing Date.
Initial and Subsequent Accounting:
The Series A Preferred Shares are classified within temporary equity (mezzanine equity) on our consolidated balance sheet due to the provisions that could
cause the equity to be redeemable at the option of the holder and the terms of the Series A Preferred Shares which do not include an unconditional obligation to
redeem at a specified or determinable date, or upon an event certain to occur. The Penny Warrants qualify for classification in shareholders’ equity and are
included in our consolidated balance sheet within “Additional paid-in capital”.
As indicated above, if a qualifying change of control occurs, then each holder of Series A Preferred Shares may, at its election, cause the Company to redeem
all of such holder’s then outstanding Series A Preferred Shares in cash at a price equal to 110.0% of the Liquidation Preference, plus, without duplication,
accrued and unpaid distributions to, but excluding, the redemption date (the “Change of Control Put”). There is a substantial premium as the Company is
required to pay 110.0% upon a change of control. The Change of Control Put requires bifurcation. However, it is uncertain whether or when a qualifying
change of control would occur that would obligate the Company to pay the substantial premium liquidation preference to holders of the Series A Preferred
Shares and at the balance sheet date, these circumstances were not probable. Thus, no value was assigned at inception. A subsequent adjustment to the carrying
value of the Series A Preferred Shares may be made only when it becomes probable that such a change of control event will occur.
The gross proceeds received from the issuance of the Series A Preferred Shares were allocated to the Series A Preferred Shares and Warrants on a relative fair
value basis.
In determining the fair value of the Series A Preferred Shares, we primarily used discounted cash flow analyses. Inputs to the discounted cash flow analyses
and other aspects of the valuation require judgment. The more significant inputs used in the discounted cash flow analyses and other areas of judgment include
assumptions on term, cash flows, and market yield.
In determining the fair value of the Warrants, we primarily used the Black Scholes Option Pricing Model (“BSOPM”). Inputs to the BSOPM and other aspects
of the valuation require judgment. The more significant inputs used in the BSOPM and other areas of judgment include the starting stock price or value of the
underlying assets, the strike price, the time to expiration, and volatility and risk-free rate. In order to consider the two-year transfer restriction of the Warrants,
considered to be security specific, we applied a Discount for Lack of Marketability with the Finnerty Method.
Therefore, the Series A Preferred Shares were initially recognized at an allocated amount on a fair value basis of $84,643, net of $5,415 in initial discount and
issuance costs. The Penny Warrants were recognized at an allocated amount on a fair value basis of $56,339, net of $3,604 in issuance costs. Penny Warrants
were recorded as additional paid-in capital.
The Series A Preferred Shares are currently not redeemable; however, they will become redeemable on September 18, 2025. Since only the passage of time is
needed to occur for the Series A Preferred Shares to become redeemable, it is considered to be probable that it will be redeemable. As such, we elected to
accrete the difference between the initial value of $84,643 and the redemption value of $150,000 over the five-year period from the date of issuance through
September 18, 2025 (the date at which the holder has the unconditional right to redeem the shares, deemed to be the earliest likely redemption date) using the
effective interest method. The accretion to the carrying value of the redeemable preferred shares is treated as a deemed dividend, recorded as a charge to
additional paid-in-capital (since there is a deficit in retained earnings) and deducted in computing earnings per share (analogous to the treatment for stated
dividends paid on the redeemable preferred shares).
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
On March 25, 2024, we paid $15,418 of accumulated dividends until March 31, 2024. On September 26, 2024, we paid $7,521 of accumulated dividends until
September 30, 2024. As of December 31, 2024 there are $3,781 of accrued and unpaid dividends.
On March 21, 2023, we paid $7,896 of accumulated dividends until September 30, 2022. On September 26, 2023, we paid $7,854 of accumulated dividends
until March 31, 2023. For the period from April 1, 2023 until December 31, 2023, we accrued $11,491 for unpaid dividends recorded as a charge to additional
paid-in-capital.
On June 11, 2024, we issued 10,992,759 Ordinary Shares (no per value). On June 13, 2024 LCLA Daylight LP sold an aggregate of 3,000,000 Ordinary
Shares.
The accumulated accretion as of December 31, 2024, 2023 and 2022 was $14,982 and $13,324 and $11,884, respectively.
Convertible Redeemable Series B Preferred Shares
On September 21, 2020 (the “Waha Closing Date”), we completed the issuance and sale of our Series B Preferred Shares (as defined below) to Waha LATAM
Investments Limited, an affiliate of Waha Capital PJSC (the “Waha Purchaser”) pursuant to our previously announced Investment Agreement, dated as of
August 20, 2020, with the Waha Purchaser (the “Waha Investment Agreement”).
We issued and sold to the Waha Purchaser, pursuant to the Waha Investment Agreement, 50,000 shares of our newly created Series B Preferred Shares, no par
value per share (the “Series B Preferred Shares”) for an aggregate purchase price of $50,000.
On December 31, 2020, we paid certain fees in an aggregate amount of $1,000 to affiliates of the Waha Purchaser.
On the terms and subject to the conditions set forth in the Waha Investment Agreement, from and after September 21, 2020, the Waha Purchaser is entitled to
appoint one director to our Board and one non-voting observer to the Board, in each case until such time as (i) the Waha Purchaser no longer holds at least 50%
of the Series B Preferred Shares purchased by the Waha Purchaser under the Waha Investment Agreement and (ii) in the event that the Waha Purchaser or the
Company converts the Series B Preferred Shares to Common Shares in full, the Waha Purchaser will be entitled to appoint one director to the Board and one
non-voting observer to the Board, in each case, until such time as the Waha Purchaser no longer holds at least 50% of the issued and outstanding Common
Shares issued to the Waha Purchaser at the conversion date.
The Waha Investment Agreement (including the forms of our amended Memorandum of Association and Articles of Association, the terms of the Series B
Preferred Shares and the Waha Shelf Registration Rights Agreement) contains other customary covenants and agreements, including certain transfer
restrictions, standstill and voting provisions and preemptive rights.
Pursuant to the Waha Investment Agreement, we and the Waha Purchaser entered into a Shelf Registration Rights Agreement (the “Waha Shelf Registration
Rights Agreement”), pursuant to which the Company filed a Registration Statement on Form F-3 covering the resale of the Common Shares for which the
Series B Preferred Shares may be converted. The issuance of the Series B Preferred Shares pursuant to the Waha Investment Agreement is intended to be
exempt from registration under the Securities Act, by virtue of the exemption provided by Section 4(a)(2) of the Securities Act.
Principal Terms of the Series B Preferred Shares
Dividends:
Dividends on each Series B Preferred Share accrue daily from and including the Waha Closing Date at a rate of 4.0% per annum and are payable quarterly in
arrears commencing on December 31, 2020. Dividends on each Series B Preferred Share accrue whether or not declared and whether or not the Company has
assets legally available to make payment thereof.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Dividends are payable, at the Company’s option, either (i) in cash or (ii) by increasing the amount of Accrued Dividends in an amount equal to the amount of
the dividend to be paid. If the Company does not declare and pay in cash a full dividend on each Series B Preferred Share on any dividend payment date, then
the amount of such unpaid dividend shall automatically be added to the amount of accrued dividends on such share on the applicable dividend payment date
without any action on the part of the Company.
In addition, the Series B Preferred Shares are entitled to participate in dividends and other distributions declared and made on the Common Stock on an as-
converted basis.
Ranking:
The Series B Preferred Shares rank on a parity basis to the Series A Preferred Shares and senior to the Common Stock with respect to dividend rights and rights
on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company.
Liquidation Rights:
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the holders of the Series B Preferred Shares
shall be entitled, out of assets legally available therefor, before any distribution or payment out of the assets of the Company may be made to or set aside for the
holders of any Common Shares, and subject to the rights of the holders of any Senior Shares or Parity Shares and the rights of the Company’s existing and
future creditors, to receive in full a liquidating distribution in cash and in the amount per Series B Preferred Share equal to the Liquidation Preference with
respect to such Series B Preferred Share.
Conversion Rights:
The Series B Preferred Shares are convertible, at the option of the holder, at any time into Common Stock at an initial conversion price of $9.251 (the “Initial
Conversion Price) per share and an initial conversion rate of 108.1081 Common Shares per Series B Preferred Share, subject to certain anti-dilution
adjustments. As of December 31, 2024 and 2023, there were no conversions of the Series B Preferred Shares. On March 27, 2024, Waha LATAM Investments
Limited decided to convert our 50,000 Series B into ordinary shares.
Each holder of Series B Preferred Shares has the right, at such holder’s option, to convert all or a part of such holder’s Series B Preferred Shares at any time
into (i) the number of Common Shares per Series B Preferred Share equal to the quotient of (A) the sum of the Stated Value plus, without duplication, any
accrued and unpaid Dividends with respect to such Series B Preferred Share as of the applicable Conversion Date (to the extent such accrued and unpaid
Dividend is not included in the Stated Value already) (such sum, the “Conversion Amount”) divided by (B) the Conversion Price as of the applicable
Conversion Date.
At any time from the third to the fifth anniversary of the Waha Closing Date, if the volume weighted average price (“VWAP”) of the Common Shares exceeds
$13.88 (150% of the Initial Conversion Price) as may be adjusted pursuant to the Memorandum and Articles of Association, for at least 10 consecutive trading
days, the Company may convert all of the Series B Preferred Shares into the number of Common Shares equal to the quotient of (1) 105% of the conversion
amount as of the conversion date divided by (2) the conversion price of such share in effect as of the conversion date.
At any time from the fifth to the seventh anniversary of the Waha Closing Date, if the VWAP of the Common Shares exceeds $12.49 (135% of the Initial
Conversion Price), as may be adjusted pursuant to the Memorandum and Articles of Association, for at least 10 consecutive trading days, the Company may
convert all of the Series B Preferred Shares into the number of Common Shares equal to the quotient of (1) 105% of the conversion amount as of the
conversion date divided by (2) the conversion price of such share in effect as of the conversion date.
In addition, at any time from the seventh anniversary of the Waha Closing Date, if the VWAP of the Common Shares exceeds the Initial Conversion Price, as
may be adjusted pursuant to the Memorandum and Articles of Association, for at least 10 consecutive trading days, the Company may convert all of the Series
B Preferred Shares into the number of Common Shares equal to the conversion amount divided by the lower of (1) the VWAP per Common Share on the 15
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
trading days immediately preceding the conversion date or (2) the price per Common Share on the trading day immediately preceding the conversion date.
Redemption Rights:
At any time on or after the seventh anniversary of the Waha Closing Date, the Company may redeem all of the Series B Preferred Shares in cash at a price
equal to the sum of (i) (x) the initial stated value of $1,000 per Series B Preferred Shares plus (y) any Dividend Accruals (such sum, the “Stated Value”) plus
(ii), without duplication, any accrued and unpaid distributions to, but excluding, the redemption date.
Change of Control Redemption:
If the Company undergoes a qualifying change of control prior to the seventh anniversary of the Waha Closing Date, the Company must redeem, subject to the
right of each holder to convert its then outstanding Series B Preferred Shares into Common Shares, all of the then outstanding Series B Preferred Shares for a
cash price per share equal to the greater of (x) 110.0% of the Stated Value plus, without duplication, any accrued and unpaid distributions to, but excluding, the
redemption date, and (y) the amount such holder would have received in respect of the number of Common Shares that would be issuable upon conversion
thereof.
If the Company undergoes a qualifying change of control on or following the seventh anniversary of the Waha Closing Date, the Company must redeem,
subject to the right of each holder to convert its then outstanding Series B Preferred Shares into Common Shares, all of the then outstanding Series B Preferred
Shares for a cash price per share equal to the greater of (x) 100% of the Stated Value plus, without duplication, any accrued and unpaid distributions to, but
excluding, the redemption date, and (y) the amount such holder would have received in respect of the number of Common Shares that would be issuable upon
conversion thereof, subject to certain conditions.
Voting Rights:
The Series B Preferred Shares will vote on all matters together with the Common Shares on an as-converted basis. Until such time as the Waha Purchaser no
longer holds at least 50% of the Series B Preferred Shares purchased by the Waha Purchaser under the Waha Investment Agreement, the prior written consent
of the Waha Purchaser is required in order for the Company to (i) authorize, create or issue any shares senior to or on parity with the Series B Preferred Shares,
excluding an additional financing meeting certain requirements; (ii) amend, modify or repeal any provision of the Memorandum and Articles of Association in
a manner adverse to the Series B Preferred Shares; (iii) change the authorized number of directors of the Company; (iv) enter into certain affiliate transactions;
(v) declare or pay any dividend or distribution with respect to any shares; (vi) redeem, purchase or otherwise acquire any Common Shares; (vii) liquidate,
dissolve or wind up the affairs of the Company or any of its subsidiaries, effect a recapitalization or reorganization, or reincorporate the Company under the
laws of a jurisdiction other than the British Virgin Islands; (viii) effect a conversion of the Company into a different legal form; and (ix) enter into any
exclusive license for all or substantially all of the Company’s products or technologies to a third party, in each case subject to certain exceptions.
Pursuant to the Waha Investment Agreement, Mr. Aseem Gupta served as director from September 21, 2020 until June 30, 2021 when he resigned to his
position in the board. As of the date of these consolidated financial statements, Waha has not designated any director since and its seat is still vacant.
Initial and Subsequent Accounting:
The Series B Preferred Shares are classified within temporary equity on our consolidated balance sheets due to the provisions that cause the equity to be
redeemable upon the occurrence of a change of control. The terms of the Series B Preferred Shares do not include an unconditional obligation to redeem at a
specified or determinable date, or upon an event certain to occur.
The Series B Preferred Shares were determined to have characteristics more akin to equity than debt. As a result, the conversion at holder’s option or at the
Company’s option prior to the seventh anniversary of the Waha Closing Date were
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
determined to be clearly and closely related to the Series B Preferred Shares and therefore do not need to be bifurcated and classified as a derivative liability.
The Company’s conversion option after the seventh anniversary of the Waha Closing Date was not determined to be clearly and closely related to the Series B
Preferred Shares as the feature is in-substance a put option as it is designed to provide the investor with a fixed monetary amount, settleable in shares. Put (call)
options embedded in equity hosts are not considered clearly and closely related. However, the embedded feature does not meet the definition of a derivative. It
has an underlying, a notional amount and a settlement provision, little to no initial net investment but it is not net settled. Therefore, the feature does not need to
be bifurcated and classified as a derivative liability.
We also evaluated whether a beneficial conversion feature (“BCF”) should be bifurcated and separately recognized. A convertible instrument contains a BCF
when the conversion price is less than the fair value of the shares into which the instrument is convertible at the commitment date. As the conversion price is
above the share price and the conversion option is not priced “in-the-money”, we concluded that the Series B Preferred Shares did not contain a BCF and no
accounting entry was required.
All the other embedded features in the Series B Preferred Shares do not need to be bifurcated.
Accordingly, the Series B Preferred Shares were recognized at fair value of $50,000 (the proceeds on the date of issuance) less issuance costs of $3,300
resulting in an initial value of $46,700.
On April 1, 2024, the total amount of the Series B preferred shares were converted and delivered to 5,405,405 shares of common stock equivalent to $67,479 of
our Treasury Stock.
Accordingly, accretion from the initial carrying amount to the redemption amount was not required.
For the years ended December 31, 2024, 2023 and 2022, we accrued, approved, and paid $499, $2,000 and $2,000, respectively, in cash dividends and as of
December 31, 2024 there were no undeclared dividends.
6. Debt and other financial liabilities
The following table summarizes our outstanding short-term and long-term debt and other financial liabilities:
As of December 31,
2024
As of December 31,
2023
Loan with Itaú Unibanco S.A. principal amounts 17,200,000 Reais and 3,000,000 Reais
2,051
3,605
Long-term debt, including current maturities
2,051
3,605
Less: Current maturities of long-term debt
1,147
1,343
Long-term debt, excluding current maturities
$
904
$
2,262
Short-term debt, including current maturities of long-term debt
49,625
28,530
Total short-term and long-term debt
$
50,529
$
30,792
The total estimated fair value of our long-term debt was approximately $2,217 and $3,601 as of December 31, 2024 and 2023, respectively.
The accompanying notes are an integral part of these consolidated financial statements.
F-36
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
The following table shows the details of the long-term debt outstanding as of December 31, 2024:
Loan
Issuance
date
Maturity
date
Currency
Amount in original
currency
Amount in U.S. dollars
Interest rate
Interest
payment
Itaú Unibanco S.A.
November 2020
November 2026
Reais
10,782
1,747
4%
Monthly
Itaú Unibanco S.A.
November 2020
November 2026
Reais
1,878
304
4%
Monthly
The changes in the balance of our total short-term and long-term debt as of December 31, 2024 and 2023 consist of the following:
As of December 31,
2024
As of December 31,
2023
Balance, beginning of year
$
30,792
$
35,050
Payments of debenture issuance by securitization program (Note 10)
—
(2,231)
Payment of borrowings
(804)
(5,807)
Accrued interest
410
630
Interest paid
(502)
(361)
Foreign currency translation adjustment
(658)
(211)
Short-term loans, net (1)
21,291
3,722
Balance, end of year
$
50,529
$
30,792
(1) Includes loans that were reclassified from long-term debt to short-term debt.
As of December 31, 2024 and 2023, short-term debt is comprised of eight loans with four financial institutions and seven loans with two financial institutions,
respectively. The weighted average interest rate on short-term borrowings outstanding as of December 31, 2024 and 2023, excluding our collateralized debt,
was 12.29% and 12.29%, respectively. As December 31, 2023, we maintain short-term debt classified as a liability held for sale, see Note 31.
At December 31, 2024, we were in compliance with the applicable covenants under our debt agreements.
7. Cash and cash equivalents and restricted cash and cash equivalents
Cash and cash equivalents:
Cash and cash equivalents consist of the following:
As of December 31,
2024
As of December 31,
2023
Cash on hand
$
38
$
27
Bank deposits
81,649
119,806
Time deposits
105,486
57,466
Money market funds
35,620
37,276
Total cash and cash equivalents
$
222,793
$
214,575
(1)
The accompanying notes are an integral part of these consolidated financial statements.
F-37
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
(1)
As of December 31, 2023, we maintain $9,319 as assets held for sale, see Note 31.
Restricted cash:
Restricted cash and cash equivalents amount to $24,423 and $26,879 as of December 31, 2024 and 2023, respectively.
We place collateralized amounts related to operations with our travel suppliers and service providers and the International Air Transport Association (“IATA”).
We are required to be accredited by IATA to sell international airlines tickets of IATA-affiliated airlines. We, therefore, as part of our operations, maintain
restricted cash in the form of time deposits or bank or insurance guarantees.
Also included within the restricted cash balance is $2,937 and $4,108 related to cash and cash equivalents balances of the securitization VIEs as of
December 31, 2024 and 2023, respectively (See Note 10).
The following table reconciles our cash and cash equivalents and restricted cash as reported in our consolidated balance sheets to the total amount shown in our
consolidated statements of cash flows:
As of December 31,
2024
As of December 31,
2023
As of December 31,
2022
As included in our consolidated balance sheets:
Cash and cash equivalents
$
222,793
$
223,894
$
219,167
Restricted cash
24,423
26,895
25,879
Total cash and cash equivalents and restricted cash as shown in our consolidated statements of cash
flows:
247,216
250,789
245,046
Cash and cash equivalents related to business held for sale (Note 31)
—
9,319
—
Restricted cash related to business held for sale (Note 31)
—
$
16
$
—
Cash and cash equivalents as of end of the period, net of business held for sale
$
247,216
$
241,454
$
245,046
(1)
As of December 31, 2023, we maintain $9,319 of cash and cash equivalents and $16 of restricted cash as assets held for sale, see Note 31.
8. Trade accounts receivable, net of allowances:
Trade accounts receivable in our consolidated balance sheets as of December 31, 2024 and 2023 are as follows:
As of December 31,
2024
As of December 31,
2023
Third-party credit card processors (1)
182,283
127,980
Fulfillment partners
38,443
30,310
Global distribution systems and travel incentives
17,115
12,177
Advertising
11,786
8,197
Airlines
1,308
3,297
Hotels
2,215
3,207
Others
4,406
5,034
Total accounts receivable
257,556
190,202
Allowance for credit expected losses
(5,608)
(6,809)
Total accounts receivable, Net
$
251,948
$
183,393
(1)
(1)
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
(1)
Net of allowance for cancellations, see Note 30.
Our receivables are short-term in nature. We have grouped our trade receivables into pools by country of origin and type (i.e., facilitation services, incentives,
advertising, transportation and tour services and others) based on similar risk characteristics. Payment terms for receivables vary depending on type and
jurisdiction, generally less than one year.
As it relates to trade receivables with credit card processors which represent most of our trade receivables as of any given date, payment terms vary but
typically are received within thirty days after booking except in those cases where transactions are effected through financing installment plans offered by
banks. When travelers pay in installments, payment settlement depends on each market's dispositions. Installment plans are offered by banks and may vary,
generally up to 12 monthly installments after booking is confirmed. We usually receive full payment from credit card processors within 30 days at an agreed-
upon discount rate, regardless of customer due dates. However, in some specific markets we receive payment from credit card processors at the time each
installment is due. In these cases, we typically enter into factoring agreements to collect these accounts receivable, thereby reducing the days of outstanding
exposure. Payment conditions for accounts receivable from advertising transactions are usually agreed in each specific contract, the common practice for them
is to be payable within 30 days. Receivables from back-end incentives typically do not have stated payment terms, although we usually receive this payment
within 12 months.
For each pool, we consider the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any
recoveries in assessing the lifetime expected credit losses. Generally, we utilize a loss rate method to calculate the allowance for expected credit losses. We
track historical loss information for our receivables by type and geography using their contractual lives. We then apply the historical credit loss percentages to
our outstanding balances as of any given date. We believe that using historical loss information is a reasonable basis on which to determine expected credit
losses for our receivables because their composition at the reporting date is consistent with that used in developing the historical credit-loss percentages.
Historically the default or delinquency rates of our trade receivables have been low even during recessions or distressed economic periods. Recessions or other
poor economic conditions had historically affected the number of bookings by travelers and therefore generation of revenue and corresponding receivables, but
they generally did not affect the collection behavior of receivables from confirmed bookings. A booking is not confirmed if credit card information is not
validated by the credit card processors’ systems. Therefore, due to the nature of our receivables and counterparties, losses have been historically limited to very
specific events at the counterparty level such as bankruptcy or financial difficulties.
Our exposure to credit risk takes the form of a loss that would be recognized if counterparties failed to, or were unable to, meet their payment obligations. We
are also exposed to political and economic risk events, which may cause non-payment of foreign currency obligations to us.
Generally, the counterparties to our trade receivables are major well-recognized and externally-credit rated credit card companies, such as MasterCard, Visa
and other local or regional credit card processors; major GDS providers, such as Travelport, Amadeus and Sabre, individual major airlines; and to a lesser
extent hotel chains and operators. We may seek cash collateral, letter of credit or parent company guarantees, as considered appropriate. We have not
experienced significant credit problems with these customers to date. Most of these entities or their parent companies are externally credit-rated. We review
these external ratings from credit agencies. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in our
consolidated balance sheet after deducting the expected credit loss allowance.
The following table shows the activity on the expected credit loss allowance for our trade receivables during the years ended December 31, 2024 and 2023:
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
As of December 31,
2024
As of December 31,
2023
Balance, beginning of year
$
6,809
$
10,529
Provisions
4,513
4,350
Recoveries and write-off
(4,639)
(8,837)
Foreign currency translation adjustment
(1,075)
767
Balance, end of year
$
5,608
$
6,809
9. Loans receivable, net of allowances
Current loans receivable in our consolidated balance sheets as of December 31, 2024 and 2023 are as follows:
As of December 31,
2024
As of December 31,
2023
Loans receivable
$
21,316
$
23,794
Securitized loans receivable
10,185
10,702
Allowance for credit expected losses
(14,934)
(13,111)
Total current loans receivable, net
$
16,567
$
21,385
Non-current loans receivable in our consolidated balance sheets as of December 31, 2024 and 2023 are as follows:
As of December 31,
2024
As of December 31,
2023
Loans receivable
$
792
$
2,213
Allowance for credit expected losses
(418)
(472)
Total non-current loans receivable, net
$
374
$
1,741
For the years ended December 31, 2024 and 2023, all of our loans receivable were originated to consumers in Brazil. As of December 31, 2024 and 2023, 85%
and 88% of loans receivable, respectively, were originated to consumers seeking to buy travel products and services with our Brazilian travel subsidiary,
Decolar, and the remaining comprised loan receivable originated to consumers seeking to buy products with other merchants.
We utilize a simplified roll rate method to calculate the allowance for expected credit losses and estimate the lifetime expected credit loss allowance based on a
collective assessment. We write off loans receivable when the customer balance becomes 360 days past due.
We apply the following rates which are calculated based on internal data and that are periodically assessed to check its adequacy in order to cover 100 % of the
estimated credit losses of the current portfolio at each period closing.
Grade
Status
Provision Rate
B
Not overdue
1%
B
Overdue b/w 1 - 5 days
1%
D
Overdue b/w 6 - 14 days
10%
E
Overdue b/w 15 - 30 days
30%
F
Overdue b/w 31 - 60 days
50%
G
Overdue b/w 61 - 90 days
70%
G
Overdue b/w 91 - 120 days
70%
G
Overdue b/w 121 - 150 days
70%
H
Overdue b/w 151 - 360 days
100%
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
We write off loans receivable when the customer balance becomes 360 days past due.
The credit quality analysis of loans receivable was as follows:
As of December 31,
2024
As of December 31,
2023
1-30 days past due
$
2,643
$
4,037
31-60 days past due
1,441
2,133
61-90 days past due
1,208
1,773
91-120 days past due
1,211
1,214
121-150 days past due
1,124
1,131
151-180 days past due
1,166
1,647
181-210 days past due
1,252
1,094
211-240 days past due
1,387
1,043
241-270 days past due
1,363
1,017
271-300 days past due
1,450
1,219
301-330 days past due
1,622
1,145
331-360 days past due
1,583
1,139
Total past due
$
17,450
$
18,592
To become due
14,843
18,117
Total loans receivable
$
32,293
$
36,709
10. Brazilian accounts receivable securitization program
Koin employs securitization programs to monetize a portion of its loans receivable since 2022. These programs involve transferring select loan assets to a
special purpose vehicle (SPV), which then issues various forms of interests in those assets to investors. Koin receives cash proceeds and/or other interests in the
SPV in exchange for the transferred assets.
The SPV is a VIE because its total equity investment at risk is not sufficient to permit it to finance its activities without additional subordinated financial
support from investors or via the collections from loans receivable purchased. We are considered the primary beneficiary of the SPV since we have the ability
to direct the activities of the VIE that most significantly impact the entity's economic performance and the obligation to absorb losses and the right to receive
benefits that are potentially significant to the VIE.
Our continuing involvement in the securitization transaction consists primarily of holding certain retained interests and acting as the primary servicer for which
we earn a servicing fee. We consolidate the assets, liabilities, and related results of the SPV in our consolidated financial statements. Any activity between the
participating subsidiary and the SPV is eliminated in consolidation. The assets of the consolidated SPV primarily consists of cash and cash equivalents and
loans receivable, which we reported on our consolidated balance sheet as restricted cash and cash equivalents and securitized loans receivable, respectively.
The assets of the SPV are the primary source of funds to settle its obligations. The third-party creditors of the SPV have legal recourse only to the assets
securing the debt and do not have recourse to our company. The liabilities primarily consists of debt securities issued by the SPV, which we reported on our
consolidated balance sheet as securitized debt obligations. Additionally, the cash flows generated by the SPV are restricted to the payment of amounts due to
third-party investors, but we retain the right to residual cash flows.
This first securitization program ended on October 27, 2023, with the full payment of all due interests and principal amounts by the VIE to the senior investors
and with the return of the residual cash flows and loans receivable to Koin.
On January 2023, we launched a second securitization program, this time through a 'K-FIDC' structure, to serve as the successor to the first facility that had
reached the end of its revolving period by the end of December 2022. We evaluated the SPV and concluded that it was also a VIE, following the same
reasoning as for the first facility. We are the primary
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
beneficiary of the SPV since we have the ability to direct the activities of the VIE that most significantly impact the entity's economic performance and the
obligation to absorb losses and the right to receive benefits that are potentially significant to the VIE.
Our continuing involvement in the securitization transaction consists primarily of holding certain retained interests and acting as the primary service for which
we earn a servicing fee. We consolidate the assets, liabilities and related results of the SPV in our consolidated financial statements.
The following table summarizes the collateralized debt as of December 31, 2024:
SPV
Collateralized debt
Interest rate
Currency
Maturity
Koin K-FIDC - Current
$
5,919 CDI +5.25% (*)
Brazilian Reais
Revolving
Total
$
5,919
(*) As of December 31, 2024, CDI equals 12.15%
The assets and liabilities of the SPV included in our consolidated financial statements as of December 31, 2024 and 2023 are as follows:
K-FIDC:
As of December 31,
2024
As of December 31,
2023
Restricted cash and cash equivalents
$
2,937
$
4,108
Loans receivable
10,185
10,702
Allowance for credit losses
(3,887)
(1,718)
Other receivables and prepaid expenses
1,583
749
Total current assets
10,818
13,841
Total assets
$
10,818
$
13,841
As of December 31,
2024
As of December 31,
2023
Accounts payable
$
14
$
15
Collateralized debt
5,919
7,533
Total current liabilities
$
5,933
$
7,548
Total liabilities
$
5,933
$
7,548
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
11. Other assets and prepaid expenses
Other current assets and prepaid expenses consist of the following:
As of December 31,
2024
As of December 31,
2023
Tax credits
$
33,212
$
37,608
Prepaid expenses and advance to suppliers
18,589
9,293
Seller indemnification
1,015
2,409
Account receivable related to non-air segment business sale (Note 31)
1,974
—
Others
2,474
2,977
Total other current assets and prepaid expenses
$
57,264
$
52,287
Other non-current assets and prepaid expenses consist of the following:
As of December 31,
2024
As of December 31,
2023
Deferred tax assets
$
61,089
$
70,729
Seller indemnification
2,611
5,052
Equity method investments
1,996
3,105
Account receivable related to non-air segment business sale (Note 31)
7,716
—
Others
749
—
Total other non-current assets and prepaid expenses
$
74,161
$
78,886
(1)
Correspond to the acquisition of Viajanet, see Note 4.
(2)
Includes $1.7 and $2.5 million as of December 31, 2024 and 2023 related to an equity stake in Stays acquired in July 2022. Stays is a vacation rental channel manager based in Brazil.
(1)
(1)
(2)
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
12. Property and equipment, net
Property and equipment, net consists of the following:
As of December 31,
2024
As of December 31,
2023
Computer hardware and software
$
25,466
$
32,640
Office furniture and fixtures
17,313
16,540
Buildings
1,881
2,001
Vehicles
129
730
Land
41
41
Total property and equipment
$
44,830
$
51,952
Accumulated depreciation
(30,640)
(35,552)
Total property and equipment, net
$
14,190
$
16,400
Accumulated depreciation as of December 31, 2024 comprised of $20,351, $9,831, $332 and $126 for computer hardware and software, office furniture and fixtures,
buildings and vehicles, respectively. Accumulated depreciation as of December 31, 2023 comprised of $26,784, $7,859, $305 and $604 for computer hardware and
software, office furniture and fixtures, buildings and vehicles, respectively.
The changes in the balance of property and equipment for the years ended December 31, 2024 and 2023 consist of the following:
As of December 31,
2024
As of December 31,
2023
Balance, beginning of year
$
16,400
$
15,532
Additions
6,488
9,820
Depreciation
(7,210)
(8,535)
Foreign currency translation adjustment
(1,488)
1,079
Assets held for sale (Note 31)
—
(1,496)
Balance, end of year
$
14,190
$
16,400
Depreciation expense for the years ended December 31, 2024, 2023 and 2022 was classified as follows:
For the year ended December 31
2024
2023
2022
Technology and product development
$
1,591
$
3,823
$
2,591
General and administrative
961
1,527
1,133
Selling and marketing
3,334
1,524
2,068
Cost of revenue
1,324
1,661
$
1,226
Total depreciation expense
$
7,210
$
8,535
$
7,018
As of December 31, 2024 and 2023, we identified no impairment indicators for our property and equipment assets.
(1)
(1)
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
13. Intangible assets, net
Indefinite-lived and Finite-lived intangible assets, net consists of the following:
As of December 31,
2024
As of December 31,
2023
Indefinite-lived intangible assets:
Trademarks and domains
$
13,882
$
13,882
Finite-lived intangible assets:
Trademarks and domains
26,264
18,494
Developed technology
183,160
160,436
Licenses
1,318
1,333
Customer relationships
24,908
39,452
Total intangible assets
$
249,532
$
233,597
Accumulated amortization
(166,482)
(143,176)
Total intangible assets, net
$
83,050
$
90,421
Accumulated amortization as of December 31, 2024 comprised $134,550, $863, $16,096 and $14,973 for developed technology, licenses, customer relationships and
trademarks, respectively. Accumulated amortization as of December 31, 2023 comprised $112,506, $777, $19,690 and $10,203 for developed technology, licenses,
customer relationships and trademarks, respectively.
The changes in the balance of intangible assets, net for the years ended December 31, 2024 and 2023 consist of the following:
As of December 31,
2024
As of December 31,
2023
Balance, beginning of year
$
90,421
$
91,500
Additions
30,330
31,146
Disposals related to assets held for sale (Nota 31)
(1,404)
—
Amortization
(31,585)
(27,975)
Foreign currency translation adjustment
(4,712)
3,988
Assets held for sale (Note 31)
—
(8,238)
Balance, end of year
$
83,050
$
90,421
Amortization expense for the years ended December 31, 2024, 2023 and 2022 was classified as follows:
For the year ended December 31
2024
2023
2022
Technology and product development
$
26,945
$
20,924
$
18,825
General and administrative
2,943
5,517
8,403
Selling and marketing
1,411
1,340
1,586
Cost of revenue
286
194
171
Total amortization expense
$
31,585
$
27,975
$
28,985
(1)
(1)
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
The estimated future amortization expense related to intangible assets with finite lives as of December 31, 2024, assuming no subsequent impairment of the
underlying assets, is as follows:
Year
Amount
2025
$
26,614
2026
19,844
2027
10,557
2028
1,626
2029 and thereafter
10,527
Total
$
69,168
Impairment Assessments
Indefinite-lived intangible assets:
Our indefinite-lived intangible assets comprise our trademarks Despegar and Decolar.We test indefinite-lived intangible assets for impairment as of December
31 of each year, or more frequently if events and circumstances indicate that an impairment may have occurred. In our evaluation of our indefinite-lived
intangible assets, we typically first perform a quantitative assessment. Periodically, we may choose to perform a qualitative assessment, prior to performing the
quantitative analysis, to determine whether the fair value of the indefinite-lived intangible asset is more likely than not impaired.
As of December 31, 2024, we performed a qualitative impairment assessment indicating that it was not “more likely than not” that the fair value of the
indefinite-lived intangible assets was less than the carrying value and concluded that there was no impairment of indefinite-lived intangible assets.
As of December 31, 2023, we performed our annual quantitative impairment test and concluded that there was no impairment of indefinite-lived intangible
assets. We base our measurement of fair value of our trade name and trademarks, classified as Level 3 measurements, using the relief-from-royalty method,
which includes unobservable inputs, including projected revenues and royalty rate of 2.5%.
14. Goodwill
A substantial portion of our goodwill relates to the acquisition of the Best Day Group.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Goodwill consists of the following:
As of December 31,
2024
As of December 31,
2023
Goodwill
$
125,832
$
150,752
The following table presents the changes in goodwill by reportable segment:
Air
Packages, Hotels
and Other Travel
Products
Financial Services
Total
Balance as of January 1, 2023
$
29,460
$
103,279
$
5,898
$
138,637
Assets held for sale (Note 31)
—
(3,685)
—
(3,685)
Foreign currency translation adjustment
2,920
12,353
527
15,800
Balance as of December 31, 2023
$
32,380
$
111,947
$
6,425
$
150,752
Foreign currency translation adjustment
(6,222)
(17,323)
(1,375)
(24,920)
Balance as of December 31, 2024
$
26,158
$
94,624
$
5,050
$
125,832
We test goodwill for impairment at the reporting unit level and the tests are performed as of December 31 of each year, or more frequently if events and
circumstances indicate that an impairment may have occurred.
2024 Impairment Assessment
We assessed qualitative factors to determine whether it is more likely than not that the fair value of our reporting units is less than their carrying amount,
consistent with the application of the Step 0 qualitative assessment for impairment testing. In our qualitative assessment, we considered relevant events and
circumstances, including, but not limited to, the following: macroeconomic conditions; industry and market considerations; costs that have a negative effect on
earnings and cash flows; overall financial performance; other relevant entity-specific events; and events affecting a reporting unit.
As of December 31, 2024, we concluded that there was no impairment of goodwill.
2023 Impairment Assessment
We compared the fair value of the reporting units to their carrying values. The fair value estimates of the reporting units are based on the present value of their
future discounted cash flows, Level 3 inputs (income approach). The income approach estimates fair value utilizing long-term growth rates and discount rates
applied to the cash flow projections. The significant estimates used in the discounted cash flows model included our forecasted gross bookings; forecasted
revenues, net of significant costs and expenses; and the discount rate. Our assumptions were based on the actual historical performance of the reporting units
and considered operating result trends, air passenger traffic growth rates, and implied risk premiums based on market prices of our equity and debt as of the
assessment dates.
As of December 31, 2023, we performed our annual goodwill impairment test and concluded that there was no impairment of goodwill.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
15. Accounts payable and accrued expenses
Accounts payable and accrued expenses consist of the following:
As of December 31,
2024
As of December 31,
2023
Marketing suppliers
$
30,330
$
40,530
Other suppliers
28,130
11,402
Total accounts payable and accrued expenses
$
58,460
$
51,932
16. Travel accounts payable
Travel accounts payable consist of the following:
As of December 31,
2024
As of December 31,
2023
Hotels and other travel providers
$
281,664
$
253,092
Canceled reservations pending payment to travelers
14,313
44,504
Airlines
51,521
49,654
Agencies
5,410
3,622
Errors and frauds provision
4,085
4,281
Other suppliers
824
234
Total travel accounts payable
$
357,817
$
355,387
17. Other liabilities
Other current liabilities consist of the following:
As of December 31,
2024
As of December 31,
2023
Taxes payable
$
31,737
$
51,277
Salaries payable
43,113
39,210
Purchase price payable for Viajanet acquisition (1)
1,385
—
Accrued earnout liability (2)
—
2,409
Others
7,422
1,797
Total other current liabilities
$
83,657
$
94,693
Other non-current liabilities consist of the following:
As of December 31,
2024
As of December 31,
2023
Deferred tax liabilities
5,422
8,100
Purchase price payable for Viajanet acquisition (1)
—
1,885
Others
1,891
2,646
Total other non-current liabilities
$
7,313
$
12,631
Correspond to outstanding balance for the Viajanet acquisition payable in June 2025. However, we settled certain contingencies which were indemnified by the sellers and accordingly we
agreed to apply those payments towards the purchase price.
(1)
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
In 2023, correspond to the earnout provision under the Best Day acquisition. As of September 25, 2024, we have applied the indemnity credit to the total earnout remaining to date. For futher
information, see Note 11.
18. Derivative financial instruments
As of December 31, 2024 and 2023, derivative financial instruments consist of foreign currency forward contracts of a short-term nature. The following table
shows the derivative financial position as of the end of each year:
Local currency
Notional
amount
Type
Maturity
Fair
value
2024
Brazilian Reais
$
1,000
Sell
Jan-25
$
7
Chilean Pesos
$
3,000
Buy
Jan-25
$
34
Colombian Pesos
$
5,500
Sell
Jan-25
$
15
Colombian Pesos
$
4,700
Sell
Jan-25
$
(31)
Colombian Pesos
$
5,000
Sell
Feb-25
$
(24)
Mexican Pesos
$
6,200
Sell
Jan-25
$
(94)
Uruguay Pesos
$
1,000
Sell
Jan-25
$
15
Uruguay Pesos
$
1,000
Sell
Jan-25
$
(31)
Peruvian pesos
$
500
Sell
Jan-25
$
(4)
Peruvian pesos
$
1,000
Sell
Feb-25
$
(7)
Argentine pesos
$
15,000
Buy
Jan-25
$
(702)
Total fair value of foreign currency forwards, net
$
(822)
Local currency
Notional
amount
Type
Maturity
Fair
value
2023
Brazilian Reais
$
9,000
Sell
Jan-24
$
474
Brazilian Reais
$
7,000
Sell
Feb-24
$
294
Brazilian Reais
$
5,000
Buy
Jan-24
$
(93)
Brazilian Reais
$
5,000
Buy
Feb-24
$
(104)
Chilean Pesos
$
1,500
Buy
Jan-24
$
(9)
Chilean Pesos
$
1,500
Buy
Feb-24
$
(13)
Chilean Pesos
$
1,500
Buy
Mar-24
$
(12)
Colombian Pesos
$
5,300
Sell
Jan-24
$
394
Mexican Pesos
$
4,000
Sell
Jan-24
$
74
Mexican Pesos
$
6,000
Sell
Feb-24
$
61
Mexican Pesos
$
4,000
Sell
Mar-24
$
56
Mexican Pesos
$
1,500
Sell
Apr-24
$
28
Total fair value of foreign currency forwards, net
$
1,150
19. Restructuring and related reorganization charges
In 2024, we committed to restructuring actions intended to simplify our businesses and improve operational efficiencies, which have resulted in headcount
reductions and consolidation of operational functions and systems. As a result, we recognized $429 in restructuring and related reorganization charges during
2024. We continue to evaluate additional cost reduction efforts, and should we make decisions in future periods to take further actions we may incur additional
restructuring and reorganization charges.
The following table summarizes the restructuring and related reorganization activity for the years ended December 31, 2024 and 2023:
(2)
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Employee
severance and
benefits
Accrued liability as of January 01, 2023
$
—
Charges
6,798
Payments
(5,899)
Accrued liability as of December 31, 2023
$
899
Charges
$
429
Payments
(1,328)
Accrued liability as of December 31, 2024
$
—
For the year ended December 31, 2024, we allocated the total employee severance and benefit expenses of $429 to “Cost of revenue” ($230), “Selling and
marketing” expenses ($94), “General and administrative” recovery $25 and “Technology and product development” expenses ($130) in our consolidated
statements of operations based on the departmental assignment of terminated employees.
For the year ended December 31, 2023, we allocated the total employee severance and benefit expenses of $6,798 to “Cost of revenue” ($513), “Selling and
marketing” expenses ($196), “General and administrative” expenses ($1,948) and “Technology and product development” expenses ($4,141) in our
consolidated statements of operations based on the departmental assignment of terminated employees.
We did not recognize any restructuring and related organization charges during 2022.
We allocate the total amounts of restructuring and related reorganization charges to the “Packages, Hotels and Other Travel Products” segment and “Corporate”
segment.
20. Income taxes
The Company is organized as a British Virgin Islands corporation. However, under the “anti-inversion” rules of Section 7874 of the U.S. Internal Revenue
Code, it is treated as a U.S. corporation for tax purposes. Accordingly, the Company is subject to federal and state income tax in the United States, as well as
foreign taxes in the multiple jurisdictions where it operates.
The following table summarizes our U.S. and foreign income / (loss) before income taxes for the years ended December 31, 2024, 2023 and 2022:
Year ended December 31,
2024
2023
2022
U.S.
$
(31,570)
$
(13,687)
$
(22,264)
Foreign
65,627
41,293
(24,948)
Net income / (loss) before income taxes
$
34,057
$
27,606
$
(47,212)
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Provision for Income Taxes
The following table summarizes our provision for income taxes for the years ended December 31, 2024, 2023 and 2022:
Year ended December 31,
2024
2023
2022
Current income tax (expenses) / benefit:
U.S. Federal
$
(376)
$
(54)
$
(188)
Foreign
(15,048)
(39,580)
(20,926)
Total current income tax expense
$
(15,424)
$
(39,634)
$
(21,114)
Deferred income tax (expenses) / benefit:
U.S. Federal
2,229
5,958
(550)
Foreign
7,043
30,560
355
Total deferred income tax (expenses) / benefit
$
9,272
$
36,518
$
(195)
Income tax (expenses) / benefit
$
(6,152)
$
(3,116)
$
(21,309)
Deferred Income Taxes
As of December 31, 2024 and 2023, the significant components of our deferred tax assets and deferred tax liabilities were as follows:
As of December 31,
2024
As of December 31,
2023
Non-current deferred tax assets
$
107,357
$
115,503
Total deferred tax assets
$
107,357
$
115,503
Less: Valuation allowance
(46,268)
(44,774)
Net deferred tax assets
$
61,089
$
70,729
Non-current tax liabilities
(5,422)
(8,100)
Total deferred tax liabilities
$
(5,422)
$
(8,100)
Total net deferred tax assets after valuation allowance
$
55,667
$
62,629
The following table summarizes the composition of deferred tax assets and deferred tax liabilities as of December 31, 2024 and 2023:
As of December 31,
2024
As of December 31,
2023
Tax loss carryforwards
$
57,268
$
72,644
Allowance for credit expected losses
5,396
5,528
Provisions and other assets
35,893
27,329
Property and equipment
1,659
1,301
Intangible assets
(4,419)
(3,959)
Others
6,138
4,560
Total net deferred tax assets before valuation allowance
$
101,935
$
107,403
Less: Valuation allowance
(46,268)
(44,774)
Total net deferred tax assets after valuation allowance
$
55,667
$
62,629
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
As of December 31, 2024, we have both foreign and U.S. net operating loss carryforwards (“NOLs”) of $237,993. If not utilized, the NOLs will begin to expire
as follows:
As of December 31, 2024
Expiration date
U.S.
Foreign
Expires 2026
$
— $
17
Expires 2027
—
1,250
Expires 2028
—
1,256
Expires 2029
—
575
Expires thereafter
—
37,816
Without expiration dates
74,033
123,046
Total NOLs
$
74,033
$
163,960
The following table shows the breakdown of our NOLs by country of origin as of December 31, 2024:
Country
NOL gross
amount
Expiration terms
Brazil
$
118,308
No expiration. Offset limitation to 30% of taxable income by fiscal year.
Argentina
3,098
5 fiscal years expiration.
United States
74,033
No expiration. Offset limitation of 80% of the taxable income by fiscal year.
Mexico
37,816
10 fiscal years expiration.
Peru
4,738
No expiration. Offset limitation of 50% of the taxable income by fiscal year.
Total NOLs
$
237,993
In the aggregate, we have foreign and U.S NOLs amounting to $197,079 which may be carried forward indefinitely but subject to certain percentage limitations
of taxable income each year.
As of December 31, 2024, we had a valuation allowance of $24,923 related to certain NOL carryforwards for which it is more likely than not that the tax
benefits will not be realized. The valuation allowance increased by $1,494 from the amount recorded as of December 31, 2023 primarily due to recoverability
analysis for the upcoming years. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income
during the carryforward period change, or if objective negative evidence in the form of cumulative losses is no longer present and additional weight may be
given to subjective evidence such as our projections for growth.
The following table presents the changes in our valuation allowance for the years ended December 31, 2024, 2023 and 2022:
Valuation
allowance
Balance as of January 01, 2022
$
23,999
Increases
39,240
Decreases
(9,019)
Balance as of December 31, 2022
$
54,220
Increases
8,201
Decreases
(17,647)
Balance as of December 31, 2023
$
44,774
Increases
6,083
Decreases
(4,589)
Balance as of December 31, 2024
$
46,268
Deferred tax assets and liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their
respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. We have foreign subsidiaries with aggregated
undistributed earnings of $44,403 as of December 31, 2024. We have not provided deferred income taxes on taxable temporary differences related to
investments
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
in certain foreign subsidiaries where the foreign subsidiary has or will invest undistributed earnings indefinitely outside of the United States. In the event we
distribute such earnings in the form of dividends or otherwise, we may be subject to income taxes. Further, a sale of these subsidiaries may cause these
temporary differences to become taxable. Due to complexities in tax laws, uncertainties related to the timing and source of any potential distribution of such
earnings, and other important factors such as the amount of associated foreign tax credits, it is not practicable to estimate the amount of unrecognized deferred
taxes on these taxable temporary differences. We consider the earnings of our foreign subsidiaries to be indefinitely reinvested, other than certain earnings the
distributions of which do not imply withholdings or state income taxes, and for that reason we have not recorded a deferred tax liability.
Reconciliation of Statutory Income Tax Rate to Effective Income Tax Rate
The reconciliation of the provision for income taxes for the years ended December 31, 2024, 2023 and 2022 to total income tax expense is as follows:
Year ended December 31,
2024
2023
2022
Net income / (loss) before income tax
$
34,057
$
27,606
$
(47,212)
Income tax rate
21 %
21 %
21 %
Expected income tax expense / (benefit)
$
7,152
$
5,797
$
(9,915)
Permanent differences:
Non-taxable income
(220)
(127)
$
—
Foreign non-creditable withholding tax
9,088
16,588
11,540
Non-deductible expenses
6,100
11,514
10,440
Currency translation adjustment
4,625
5,672
2,595
Tax credits recovery
—
(309)
—
Others
(1,744)
892
(256)
Unrecognized tax benefits and related interest
(2,957)
(14,081)
1,029
Foreign rate differential
(7,229)
(3,499)
(9,091)
Tax inflation adjustment
(4,312)
(27,103)
(12,716)
Tax holiday
(14,298)
3,977
5,990
True up
(1,460)
(1,253)
2,283
Change in rate
—
—
—
Change in valuation allowance
11,407
5,048
19,410
Income tax expense / (benefit)
$
6,152
$
3,116
$
21,309
Our effective tax rate for the period ended December 31, 2024 was 18.1%, higher than the effective tax rate of 11.3%, as of December 31, 2023 mainly due to
the effect of the valuation allowance arising from the increase in net operating losses in Mexico. The variation is also driven by the reduction of withholding
taxes applicable to intercompany transactions. Furthermore, the effect of the tax holiday in Brazil due to PERSE Regime.
Our effective tax rate for the year ended December 31, 2023 was 11.3%, lower than the effective tax rate of 45.1% as of December 31, 2022 mainly due to the
impact of the tax settlement and closing tax audits in Mexico and Tax inflation adjustment related to accumulated net operating losses in Argentina. The
variation is also driven by the effect of incremental withholding taxes applicable to intercompany transactions. Furthermore, the effect of the valuation
allowance arising from the decrease in net operating losses in Mexico and Brazil.
Our effective tax rate for the year ended December 31, 2022 was 45.1%, higher than the 21% tax rate due to changes in valuation allowance of deferred tax
assets primarily in Brazil, US and Mexico based on a recoverability analysis for the upcoming years; increase in foreign non-creditable withholding tax;
decrease in impact of uncertain tax positions, effects of non-deductible expenses and the impact of the new promotional regime ´Perse” in Brazil.
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Knowledge-based Economy Promotional Regime in Argentina
On June 10, 2019, the Argentine government enacted Law No. 27,506 (also known as “Knowledge-based Economy Promotional Regime” or “Knowledge
Law”), which established a regime that provides certain tax benefits for companies that meet specific criteria, such as companies that derive at least 70% of
their revenues from specified activities.
On October 7, 2020, changes to the Knowledge-based Economy Promotional Regime were finally approved by the Congress. The approved regime has effect
from January 1, 2020 through December 31, 2029 and grants (i) a reduction of the income tax up to 60% (60% for micro and small enterprises, 40% for
medium-sized enterprises and 20% for large enterprises) over the promoted activities for each fiscal year, applicable to both Argentine source income and
foreign source income; (ii) stability of the benefits established by the Knowledge-based Economy Promotional Regime (as long as the beneficiary is registered
and in good standing) and (iii) a non-transferable tax credit bond generally amounting to 70% (up to 80% in certain specific cases) of the company’s
contribution to the social security regime of every employee whose job is related to the promoted activities (caps on the number of employees are applicable).
Total amount of bonds are defined based on Budget approved by Government for each fiscal period. The tax credit may be used within 24 months from its
issuance date (this period can be extended for an additional 12 months in certain cases) to offset federal taxes, such as VAT (excludes income tax).
On January 14, 2022, the Under Secretariat of Knowledge Economy issued Disposition 33/2022 by which our Argentine subsidiary Despegar.com.ar S.A.
obtained the registration in the National Registry of Beneficiaries of the Knowledge-based Economy Promotional Regime, created by Article 3 of Law No.
27,506, as amended. Tax benefits granted pursuant to the promotional regime to Despegar.com.ar S.A were retroactive to January 1, 2020.
During the years ended December 31, 2024, 2023 and 2022, the tax holiday effect was a tax benefit of $3,161, a Tax expense of $2,185 and a tax benefit of
$839, respectively. The aggregate per share effect of the income tax expense amounted to $0.04 and income tax benefit amounted to $0.03 for the years ended
December 31, 2024 and 2023, respectively.
Emergency Program to offset the economic effects of the COVID-19 pandemic for the tourism and events sector PERSE in Brazil
Law 14,148/2021, published on May 3, 2021, established several emergency actions by the government to offset the economic effects of the COVID-19
pandemic for the tourism and events sector (“Programa Emergencial de Retomada do Setor de Eventos y Turismo” or “PERSE”). Benefits include for a 60-
month period a 0% rate for corporate income taxes (Corporate Income Tax “IRPJ” and Social Contribution on Net Income “CSLL”) and a 0% rate on federal
gross revenue taxes (Contribution to the Social Integration “PIS” and Contribution to Social Security Financing “COFINS”).
On March 18, 2022, the Brazilian legislature removed a prior presidential veto on an article from Law 14,148/2021 that introduced a Temporary Tax
Exemption for taxpayers in the tourism and events sector was later reinserted in Law 14,428/2021 and is effective as from that date.
On December 29, 2023 Provisional Measure “MP” 1202/23 was published including, among others, the revocation of article 4 of Law 14.148, which instituted
PERSE. Based on the MP all economic sectors benefiting from PERSE must collect the taxes included in the program based on the rates provided for in the
specific legislation as following: from April 1, 2024 in relation to federal gross revenue taxes (PIS and COFINS) and CSLL; and from January 1, 2025, in
relation to IRPJ. PERSE could progressively be phased out with the gradual resumption of the collection of taxes previously exempted.
On May 22, 2024, the Brazilian government published Law No. 14,859/2024, maintaining PERSE with the same framework for 2024. As a result of this
legislation, Decolar requested authorization from the Federal Tax Authorities and began submitting a new tax return called "DIRBI," detailing the amounts of
tax benefits.
On March 24, 2025 the Official Gazette of the Union published Executive Declaratory Act No. 2, officially announcing the public hearing and the termination
of the PERSE program due to reaching the 15 billion threshold. The Special Secretariat of the Federal Revenue of Brazil confirmed that the limit set by Article
4-A of Law No. 14.148/2021 was met, as presented during the National Congress public hearing on March 12, 2025. On March 28, the company filed a writ of
mandamus to compel the initiation of discussions aimed at safeguarding its rights.
The accompanying notes are an integral part of these consolidated financial statements.
F-54
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
During the years ended December 31, 2024, and 2023 the tax holiday effect was a tax benefit of $10,704 and a Tax expense of $1,792, respectively. The
aggregate per share effect of the income tax amounted to an expense of $0.13 and benefit of $0.02 for the years ended December 31, 2024 and 2023,
respectively.
Uncertain tax positions
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits and interest is as follows:
Year ended December 31,
2024
2023
2022
Balance, beginning of year
$
21,398
$
41,925
$
45,865
Increases to tax positions related to current year
120
—
—
Increases to tax positions related to prior years
—
—
2,453
Decreases to tax positions related to prior years
(4,796)
(16,853)
(6,912)
Settlements during current year
—
(8,598)
(5,121)
Interest and penalties
1,799
2,753
5,687
Currency translation adjustment
(3,597)
2,171
(47)
Balance, end of year
$
14,924
$
21,398
$
41,925
(1) Includes updates, interest and penalties.
(2) Includes tax positions in Mexico, Colombia, Argentina and US related to Best Day acquisition.
(3) Includes tax positions effectively settled in Mexico related to Best Day acquisition.
As of December 31, 2024, and 2023, we had $14,924 and $21,398 of gross unrecognized tax benefits, respectively.
As of December 31, 2024 and 2023, total gross interest and penalties accrued were $8,986 and $12,695, respectively.
During the years ended December 31, 2024 and 2023, we recognized interest expense of $1,799 and $2,753 in connection with our unrecognized tax benefits,
respectively.
As of December 31, 2024 and 2023, we recognized a decrease and settlement related to interest and penalties of $4,796 and $9,320 respectively.
We are routinely audited by U.S. federal and foreign income tax authorities. At any point in time, we may have tax audits underway at various stages of
completion. These audits include questioning the timing and the amount of income and deductions and the allocation of income and deductions among various
tax jurisdictions. The Mexican Tax Authority finalized during 2023 the examination of the income tax return for the fiscal years 2014, 2015, 2016 and 2017 of
our subsidiary Viajes Beda, a settlement request (“acuerdo conclusivo”) before the Mexican Taxpayer Ombudsman (“Procuraduría de la Defensa del
Contribuyente”) was closed and the dispute with the Mexican Tax Authority was concluded. As result we recognized a tax benefit of $14,256 related to
transactional taxes (VAT) and $13,241 related to income tax.
During the third quarter of 2020, the Internal Revenue Service (“IRS”) performed an income tax assessment on fiscal year 2017 applying adjustments on
foreign tax credits allocation criteria taken during this period. We therefore recognized and paid additional income tax for $1,649. Subsequently, we submitted a
request to the IRS to offset the amount paid with net operating losses and recover the cash payment. In 2023, the IRS approved our request and refunded the tax
credits to the Company.
On June 2, 2023, the Colombian Tax Authority (DIAN) issued a Special Requirement as part of the comprehensive International Taxation program. The aim
was to modify the income tax declaration by making adjustments related to the increase in declared gross income and the rejection of certain expenses. In
response to this requirement, the Company submitted an objection on September 6, 2023. Subsequently, on March 13, 2024, the Authority issued the Official
Review Settlement in line with the previous special requirement, establishing a tax liability of $3,250, including a penalty for inaccuracy.
On May 14, 2024, the company filed the Appeal for Reconsideration against the Official Review Assessment.
(1)
(1)(2)
(1)(3)
The accompanying notes are an integral part of these consolidated financial statements.
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
On Apr 7, 2025, the tax authority issued a resolution in response to the Appeal for Reconsideration, recognizing the deductibility of certain expenses rejected in
the previous instance (official liquidation), although maintaining its position on the majority of the observations originally raised. Consequently, the DIAN
proceeds to modify its Official Review Settlement, resulting in an updated tax liability of $1,736 . To this tax liability, which arises from the official resolution
issued by the tax authority, should be added $2,096 for tax credits already used, interest for $2,638 (calculated as of the date of the last resolution), and a
penalty for $419.
As of the date of issuance of the mentioned resolution, the Company is preparing the legal action to be filed within the deadlines established by the regulations
in force.The Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is not more likely than not. For that
reason, the Company has not recorded any expense or liability for the disputed amounts
21. Segment information
Our chief executive officer, as the chief operating decision maker (“CODM”), organizes our company, manages resource allocations and measures performance
amongst three reportable segments: “Air”, “Packages, Hotels and Other Travel Products” and “Financial Services”.
We determined our operating segments based on how our chief operating decision makers (“CODM”) manage our business, make operating decisions and
evaluate operating performance. Effective for our fiscal year 2022, our CODM changed their internal reporting to refine the way they view our financial
services operations and its interaction with our travel business. Also, we started allocating certain expenses to our segments which were previously considered
part of our corporate structure and were unallocated. These changes resulted in revisions to the financial information provided to the CODM on a recurring
basis in their evaluation of our financial performance and the decision-making process. The CODM believes these changes better reflect the performance of our
reportable segments.
Accordingly, we changed our segment reporting under ASC 280 “Segment Reporting” to report three reportable segments: “Air”, “Packages, Hotels and Other
Travel Products” and “Financial Services”.
Our segment reporting structure is as follows:
•
Travel Business:
Our travel business is comprised of two reportable segments: “Air” and “Packages, Hotels and Other Travel Products”.
a.
Our “Air” segment primarily consists of facilitation services for the sale of airline tickets on a stand-alone basis and excludes airline tickets that are
packaged with other non-airline flight products.
b.
Our “Packages, Hotels and Other Travel Products” segment primarily consists of facilitation services for the sale of travel packages (which can
include airline tickets and hotel rooms), as well as stand-alone sales of hotel rooms (including vacation rentals), car rentals, bus tickets, cruise tickets,
travel insurance and destination services. Both segments also include the sale of advertisements and incentives earned from suppliers.
•
Financial Services Business:
Our financial services business is comprised of one reportable segment: “Financial Services”. Our “Financial Services” segment primarily consists of loan
origination to our travel business’ customers and to customers of other merchants in various industries. Our “Financial Services” segment also consists of
processing, fraud identification, credit scoring and IT services to our travel business, and to third-party merchants.
For all our segments, our CODM does not evaluate operating segments using asset or liability information, the CODM primarily uses Adjusted Segment
EBITDA to allocate operating and capital resources and assesses performance of each segment by comparing actual gross profit results to historical results and
previously forecasted financial information. For all years presented, we calculated Adjusted Segment EBITDA as our net loss for the year adjusted for income
taxes; financial results, net; stock-based compensation expense; acquisition transaction costs; depreciation and amortization;
The accompanying notes are an integral part of these consolidated financial statements.
F-56
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Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
impairment charges; and restructuring, reorganization and other exit activities charges. Adjusted Segment EBITDA includes allocations of certain expenses
based on transaction volumes and other usage metrics. Our allocation methodology is periodically evaluated and may change.
Generally, our segment disclosure does not include intersegment revenues related to intra-group invoicing for the use of trademarks and various management
services which are eliminated from the operating results of each segment. Intersegment transactions are conducted according to our transfer pricing policy.
However, our segment disclosure does include intersegment revenue consisting mainly of credit card processing and fraud prevention services provided by
Koin to our travel business’ subsidiaries. These intersegment transactions are recorded by each segment at amounts that approximate fair value as if the
transactions were between third parties, and therefore, impact segment performance. However, the revenue and corresponding expense are eliminated in
consolidation. The elimination of such intersegment transactions is included within “Intersegment eliminations” column in the table below.
In addition, as depreciation and amortization are not included in our segment’s performance measure, we do not report Property and equipment and intangible
assets by segment as it would not be meaningful. Our CODM does not regularly use this information. However, we report loans receivable on a gross basis and
separately their related allowance for expected credit losses as part of the financial services segment assets as this information is regularly monitored by the
CODM.
The following tables present our segment information for the years ended December 31, 2024, 2023 and 2022:
Year ended December 31, 2024
Air
Packages,
Hotels and
Other travel
products
Financial
Services
Intersegment
Eliminations
Corporate
Total
Consolidated
External revenues
$
262,534
$
493,950
$
17,577
$
—
$
—
$
774,061
Inter segment revenues
$
—
$
—
$
33,550
$
(33,550)
$
—
$
—
Total revenues
$
262,534
$
493,950
$
51,127
$
(33,550)
$
—
$
774,061
Less:
External cost of revenue
(66,996)
(112,130)
(27,176)
—
—
(206,302)
Intersegment cost of revenues
(14,539)
(19,011)
—
33,550
—
—
Payroll expense
(44,986)
(88,567)
(15,443)
—
—
(148,996)
Non payroll expense
(30,441)
(63,573)
(4,243)
—
—
(98,257)
Marketing expense
(64,011)
(80,350)
(108)
—
—
(144,469)
Other segment item
—
(842)
—
—
—
(842)
Adjusted positive EBITDA
$
41,561 #REF! $
129,477 #REF! $
4,157 #REF! $
—
$
—
$
175,195
Depreciation and amortization
(10,511)
(14,632)
(3,430)
—
(10,222)
(38,795)
Stock-based compensation expense
—
—
—
—
(9,901)
(9,901)
Restructuring, reorganization and other exit activities charges
—
(613)
—
—
(2,757)
(3,370)
Operating income (loss)
$
31,050
$
114,232
$
727
$
—
$
(22,880)
$
123,129
Financial results, net
(89,072)
Income before income tax
$
34,057
Income tax expense
(6,152)
Net income for the year
$
27,905
Net income attributable to Despegar.com, Corp.
$
27,905
(1) Excluding of depreciation, amortization, restructuring, reorganization and other exit activities charges
(2) Other segment item include equity investment
(1)
(2)
The accompanying notes are an integral part of these consolidated financial statements.
F-57
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Year ended December 31, 2023
Air
Packages,
Hotels and
Other travel
products
Financial
Services
Intersegment
Eliminations
Corporate
Total
Consolidated
External revenues
$
257,649
$
437,010
$
11,381
$
—
$
—
$
706,040
Inter segment revenues
$
—
$
—
$
29,531
$
(29,531)
$
—
$
—
Total revenues
$
257,649
$
437,010
$
40,912
$
(29,531)
$
—
$
706,040
Less:
External cost of revenue
(81,450)
(119,601)
(25,517)
—
—
(226,568)
Intersegment cost of revenues
(14,311)
(15,220)
—
29,531
—
—
Payroll Expense
(53,320)
(92,419)
(14,167)
—
—
(159,906)
Non payroll expense
(31,032)
(38,047)
(1,992)
—
—
(71,071)
Marketing expense
(64,364)
(67,491)
(33)
—
—
(131,888)
Other segment item
—
(1,060)
—
—
—
(1,060)
Adjusted positive / (negative) EBITDA
13,172
103,172
(797)
—
—
115,547
Depreciation and amortization
(9,526)
(11,673)
(1,202)
—
(14,109)
(36,510)
Stock-based compensation expense
—
—
—
—
(3,454)
(3,454)
Acquisition transaction costs
—
—
—
—
—
—
Restructuring, reorganization and other exit activities charges
—
(4,546)
—
—
(6,798)
(11,344)
Operating income (loss)
$
3,646
$
86,953
$
(1,999)
$
—
$
(24,361)
$
64,239
Financial results, net
(36,633)
Income before income tax
$
27,606
Income tax expense
(3,116)
Net income for the year
$
24,490
Net income attributable to Despegar.com, Corp.
$
24,490
(1) Excluding of depreciation, amortization, restructuring, reorganization and other exit activities charges
(2) Other segment item include equity investment
(1)
(2)
The accompanying notes are an integral part of these consolidated financial statements.
F-58
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Year ended December 31, 2022
Air
Packages,
Hotels and
Other travel
products
Financial
Services
Intersegment
Eliminations
Corporate
Total
Consolidated
External revenues
$
215,782
$
317,748
$
4,442
$
—
$
—
$
537,972
Inter segment revenues
$
—
$
—
$
7,805
$
(7,805)
$
—
$
—
Total revenues
$
215,782
$
317,748
$
12,247
$
(7,805)
$
—
$
537,972
Less:
External cost of revenue
(67,805)
(94,927)
(18,768)
—
—
(181,500)
Intersegment cost of revenues
(4,416)
(3,389)
—
7,805
—
—
Payroll Expense
(44,074)
(79,759)
(6,307)
—
—
(130,140)
Non payroll expense
(30,082)
(45,844)
(5,347)
—
—
(81,273)
Marketing expense
(51,452)
(51,408)
(103)
—
—
(102,963)
Other segment item
—
(164)
—
—
—
(164)
Adjusted positive / (negative) EBITDA
17,953
42,257
(18,278)
—
—
41,932
Depreciation and amortization
(10,339)
(12,516)
(71)
—
(13,077)
(36,003)
Stock-based compensation expense
—
—
—
—
(7,292)
(7,292)
Impairment charges
—
—
—
—
—
—
Acquisition transaction costs
(390)
—
—
—
—
(390)
Restructuring, reorganization and other exit activities charges
—
—
—
—
—
—
Operating income/(loss)
$
7,224
$
29,741
$
(18,349)
$
—
$
(20,369)
$
(1,753)
Financial results, net
(45,459)
Loss before income tax
$
(47,212)
Income tax benefit
(21,309)
Net loss for the year
$
(68,521)
Net loss attributable to Despegar.com, Corp.
$
(68,521)
(1) Excluding of depreciation, amortization, restructuring, reorganization and other exit activities charges
(2) Other segment item include equity investment
(1)
(2)
The accompanying notes are an integral part of these consolidated financial statements.
F-59
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Revenue by Business Model, Type and Country
The following table presents our consolidated revenues from third parties by business model, revenue type and country for the years ended December 31, 2024,
2023 and 2022:
Year ended December 31,
2024
2023
2022
Business Model:
Prepay model
$
658,128
$
619,658
$
457,335
PAD model
10,260
12,709
11,364
Interest revenue
14,870
9,272
4,114
Others
90,803
64,401
65,159
Total Revenue
$
774,061
$
706,040
$
537,972
Revenue Type:
Commissions and service fees
$
652,750
$
607,251
$
455,790
Incentive fees
39,832
42,998
39,859
Advertising
26,200
20,594
16,166
Destination services
15,638
25,116
14,071
Interest revenue
14,870
9,272
4,114
Financial services
2,707
2,109
328
Others
22,064
(1,300)
7,644
Total Revenue
$
774,061
$
706,040
$
537,972
Country:
Argentina
$
115,294
$
118,239
$
75,136
Brazil
270,828
230,306
144,423
Uruguay
152,577
116,364
98,249
Mexico
127,417
129,680
116,273
Other countries
107,945
111,451
103,891
Total Revenue
$
774,061
$
706,040
$
537,972
(1)
Others includes incentive fees, advertising, breakage, loyalty revenue and financial services
(2)
Financial services include Financial Intermediation Processing fee, fraud prevention services and others.
(3)
As of December 31, 2024, Other includes principally revenue from breakage ($32,625, $11,620 and $8,668 December 31, 2024, 2023 and 2022, respectively) net of the effect of loyalty
programs.(See Note 3)
(4)
Other countries include Chile, Perú, Colombia, Ecuador and others.
(1)
(2)
(3)
(4)
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Assets by Country
The following table presents our assets by country:
As of December 31,
2024
As of December 31,
2023
Goodwill:
Argentina
$
1,200
$
1,200
Brazil
21,649
27,543
Mexico
79,452
97,743
Uruguay
16,839
16,839
Other countries
6,692
7,427
Total goodwill
$
125,832
$
150,752
Property and equipment, net:
Argentina
$
4,959
$
4,923
Brazil
2,581
2,759
Mexico
762
1,282
Uruguay
876
935
United States
1,686
1,410
Other countries
3,326
5,091
Total property and equipment, net
$
14,190
$
16,400
Asset information by segment:
Financial Services:
Loans receivable
$
32,293
$
36,709
Allowance for credit losses
(15,352)
(13,583)
Total loans receivable, net
$
16,941
$
23,126
Other countries include Chile, Peru and Colombia.
Other countries include Chile, Peru, Colombia and Ecuador.
22. Commitments and contingencies
Commitments:
Operating Leases
Our commitments include operating lease commitments. Generally, our property and equipment, including a fleet of dedicated vans to provide transportation
services, office and retail space, and others are supplied through operating leases. The future contractual aggregate minimum lease payments under non-
cancellable operating leases and other commitments are disclosed in Note 29.
Employment Agreements
In the ordinary course of business, we entered into employment agreements with certain of our key employees which provide for compensation guidelines.
Generally, we pay compensation to our executive officers in the form of (i) cash paid on a monthly basis and (ii) an annual bonus subject to the fulfillment of
certain performance targets. We recognize compensation in “Other liabilities” in our consolidated balance sheets and in “General and administrative” expenses
in our consolidated statements of operations.
(1)
(2)
(1)
(2)
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Contingencies:
We are a party to a number of tax, labor and social security, regulatory and legal matters outstanding in the ordinary course of business. We estimate the range
of our liability related to contingencies when we believe the amount or range of loss can be estimated. We record our best estimate of a loss when the loss is
considered probable. When a liability is probable and there is a range of estimated loss with no best estimate in the range, we record the minimum estimated
liability related to the lawsuits or claims. As additional information becomes available, we assess the potential liability related to our pending litigation and
claims and revise our estimates.
Significant judgment is required to determine the probability that a liability has been incurred and whether such liability is reasonably estimable. We base
accruals made on the best information available at the time which can be highly subjective. Due to uncertainties related to the resolution of lawsuits and claims,
the ultimate outcome may differ significantly from our estimates. In the opinion of management and based on liability accruals provided, our ultimate exposure
with respect to these pending lawsuits and claims is not expected to have a material adverse effect on our consolidated financial position or cash flows,
although they could have a material adverse effect on our results of operations for a particular reporting period. In August 2024, we voluntarily reported a
potential violation of certain regulations applicable to the Company. As of the date of this report, the potential impact of this contingency cannot be estimated
and we are not aware of any ongoing investigations or litigation that could have a material impact on the company.
We also evaluate other potential contingent matters, including income tax withholdings, valued-added tax, revenue tax, payroll taxes and other similar matters.
We currently estimate possible losses related to these matters for which we have not accrued liabilities, as they are not deemed probable, to be approximately in
a range between $103,361 to $121,225. In addition, there are certain labor-related contingencies in Brazil classified as possible by the Company’s legal
counsel. The range of potential losses derived from these contingencies can not be reasonably estimated. We periodically evaluate the likelihood of probable
and reasonably possible losses, if any, related to all known contingencies on an ongoing basis. Future increases or decreases to our accrued liabilities may be
necessary and will be recorded in the period when such amounts are determined to be probable and reasonably estimable.
Legal Proceedings
We are a party to various lawsuits, claims and disputes mainly with customers arising out of the ordinary course of our business. As of December 31, 2024 and
2023, we have provided an amount of $9,426 and $8,529 to cover for probable losses, respectively.
Labor, Social Security and Tax Contingencies
As of December 31, 2024 and 2023, we have provided an amount of $1,687 and $1,154 mainly related to labor and social security contingencies, respectively.
As of December 31, 2024 and 2023, we have provided an amount of $6,638 and $11,135 mainly related to tax contingencies, respectively.
Labor and social security contingencies are mainly related to former employees’ litigation and unasserted labor claims. Tax contingencies are mainly related to
unasserted claims in the jurisdictions where we operate regarding VAT or other taxes. While we believe that the assumptions and estimates used to determine
contingent liabilities are reasonable, the ultimate outcome of these matters cannot presently be determined.
Tax Audits
We are involved in various tax matters, with respect to some of which the outcome is uncertain. We establish reserves to remove some or all of the tax benefit
of any of our tax positions at the time we determine that it becomes uncertain based upon one of the following conditions: (1) the tax position is not “more
likely than not” to be sustained, (2) the tax position is “more likely than not” to be sustained, but for a lesser amount, or (3) the tax position is “more likely than
not” to be sustained, but not in the financial period in which the tax position was originally taken. For purposes of evaluating whether
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
or not a tax position is uncertain, (1) we presume the tax position will be examined by the relevant taxing authority that has full knowledge of all relevant
information; (2) the technical merits of a tax position are derived from authorities such as legislation and statutes, legislative intent, regulations, rulings and
case law and their applicability to the facts and circumstances of the tax position; and (3) each tax position is evaluated without consideration of the possibility
of offset or aggregation with other tax positions taken. A number of years may elapse before a particular uncertain tax position is audited and finally resolved or
when a tax assessment is raised. The number of years subject to tax assessments varies depending on the tax jurisdiction. The tax benefit that has been
previously reserved because of a failure to meet the “more likely than not” recognition threshold would be recognized in our income tax expense in the first
interim period when the uncertainty disappears under any one of the following conditions: (1) the tax position is “more likely than not” to be sustained, (2) the
tax position, amount, and/or timing is ultimately settled through negotiation or litigation, or (3) the statute of limitations for the tax position has expired. See
Note 20 for details.
Matters related to VAT in Argentina
In October 2021, we became aware that the tax authority in Argentina may have a divergent interpretation of the application of value-added taxes (VAT) to
certain air transactions.
As of the date of these consolidated financial statements, we have not received any assessment, inquiry, audit, or any other form of claim on our application of
VAT. While we believe we have complied with all applicable tax laws, rules and regulations in the relevant jurisdiction, the tax authority may have a different
view and determine that we owe additional VAT. We have not recorded any liability in connection with this matter. As of the date of these consolidated
financial statements, it is unclear what further actions, if any, the tax authority will take with respect to this matter. Such actions could include initiating an
audit, assessing additional taxes and/or imposing interest, fines, penalties or criminal proceedings.
Matters related to PIS/COFINS Importation in Brazil
On October 10, 2023, our subsidiary in Brazil received a Penalty Notice issued by the Brazilian Federal Revenue, embodied in administrative process for the
collection of alleged Federal Contributions PIS/COFINS/Importation debts on service imports related to the fiscal year 2019, for the amount of $27,445.
According to the tax authority, the company failed to pay importation taxes on remittances abroad made to various legal entities. On November 2, 2023, the
company filed its defense rejecting the supposed debt. The defense was complemented by specific supporting documentation to justify remittances abroad and
appropriate tax treatment. On July 7, 2024, a Tax due diligence was carried out by the Administrative Judge. On August 8, 2024, a statement was filed
regarding the diligence. The company is awaiting the court decision in the first instance.
The Management’s opinion, based on the opinion of external legal counsel, is that the risk of losing the case is reasonably possible, but not probable, based on
the technical merits. For that reason, the Company has not recorded any expense or liability for the disputed amounts.
23. Related party transactions
Balances and operations with Expedia
Expedia, Inc. (“Expedia”), a subsidiary of Expedia Group, Inc., a Delaware corporation, is a shareholder of record of the Company.
In September 2024, we entered into the second amended and restated lodging outsourcing agreement with Expedia (the “Expedia Outsourcing Agreement”),
whereby the parties agreed to terminate the then existing outsourcing agreement, entered into on July 12, 2017 (as amended and restated on November 15,
2019). The initial term of the Expedia Outsourcing Agreement is ten years, expiring on December 31, 2034, and it automatically renews annually unless
otherwise terminated by either party upon thirty days’ written notice.
While the prior Expedia outsourcing agreement allowed us to source a limited percentage of our hotel bookings outside of Latin America, the Expedia
Outsourcing Agreement enables us to expand our own directly sourced non-Latin America hotel and accommodation supply, and further optimize our lodging
supply to pursue key growth initiatives, including its B2B, White Label, SaaS, and M&A strategies and establish new strategic partnerships.
We understand that the Expedia Outsourcing Agreement unlocks several strategic advantages for both parties, such as: (i) it enables us to further optimize our
lodging supply to pursue key growth initiatives, including its B2B, White Label, SaaS, and M&A strategies and we are able to expand our own directly sourced
non-Latin American hotel supply and establish
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
new strategic partnerships; (ii) it provides Expedia a guaranteed percentage of Despegar's global hotel bookings and exclusive rights to distribute certain
lodging supply in Latin America; (iii) allows us to grant to Decolar Partners right to access and distribute Expedia-sourced lodging inventory. Each Decolar
Partner must be contractually bound to comply with obligations that are at least equivalent to those we have under the agreement with Expedia. We remain
solely responsible for our Decolar Partners, including for any liabilities or breaches arising from their activities; (iv) the Expedia Outsourcing Agreement
provides for certain termination rights by Expedia and by us; (v) under the original agreement, the previously recorded perpetual $125,000 liability on
Despegar’s balance sheet should now, under the new Agreement, be amortized over 10 years, subject to certain thresholds. The Agreement will be
automatically renewed thereafter for successive one-year terms unless either party provides at least thirty days advance written notice of non-renewal.
Under the agreements, we maintained (i) a receivable position of $18,595 and $16,437 recognized under “Related party receivable” in our consolidated balance
sheets as of December 31, 2024 and 2023, respectively, and (ii) a payable position of $101,365 and $87,748 recognized under “Related party payable” in our
consolidated balance sheets as of December 31, 2024 and 2023, respectively. We generated revenue of $59,554, $40,288 and $24,220 for the years ended
December 31, 2024, 2023 and 2022, respectively, representing 8%, 6% and 5% of our total consolidated revenues for the years ended December 31, 2024,
2023 and 2022, respectively.
Balances with Dominicana Experience DMC, SRL
We maintained (i) a receivable position of $209 recognized under “Related party receivable” in our consolidated balance sheet as of December 31, 2023, and
(ii) a payable position of $500 recognized under “Related party payable” in our consolidated balance sheets as of December 31, 2023.
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
24. Fair value measurements
Items measured at fair value on a recurring basis
Financial assets and liabilities carried at fair value at December 31, 2024 are classified in the categories described in the table below:
Level 1
Level 2
Level 3
Total
Assets
Cash equivalents
Money market funds
$
35,620
$
—
$
—
$
35,620
Time deposits
105,486
—
—
105,486
Other assets
Foreign currency forwards
—
71
—
71
Total assets at fair value
$
141,106
$
71
$
—
$
141,177
Liabilities
Other liabilities
Purchase price payable
—
—
(1,385)
(1,385)
Foreign currency forwards
—
(893)
—
(893)
Total liabilities at fair value
$
—
$
(893)
$
(1,385)
$
(2,278)
Financial assets and liabilities carried at fair value at December 31, 2023 are classified in the categories described in the table below:
Level 1
Level 2
Level 3
Total
Assets
Cash equivalents
Money market funds
$
37,276
$
—
$
—
$
37,276
Time deposits
57,466
—
—
57,466
Other assets
Foreign currency forwards
—
1,380
—
1,380
Total assets at fair value
$
94,742
$
1,380
$
—
$
96,122
Liabilities
Other liabilities
Accrued earnout liability
$
—
$
—
$
(2,409)
$
(2,409)
Purchase price payable
—
—
(1,885)
(1,885)
Foreign currency forwards
—
(231)
—
(231)
Total liabilities at fair value
$
—
$
(231)
$
(4,294)
$
(4,525)
We value our derivative instruments using pricing models. Pricing models consider the contract terms as well as multiple inputs where applicable, such as
interest rate yield curves, option volatility and foreign currency exchange rates. Derivatives are considered “Level 2” fair value measurements. Our derivative
instruments are typically short-term in nature.
We measure the fair value of the earnout payment using a series of “digital options”. We believe this methodology can be applied because our earnout payment
provides for a fixed payment to the sellers if our stock price exceeds a predetermined strike price during the earnout measurement period. In the application of
this methodology, we performed a valuation in a risk neutral framework, using a Black-Scholes-Merton Digital call option formula. The significant inputs used
were our share price as of the valuation date, our share price historical volatility, U.S. risk free rate, estimated term and credit-risk adjustment spread.
We measure the fair value of the purchase price payable considering the present value of the deferred payments discounted using a discount rate which
represents the maturity and risk of the obligation.
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
We classify our cash equivalents and investments within Level 1 as we value our cash equivalents and investments using quoted market prices.
We hold term deposit investments with financial institutions. Term deposits with original maturities of less than three months are classified as cash equivalents
and those with remaining maturities of less than one year are classified within short-term investments.
As of December 31, 2024 and 2023, our cash and cash equivalents consisted primarily of term deposits with maturities of three months or less, money market
funds and bank account balances.
Items measured at fair value on a non-recurring basis
Our non-financial assets, such as goodwill, indefinite and finite-lived intangible assets and property and equipment, as well as equity method investments, are
adjusted to fair value only when an impairment charge is recognized, or the underlying investment is sold. Such fair value measurements are based
predominately on Level 3 inputs.
Goodwill:
As of December 31, 2024 and 2023, we performed our annual goodwill impairment test and concluded that there was no impairment of goodwill. See Note 14
for further details.
Finite-lived intangible assets:
During 2024 and 2023, we had no impairments of finite-lived intangible assets. See Note 13 for further details.
25. Losses per share
The following table presents our basic and diluted losses per share for the years ended December 31, 2024, 2023 and 2022:
Year ended December 31,
2024
2023
2022
Net income / (loss) for the year
$
27,905
$
24,490
$
(68,521)
Accretion of redeemable non-controlling interest
—
—
(473)
Accretion of Series A non-convertible preferred shares
(14,982)
(13,324)
(11,884)
Accrual of cumulative dividends of Series A non-convertible preferred shares
(15,229)
(15,750)
(15,375)
Accrual of dividends of Series B convertible preferred shares
(499)
(2,000)
(2,000)
Net loss for the year attributable to Despegar.com, Corp. common shareholders
$
(2,805)
$
(6,584)
$
(98,253)
Numerator of basic and diluted losses per share
$
(2,805)
$
(6,584)
$
(98,253)
Weighted average common shares outstanding—basic and diluted
81,748
77,170
76,823
Denominator of basic and diluted losses per share
$
81,748
$
77,170
$
76,823
Basic and diluted losses per share
$
(0.03)
$
(0.09)
$
(1.28)
For additional information related to common shares outstanding, see Note 32.
For the year ended December 31, 2024, we excluded 1,002 of outstanding restricted stock units and 386 stock options from the calculations of diluted earnings
per share attributable to common shareholders because their effect would have been antidilutive.
For the year ended December 31, 2023, we excluded 775 of outstanding stock awards and 5,405 convertible preferred stock from the calculations of diluted
earnings per share attributable to common shareholders because their effect would have been antidilutive.
For the year ended December 31, 2022, we excluded 670 of outstanding stock awards and 5,405 convertible preferred stock from the calculations of diluted
earnings per share attributable to common shareholders because their effect would have been antidilutive.
(1)
(1)
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Basic and diluted earnings per share is presented using the two-class method required for participating securities. We consider that our Series B preferred stock
to be participating securities and, in accordance with the two-class method, earnings allocated to participating securities and the related number of outstanding
shares of participating securities are excluded from the computation of basic and diluted net loss per common share. If a dividend is paid on common stock, the
holders of Series B preferred stock are entitled to a proportionate share of any such dividend as if they were holders of common stock (on an if-converted
basis). As the holders of our Series B preferred stock do not have contractual obligation to share in the losses of the Company, the net loss attributable to
common shareholders for each period is not allocated between common stock and participating securities. Accordingly, preferred stock is excluded from the
calculation of basic and diluted net loss per share as the effect would have been antidilutive.
26. Shareholders’ (deficit) and mezzanine equity
In connection with our issuances of non-convertible redeemable Series A preferred shares and warrants to L Catterton Latin America III, L.P., and convertible
redeemable Series B preferred shares to Waha LATAM Investments Limited, on September 18, 2020, we amended our Memorandum of Association and
Articles of Association to establish the terms of the Series A Preferred Shares and Series B Preferred Shares. See Note 5 for a description of the terms of the
Series A Preferred Shares and Series B Preferred Shares.
Common Stock
We are authorized to issue an unlimited number of common shares without par value. Common stock is entitled to 1 vote per share. Common stock qualifies
for dividends, when and if declared by our Board of Directors.
Preferred Stock
We are authorized to issue 150,000 series A preferred shares without par value (the “Series A Preferred Shares”) and 50,000 series B preferred shares without
par value (the “Series B Preferred Shares”).
Both Series A Preferred Shares and Series B Preferred Shares are not part of our shareholders’ equity, rather they are classified as mezzanine equity due to their
redemption features. See Note 5 for a description of the rights attaching to the Series A Preferred Shares and Series B Preferred Shares.
The Series A Preferred Shares are classified within the mezzanine equity section on our consolidated balance sheets due to the provisions that could cause the
equity to be redeemable at the option of the holder. The Series B Preferred Shares are classified within the mezzanine equity section on our consolidated
balance sheets due to the provisions that cause the equity to be redeemable upon the occurrence of a change of control.
As of December 31, 2024 and 2023, we have no preferred stock outstanding as part of our shareholders’ equity.
Warrants
Pursuant to the L Catterton Investment Agreement, we agreed to issue to the Catterton Purchaser, warrants to purchase 11,000,000 Common Shares at an
exercise price of $0.01 per share (“Penny Warrants”), subject to certain customary anti-dilution adjustments provided under the Warrants, including for stock
splits, reclassifications, combinations and dividends or distributions made by the Company on the Common Shares. The Penny Warrants expire ten years after
the Catterton Closing Date. The Penny Warrants vest and are exercisable as of the issuance date.
We classified our warrants in our shareholders’ equity and are included in our consolidated balance sheets within “Additional paid-in capital”. On June 11,
2024, L Catterton has converted their warrants into Common Stock by 10,992,759 ordinary shares (no per value). December 31, 2023, no warrants were
exercised.
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
Treasury Stock
As of December 31, 2024 and 2023, our treasury stock was comprised of 854,561 and 6,259,966 shares of common stock amounting to $10,788 and $78,267,
respectively.
Share Repurchases
We had no share repurchase program outstanding as of December 31, 2024 and 2023.
Dividends on our Common Stock
During the years ended December 31, 2024 2023 and 2022, we neither declared nor paid any dividends on our common stock.
Dividends on our Mezzanine-classified Preferred Stock
We paid dividends in cash to our Series A preferred shareholders for $15,418 on March 25, 2024 and $7,521 on September 26, 2024. We accrued $15,229 as of
December 31, 2024.
We paid dividends in cash to our Series A preferred shareholders for $7,896 on March 21, 2023 and $7,854 on September 26, 2023. We accrued $15,750 as of
December 31, 2023.
On March 31, 2022, we paid $15,375 in dividends to our Series A preferred shareholders. In September 2022, we did not pay dividends in cash but instead
were accrued and accumulated $11,491.
On March 21, 2024 we paid $499 in dividends to our Series B preferred shareholders. During the years ended December 31, 2023 and 2022, we paid $2,000 in
dividends to our Series B preferred shareholders, respectively.
Accumulated Other Comprehensive Income / (Loss)
The balance of accumulated other comprehensive income / (loss) as of December 31, 2024, 2023 and 2022 was comprised of foreign currency translation
adjustments. These translation adjustments include foreign currency translation gain (losses) for the years ended December 31, 2024, 2023 and 2022 of
$(22,492), $4,434 and $1,973, respectively.
27. Financial results, net
The following table presents the components of financial results, net:
Year ended December 31,
2024
2023
2022
Foreign exchange losses
$
(30,313)
$
(24,027)
$
(39,152)
(Losses) \ gains on derivative financial instruments
(2,823)
2,385
2,940
Interest income
12,734
15,289
17,980
Interest expense
(11,887)
(10,290)
(8,484)
Factoring expense
(28,199)
(32,216)
(18,463)
Bank expense
(986)
(906)
(1,370)
(Losses) \ gains on marketable securities
(27,111)
11,773
—
Others
(487)
1,359
1,090
Total financial results, net
$
(89,072)
$
(36,633)
$
(45,459)
28. Stock-based compensation
All stock options are fully vested since December 31, 2022. We did not grant stock options during the years ended December 31, 2024, 2023 and 2022. We
generally issue restricted stock units (“RSUs”) as our primary form of stock-based
The accompanying notes are an integral part of these consolidated financial statements.
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Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
compensation, which consist of service-based awards and typically vest 33% after one year and others vest 25% after one year and will then vest yearly over
the following 3 or 4 years, as appropriate.
The following table presents a summary of our RSU activity:
RSUs
(in number of shares)
Weighted average grant-date
fair value
Balance as of January 1, 2022
1,264,703
$
9.60
Granted
622,781
$
11.36
Vested
(1,021,791)
$
7.30
Cancelled
(195,933)
$
11.22
Balance as of December 31, 2022
669,760
$
10.74
Granted
892,367
$
6.17
Vested
(588,531)
$
7.88
Cancelled
(198,345)
$
9.21
Balance as of December 31, 2023
775,251
$
7.38
Granted
788,556
$
8.73
Vested
(510,903)
$
17.84
Cancelled
(50,666)
$
7.92
Balance as of December 31, 2024
1,002,238
$
7.86
The total market value of shares vested during the years ended December 31, 2024, 2023 and 2022 was $9,764, $4,634 and $5,055, respectively.
The following table presents a summary of our stock option activity:
Options
(in number of shares)
Weighted average exercise
price
Balance as of January 1, 2022
627,756
$
14.00
Exercised
(48,172)
$
6.41
Forfeited / Cancelled
(88,527)
$
11.28
Balance as of December 31, 2022
491,057
$
9.66
Exercised
(3,827)
$
6.03
Forfeited / Cancelled
(77,758)
$
9.65
Balance as of December 31, 2023
409,472
$
9.73
Exercised
(14,414)
$
9.02
Forfeited / Cancelled
(8,878)
$
17.18
Balance as of December 31, 2024
386,180
$
9.79
Fully vested as of December 31, 2024
386,180
$
9.79
As of December 31, 2024, the closing stock price of $19.25 was higher than the minimum exercise price of the stock option plans and therefore, there is
intrinsic value of $3,663 at December 31, 2024. The total aggregate intrinsic value of stock options exercised was $85 for the year ended December 31, 2024.
As of December 31, 2023, the closing stock price of $9.46 was higher than the minimum exercise price of the stock option plans and therefore, there is intrinsic
value of $601 at December 31, 2023. The total aggregate intrinsic value of stock options exercised was $12 for the year ended December 31, 2023.
As of December 31, 2022, the closing stock price of $5.13 was lower than the minimum exercise price of the stock option plans and therefore, there is not
intrinsic value at December 31, 2022. The total aggregate intrinsic value of stock options exercised was $142 for the year ended December 31, 2022.
The accompanying notes are an integral part of these consolidated financial statements.
F-69
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
During the years ended December 31, 2024, 2023 and 2022, we recognized total stock-based compensation expense of $9,901, $3,454 and $7,292, respectively,
mainly within “General and administrative” expenses in our consolidated statements of operations. Cash received from stock-based award exercises for the
years ended December 31, 2024, 2023 and 2022 was $126, $4 and $340, respectively.
As of December 31, 2024, 2023, and 2022 we had 1,388,418,1,184,723 and 1,160,817 shares of common stock assigned for stock-based awards, respectively.
We issue new shares to satisfy the exercise or release of stock-based awards.
29. Leases
We have operating leases for office space, customer centers and a fleet of dedicated vans. Our leases have remaining lease terms of 1 to 16 years, some of
which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.
As of December 31, 2024, our weighted-average discount rate and weighted-average remaining lease term were approximately 11% and 7 years, respectively.
As of December 31, 2023, our weighted-average discount rate and weighted-average remaining lease term were approximately 9% and 8 years, respectively.
We had no finance leases as of any of the years presented. We had not entered into leases that had not yet commenced as of any of the years presented.
Supplemental cash flow information related to leases were as follows:
Year ended December 31
2024
2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating lease payments
$
7,042
$
6,068
As of December 31, 2024, the operating lease liabilities will mature over the following periods:
As of December 31,
2024
2025
$
5,467
2026
4,239
2027
3,414
2028
2,466
2029
1,260
2030 and thereafter
4,933
Total remaining lease payments
$
21,779
Less: Imputed interest
(5,512)
Total operating lease liabilities:
$
16,267
Current operating lease liability
5,205
Non-current operating lease liability
$
11,062
Operating lease costs were $9,991, $9,375 and $8,899 for the years ended December 31, 2024, 2023 and 2022, respectively.
The accompanying notes are an integral part of these consolidated financial statements.
F-70
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
30. Valuation and qualifying accounts
The following table presents the changes in our valuation and qualifying accounts:
Balance, beginning of
year
Charges to earnings
Charges to other
accounts
Deductions
Balance, end of year
2022
Allowance for credit expected losses – Accounts
Receivable
$
10,911
$
8,233
$
269
$
(8,884)
$
10,529
Allowance for credit expected losses financial –
Loans Receivable
$
2,064
$
13,972
$
(132)
$
(3,493)
$
12,411
Allowance for cancellations
$
19,216
$
5,598
$
70
$
(16,707)
$
8,177
Other reserves
$
2,272
$
10,187
$
112
$
(9,779)
$
2,792
2023
Allowance for credit expected losses – Accounts
Receivable
$
10,529
$
4,350
$
767 $ $
(8,837)
$
6,809
Allowance for credit expected losses financial –
Loans Receivable
$
12,411
$
13,692
$
1,108 $ $
(13,628)
$
13,583
Allowance for cancellations
$
8,177
$
17,513
$
(541)
$
(16,919)
$
8,230
Other reserves
$
2,792
$
11,307
$
(263)
$
(9,555)
$
4,281
2024
Allowance for credit expected losses – Accounts
Receivable
$
6,809
$
4,513
$
(1,075) $ $
(4,639)
$
5,608
Allowance for credit expected losses financial –
Loans Receivable
$
13,583
$
18,226
$
(3,580) $ $
(12,877)
$
15,352
Allowance for cancellations
$
8,230
$
22,150
$
2,229 $ $
(22,754)
$
9,855
Other reserves
$
4,281
$
7,553
$
(351) $ $
(7,398)
$
4,085
Charges to other accounts primarily relate to net translation adjustments.
Deductions include our credit write-off inputs as of December 31, 2024, 2023, 2022 $652, $1,963 and $0, respectively.
Deductions include our credit write-off inputs as of December 31, 2024, 2023, 2022 $12,877, $13,628 and $3,218, respectively.
Other reserves primarily include our accrual of the cost associated with purchases made on our website related to the use of fraudulent credit cards charged-back due to payment disputes.
(1)
(2)
(3)
(4)
(2)
(3)
(4)
(2)
(3)
(4)
(1)
(2)
(3)
(4)
The accompanying notes are an integral part of these consolidated financial statements.
F-71
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
31. Assets and liabilities held for sale
The following table presents our information related to the major classes of assets and liabilities that were classified as held for sale in our consolidated balance
sheets as of December 31, 2023:
Year ended December 31, 2023
Current
Non current
Total
Cash and cash equivalents (Note 7)
$
9,319
$
—
$
9,319
Restricted cash (Note 7)
16
—
16
Trade accounts receivable, net of credit expected loss (Note 8)
6
—
6
Other assets and prepaid expenses (Note 11)
2,238
—
2,238
Related parties receivables (Note 23)
2,567
—
2,567
Property and equipment (Note 12)
—
1,496
1,496
Intangible assets (Note 13)
—
8,238
8,238
Valuation allowance
—
(861)
(861)
Assets classified as held for sale
$
14,146
$
8,873
$
23,019
Accounts payable and accrued expenses (Note 15)
$
314
$
—
$
314
Travel accounts payable (Note 16)
175
—
175
Short-term debt and other financial liabilities (Note 6)
5,966
—
5,966
Other liabilities (Note 17)
1,915
—
1,915
Liabilities classified as held for sale
$
8,370
$
—
$
8,370
The carrying amount of assets and liabilities classified as held for sale as of December 31, 2023 is $23,019 and $8,370, respectively. The Company has
recognized a $4,546 non-cash loss on disposal as of December 31, 2023 (presented within “Other operating expenses, net” in the Consolidated Statement of
Operations) after comparing the carrying amount of net assets held for sale and its corresponding fair value less cost to sell at year-end. This amount includes
the impact of cumulative translation adjustments and deferred income taxes associated with the disposal group. Goodwill allocated to the disposal group
(totaling $3,685) has been written-off.
As of December 31, 2023, assets and liabilities classified as held for sale correspond to one of our non-air segment lines of business.
We determined that the operations included in the table above did not meet the criteria to be classified as discontinued operations under the ASC 205 guidance.
The transfer of the disposal group was completed sale on July 31, 2024 and the Company has recognized a loss of $613 for this transaction (presented within
“Other operating expenses, net” in the Consolidated Statement of Operations).
32. Subsequent events
Argentine currency status and exchange regulations
On April 11, 2025, the Argentine government announced the removal of most foreign exchange restrictions. The measures are part of a broader economic
reform and include a shift to a managed floating exchange rate regime. While some controls remain in place, the new framework is expected to improve access
to the official foreign exchange market.
Payment of dividends to preferred shareholders
On March 27, 2025, we paid $7,479 of accumulated dividends to our Series A preferred shareholders.
The accompanying notes are an integral part of these consolidated financial statements.
F-72
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
HBX outsourcing agreement
On January 27, 2025, we entered into a new outsourcing agreement with our partner, Hotelbeds. As a result of this agreement, we collected an advance
payment on February 10, 2025.
Merger Agreement of Despegar.com to be acquired by Prosus for $19.50 per share in cash
On December 23, 2024, we entered into the Merger Agreement to be acquired by an affiliate of Prosus for $19.50 per ordinary share in an all-cash transaction.
The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, at the time the Merger becomes
effective (the “Effective Time”), each ordinary share, no par value, of the Company issued and outstanding immediately prior to the Effective Time, other than
ordinary shares (a) held in the treasury of the Company or owned by any direct or indirect wholly owned subsidiary of the Company, (b) owned by Merger Sub,
Parent or any direct or indirect wholly owned subsidiary of Parent, or (c) held by holders who (i) are entitled to demand appraisal rights under Section 179 of
the BVI Business Companies Act (Revised Edition 2020), as amended (the “BVI Act”), (ii) have properly exercised and perfected their demands for appraisal
of such ordinary shares in the time and manner provided in Section 179 of the BVI Act and (iii) as of the Effective Time, have neither effectively withdrawn
nor lost their rights to such appraisal and payment under the BVI Act, will be automatically cancelled and converted into the right to receive $19.50 in cash,
without interest (the “Ordinary Share Consideration”). For avoidance of doubt, the ordinary shares in clauses (a), (b) and (c) will be cancelled.
In addition, at the Effective Time, each Series A Preferred Share will be converted automatically into the right to receive a cash amount equal to the product of
(a) 110.0% and (b) the sum of (i) $1,000 per share and (ii) any Accrued Dividends (as defined in the Merger Agreement) per Series A Preferred Share, plus (c)
without duplication, any accrued and unpaid Dividends (as defined in the Merger Agreement) to, but excluding, the Closing Date.
In addition, at the Effective Time, and in each case subject to the terms and conditions of the Merger Agreement:
(a) each outstanding and unexercised option to purchase ordinary shares granted under any Company Stock Plan (as defined in the Merger Agreement)
(each, a “Company Option”), whether vested or unvested, with an exercise price per share that is less than the Ordinary Share Consideration will be
cancelled and converted into the right to receive an amount in cash, without interest, equal to the product of (i) the amount by which the Ordinary
Share Consideration exceeds the applicable exercise price per Share of such Company Option and (ii) the aggregate number of shares remaining
issuable upon exercise of such Company Option, less applicable taxes and authorized deductions;
(b) each Company Option, whether vested or unvested, that has an exercise price per share that is equal to or greater than the Ordinary Share
Consideration will be cancelled without the payment of consideration;
(c) each outstanding restricted stock unit award in respect of shares granted under any Company Stock Plan or otherwise, including any such restricted
stock unit award that is settled in shares and any such phantom restricted stock unit award that is settled in cash (each, a “Company RSU”) that is
vested but not settled as of immediately prior to the Effective Time (each, a “Vested RSU”), will be cancelled and converted into the right to receive
an amount in cash, without interest, equal to the product of (a) the Ordinary Share Consideration and (b) the aggregate number of shares subject to
such Vested RSU, less applicable taxes and authorized deductions;
(d) each Company RSU that is not a Vested RSU or a Continued RSU (as defined below) (each, an “Other RSU”), will be cancelled and converted into a
contingent right to receive from the Surviving Company (without interest and subject to the same vesting terms and conditions and settlement
schedule as the corresponding Other RSU immediately prior to the Effective Time) an amount in cash equal to the product of (i) the Ordinary Share
Consideration and (ii) the aggregate number of shares subject to such Other RSU, less applicable taxes and authorized deductions; and
(e) each outstanding Company RSU that was granted on or following the date of the Merger Agreement (each, a “Continued RSU”) will remain
outstanding as a restricted stock unit in respect of shares, without par value, of the Surviving Company, on substantially the same terms and conditions
as in effect immediately prior to the Effective Time, subject to certain adjustments, less applicable taxes and authorized deductions.
On January 21, 2025, a separate class meeting of the holders of the Series A Preferred Shares of the Company was held, at which the sole holder of the Series A
Preferred Shares approved and voted in favor of the merger agreement under which Prosus, a leading global technology company, will acquire Despegar for
$19.50 per ordinary share in an all-cash transaction.
The accompanying notes are an integral part of these consolidated financial statements.
F-73
Table of Contents
Despegar.com, Corp.
Notes to the Consolidated Financial Statements (Continued)
(In thousands of U.S. dollars, except per share data in U.S. dollars)
On March 4, 2025 ordinary shareholders of Despegar duly approved the definitive merger agreement under which Prosus, a leading global technology
company, will acquire Despegar for $19.50 per ordinary share in an all-cash transaction.
The accompanying notes are an integral part of these consolidated financial statements.
F-74
Docusign Envelope ID: C98F5AA8-FF2E-4A84-8D32-BF33C49EAD7C
Expedia, Inc.
1111 Expedia Group Way West Seattle, WA 98119
Despegar.com, Corp.
Commerce House, Wickhams Cay 1
P.O. Box 3140, Road Town Tortola, British Virgin Islands
This letter agreement (“Letter Agreement”) by and between Despegar.com, Corp. (the “Company”) and Expedia, Inc. (“Expedia”) is
effective as of September 13, 2024 (the “Agreement Date”) (the “Parties”). Reference is made to the Sixth Amended and Restated
Investors’ Rights Agreement, dated as of August 29, 2017, by and among the Company, Expedia and the other shareholders named therein (as
amended, restated or otherwise modified from time to time, the “IRA”). All capitalized terms, where not defined in this Letter
Agreement, shall have the meanings set out in the IRA.
The Parties desire to extend the term of the registration rights provided in the IRA to Expedia, on the terms set forth in this Letter Agreement.
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties hereby agree as follows.
From and after the Agreement Date, the Parties agree as follows:
1.
REGISTRATION RIGHTS. The Company hereby extends the registration rights provided to Expedia in Article II of the IRA, on the
terms and conditions set forth in the IRA, for the period beginning upon the expiration of such rights with respect to Expedia and ending two
years thereafter on September 22, 2026.
2.
GENERAL. Except as expressly modified herein between the Parties, all terms, conditions and provisions of the IRA shall continue in
full force and effect as set forth in the IRA immediately prior to the effectiveness of the Letter Agreement, including without limitation, the
confidentiality provisions in Section 6.7 of the IRA. In the event of a conflict between the terms and conditions of the IRA and the terms and
conditions of this Letter Agreement, the terms and conditions of this Letter Agreement shall prevail. Each Party represents and warrants to the
other Party that this Letter Agreement has been duly authorized, executed and delivered by it and constitutes a valid and legally binding
agreement with respect to the subject matter contained herein. Each Party agrees that the IRA, with the extension of Expedia’s registration
rights in accordance with this Letter Agreement, constitutes the complete and exclusive statement of the agreement between the Parties, and
supersedes all prior proposals and understandings, oral and written, relating to the subject matter contained herein. This Letter Agreement
shall not be modified or rescinded except in writing signed by all of the Parties. This Letter Agreement may be signed in two or more
counterparts, each of which will be deemed an original, and all of which together will constitute one and the same instrument. All signatures
of the parties may be transmitted by facsimile or electronic mail, and such transmission will, for all purposes, be deemed to be the original
signature of such Party whose signature it reproduces and will be binding on such Party. This Letter Agreement shall be governed by and
construed in accordance with the Laws of the State of New York applicable to agreements made and to be performed entirely within such
State, without regard to the conflict of Laws principles of such State. To the extent the Company or any of its Affiliates believes a disclosure
of the existence of this Letter Agreement and/or any of its terms may be required under application law or regulation or the rules of any
applicable securities exchange, the Parties shall coordinate to ensure appropriate redaction of Expedia’s commercially sensitive information is
implemented to the satisfaction of Expedia prior to any such filing. This provision shall survive termination or expiry of this Letter
Agreement.
[Signature page follows]
Docusign Envelope ID: C98F5AA8-FF2E-4A84-8D32-BF33C49EAD7C
Sincerely,
Expedia, Inc.
By: /s/ Adrian Esguerra
Name: Adrian Esguerra
Title: Vice President, Legal
Acknowledged and Agreed:
Despegar.com, Corp
By:
Name:
Title:
/s/ Monica Alexandra Soares da Silva
Monica Alexandra Soares da Silva General Counsel
Signature page to Letter Agreement
Exhibit 2.8
Description of Securities Registered under Section 12(b) of the Exchange Act
As of December 31, 2024, Despegar.com, Corp. (the “Company”, “we”, “us” or “our”) had one class of securities registered under Section 12(b) of the
Securities Exchange Act of 1934 – ordinary shares, with no par value.
The following is a summary of the terms of our shares, certain provisions of the BVI Business Companies Act, 2004 (as amended from time to time, the “BVI
Act”) and certain provisions of our memorandum and articles of association, which are qualified in their entirety by reference to the BVI Act and our
memorandum and articles of association, and they are available upon request. We have filed copies of our memorandum and articles of association as exhibit
3.1 to Form 6-K, filed on December 14, 2023.
General
We are a BVI business company incorporated with limited liability and our affairs are governed by the provisions of our memorandum and articles of
association, as amended and restated from time to time, and by the provisions of applicable BVI law, including the BVI Act.
Our company number in the BVI is 1936519. As provided in paragraph 4 of our memorandum of association, subject to BVI law, we have full capacity to carry
on or undertake any business or activity, do any act or enter into any transaction and, for such purposes, full rights, powers and privileges. Our registered office
is at Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands and our registered agent is Conyers Trust Company (BVI)
Limited of Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola, British Virgin Islands.
The transfer agent and registrar for our ordinary shares is Computershare Trust Company, N.A., which maintains the register of members of the Company at
480 Washington Boulevard, Jersey City, NJ 07310, USA. The shares of the Company are held in uncertificated (book-entry) form and no shareholder has the
right to require issuance or provision to it at any time of any share certificate.
The following is a summary of the material provisions of our share capital and our memorandum and articles of association. This discussion does not purport to
be complete and is qualified in its entirety by reference to our memorandum and articles of association.
Ordinary Shares
The following summarizes the rights of holders of our ordinary shares. Each ordinary share confers on the holder:
(a) the right to one vote at a meeting per share on all matters to be voted on by shareholders generally, including the election of directors at an annual meeting
of the shareholders;
(b) the right to an equal share in any dividend paid by the Company and payable in respect of our ordinary shares and as may be declared from time to time by
our board of directors out of funds legally available for that purpose, if any; and
(c) upon our liquidation, dissolution or winding up, the right to an equal share in the distribution of the surplus assets of the Company available to the ordinary
shareholders, but subject in each case to the rights attaching to any additional class or classes of shares (including any preferred shares) that may be authorized
and issued after the closing date of our initial public offering. Our ordinary shares do not confer cumulative voting rights
Series A Preferred Shares
The following summarizes the rights of holders of our Series A Preferred Shares. Each Series A Preferred Share confers on the holder:
a) the right to dividends on each Series A Preferred Share, accruing at a rate of 10.0% per annum and payable semi-annually in arrears;
b) the right to one vote per share on any matter on which holders of Series A Preferred Shares are entitled to vote separately as a class, whether at a meeting or
by written consent; and
c) upon our liquidation, dissolution or winding up, a preferential right to the distribution of the surplus assets of the Company.
The prior written approval of the holders of a majority of the Series A Preferred Shares outstanding at such time, acting together as a separate class, is required
in order for the Company to (i) amend the memorandum and articles of association in a manner that adversely affects the holders of Series A Preferred Shares,
(ii) create or issue any shares ranking senior or pari passu to the Series A Preferred Shares, or any securities convertible or exchangeable into, or exercisable
for shares, ranking senior or pari passu to the Series A Preferred Shares or issue any additional Series A Preferred Shares or increase the authorized number
of Series A Preferred Shares, other than as permitted in the memorandum and articles of association, (iii) declare or pay any dividend or distribution, or
repurchase or redeem any shares, subject to certain exceptions, including with respect to the Series A Preferred Shares, (iv) make any fundamental change in
the nature of the business in which the Company is primarily engaged, (v) initiate, engage in or permit to occur (to the extent within the control of the
Company), any liquidation, dissolution or winding up of the Company, (vi) continue or re-domicile the Company in any jurisdiction other than the British
Virgin Islands, or (vii) take or permit certain of the foregoing with respect to the significant subsidiaries of the Company.
So long as L Catterton Latin America III, L.P. or its affiliates (the “L Catterton Purchaser”) hold any Series A Preferred Shares, the prior written consent of the
L Catterton Purchaser is required in order for the Company to (i) incur any indebtedness for borrowed money in excess of the greater of (x) $60 million, and (y)
an amount equal to 1.0x the Company’s consolidated Adjusted EBITDA (as defined in the memorandum and articles of association) for the twelve-month
period ending at the end of the last quarter for which the Company has publicly reported financial results, subject to certain exceptions, (ii) sell, dispose of or
enter into any exclusive license for any material asset (or group of related assets) of the Company or with a fair market value equal or greater to 10% of the
Company’s consolidated total assets and (iii) enter into certain affiliate transactions, in each case subject to certain exceptions.
At any time on or after September 18, 2025, each holder of Series A Preferred Shares may, at its election, cause the Company to redeem all or part of such
holder’s then outstanding Series A Preferred Shares in cash at a price equal to the liquidation preference, plus, without duplication, accrued and unpaid
distributions to, but excluding, the redemption date. In addition, if the Company undergoes a qualifying change of control, each holder of Series A Preferred
Shares may, at its election, cause the Company to redeem all of such holder’s then outstanding Series A Preferred Shares in cash at a price equal to 110.0% of
the liquidation preference, plus, without duplication, accrued and unpaid distributions to, but excluding, the redemption date.
Additional Shares
Our board of directors may determine the rights, privileges, restrictions and conditions attaching to each such class of preferred shares (which may be more
favorable than those attaching to the ordinary shares), as the board of directors may determine in its sole and absolute discretion (subject always to obtaining
any approval required in respect of the consent, veto or approval rights assigned to the holders of Series A Preferred Shares in the memorandum and articles of
association), including without limitation:
• the number of shares constituting the additional class of preferred shares;
• the dividend and other distribution rights of the class of preferred shares (which may be payable in preference to, or in relation to, the dividends payable on
our ordinary shares or any other class or classes of shares);
• whether the class of preferred shares shall have voting rights and, if so, whether they shall vote separately or together as a single class with the ordinary
shares and/or any other class of shares;
• whether the class of preferred shares shall have conversion and/or exchange rights and privileges and, if so, the terms and conditions of such conversion
and/or exchange;
• whether the class of preferred shares shall impose conditions and restrictions upon the business and affairs of the Company and/or any of its subsidiaries or
the right to approve and/or veto certain matters and/or to appoint and/or remove one or more directors of the Company; and
• the rights of the preferred shares in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, including, without
limitation, any liquidation preference and whether such rights shall be in preference to, or in relation to, the comparable rights of the ordinary shares or any
other class or classes of shares.
Limitation on Liability and Indemnification Matters
Under BVI law, each of our directors, in exercising his powers or performing his duties, is required to act honestly and in good faith and in what the director
believes to be in our best interests, is required to exercise his powers as a director for a proper purpose, may not act, or agree to us acting, in a manner that
contravenes the BVI Act or our memorandum or articles of association, and is required to exercise the care, diligence and skill that a reasonable director would
exercise in the same circumstances (taking into account, but without limitation, the nature of the company; the nature of the decision; and the position of the
director and the nature of the responsibilities undertaken by him).
Our memorandum and articles of association provide that, to the fullest extent permitted by law, the Company is authorized to provide indemnification of (and
advancement of expenses to) officers, directors and agents of the Company (and any other persons to which the Company is permitted to provide
indemnification under applicable law) through provisions in the memorandum and articles of association, agreements with such officers, directors, agents or
other persons, vote of disinterested directors or otherwise, subject only to limits created by the BVI Act.
Our memorandum and articles of association provide that the Company shall indemnify against all expenses, including legal fees, and against all judgments,
fines and amounts paid in settlement and reasonably incurred in connection with legal, administrative or investigative proceedings any person who: (a) is or
was a party or is threatened to be made a party to any threatened, pending or completed proceedings, whether civil, criminal, administrative or investigative, by
reason of the fact that the person is or was a director, an officer or a liquidator of the Company; or (b) is or was, at the request of the Company, serving as a
director, officer or liquidator of, or in any other capacity is or was acting for, another body corporate or a partnership, joint venture, trust or other enterprise;
provided that such indemnification shall not apply unless the person claiming such indemnification acted honestly and in good faith and in what he believed to
be the best interests of the Company and, in the case of criminal proceedings, the person had no reasonable cause to believe that his conduct was unlawful.
We may pay any expenses, including legal fees, incurred by any such person in defending any legal, administrative or investigative proceedings in advance of
the final disposition of the proceedings. If a person to be indemnified has been successful in defense of any proceedings referred to above, the person is entitled
to be indemnified against all expenses, including legal fees, and against all judgments, fines and amounts paid in settlement and reasonably incurred by the
person in connection with the proceedings.
We may purchase and maintain insurance in relation to any person who is or was a director, an officer or a liquidator of the Company, or who at the request of
the Company is or was serving as a director, an officer or a liquidator of, or in any other capacity is or was acting for, another body corporate or a partnership,
joint venture, trust or other
enterprise, against any liability asserted against the person and incurred by the person in that capacity, whether or not we have or would have had the power to
indemnify the person against the liability as provided in memorandum and articles of association.
Shareholders’ Meetings and Consents
The following summarizes certain relevant provisions of BVI laws and our memorandum and articles of association in relation to our shareholders’ meetings:
• Our memorandum and articles of association contemplate two types of shareholders’ meetings, namely:
(i)
an annual meeting of shareholders (each an “annual meeting”); and
(ii) any meeting of shareholders which is not an annual meeting (each a “special meeting”).
• Only the board of directors may convene an annual meeting. Annual meetings shall be held in each calendar year.
All annual meetings shall be held at such date, time and place, either within or outside the BVI, as shall be determined from time to time by the board of
directors. The business of an annual meeting shall be the election and re-election of directors for those board seats whose terms expire at such meeting and any
other items of business proposed by the board of directors and/or otherwise duly proposed by eligible shareholders in accordance with the memorandum and
articles of association.
• Special meetings may only be called: (i) by the board of directors at its own initiative; or (ii) by the board of directors upon receiving a compliant written
request from a shareholder or shareholders entitled to exercise at least 30% of the voting rights in respect of the matter for which the meeting is requested.
Upon receipt of a compliant requisition notice, the board of directors shall convene the requested special meeting for a date not later than 90 days after the date
of receipt of the requisition notice, provided the various restrictions, conditions and provision of information and other procedural requirements set out in the
memorandum and articles of association have been met by the requisitionists. A special meeting may be held at such date, time and place, within or outside the
BVI, as shall be stated in the notice of the meeting.
• Director elections and re-elections by shareholders may occur only at annual meetings (not special meetings) and then only in respect of those board seats
whose terms expire at such meeting. Nominations of persons for election or re-election as directors of the Company at an annual meeting may only be made by
(i) the board of directors; or (ii) any shareholder (or shareholders collectively) other than any holder of Series A Preferred Shares (for so long as such holder has
the right to appoint a director) holding not less than 3% of the voting rights that may be exercised at the annual meeting entitled to attend and vote at such
meeting, provided the various restrictions, conditions and provision of information and other procedural requirements set out in the memorandum and articles
of association have been met by the nominating shareholders. The board of directors also retains discretion to veto inappropriate candidates nominated by
shareholders for election as a director in certain enumerated circumstances, including (a) where the candidate is not qualified, does not have the necessary
experience, has a conflict of interest or is otherwise unsuitable or unfit for office; and (b) where an appointment may adversely affect the Company’s (and/or its
subsidiaries’ respective) reputation or business; or would result in the Company not having the required number of independent directors for its audit
committee; or would result in the Company losing its “foreign private issuer” status.
• Written notice of any shareholder meeting shall be given to each shareholder entitled to vote at such meeting and each director not fewer than 10 nor more
than 120 days before the date of the meeting. The inadvertent failure or accidental omission to give notice of a meeting to, or the non-receipt of a notice of a
meeting by, any person entitled to receive notice shall not invalidate the shareholder meeting or the proceedings at that meeting. A meeting of shareholders held
in contravention of such notice requirements is valid if shareholders holding at least 90% of the total voting rights on all the matters to be considered at the
meeting have waived notice of the meeting and, for this purpose, the presence of a shareholder at the meeting shall be deemed to constitute waiver on his part.
• A shareholder may be represented at a meeting of shareholders by a proxy who may speak and vote on behalf of the shareholder.
• A meeting of shareholders is duly constituted and quorate if, at the commencement of the meeting, there are present in person or by proxy holders of not less
than a simple majority of the votes of the shares entitled to vote on the resolutions to be considered at the meeting. If within two hours from the time appointed
for the meeting a quorum is not present, the meeting, if convened upon the requisition of shareholders, shall be dissolved; in any other case it shall stand
adjourned to such other date, time and place as the chairman may determine and announce at the meeting (without the need for any further notice to
shareholders). At any such adjourned meeting, a quorum shall be present if there are present in person or by proxy not less than one-third of the votes of the
shares entitled to vote on the resolutions to be considered at the meeting and any business may be transacted that might have been transacted at the meeting as
originally notified. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each shareholder of record entitled to vote at the meeting.
• A resolution of shareholders is valid only if approved at a duly constituted and quorate meeting of shareholders by the affirmative vote of a simple majority
(or such greater majority as may be specified in respect of a particular matter in the memorandum and articles of association) of the votes of those shareholders
present at the meeting and entitled to vote and voting on the resolution. Shareholders are prohibited from adopting resolutions by written consent and all
resolutions of the shareholders need to be adopted at a meeting of our shareholders convened in accordance with our memorandum and articles of association.
• In addition, in order to nominate candidates for election as a director at an annual meeting or propose topics for consideration at an annual meeting or special
meeting of shareholders, shareholders must notify the Company in writing prior to the meeting at which directors are to be elected or the proposals are to be
acted upon, and such notice must contain the documentation and information specified in our memorandum and articles of association. To be timely, notice
with respect to an annual meeting of shareholders must be received by not later than the close of business on the 90th day, nor earlier than the close of business
on the 120th day, prior to the first anniversary of the preceding year’s annual meeting (provided that if the Company did not have an annual meeting the
preceding year not later than the close of business on June 30 of the calendar year in which the annual meeting is to be held or such other date notified to
shareholders by the board of directors). In the case of any business or other matter to be considered at a special meeting of shareholders, notice of such business
or other matter must be included with the original requisition notice. Various other restrictions, conditions and provision of information and other procedural
requirements set out in the memorandum and articles of association shall also apply. Such advance notice requirements and other provisions may preclude or
limit the ability of shareholders to nominate candidates for election as a director or propose topics for consideration at a meeting of shareholders. Furthermore,
our board of directors may in certain circumstances veto candidates proposed by shareholders (as described in the fourth bullet point in this section).
Differences in Corporate Law
We were incorporated under, and are governed by, the laws of the BVI. Set forth below is a summary of some of the key differences between provisions of the
BVI Act applicable to us and the laws applicable to companies incorporated in the State of Delaware in the United States and their shareholders, which should
not be taken as exhaustive.
Director’s Fiduciary Duties
Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components:
the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise
under similar circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available
regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be in the best interests of the
corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best
interest of the corporation and its shareholders take precedence over any interest possessed by a director, officer or
controlling stockholder and not shared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in
good faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of
a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural fairness
of the transaction, and that the transaction was of fair value to the corporation.
BVI law provides that every director of a BVI company in exercising his powers or performing his duties shall act honestly and in good faith and in what the
director believes to be in the best interests of the company. Additionally, the director shall exercise the care, diligence, and skill that a reasonable director would
exercise in the same circumstances (taking into account but without limitation, the nature of the company, the nature of the decision and the position of the
director and the nature of the responsibilities undertaken by him). In addition, BVI law provides that a director shall exercise his powers as a director for a
proper purpose and shall not act, or agree to the company acting, in a manner that contravenes the BVI Act or the memorandum association or articles of
association of the company.
Amendment of Governing Documents
Under Delaware corporate law, with very limited exceptions, a vote of the shareholders is required to amend the certificate of incorporation. In addition,
Delaware corporate law provides that shareholders have the right to amend the bylaws, and the certificate of incorporation also may confer on the directors the
right to amend the bylaws.
The laws of the BVI provide more flexibility as to the approvals required for amending the governing documents of the company. Our memorandum and
articles of association provide they may only be amended by way of:
(a) both an ordinary resolution of shareholders (passed by a simple majority vote) and a resolution of directors (passed by a simple majority vote at a meeting
of directors or by unanimous written consent), but written subject to the condition that the resolution of directors is adopted not later than the seventh day
following the adoption of the resolution of shareholders;
(b) a special resolution of members (passed by a two-thirds (66 2/3%) super majority vote), save that certain provisions may not be amended in this manner, as
further described below; or
(c) a resolution of directors (passed by a simple majority vote at a meeting of directors or by unanimous written consent), save that certain provisions may not
be amended in this manner, as further described below.
The provisions of our memorandum and articles of association that may not be amended pursuant to (b) and (c) above include provisions (and related
definitions) relating to the capacity and powers of the Company; the powers of our board to issue shares and authorize and issue additional classes of shares
and the repurchase of the company’s own shares, and to fix a record date for shareholder meetings; the powers of our board or shareholders to amend the
memorandum and articles; most provisions regarding shareholder meetings and the ability of shareholders to requisition meetings and make proposals and
nominate candidates for election as directors at shareholder meetings; the powers of the board of directors and the officers of the Company and their
proceedings; dividends and other distributions; director conflicts and indemnification; appointment of auditors and the audit process; the voluntary liquidation
of the Company; the redomiciliation of the Company to a foreign jurisdiction, and the exclusive jurisdiction clause. Further, at any time that Expedia owns 5%
or more of the outstanding ordinary shares of the Company, Article 26 of the articles of association (which relates to Expedia’s and its nominated directors’
ability to pursue opportunities that may compete with the Company) may not be amended, altered, changed or repealed without the prior written consent of
Expedia.
Written Consent of Directors
Under Delaware corporate law, directors may act by written consent only on the basis of a unanimous vote.
Similarly, under our memorandum and articles of association, a resolution of our directors in writing shall be valid only if consented to by all of the directors
(or all of the members of a committee of directors, as the case may be) entitled to vote on the resolution.
Written Consent of Shareholders
Under Delaware corporate law, unless otherwise provided in the certificate of incorporation, any action to be taken at any annual or special meeting of
shareholders of a corporation may be taken by written consent of the holders of outstanding stock having not less than the minimum number of votes that
would be necessary to take that action at a meeting at which all shareholders entitled to vote were present and voted.
Our memorandum and articles of association provide that a resolution of shareholders is valid only if approved at a duly constituted and quorate meeting of
shareholders by the affirmative vote of a simple majority (or such greater majority as may be specified in respect of a particular matter in the memorandum and
articles of association) of the votes of those shareholders present at the meeting and entitled to vote and voting on the resolution.
Shareholder Proposals
Under Delaware corporate law, a shareholder has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice
provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing
documents, but shareholders may be precluded from calling special meetings.
BVI law and our memorandum and articles of association provide that (i) our directors shall call a special meeting of the shareholders if requested in writing to
do so by shareholders entitled to exercise at least 30% of the voting rights in respect of the matter for which the meeting is requested; and (ii) shareholders may
put forward proposals at an annual meeting or, with the prior consent of our board of directors, at any special meeting convened by our board of directors, in
each case subject to the various restrictions, conditions, and provision of information and other procedural requirements (including lengthy advance notice
periods) described above in “—Shareholders’ Meetings and Consents.”
Sale of Assets
Under Delaware corporate law, a vote of the shareholders is required to approve the sale of assets only when all or substantially all assets are being sold.
Under the BVI Act, unless otherwise provided in the memorandum and articles of association, shareholder approval is required when more than 50% of the
company’s total assets by value are being disposed of or sold if not made in the usual or regular course of the business carried out by the company. However,
this provision is without effect under our memorandum and articles of association, and the directors may by resolution of directors sell, transfer, lease,
exchange or otherwise dispose of the assets of the Company without the sale, transfer, lease, exchange or other disposition being authorized by a resolution of
the shareholders (subject always to obtaining any approval required in respect of the consent, veto or approval rights assigned to the holders of Series A
Preferred Shares in the memorandum and articles of association).
Dissolution; Winding Up
Under Delaware corporate law, unless the board of directors approves the proposal to dissolve, dissolution must be approved in writing by shareholders holding
100% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the
corporation’s outstanding shares. Delaware corporate law allows a Delaware corporation to include in its certificate of incorporation a supermajority voting
requirement in connection with dissolutions initiated by the board.
As permitted by BVI law and our memorandum and articles of association (subject always to obtaining any approval required in respect of the consent, veto or
approval rights assigned to the holders of Series A Preferred Shares in the memorandum and articles of association), we may be voluntarily liquidated under
Part XII of the BVI Act by resolution of shareholders with the prior approval of a resolution of directors if we have no liabilities or we are able to pay our debts
as they fall due and the value of the Company’s assets equals or exceeds its liabilities.
Continuation under Foreign Law
As permitted by BVI law and our memorandum and articles of association (subject always to obtaining any approval required in respect of the consent, veto or
approval rights assigned to the holders of Series A Preferred Shares in the memorandum and articles of association), we may with the approval of both a
resolution of directors and resolution of shareholders continue as a company incorporated under the laws of a jurisdiction outside the British Virgin Islands in
the manner provided under those laws.
Redemption of Shares
Under Delaware corporate law, any stock may be made subject to redemption by the corporation at its option, at the option of the holders of that stock or upon
the happening of a specified event, provided shares with full voting power remain outstanding. The stock may be made redeemable for cash, property or rights,
as specified in the certificate of incorporation or in the resolution of the board of directors providing for the issue of the stock.
As permitted by BVI law and our memorandum and articles of association (subject always to obtaining any approval required in respect of the consent, veto or
approval rights assigned to the holders of Series A Preferred Shares in the memorandum and articles of association), shares may be repurchased, redeemed or
otherwise acquired and held by us (a) with the prior written consent of the holder of such shares (which consent may be given by agreement in advance and
may be either unconditional or conditional); (b) in accordance with the terms and restrictions of such shares or the terms upon which such shares are issued,
without the consent of the holder of such shares; or (c) as described under “Compulsory Acquisition” below, without the consent of the holder of such shares,
subject in cases (a) and (b) to compliance with applicable BVI laws regarding solvency unless the redemption is made pursuant to a right of the shareholder to
have his shares redeemed or to have his shares exchanged for money or other property of the company.
Compulsory Acquisition
Under Delaware General Corporation Law §253, in a process known as a “short form” merger, a corporation that owns at least 90% of the outstanding shares
of each class of stock of another corporation may either merge the other corporation into itself and assume all of its obligations or merge itself into the other
corporation by executing, acknowledging and filing with the Delaware Secretary of State a certificate of such ownership and merger setting forth a copy of the
resolution of its board of directors authorizing such merger. If the parent corporation is a Delaware corporation that is not the surviving corporation, the merger
also must be approved by a majority of the outstanding stock of the parent corporation. If the parent corporation does not own all of the stock of the subsidiary
corporation immediately prior to the merger, the minority shareholders of the subsidiary corporation party to the merger may have appraisal rights as set forth
in §262 of the Delaware General Corporation Law.
Under the BVI Act, subject to any limitations in a company’s memorandum or articles, members holding 90% of the votes of the outstanding shares entitled to
vote, and members holding 90% of the votes of the outstanding shares of each class of shares entitled to vote as a class, may give a written instruction to the
company directing the company to redeem the shares held by the remaining members. Upon receipt of such written instruction, the company shall redeem the
shares specified in the written instruction, irrespective of whether or not the shares are by their terms redeemable. The company shall give written notice to
each member whose shares are to be redeemed stating the redemption price and the manner in which the redemption is to be effected. A member whose shares
are to be so compulsorily redeemed is entitled to dissent from such redemption, and to be paid the fair value of his shares, as described under “—Appraisal
Rights” below.
Variation of Rights of Shares
Under Delaware corporate law, a corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of that class,
unless the certificate of incorporation provides otherwise. Under our memorandum and articles of association, the rights attached to any class of shares may be
varied pursuant to any permitted means of amendment to our memorandum and articles of association (in this regard, see “—Amendment of Governing
Documents” above) with no express provisions or additional investor protections regarding variations of class rights.
Removal of Directors
Under Delaware corporate law, a director of a corporation with a classified board may be removed only for cause with the approval of a majority of the
outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.
Our memorandum and articles of association provide that a director of the Company (other than a director appointed by the holders of Series A Preferred
Shares (the “Preferred Director”)) may only be removed: (i) with cause, by a resolution approved by shareholders holding not less than two-thirds of the voting
rights at a meeting of shareholders called for the stated purpose of removing the director or for stated purposes including the removal of the director, or (ii) with
cause, by a resolution approved by directors holding not less than two-thirds of the voting rights of all of those directors entitled to vote on the resolution at a
meeting of directors or by way of written consent of two-thirds of those directors entitled to vote on the removal. For these purposes, “cause” is to be given the
same meaning it has under Delaware corporate law.
If a Preferred Director fails to resign upon the holders of Series A Preferred Shares nominating a replacement, our memorandum and articles of association
provide that the Preferred Director may be removed by a resolution approved by directors holding not less than a simple majority of the voting rights of all
those directors entitled to vote on the resolution at a meeting of directors or by way of the unanimous written consent of those directors entitled to vote on the
removal.
Mergers
Under Delaware corporate law, one or more constituent corporations may merge into and become part of another constituent corporation in a process known as
a merger. A Delaware corporation may merge with a foreign corporation as long as the law of the foreign jurisdiction permits such a merger. To effect a merger
under Delaware General Corporation Law §251, an agreement of merger must be properly adopted and the agreement of merger or a certificate of merger must
be filed with the Delaware Secretary of State. In order to be properly adopted, the agreement of merger must be adopted by the board of directors of each
constituent corporation by a resolution or unanimous written consent. In addition, the agreement of merger generally must be approved at a meeting of
stockholders of each constituent corporation by a majority of the outstanding stock of the corporation entitled to vote, unless the certificate of incorporation
provides for a supermajority vote. In general, the surviving corporation assumes all of the assets and liabilities of the disappearing corporation or corporations
as a result of the merger.
Under the BVI Act, two or more BVI companies may merge or consolidate in accordance with the statutory provisions. A merger means the merging of two or
more constituent companies into one of the constituent companies, and a consolidation means the uniting of two or more constituent companies into a new
company. In order to merge or consolidate, the directors of each constituent BVI company must approve a written plan of merger or consolidation which must
be authorized by a resolution of shareholders. One or more BVI companies may also merge or consolidate with one or more companies incorporated under the
laws of jurisdictions outside the BVI, if the merger or consolidation is permitted by the laws of the jurisdictions in which the companies incorporated outside
the BVI are incorporated. In respect of such a merger or consolidation a BVI company is required to comply with the provisions of the BVI Act and a company
incorporated outside the BVI is required to comply with the laws of its jurisdiction of incorporation.
Inspection of Books and Records
Under Delaware corporate law, any shareholder of a corporation may for any proper purpose inspect or make copies of the corporation’s stock ledger, list of
shareholders and other books and records. Under BVI law, members of the general public, on payment of a nominal fee, can obtain copies of the public records
of a company available at the office of the BVI Registrar of Corporate Affairs which will include the company’s certificate of incorporation, its memorandum
and articles of association (with any amendments) and records of license fees paid to date and will also disclose any articles of dissolution, articles of merger
and a register of charges if the company has elected to file such a register.
A shareholder of a BVI company is entitled, on giving written notice to the company, to inspect:
(1) the memorandum and articles;
(2) the register of members;
(3) the register of directors; and
(4) the minutes of meetings and resolutions of shareholders and of those classes of members of which he or she is a shareholder; and to make copies of or take
extracts from the documents and records referred to in (1) to (4) above.
However, subject to the memorandum and articles, the directors may, if they are satisfied that it would be contrary to the company’s interests to allow a
shareholder to inspect any document, or part of a document, specified in (b), (c) or (d) above, refuse to permit the shareholder to inspect the document or limit
the inspection of the document, including limiting the making of copies or the taking of extracts from the records.
Where a company fails or refuses to permit a shareholder to inspect a document or permits a shareholder to inspect a document subject to limitations, that
shareholder may apply to the BVI courts for an order that he should be permitted to inspect the document or to inspect the document without limitation.
A BVI company is required to keep at the office of its registered agent the memorandum and articles of the company; the register of shareholders maintained or
a copy of the register of shareholders; the register of directors or a copy of the register of directors; and copies of all notices and other documents filed by the
company in the previous ten years.
Where a company keeps a copy of the register of shareholders or the register of directors at the office of its registered agent, it is required to notify any changes
to the originals of such registers to the registered agent, in writing, within 15 days of any change; and to provide the registered agent with a written record of
the physical address of the place or places at which the original register of shareholders or the original register of directors is kept. Where the place at which the
original register of shareholders or the original register of directors is changed, the company is required to provide the registered agent with the physical
address of the new location of the records within fourteen days of the change of location.
A BVI company is also required to keep at the office of its registered agent or at such other place or places, within or outside the BVI, as the directors
determine the minutes of meetings and resolutions of shareholders and of classes of shareholders; and the minutes of meetings and resolutions of directors and
committees of directors. If such records are kept at a place other than at the office of the company’s registered agent, the company is required to provide the
registered agent with a written record of the physical address of the place or places at which the records are kept and to notify the registered agent, within 14
days, of the physical address of any new location where such records may be kept.
A BVI company is also required keep at the office of its registered agent or at such other place or places, within or outside the BVI, as the directors may
determine, the records and underlying documentation of the company which shall be in such form as are sufficient to show and explain the company’s
transactions and will, at any time, enable the financial position of the company to be determined with reasonable accuracy. If such records and underlying
documentation are kept at a place other than at the office of the company’s registered agent, the company is required to provide the registered agent with a
written record of the physical address of the place or places at which the records and underlying documentation are kept and of the name of the person who
maintains and controls the company’s records and underlying documentation and to notify the registered agent, within 14 days, of any change to such details.
Conflict of Interest
Under Delaware corporate law, a contract between a corporation and a director or officer, or between a corporation and any other organization in which a
director or officer has a financial interest, is not void as long as the material
facts as to the director’s or officer’s relationship or interest are disclosed or known and either a majority of the disinterested directors authorizes the contract in
good faith or the shareholders vote in good faith to approve the contract. Nor will any such contract be void if it is fair to the corporation when it is authorized,
approved or ratified by the board of directors, a committee or the shareholders.
The BVI Act provides that a director shall, forthwith after becoming aware that he is interested in a transaction entered into or to be entered into by the
company, disclose that interest to the board of directors of the company. The failure of a director to disclose that interest does not affect the validity of a
transaction entered into by the director or the company, so long as the director’s interest was disclosed to the board prior to the company’s entry into the
transaction or was not required to be disclosed because the transaction is between the company and the director himself and is otherwise in the ordinary course
of business and on usual terms and conditions.
As permitted by BVI law and our memorandum and articles of association, a director interested in a particular transaction may generally vote on it, attend
meetings at which it is considered and sign documents on our behalf which relate to the transaction, or do any other thing in his capacity as director that relates
to the transaction. However, under our memorandum and articles there is an exception relating to any transaction, agreement or arrangement with respect to
which (i) Expedia is a counterparty or has a material economic interest in the counterparty or (ii) in the reasonable opinion of a majority of the members of our
board that are not designated or nominated by, or employed by, Expedia, there would exist a conflict of interest (as defined in our memorandum and articles of
association) between the interests of Expedia, on the one hand, and that of the Company, on the other hand. In such circumstances, subject to certain
conditions, the directors appointed by Expedia may be excluded from the relevant portion of the board or committee meeting.
Our memorandum and articles also contain an acknowledgment that the Company and its affiliates may engage in the same, similar or related lines of business
as those engaged in by Expedia and that the Company may have an interest in the same areas of business opportunity as Expedia. Our memorandum and
articles provide that, to the fullest extent permitted by law but subject to compliance with any confidentiality obligations owed to the Company, directors of the
Company appointed by Expedia may (without any liability or any duty to account for profits) refer potential business opportunities to Expedia (and shall have
no obligation to refer such potential business opportunities to the Company) which may pursue them without any restriction or liability, unless the potential
business opportunity was presented or offered to the director solely in his or her capacity as a director of the Company or for the benefit of the Company.
Furthermore, even a potential business opportunity presented or offered to a director appointed by Expedia solely in his or her capacity as a director of the
Company or for the benefit of the Company may be referred to and pursued by Expedia in the event our board of directors (excluding the directors appointed
by Expedia) declines to pursue such an opportunity.
Transactions with Interested Shareholders
Delaware corporate law contains a business combination statute applicable to Delaware public corporations whereby, unless the corporation has specifically
elected not to be governed by that statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business combinations with
an “interested shareholder” for three years following the date that the person becomes an interested shareholder. An interested shareholder generally is a person
or group who or that owns or owned 15% or more of the target’s outstanding voting stock within the past three years. This has the effect of limiting the ability
of a potential acquirer to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other
things, prior to the date on which the shareholder becomes an interested shareholder, the board of directors approves either the business combination or the
transaction that resulted in the person becoming an interested shareholder. This encourages any potential acquirer of a Delaware public corporation to negotiate
the terms of any acquisition transaction with the target’s board of directors.
BVI law has no comparable provision. As a result, we cannot avail ourselves of the types of protections afforded by the Delaware business combination statute.
However, although BVI law does not expressly regulate transactions between a company and its significant shareholders, it does provide that transactions by
the Company must be entered into bona fide in the best interests of the company and not with the effect of oppressing or constituting a fraud on the minority
shareholders.
Independent Directors
There are no provisions under Delaware corporate law or under the BVI Act that require a majority of our directors to be independent.
Cumulative Voting
Under Delaware corporate law, cumulative voting for elections of directors is not permitted unless the company’s certificate of incorporation specifically
provides for it. Cumulative voting potentially facilitates the representation of minority shareholders on a board of directors since it permits the minority
shareholder to cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power with respect to electing
such director. There are no prohibitions to cumulative voting under the laws of the British Virgin Islands, but our memorandum of association and articles of
association do not provide for cumulative voting.
Shareholders’ Suits
The enforcement of the Company’s rights will ordinarily be a matter for our directors. However, in certain limited circumstances, a shareholder may have the
right to seek certain remedies against us in the event the directors are in breach of their duties under the BVI Act. Pursuant to Section 184B of the BVI Act, if a
company or director of a company engages in, proposes to engage in or has engaged in, conduct that contravenes the provisions of the BVI Act or the
memorandum or articles of association of the company, a BVI court may, on application of a shareholder or director of the company, make an order directing
the company or director to comply with, or restraining the company or director from engaging in conduct that contravenes, the BVI Act or the memorandum or
articles. Furthermore, pursuant to Section 184I of the BVI Act a shareholder of a company who considers that the affairs of the company have been, are being
or are likely to be, conducted in a manner that is, or any acts of the company have been, or are likely to be, oppressive, unfairly discriminatory or unfairly
prejudicial to him in that capacity, may apply to the BVI court for an order which can, if the court considers that it is just and equitable to do so, require the
company or any other person to pay compensation to the shareholders (among various other potential orders and remedies). Under Section 184G of the BVI
Act, a shareholder of a company may bring an action against the company for breach of a duty owed by the company to him as a shareholder.
Under Section 184C of the BVI Act, a shareholder also may, with the permission of the BVI court, bring an action or intervene in a matter in the name of the
company, in certain circumstances. Such actions are known as derivative actions. The BVI court may only grant permission to bring a derivative action where
the following circumstances apply: (i) the company does not intend to bring, diligently continue or defend or discontinue proceedings; or (ii) it is in the
interests of the company that the conduct of the proceedings not be left to the directors or to the determination of the shareholders as a whole.
When considering whether to grant leave, the BVI court is also required to have regard to the following matters: whether the shareholder is acting in good
faith; whether a derivative action is in the interests of the company, taking into account the directors’ views on commercial matters; whether the proceedings
are likely to succeed; the costs of the proceedings in relation to the relief likely to be obtained; and whether an alternative remedy is available.
Any shareholder of a company may apply to BVI court under the Insolvency Act, 2003 of the BVI for the appointment of a liquidator to liquidate the company
and the court may appoint a liquidator for the company if it is of the opinion that it is just and equitable to do so.
Generally any other claims against a BVI company by its shareholders must be based on the general laws of contract or tort applicable in the BVI or their
individual rights as shareholders as established by the BVI Act or the company’s memorandum and articles of association. There are also common law rights
for the protection of shareholders that may be invoked, largely derived from English common law. Under general English company law known as the rule in
Foss v. Harbottle, a court will generally refuse to interfere with the management of a company at the insistence of a minority of its shareholders who express
dissatisfaction with the conduct of the company’s affairs by the majority or the board of directors. However, every shareholder is entitled to seek to have the
affairs of the company conducted properly according to law and the constituent documents of the corporation. As such, if
those who control the company have persistently disregarded the requirements of company law or the provisions of the company’s memorandum and articles of
association, then the courts may grant relief. Generally, the areas in which the courts may intervene are the following: a company is acting or proposing to act
illegally or beyond the scope of its authority; the act complained of, although not beyond the scope of the authority, could only be effected if duly authorized by
more than the number of votes which have actually been obtained; the individual rights of the plaintiff shareholder have been infringed or are about to be
infringed; or those who control the company are perpetrating a “fraud on the minority.”
Appraisal Rights
The BVI Act provides that any shareholder of a BVI company is entitled to payment of the fair value of his shares upon dissenting from any of the following:
(a) a merger if the company is a constituent company, unless the company is the surviving company and the shareholder continues to hold the same or similar
shares; (b) a consolidation if the company is a constituent company; (c) any sale, transfer, lease, exchange or other disposition of more than 50% in value of the
assets or business of the company if not made in the usual or regular course of the business carried on by the company (unless, as in our case, such appraisal
right is excluded in the memorandum and articles of association) but not including: (i) a disposition pursuant to an order of the court having jurisdiction in the
matter, (ii) a disposition for money on terms requiring all or substantially all net proceeds to be distributed to the shareholders in accordance with their
respective interest within one year after the date of disposition, or (iii) a transfer pursuant to the power of the directors to transfer assets for the protection
thereof; (d) a compulsory redemption of 10% or fewer of the issued shares of the company required by the holders of 90% or more of the shares of the
company pursuant to the terms of the BVI Act; and (e) an arrangement, if permitted by the BVI court.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii)
CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
[***] indicates the redacted confidential portions of this exhibit.
SECOND AMENDED AND RESTATED LODGING OUTSOURCING AGREEMENT
AMONG
TRAVEL RESERVATIONS S.R.L,
DECOLAR.COM, INC.,
DESPEGAR.COM, CORP.,
AND
EXPEDIA, INC.
DATED
SEPTEMBER 13, 2024
TABLE OF CONTENTS
1. DEFINITIONS 1
2. LODGING SUPPLY 13
3. ECONOMIC TERMS 25
4. CONFIDENTIALITY 31
5. DATA; SECURITY 33
6. INTELLECTUAL PROPERTY; LICENSE 35
7. REPRESENTATIONS, WARRANTIES AND COVENANTS 37
8. COMPLIANCE; PROHIBITED ACTIVITIES; TERMS AND CONDITIONS; ADDITIONAL COVENANTS 39
9. INDEMNIFICATION 43
10. LIMITATION OF LIABILITY 47
11. TERM AND TERMINATION 48
12. TAXES. 50
13. DISPUTE RESOLUTION 53
14. RELEASES/PUBLICITY 54
15. GENERAL 54
i
SECOND AMENDED AND RESTATED LODGING OUTSOURCING AGREEMENT
This Second Amended and Restated Lodging Outsourcing Agreement, dated September 13, 2024 (this “Agreement”), is among
Expedia, Inc., a Washington corporation (“Expedia”), Travel Reservations S.R.L, a Uruguay corporation (“Travel Reservations”), Decolar.com,
Inc., a Delaware Corporation (“Decolar Parent”, and together with Travel Reservations, jointly and severally, “Decolar”) and Despegar.com,
Corp., a British Virgin Islands entity (“Decolar PubCo,” and together with Decolar Parent, each, a “Guarantor”).
WHEREAS, as of the date of this Agreement, Expedia owns 9,590,623 shares of common stock of Decolar Parent (the “Transaction
Shares”);
WHEREAS, Decolar currently operates Travel Solutions in which it has access to and markets lodging reservations;
WHEREAS, Decolar wishes Expedia via its Affiliates to provide rates and availabilities for the Decolar Platform for properties as set
forth herein via an API or other tools provided by Expedia;
WHEREAS, on July 12, 2017, the Parties entered into that certain Lodging Outsourcing Agreement, as amended and restated on
November 15, 2019 (as further amended, supplemented or otherwise modified from time to time (the “Existing Agreement”)), which agreement
the Parties agree will be terminated and cease to be in effect as of January 1, 2025 (the “Effective Date”); and
WHEREAS, Decolar Parent and Decolar PubCo intend to fully and unconditionally guarantee the performance and payment of Decolar
under this Agreement.
THEREFORE, for good and valuable consideration which each of the Parties hereby acknowledge, the Parties hereby amend and
restate the Existing Agreement as follows:
1.
DEFINITIONS
1.1
As used in this Agreement, the following terms have the following specified meanings:
“Accountant” means a certified public accounting firm chosen by the Parties from one of: KPMG, Ernst & Young, Deloitte and
PricewaterhouseCoopers.
“Affiliate” of a Person (for the purposes of this definition, the “First Person”) means another Person that either directly or indirectly,
through one or more intermediaries, Controls, is Controlled by or is under common Control with, the First Person. The term “Affiliate” with
respect to Expedia will mean Expedia, and only those Persons over which Expedia Group, Inc., a Delaware corporation, has Control and will not
be interpreted to include any of the following: (a) IAC/InterActiveCorp and its Affiliates (other than Expedia and its subsidiaries), (b) Liberty
Interactive Corporation and its Affiliates (other than Expedia and its subsidiaries), (c) trivago GmbH and its subsidiaries or (d) Decolar PubCo
and its Subsidiaries; provided, that in the case of clause (a) such Person shall be considered an Affiliate if such Person becomes and remains a
direct or indirect wholly owned Subsidiary of Expedia, Inc. a Delaware corporation. For purposes of this Agreement, (i) neither Decolar nor its
Affiliates will be deemed to be Affiliates of Expedia and its Affiliates and (ii) neither Expedia nor any of its Affiliates will be deemed to be
Affiliates of Decolar and its Affiliates. The term “Affiliate” with respect to Decolar will mean Decolar PubCo and only those Persons over which
Decolar PubCo has Control.
1
“Affiliate-Collect Booking” means an Expedia-Sourced Travel Booking for which the Room Revenue is collected from the End User by
Decolar at the time of the Transaction.
“Agreement” means this Second Amended and Restated Lodging Outsourcing Agreement, including all exhibits and schedules hereto
and all amendments, addenda or restatements hereto and thereto.
“Arbitrator” has the meaning set forth in Section 13.2.
“Bankruptcy Event” means with respect to any person, (i) such person commences a Bankruptcy Proceeding with respect to itself, (ii)
has commenced against it a Bankruptcy Proceeding which remains unstayed or undismissed for a period of 30 days or more, (iii) becomes
generally unable to, or admits in writing its inability to, pay its debts as they become due, or (iv) takes any action in furtherance of, or indicating
its consent to, any of the acts described in clauses (i) through (iv).
“Bankruptcy Proceeding” means any proceeding or other action under any law relating to bankruptcy, insolvency, liquidation of assets,
assignment for the benefit of creditors, conservatorship, moratorium, receivership or otherwise providing temporary or permanent relief to a
debtor, in each case with respect to Decolar or an Affiliate thereof.
“Booking Holdings Group” means (a) Booking Holdings Inc. or any of its Affiliates as it may be constituted at any point in time,
(b) the respective businesses of Booking.com, Priceline.com, Agoda.com, Kayak.com, RentalCars.com (collectively, the “Specified Booking
Operations”), whether or not such businesses remain a part of the operations of Booking Holdings Group Inc. and (c) any future business of
Booking Holdings Inc. which is similar in size and nature to the Specified Booking Operations, whether or not such business remains a part of
the operations of Booking Holdings Inc.
“Bookings Shortfall” has the meaning set forth in Section 2.1.3(a).
“Business Day” means any day on which banks in New York, New York USA, and Buenos Aires, Argentina are open for commercial
banking business during normal banking hours, other than Saturday, Sunday or any federal or national holiday in the United States or Argentina.
For payment purposes, Business Day shall refer to the place of issuance of payment, which may be Brazil, Mexico, Uruguay, USA or any other
that the Parties may agree on from time to time.
“Change of Control” means (a) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all the assets of
Decolar Parent and its Subsidiaries, taken as a whole, to any Strategic Party or (b) the acquisition by any Strategic Party, in a single transaction
or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership, of more
than 50% of the total voting or economic power of the securities of Decolar Parent or any direct or indirect parent of Decolar Parent.
“Claims” has the meaning set forth in Section 9.1.
“Compensation” means the amount of compensation designated as a commission or, for a non-commissionable rate, as a margin or
facilitation fee, that Expedia or any of its Affiliates receives or is entitled to retain from amounts received from Decolar or any of its Affiliates,
an End User, other third party or the Travel Supply Provider, in each case, solely and directly in respect of a specific Travel Booking, excluding
any and all Indirect Revenues, Service Fees, any Taxes and net of any amounts relating to fraud, cancellations, refunds or otherwise.
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“Confidential Customer Personal Data” means any of the following information with respect to any individual: (a) contact
information, including name, street address, phone number, and email address; (b) IP address (depending on circumstances); (c) demographic
information (when linked to an individual); (d) date of birth or age; and (e) citizenship.
“Confidential Information” has the meaning set forth in Section 4.1.
“Consumed” means, in the context of a Transaction, that the accommodation underlying such Transaction has actually been provided to,
and consumed by, the End User by the relevant lodging Travel Supply Provider or other provider and that the Compensation for such Transaction
has been retained or otherwise received by Expedia or its Affiliates.
“Consumed Travel Booking” has the meaning set forth in Section 3.1.1.
“Control” means, with regard to any entity, the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of such entity. A person who holds the legal or beneficial ownership, directly or indirectly, of fifty percent (50%) or
more of the shares (or other ownership interest, if not a corporation) of such entity through voting rights or through the exercise of rights
pursuant to agreement shall be presumed to have control of such entity, in the absence of proof by a preponderance of the evidence to the
contrary.
“Copyright Act” means the United States Copyright Act of 1976, as amended from time to time.
“Costs” shall mean any and all costs, fees, contra-revenues or other expenses consistent with Expedia’s accounting policies and
procedures, which, in each case, is in connection with this Agreement.
“Costs of Service” means any and all direct or indirect Costs arising out of, or related to, the servicing of a Transaction in connection
with, or following the completion, of the booking, including Goodwill Modifications, refunds, chargebacks, relocations, disputes, uncollected
payments, penalties, fines, customer support and service and other fees.
“Costs of Service Percentage” means [***]% or, if applicable, such percentage as determined from time to time in accordance with
Section 3.6.
“Credit Card Fraud Costs” means any and all direct or indirect Costs related to, or arising out of, fraud, including amounts rebated,
repaid, or refunded to any third party, including issuing banks, other credit and other payment card processors, merchants and Travel Supply
Providers, in each case in connection with any Transaction.
“Credit Card Fraud Percentage” means [***]% or, if applicable, such percentage as determined from time to time in accordance with
Section 3.6.
“Credit Card Transaction Costs” means any and all direct or indirect Costs that are charged by payment processing providers or
services, including credit and other payment card fees, merchant fees, payment exchange systems fees (including Bitcoin and other electronic
and/or future currencies) and any and all interest and other charges associated with such payments, which are paid in connection with any
Transaction.
“Credit Card Transaction Percentage” means [***]% or, if applicable, such percentage as determined from time to time in accordance
with Section 3.6.
3
“Customer Personal Data” means any Highly Sensitive Customer Personal Data, Highly Sensitive Customer Personal Data and
Confidential Customer Personal Data.
“Decolar” has the meaning set forth in the preamble to this Agreement.
“Decolar API” means Decolar’s XML application protocol interface, or any future method, conduit or medium of delivery or access,
which makes Decolar Travel Products available for booking by customers on any third-party Travel Solution.
“Decolar Application” has the meaning set forth in Section 2.1.2(a).
“Decolar Brand” means the Trademarks “Decolar” and “Despegar”, “Best Day”, “HotelDO”, “Stays”, “Viajes Falabella”, “Viajanet” or
any other future brand that under which Decolar PubCo or any of its Subsidiaries operates.
“Decolar Channel” has the meaning set forth in Section 8.4.1(a).
“Decolar Customer Personal Data” has the meaning set forth in Section 5.1.2(a).
“Decolar Excluded Solutions” has the meaning given in Section 2.1.3(a).
“Decolar Indemnified Parties” has the meaning set forth in Section 9.1.
“Decolar Obligations” has the meaning set forth in Section 3.5.1.
“Decolar Parent” has the meaning set forth in the preamble to this Agreement.
“Decolar Platform” means any platform or Travel Solution owned, operated, facilitated, supported, or supplied by, or on behalf of,
Decolar or its Affiliates to offer bookings of Travel Products, including Decolar’s desktop and mobile Websites, telesales services and systems,
mobile applications, offline sales, and any other tools, applications (including the Decolar Application) or mediums now or hereafter developed,
whether or not branded with a Decolar Brand.
“Decolar Privacy Policy” has the meaning set forth in Section 5.1.1.
“Decolar Predatory” has the meaning set forth in Section 8.4.1(a).
“Decolar PubCo” has the meaning set forth in the preamble to this Agreement
“Decolar Territory” means all countries in the South American continent and the countries of Anguilla, Antigua and Barbuda, Aruba,
Bahamas, Barbados, Belize, Bermuda, Bonaire, British Virgin Islands, Cayman Islands, Costa Rica, Cuba, Curaçao, Dominica, Dominican
Republic, El Salvador, Grenada, Guadeloupe, Guatemala, Haiti, Honduras, Jamaica, Martinique, Mexico, Montserrat, Nicaragua, Panama,
Puerto Rico, Saba, Saint Barthélemy, Saint Kitts and Nevis, Saint Lucia, Saint Martin, Saint Vincent and the Grenadines, Sint Eustatius, Sint
Maarten Trinidad and Tobago, Turks and Caicos Islands and U.S. Virgin Islands.
“Decolar Transactional Data” has the meaning set forth in Section 5.1.3(b).
“Decolar Travel Product” means any Travel Product which is offered, made available or otherwise permitted to be booked by, through
or on behalf of Decolar and/or its Affiliates (other than Expedia-Sourced Travel Bookings).
4
“Disclosing Party” has the meaning set forth in Section 4.1.
“Dispute” means any dispute, controversy or disagreement between the Parties arising out of, or relating to, any provision in this
Agreement, including its negotiation, validity, interpretation, existence, breach, termination, construction or application, or the rights or
obligations of, or compliance with such rights and obligations by, any Party, or the relationship between the Parties.
“Effective Date” has the meaning set forth in the Recitals.
“Employer” has the meaning set forth in Section 15.3.
“End User” means a Person that is a consumer of a Travel Product.
“Excluded Providers” has the meaning set forth in Section 8.4.1(d).
“Existing Agreement” has the meaning set forth in the Recitals.
“Expedia” has the meaning set forth in the preamble to this Agreement.
“Expedia Account” has the meaning set forth in Section 3.3.4.
“Expedia API” means Expedia’s XML application protocol interface, or any future method, conduit or medium of delivery or access,
which makes Expedia’s travel products and services available for booking by customers on any third-party Travel Solution, including through
the Decolar Platform.
“Expedia Incremental Taxes” means any additional Taxes imposed on or payable by Expedia or any of its Affiliates arising out of or
resulting from the failure by Decolar to, with respect to any Expedia-Sourced Travel Bookings booked after the date of this Agreement,
separately state any Service Fees charged by Decolar from the Room Rate.
“Expedia Indemnified Parties” has the meaning set forth in Section 9.2.
“Expedia Information” has the meaning set forth in Section 6.1.1.
“Expedia Share of Wallet” has the meaning set forth in Section 2.1.3(a)
“Expedia-Sourced Travel Bookings” means Travel Bookings of Expedia Travel Products sourced through the Expedia API which are
made on or through the Decolar Application or Decolar Platform.
“Expedia Specifications” has the meaning set forth in Section 2.1.2(a)
“Expedia Transactional Data” has the meaning set forth in Section 5.1.3(a)
“Expedia Travel Product” means any Travel Product (including any Vrbo Properties provided pursuant to Section 2.5), which is
offered, made available or otherwise permitted to be booked (existing now or made available in the future) by, through or on behalf of Expedia
and/or its Affiliates.
“Expedia Travel Solution” means a Travel Solution operated by or on behalf of, or otherwise powered (whether through the provision
of Travel Products, technology or otherwise), supported or facilitated by Expedia or its Affiliates through the use of an Expedia Platform.
5
“Expedia Travel Solution Taxes” means all Travel Solution Taxes (other than any Expedia Incremental Taxes) that are or may be
imposed or incurred, with respect to any Expedia-Sourced Travel Bookings booked after [***] to be paid, remitted or forwarded by or on behalf
of Expedia or its Affiliates to any Travel Supply Provider or any Governmental Authority. For the avoidance of doubt, Transaction Taxes and
Expedia Incremental Taxes are not included in Expedia Travel Solution Taxes.
“Expedia Travel Unclaimed Property Liabilities” has the meaning set forth in Section 12.2.2.
“Final Determination” has the meaning set forth in Section 12.4.
“Foregone Gross Profit” has the meaning set forth in Section 2.1.3(a).
“Goodwill Modifications” has the meaning set forth in Section 2.1.8(b).
“Governmental Authorities” means any national, state, provincial, municipal or local or similar governments, regulatory or taxing
authorities, governmental departments, agencies, commissions, bureaus, officials, ministers, courts, bodies, boards, tribunals, or dispute
settlement panels or other Law, rule or regulation-making organizations or entities (including any travel industry regulatory or administrative
body): (i) having or purporting to have jurisdiction on behalf of any nation, territory, state, or other geographic or political subdivision of any of
them; or (ii) exercising, or entitled or purporting to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing
authority or power over a Party or any Affiliate.
“Gross Booking Value” or “GBV” means, for each Measurement Period, the total amount actually collected, or which should have been
collected, or that will be collected when a Travel Booking is Consumed, from an End User (in each case, excluding the impact of any coupons,
credits, promotions or other discounts offered or provided by a party other than Expedia) with respect to a Travel Booking by the End User.
“Gross Profit” means, for any relevant period, an amount equal to (a) GBV received by Expedia or Decolar for each Expedia-Sourced
Travel Booking in each case for a Consumed Travel Booking excluding any and all Indirect Revenues, Service Fees, any Taxes and net of any
amounts relating to fraud, cancellations, refunds or otherwise, less (b) without duplication, Costs associated with any debit memo, replacement
room nights, chargebacks, and cancellation fees where applicable, less (c) the cost of providing the room accommodation reservation; less
(d) without duplication, the product of (i) the sum (A) where Expedia or its Affiliate processes a credit card for a Transaction, the Credit Card
Fraud Percentage plus Credit Card Transaction Percentage; plus (B) the Cost of Service Percentage; and plus (C) for each Property-Collect
Booking Transaction, [***]% and (ii) such GBV, and less (e) if, for any applicable period of determination, the Decolar Obligations exceed two
times the Posted Collateral, the product of (1) the Insurance Cost Percentage and (2) one (1) less the quotient of (x) two times Posted Collateral
over (y) Decolar Obligations, each of the foregoing in this clause (e) calculated for such period based on an average daily basis (the amount in
subpart (e), the “Excess Insurance Cost”).
“Guarantors” has the meaning set forth in the preamble to this Agreement.
“Guest Reviews” means any reviews by customers for a given Expedia Travel Product included within Expedia Information.
“Highly Sensitive Customer Personal Data” means any of the following information with respect to any individual: (a)
financial/payment account numbers, including credit/debit card numbers; (b) authentication data, such as passwords or PINs, for financial or
medical accounts; (c) social security
6
numbers and other national identification numbers; (d) driver’s license number; (e) passport numbers; (f) email addresses; (g) telephone
numbers; and (h) data related to racial or ethnic origin, political opinions, moral, religious or philosophical views, trade union affiliations, health
and/or sexual preferences.
“Indemnified Party” has the meaning set forth in Section 9.3.
“Indemnifying Party” has the meaning set forth in Section 9.3.
“Indirect Revenues” means, for a given period, the aggregate amount (without duplication) of any revenues received by a Party or its
Affiliates indirectly related to any Travel Bookings or other transactions through a Travel Solution, including Overrides, marketing funds from
Travel Supply Providers or other third parties, bonus payment processing revenues (such as credit card fees and rebates), and vendor bonuses.
“Initiative” means a data sharing initiative being carried out amongst Decolar, Expedia, and [***] with the purpose of increasing
bookings of applicable Expedia Sourced Travel Bookings through the Decolar Application or Decolar Platform.
“Initiative Data” means Gross Booking Value, Room Revenue, net room nights, average daily rate, booking window, length of stay, and
rate plan mix, and any other data agreed upon by the parties in writing.
“Insurance Costs Percentage” means [***]% or, if applicable, such percentage as determined from time to time in accordance with
Section 3.6.
“Intellectual Property Rights” means all technology, intellectual property or other proprietary rights in any jurisdiction (including
People’s Republic of China) including: (i) rights in, arising out of, or associated with published and unpublished works of authorship, including
rights in audiovisual works, collective works, computer programs (whether in source code or executable form and whether in open source or
proprietary form), documentation, compilations, databases, derivative works, literary works, maskworks, and sound recordings, and rights
granted under the Copyright Act or any similar Law of another jurisdiction; (ii) rights in, arising out of, or associated with databases, data
compilations and collections and technical data; (iii) rights in, arising out of, or associated with inventions, discoveries, improvements, business
methods, compositions of matter, machines, methods and processes and new uses for any of the preceding items, including rights granted under
the Patent Act or any similar Law of another jurisdiction; (iv) rights in, arising out of, or associated with Trademarks, including without
limitation rights granted under the Lanham Act or any similar Law of another jurisdiction and under the common law; (v) rights in, arising out
of, or associated with information that is not generally known or readily ascertainable through proper means, whether tangible or intangible,
including algorithms, customer lists, ideas, designs, formulas, know-how, methods, processes, programs, prototypes, systems and techniques,
including rights granted under the Uniform Trade Secrets Act or any similar Law of another jurisdiction; (vi) rights in, arising out of, or
associated with a person’s name, voice, signature, photograph, persona, or likeness, including rights of personality, privacy, and publicity;
(vii) rights of attribution and integrity and other moral rights of an author; and (viii) rights in, arising out of, or associated with domain names,
social media handles and other identifiers, web addresses and Websites.
“Interest Rate” means a rate per annum equal to the Secured Overnight Financing Rate for borrowings of a three (3)-month period as
published by the CME Group Benchmark Administration Limited, or, if not published thereby, in another authoritative source selected by the
Parties), on the date
7
such payment was required to be made (or, if unavailable, on the next preceding date for which such quotation is available) plus 500 basis points.
“Investors’ Rights Agreement” means that certain Fifth Amended and Restated Investors’ Rights Agreement, entered into as of
March 6, 2015, by and among Decolar Parent and the Stockholders (as defined therein).
“Lanham Act” means the Lanham (Trademark) Act, 17 U.S.C. §§ 1051 et seq.
“Laws” means any law, common law, rule, statute, regulation, by-law, order, ordinance, protocol, code, guideline, treaty, policy, notice,
direction or judicial, arbitral, administrative, tribunal, ministerial or departmental judgment, award, decree, treaty, directive, or other requirement
or guideline published or in force at any time during the Term, which applies to or is otherwise intended to govern or regulate either or both
Parties, property, transaction, activity, event or other matter, including any rule, order, judgment, directive or other requirement or guideline;
provided, however, that in respect of any of the foregoing it is issued by any Governmental Authority. For the avoidance of doubt, Law includes
Privacy Law.
“Licensee” has the meaning set forth in Section 6.2.
“Licensor” has the meaning set forth in Section 6.2.
“Marketing Fee Payments” has the meaning set forth in Section 3.2.1.
“Marketing Fee Statement” has the meaning set forth in 3.4.1.
“Marketing Fees” has the meaning set forth in Section 3.1.1.
[***].
“Materials” has the meaning set forth in Section 6.2.
“Merchant of Record” means a Person collecting revenues and any other amounts (including amounts in respect of Taxes) from End
Users or other parties on behalf of another Person with respect to any Travel Bookings of (or other transactions through a Travel Solution in
respect of) Travel Products offered by such other Person.
“Minimum Bookings Percentage” has the meaning set forth in Section 2.1.3(a).
“NOC Transition Date” means the date on which Expedia notifies Decolar that (i) Decolar has completed certain developments, to
Expedia’s reasonable satisfaction, that are necessary in order for net remittance of Travel Bookings to be enacted, including but not limited to
integrating a new set of API profiles/client dentifications and enacting the changes for the Mexican point of sale required under this Agreement,
and (ii) both parties are capable of processing net remittance of Travel Bookings.
“Non-Refundable Travel Booking” means any Expedia-Sourced Travel Booking that cannot be cancelled without eliminating all rights
of the applicable Travel Supply Provider to any portion of the Room Revenue in respect of such Expedia-Sourced Travel Booking.
“Notice” has the meaning set forth in Section 15.9.
“OFAC” has the meaning set forth in Section 7.2.1.
8
“Overrides” means, for a given period, the aggregate amount (without duplication) of any and all remuneration of any kind paid by a
Travel Supply Provider to Expedia or its Affiliates which remuneration is, or was, contingent upon the achievement of one or more performance
metrics.
“Package” has the meaning set forth in Schedule 4.
“Party” means any of Decolar, Decolar Parent or Expedia; and “Parties” means Decolar, Decolar Parent, and Expedia, collectively.
“Patent Act” means the U.S. Patent Act, 35 U.S.C. §§ 1 et seq.
“Payment” means any payment due and payable from one Party under this Agreement to the other Party, including Marketing Fee
Payments, Room Revenue Payments, etc.
“Payment Card Industry Data Standard Security Requirements” means those payment card industry data standard security
requirements and integrated cardholder information security program established by the major credit card network entities with respect to the
security requirements imposed on services providers supporting debit, credit, prepaid or other payment cards.
“Person” means any individual, sole proprietorship, partnership, firm, entity, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, body corporate or Governmental Authority.
“Pre-Approved Eligible Bank” means [***], provided that such list may be modified from time to time by Expedia in good faith to
remove a financial institution or add a financial institution located in the United States.
“Privacy Law” means any applicable Law in any jurisdiction relating to the collection, use, storage or disclosure of information about
an identified or identifiable individual or other Person.
“Posted Collateral” means the Qualifying Letters of Credit and Security Deposit provided pursuant to Section 3.5.
“Property-Collect Booking” means a booking for which the Room Revenue is collected from the End User by the property at the time
of check-out or at a time otherwise agreed by the property and Expedia or its Corporate Affiliates.
“Qualifying Insurance” has the meaning set forth in Section 3.5.
“Qualifying Insurer” means an insurer of international standing and repute with a Standard & Poor’s rating of at least AA (Very
Strong).
“Qualifying Letter of Credit” has the meaning set forth in Section 3.5.1.
“Quarterly Minimum Bookings Statement” has the meaning set forth in Section 3.4.2.
“Receiving Party” has the meaning set forth in Section 4.1.
“Refund Fees” has the meaning set forth in Section 3.4.1.
“Representative” of a Party, means an officer, director, stockholder, employee, agent, advisor or consultant of such Party.
9
“Required Collateral Amount” has the meaning set forth in Section 3.5.1.
“Reserved Liability” has the meaning set forth in Section 9.4.7.
“Restricted Employee” has the meaning set forth in Section 15.3.
“Room Rate” means, for any given Expedia Travel Product, the rate which is provided to Decolar by Expedia through the Expedia API
for such Expedia Travel Product, including the nightly rate, applicable Taxes and fees and any other pricing related information.
“Room Revenue” has the meaning set forth in Section 3.3.
“Room Revenue Payment” has the meaning set forth in Section 3.3.2.
“Sanctions Target” an individual, entity or body that is (i) listed on the EU Consolidated List of Designated Parties, maintained by the
European Union; the Consolidated List of Asset Freeze Targets, maintained by HM Treasury (UK); any other list of designated parties
maintained by the EU or its Member States; the U.S. List of Specially Designated Nationals and Blocked Persons or the U.S. Foreign Sanctions
Evaders List, maintained by OFAC; the U.S. Entity List or the U.S. Denied Persons List, maintained by the U.S. Commerce Department’s
Bureau of Industry and Security; or any list of parties subject to asset-freezing measures issued by the United Nations; (ii) is 50% or more owned
or controlled, directly or indirectly, individually or in the aggregate, by any one or more parties on the foregoing lists; or (iii) is ordinarily
resident, incorporated, or headquartered in any territory that is or becomes subject to comprehensive U.S. economic sanctions, including at the
time of this Agreement Cuba, Iran, North Korea, Syria, and the designated areas of Ukraine.
“Service Fees” means for any Travel Product any services fees or booking fees added to, or otherwise included in, a Room Rate.
“Sort Order” means the sort order in which Travel Products are returned to the Decolar Application and/or the Decolar Platform and
displayed on an applicable Decolar Platform through the Expedia API.
“Stock Repurchase Agreement” means that certain Stock Repurchase Agreement, entered into as of March 3, 2015, by and among
Decolar Parent and the Sellers (as defined therein).
“Stock Subscription Agreement” means that certain Common Stock Subscription Agreement, entered into as of March 3, 2015, by and
among Decolar Parent, Expedia and the Pre-Closing Holders (as defined therein).
“Strategic Party” means any Person other than a single individual which does not directly or indirectly own or Control, any assets or
companies operating (x) in the consumer or corporate travel industry, or (y) as an Internet-enabled provider of travel search or information
services.
“Subsidiary” means, with respect to any Person, any other Person of which at least a majority of the securities or ownership interests
having by their terms ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions is directly
or indirectly owned or controlled by such Person and/or by one or more of its Subsidiaries.
“Tax” or, collectively, “Taxes” means any and all federal, national, state, local, provincial and other taxes, imposts, duties, levies,
assessments and other similar governmental charges and fees imposed
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by any Governmental Authority, including capital gains, occupancy, gross receipts, business, income, profits, sales, use, lodging or
accommodation, value added, goods and services, ad valorem, transfer, franchise, withholding, recapture, stamp duty, excise and property taxes
and other taxes of any nature whatsoever (but not, for the avoidance of doubt, any Unclaimed Property Liabilities), together with all interest,
penalties, and additions imposed with respect to such amounts.
“Tax Returns” has the meaning set forth in Section 12.1.2.
“Term” has the meaning set forth in Section 11.1.
“Trademark” means any words, names, symbols, sounds, devices, designs, and other designations, and combinations of the preceding
items, used to indicate a source of origin or form of certification, including without limitation logos, trade names, trade dress, trademarks and
service marks, in each case, whether or not registered.
“Transaction” means a Travel Booking through the Expedia API.
“Transaction Agreements” means this Agreement, the Stock Repurchase Agreement, the Stock Subscription Agreement, the Investors’
Rights Agreement and the Voting Agreement.
“Transaction Shares” has the meaning set forth in the Recitals.
“Transaction Statement” has the meaning set forth in Section 3.3.1.
“Transaction Taxes” means any and all sales, use, excise, gross receipts, value added, goods and services, occupancy, consumption,
accommodation, tourism and any other similar transfer Taxes that are in the nature of transaction Taxes (and that are not in the nature of business
activity Taxes imposed on, measured by, or based on gross or net income or gross or net receipts that are not transaction Taxes (including, but not
limited to, the Business and Occupation Taxes imposed by the State of Washington or any locality thereof), filing and recordation fees and
similar Taxes, charges and fees incurred with respect to any amounts payable or deemed to be payable to Decolar by Expedia or to Expedia by
Decolar pursuant to this Agreement.
“Transition Term” has the meaning set forth in Section 11.2.3(c).
“Travel Booking” means the booking of a Travel Product.
“Travel Products” means lodging and lodging-like products and services (available now or hereafter fully developed), whether as a
standalone product or a Package, which may be offered for booking by a Party or its Affiliates in its sole discretion from time to time.
“Travel Solution” means any online (including Websites) or offline portal, medium or other channel for consumer activities relating to
travel or travel-related products, services or other offerings, including shopping, booking, reviewing, searching and redeeming of such travel or
travel-related products, offerings and services.
“Travel Solution Taxes” means all Travel Taxes (or amounts in respect of Travel Taxes, but not any costs or expenses) that are or may
be imposed or incurred with respect to any Travel Bookings by or for End Users through Travel Solutions, to be paid, remitted or forwarded by
or on behalf of a Party or its Affiliates to any Travel Supply Provider or any Governmental Authority. For the avoidance of doubt, Transaction
Taxes are not included in Travel Solution Taxes.
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“Travel Supply Provider” means a third-party supplier of any lodging pursuant to a contract between such supplier, on the one hand,
and a Party and/or its Affiliates, on the other hand.
“Travel Taxes” means any and all sales, use, occupancy, lodging, tourism related, excise, gross receipts, value added, ad valorem, goods
and services and other similar types of transfer Taxes, duties, fees, public imposts, or charges and Taxes however designated, and other
transactional Taxes or fees of any kind (including any related interest, penalties and additions to Tax) imposed by any Governmental Authority
that are imposed on, measured by, or in relation to amounts paid for hotel room, lodging, or accommodation rentals, car rentals, tours,
attractions, theme park admissions, show tickets, ground transportation, other in-destination activities, airfare, or other travel-related services,
including services typically provided by online companies and services typically provided in connection with the furnishing of accommodations
and/or travel related products. For the avoidance of doubt and notwithstanding anything to the contrary herein, (i) Transaction Taxes incurred in
connection with amounts payable or deemed payable pursuant to this Agreement shall be borne by Decolar and Expedia in accordance with
Section 12.1.1 (and shall not be considered Travel Taxes), and (ii) Taxes imposed on the net income or net worth of Expedia or Decolar,
respectively, or franchise or other business activity Taxes imposed by a jurisdiction in lieu of net income Taxes where such jurisdiction does not
impose a Tax on net income (including, the Ohio Commercial Activity Tax, the Washington Business and Occupation Tax, the Nevada
Commerce Tax and the Texas Franchise (Margins) Tax), shall be borne by the Person incurring such Taxes (and shall not be considered Travel
Taxes), and Taxes in the nature of business activity Taxes that may be imposed on income with respect to Travel Bookings or Travel Solutions,
such as gross receipts Taxes or general excise Taxes, shall not be treated as Taxes on net income, and therefore shall not be excluded from the
definition of Travel Taxes pursuant to this clause (ii), although the Parties neither concede nor agree that any such Taxes apply to Travel
Bookings or the Travel Solutions as a matter of applicable Law.
“TSF” means the traveler service fee paid by the End User of a Vrbo Transaction, as set out in the Expedia API;
“Unclaimed Property Liabilities” means any and all Losses arising out of or relating to unclaimed property or escheatment
proceedings or claims instituted or otherwise made by or on behalf of any Governmental Authority or other third Person. For the avoidance of
doubt, the Parties neither concede nor agree that any amounts associated with any Travel Bookings or Travel Solution give rise to Unclaimed
Property Liabilities as a matter of applicable Law.
“Uniform Trade Secrets Act” means the Uniform Trade Secrets Act, published by the Uniform Law Commission of 1979, as amended
in 1985.
“USD” or “$” means United States dollars, the lawful currency of the United States of America.
“Voting Agreement” means that certain Third Amended and Restated Voting Agreement entered into as of March 6, 2015, by and
among Decolar Parent and the Stockholders (as defined therein).
“Voyager Materials” has the meaning set forth in Section 6.5.2.
“Voyager Tool” has the meaning set forth in Section 6.5.1.
“Vrbo” means the relevant entity from the following: EG Vacation Rentals Ltd., HomeAway.com Inc., Bookabach Ltd., Stayz Pty Ltd.,
or HomeAway Emerging Markets Pty. Ltd., or any other Group Member of the above as identified in the Vrbo T&Cs for any given Booking.
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“Vrbo Gross Profit” means an amount equal to (a) GBV or TSF received by Expedia or its Affiliates for a Consumed Vrbo Transaction
excluding any and all Indirect Revenues, Service Fees, any Taxes and net of any amounts relating to fraud, cancellations, refunds or otherwise
less, (b) where applicable in relation to a Travel Booking, without duplication, Costs associated with any debit memo, replacement room nights,
charge backs, and cancellation fees where applicable less; (c) the cost of providing the room accommodation reservation; less (d) where
applicable in relation to a Travel Booking, without duplication, the product of (i) (A) where Expedia or its Affiliate processes a credit card for a
Transaction, [***]% of GBV; plus (B) [***]% of GBV for Cost of Service. For Gross Profit based only on TSF, (d) shall not apply.
“Vrbo Transaction” means a Travel Booking of a Vrbo Property through the Expedia API.
“Website” means any and all mediums, tools, instruments, channels and/or methods, now or hereafter developed for the access,
distribution or sharing of information or electronically conducting commerce over a publicly available network, including a website, application
and any and all versions of such sites and/or applications specifically designed and optimized for mobile device, such as a smartphone, tablet
computer or other similar end user device.
1.2
Interpretation. Unless otherwise expressly provided, for purposes of this Agreement the following rules of interpretation shall
apply:
1.2.1
The Parties agree that they have been represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any Law, regulation, holding or rule of construction providing that ambiguities in an agreement or other
document will be construed against the Party drafting such agreement or document.
1.2.2
The language used in this Agreement shall be deemed to be the language chosen by the Parties to express their mutual
intent and no rule of strict construction shall be applied against either Party.
1.2.3
Any reference to any Law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the
context requires otherwise.
1.2.4
Unless otherwise specified herein, any reference to any agreement, document or instrument shall mean such agreement,
document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof.
1.2.5
Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine,
feminine or neutral forms, and the singular form of nouns and pronouns shall include the plural, and vice versa. Where a word or phrase is
defined, each of its other grammatical forms shall have a corresponding meaning.
1.2.6
Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be
followed by the words “without limitation,” unless the context specifies otherwise.
1.2.7
Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done, shall
be calculated by excluding the day on which the period commences and including the day on which the period ends and by extending the period
to the next Business Day following if the last day of the period is not a Business Day.
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1.2.8
Whenever the words “hereunder,” “hereof,” “hereto” and words of similar import are used in this Agreement, they shall
be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof.
1.2.9
The word “or” is used in the inclusive sense of “or.” The terms “or,” “any” and “either” are not exclusive.
1.2.10 Unless otherwise specified herein, whenever a provision of this Agreement requires an approval or consent and the
approval or consent is not delivered within the applicable time limit, then, unless otherwise specified, the Party whose consent or approval is
required shall be conclusively deemed to have withheld its approval or consent.
1.2.11 Unless otherwise specified, all references to money amounts are to the lawful currency of the United States of America.
1.2.12 Headings of Sections are inserted for convenience of reference only and do not affect the construction or interpretation
of this Agreement.
2.
LODGING SUPPLY
2.1
Lodging Supply to Decolar.
2.1.1
Expedia API. Except as otherwise expressly provided herein, at all times, during the Term of this Agreement, Expedia
shall make the then-current version of the Expedia API available to Decolar for use by Decolar and its Affiliates in accordance with the
provisions of this Agreement and the Expedia Specifications. Expedia shall be responsible for any and all costs associated with the standard
development and operations of the Expedia API in the form delivered to Decolar. The Parties acknowledge and agree that this Agreement is
intended to create a white label service that does not reveal Expedia’s or its Affiliates’ branding, Marks and Materials to End Users and
accordingly the same shall not be revealed to third parties except as required by law or this Agreement to Decolar users.
2.1.2
Decolar Application.
(a)
Interface with Expedia API. Decolar shall ensure, in the terms set forth herein, that the Decolar Platform that
interfaces with the then-current version of the Expedia API to enable the exchange of data regarding Expedia Travel Products (the “Decolar
Application”) is and at all times (i) consistent with the then-current version of the Expedia API; and (ii) in accordance with the Expedia API
specifications, including those specifications available at https://developers.expediagroup.com/docs/products/rapid, as in effect from time to time
(the “Expedia Specifications”). At any time upon reasonable prior notice to Decolar, Expedia will have the right to review the usage by Decolar
of, and interface of the Decolar Platform with, the then-current version of the Expedia API. Where Expedia informs Decolar that reasonable
modifications or updates (A) will occur or have occurred to the Expedia API and/or Expedia Specifications as generally applicable to all
applicable third-party commercial recipients of the Expedia API feed or (B) are otherwise necessary or advisable to the Decolar Platform,
Decolar shall use its commercially reasonable efforts to make the necessary modifications to the Decolar Platform to integrate such
modifications or updates promptly and, in any event, as soon as reasonably practicable, but in any event, by the end of the following calendar
quarter.
(b)
Currency of API Calls. Decolar shall ensure that any call to the Expedia API via the Decolar Platform for Expedia
Travel Products shall be made solely in the following currencies: (i) for the Decolar Platform with a Brazilian country code top-level domain
(being .br or com.br or any variation
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thereof) (“Brazilian POS”), in Brazilian Real, (ii) for the Decolar Platform with a Mexican country-code top-level domain (being .mx or
.com.mx or any variation thereof) (“Mexican POS”), Mexican Pesos, and (iii) for any other Decolar Platform in such currency as Expedia may
make available therefor via the Expedia API.
(c)
Measures for Noncompliance. If Decolar fails to comply with any of its obligations under this Section 2.1.2, Expedia
shall be entitled to (i) withhold payment due to Decolar under the Agreement for an amount equal to any losses suffered by Expedia as a result of
such failure, or deduct and withhold on any payment for such amounts to Decolar in order to comply with its or its Affiliates’ obligations under
applicable tax Laws, and (ii) suspend access to the Expedia Travel Products being affected by the corresponding failure, to the extent reasonably
necessary in order for Expedia to address such noncompliance.
2.1.3
Expedia Share of Wallet.
(a)
Defined Terms. The following terms have the following meanings:
“Bookings Shortfall” means, for any Measurement Period, the amount by which the Gross Booking Value of Expedia-Sourced Travel
Bookings on the Decolar Platform for such Measurement Period, irrespective of whether such Expedia-Sourced Travel Booking was Consumed,
fell short of that which would have been required for the Expedia Share of Wallet to equal the Minimum Bookings Percentage.
“Decolar Excluded Solutions” means (a) software systems such as Software-as-a-Service and booking engine offerings enabling third
persons to sell, advertise, promote or distribute products and services but not Decolar Travel Products and Expedia Travel Products (whether or
not branded with or featuring Decolar’s or its Affiliates’ brands), and (b) booking tools and white label sites enabling third parties to offer
bookings of lodging and lodging-like travel products or services (whether or not branded with or featuring Decolar’s or its Affiliates’ brands) but
not Decolar Travel Products and Expedia Travel Products; provided that, such products and services will include Travel Products sold by
licensees of the foregoing solutions from third parties. For the avoidance of doubt, any Decolar Travel Products and Expedia Travel Products that
may be offered through Decolar Excluded Solutions will be subject to the Expedia Share of Wallet and related calculations.
“Expedia Share of Wallet” means, for any Measurement Period, the quotient, expressed as a percentage, of: (a) the Gross Booking
Value (less the value of any cancellations) from Expedia-Sourced Travel Bookings booked, regardless whether Consumed, during such
Measurement Period, divided by (b) the Gross Booking Value of Travel Bookings booked, regardless whether Consumed, (less the value of any
cancellations) on or through the Decolar Platform less the Gross Booking Value of Travel Bookings booked regardless whether Consumed (less
the value of any cancellations) through Decolar Excluded Solutions, in each case during such Measurement Period.
“Foregone Gross Profit” means with respect to a Bookings Shortfall in a Measurement Period, the Gross Profit that would have been
retained or otherwise received by Expedia under this Agreement (the "Expedia Gross Profit") had Expedia-Sourced Travel Bookings been made
with a Gross Booking Value (less the value of any cancellations using the average value of cancellations for such Measurement Period) equal to
the Bookings Shortfall, assuming for such purpose that the amounts described in clauses (b) through (e) of the definition of Gross Profit
constitute the same percentage of Gross Booking Value of the Bookings Shortfall as each did as a percentage of Gross Booking Value for all
Travel Bookings during such Measurement Period. In calculating the Foregone Gross Profit, no regard will be made as to
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whether or not the applicable Travel Booking was Consumed (i.e., the calculations of Gross Profit and GBV will not require a Travel Booking to
be Consumed for the applicable amounts of such Travel Booking being included in the calculation thereof).
“Measurement Period” means each six (6) month period commencing on January 1 and July 1 of each year.
“Minimum Bookings Percentage” means [***]%.
(b)
Share of Wallet Obligation. Decolar shall ensure that the Expedia Share of Wallet is no less than the Minimum
Bookings Percentage in any Measurement Period. By no later than the Measurement Period following that during which a Bookings Shortfall
occurs, Decolar shall cause the Decolar Platform to book Expedia-Sourced Travel Bookings with an aggregate GBV in the amount of such
Bookings Shortfall, in addition to that required to achieve the Minimum Bookings Percentage. The obligation in the preceding sentence and in
the following clause (c), shall not be due to the extent that a Booking Shortfall is attributable to a breach by Expedia of the Agreement.
(c)
Supplier Relevance Makewhole. The Parties agree that: (i) the value of Expedia-Sourced Travel Bookings hereunder
consists not only of the direct profit arising from such transactions but also of the value that generating booking volumes has to Expedia’s
relevance to Travel Suppliers; (ii) the damages suffered by Expedia as a result of a reduction in supplier relevance resulting from a breach of the
foregoing clause (b) (Share of Wallet Obligation) would be impossible to accurately estimate; and (iii) the remedy in the following sentence
constitutes a reasonable estimate of the actual or anticipated harm that might arise from such a breach. Accordingly, in addition to the obligation
described in clause (b) (Share of Wallet Obligations) above, if the Expedia Share of Wallet during any Measurement Period is less than [***]%,
without prejudice to Expedia’s rights under Sections 11.2.3(b) and 11.3.2, if applicable, Decolar shall pay to Expedia, by no later than the end of
the following Measurement Period, an amount equal to the Foregone Gross Profit in respect of the applicable Bookings Shortfall.
(d)
Audit Right. Expedia shall have the right to appoint the Accountant to audit all activity in connection with this Section
2.1.3 (an “Audit”) upon providing at least thirty (30) days prior written notice to Decolar and no more frequently than once per calendar year
(and at one additional time per calendar year if such cost is borne by Expedia). The Parties shall select the Accountant for the Audit and shall
schedule a mutually convenient time for the Audit; provided that any Audit shall be conducted during normal business hours. The cost of the
Audit shall be shared equally between the Parties. The output report of the Audit shall be shared with both Parties. The Audit shall cover, at a
minimum: a full reconciliation at a transactional level of all Travel Bookings, which are itemized on a booking-by-booking basis (including the
following details of the booking: hotel, hotel IDs, dates of stay, GBV, room rate, and Expedia Gross Profit (if any) and the associated supporting
data from Decolar financial systems of record, including without limitation evidence of (1) the total GBV from non-Expedia Travel Bookings
and Expedia Travel Bookings (irrespective of whether the Travel Booking was Consumed); (2) Expedia Gross Profit (irrespective of whether the
Travel Booking was Consumed); and (3) bookings of Packages, including the composition and individual component pricing and allocation of
revenue and gross profit amongst lodging and non-lodging components and, if applicable, cost of each individual component of such package,
unless otherwise provided in this Agreement. The Audit shall encompass Decolar and all of its Affiliates (trading and non-trading).
2.1.4
Decolar as Merchant of Record. Decolar or an Affiliate of Decolar will act as the Merchant of Record on all Expedia-
Sourced Travel Bookings with respect to non-refundable and
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other pay-in-advance bookings of Travel Products, where applicable, that are supplied by Expedia or its Affiliates pursuant to this Agreement,
except for such Expedia-Sourced Travel Bookings for which Expedia and Decolar agree by virtue of using certain booking channels that Expedia
or its Affiliate shall serve as the Merchant of Record, which shall be included in the calculation of the Expedia Share of Wallet.
2.1.5
Display and Pricing Obligations. Decolar and its Affiliates shall display, or cause to be displayed, and shall make
available Expedia Travel Products for booking on the Decolar Platform. The Expedia Travel Products (other than those that are a part of a
Package) shall be displayed on such Decolar Platforms in a manner that (i) is at least as prominent as any other supply provider with the same or
a similar price or compensation for a similar Travel Product, and (ii) does not otherwise discriminate against or purposefully disadvantage such
Expedia Travel Products relative to any other Travel Products offered or made available on such Decolar Platform, whether through sort order,
merchandising campaigns or otherwise. Except as otherwise provided herein, the Sort Order of the Expedia Travel Products shall be displayed
on the Decolar Platforms as determined by Decolar in its sole discretion.
2.1.6
Quality of Expedia Travel Products.
(a)
Expedia Service Level Obligations. If at any time during the Term, the Expedia API (a) fails completely to respond to
the Decolar Application for a period in excess of [***] continuous minutes or (b) fails to respond within [***] seconds on [***]% of list,
availability or reservation requests made by the Decolar Application in accordance herewith in conjunction with completing a Transaction for a
period in excess of [***] continuous minutes (each, an “Expedia Service Level Failure”), then Decolar may switch to other sources of
inventory, subject to Section 8.4.1(d) and Section 2.1.10 (a “Performance Switch”) without any penalty only until such time as the immediately
following time that the Expedia API is again responsive or timely responsive. Expedia agrees that Decolar will be treated substantially similarly
to other similarly situated recipients of lodging supply through the Expedia API in the same geographic region (including Hotels.com and
Expedia’s Affiliates marketing their products in such region) with respect to response times of the Expedia API. In addition, Expedia and Decolar
will work together in seeking optimal solutions for customers with respect to Expedia API and Decolar Platform performance.
(b)
Credit for Performance Switch. [***].
(c)
Parity of Decolar Supply. Expedia shall make such Travel Products available to Decolar through the Expedia API at
rates and availability (other than with respect to (i) limited promotions and (ii) testing optimization) that are substantially equivalent, to those
made available at such time to End Users on the then-current version of the Hotels.com-branded Expedia Travel Solution in the same country in
which the comparison is made (so by way of example, Expedia will make available Travel Products on Hotels.com, the comparison will be made
to the Hotels.com US Website, but only to the extent Expedia or its Affiliates are not, on the advice of counsel, prohibited from making such
Expedia Travel Products available to Decolar and its Affiliates by the terms of the applicable contract between Expedia or its Affiliates and the
applicable Travel Supply Provider with respect to such hotel). Expedia represents that it will not intentionally show bias against Decolar with
respect to the rates and availability of Travel Products on such Hotels.com-branded Expedia Travel Solution relative to other Expedia Travel
Solutions in the corresponding territory.
2.1.7
Expedia Rights. Expedia reserves the right to remove Expedia API access and/or cancel any and all Expedia-Sourced
Travel Bookings, if Decolar or any party which owns or otherwise
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operates any such Decolar Platform (a) does not comply, in all material respects, with rules, regulations or policies for use of the Expedia API as
determined by Expedia reasonable discretion from time to time, including modifications to pricing and/or unauthorized modifications to pricing
display for Expedia Travel Products (whether through couponing, discounting, promotions or otherwise); (b) are identified with inactive Expedia
API access or Decolar and its Affiliate’s sites with no live content for a period of seven (7) days; (c) are non-responsive to correspondence within
reasonable time, reasonable corrections or requests regarding the Expedia API; (d) does not comply, in all material respects, with the payment
provisions under Section 3 or (e) commit any other acts or omissions that, in Expedia’s reasonable sole discretion, may pose material threats to
Expedia’s (i) financial stability, (ii) information/data security, (iii) agreements, licenses or relationships with its Travel Supply Providers and/or
(iv) Expedia’s Intellectual Property Rights, and, in the case of each of the preceding clauses (a), (b), (c) and (e), does not cure the circumstances
described in such clause within a reasonable period of time, which period shall be no less than ten (10) days after notification by Expedia of the
first occurrence thereof; provided, however, (A) in the event of each successive violation of the preceding clauses (b), (c) and (e), Expedia shall
not be obligated to provide any cure period and (B) in the event of more than three successive violations of the preceding clause (a) within any
twelve (12)-month period Expedia shall not be obligated to provide any cure period. In the event that Expedia identifies the volume of queries
originating from Decolar’s use of the Expedia API unduly burdens the Expedia API (or any of the associated systems, network devices or data),
and/or creates capacity-related issues or results in material additional costs, Expedia will promptly notify Decolar in writing of any such
circumstances, and Decolar shall, within 15 days, provide Expedia with a remediation plan to reduce such load or issues to be applied no later
than 15 days thereafter. If Decolar fails to cooperate in making such necessary changes, Expedia reserves the right to restrict Decolar’s access to
the Expedia API.
2.1.8
Customer Care.
(a)
During the Term, (i) [***]; (ii) Decolar shall provide commercially reasonable cooperation, at Expedia’s request, to
facilitate Expedia’s customer care and support; and (iii) Decolar shall provide first line support to customers of Expedia Travel Solutions in
accordance with (x) the best industry standards (including but not limited to its practices in relation to standard greetings, scripts, response times
and escalation procedures) and (y) the terms of this Agreement.
(b)
Subject to Section 6.5 with respect to the use of the Voyager Tool, Decolar will be responsible for and shall provide, all
support to End Users for customer care and support issues related to Expedia Travel Products and will be solely responsible for any liability to
End Users as a result of such customer care and support; provided that Decolar shall not, at any time, have the ability to engage in any activities
with respect to Expedia Travel Products that result in the issuance of any End User “accommodations”, such as cancellations outside of the
cancellation window or goodwill coupons and credits, discounts, refunds, and similar accommodations (“Goodwill Modifications”), without the
prior written consent of Expedia. Expedia will provide second line consultative support for customer care and support issues with respect to the
Expedia Travel Products, including Goodwill Modifications, at Decolar’s sole cost and expenses. Without limiting the generality of the
foregoing, Decolar will as soon as reasonably practicable: (a) transmit to End Users booking Expedia Travel Products, without substantial
revision, deletion or change of any sort, all information transmitted by Expedia or its Affiliates to Decolar for re-delivery to such End Users (e.g.,
booking confirmation e-mails and other customer support communications), provided that such information need not contain any of Expedia’s or
its Affiliates’ branding, Marks and Materials; and (b) transmit to Expedia all communications, without substantial revision, deletion or change of
any sort, received by Decolar or its Affiliates from such End Users relating to Expedia Travel Products (e.g., booking requests and other
customer service inquiries), other than
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Highly Sensitive Customer Personal Data (other than to the extent necessary to facilitate an Expedia-Sourced Travel Booking). Decolar will be
responsible for any liability to End Users as a result of the customer care and support for Expedia Travel Products booked through the Decolar
Platform, including all Goodwill Modifications and costs associated with any debit memo, replacement room nights, chargebacks, and
cancellation fees. Expedia shall be responsible for all liability to the extent caused by information created by Expedia or its Affiliates that is
transmitted to Decolar by Expedia’s second-line support or by the Voyager Tool.
2.1.9
Redistribution.
(a)
Subject to the terms of this Agreement, Decolar may allow third parties (“Decolar Partners”) to (1) via a Decolar API
(the “Decolar API”) or white label sites (“Decolar White Label Sites”), enable End Users to view Expedia Travel Information and access and
book Expedia Travel Products, in each case on Decolar Partners’ consumer facing websites (“Decolar Partner Sites”), and (2) via agent booking
tools (“Decolar Partner Tools”, together with the Decolar Partner Sites and Decolar White Label Sites, the “Decolar Partner Solutions”),
access Expedia Travel Information and access or book Expedia Travel Products, in each case on behalf of End Users, in all cases under clauses
(1) and (2) subject to the following restrictions:
(i)
Decolar must ensure that each Decolar Partner is bound by and complies with obligations that are at least
equivalent to those imposed on Decolar under this Agreement and shall procure that the Decolar Partner enters into terms the same as or no less
onerous than the terms of use for Decolar Partners (“Partner Terms of Use”) as set out in the Expedia Specifications;
(ii)
Decolar shall be solely responsible for the actions of each Decolar Partner as if such actions are the actions of
Decolar, including any liabilities for Taxes;
(iii)
at Expedia’s request, and in any event no more frequently than quarterly, Decolar shall promptly provide a list of
new Decolar Partners since the last report provided (it being understood that all Decolar Partners that exist as of the Effective Date which shall
have been disclosed to Expedia in writing shall be considered a prior report for purposes of this clause);
(iv)
Decolar may only make Expedia Information and Expedia Travel Products available to Decolar Partners who
are not included on Schedule 1, which may be amended by Expedia from time to time. In the event that any Decolar Partner becomes an
Acquired Entity, such partner will be automatically removed from Schedule 1;
(v)
Expedia will provide Decolar with a list of prohibited geographies in which the Expedia Information and
Expedia Travel Products may not be made available by Decolar, which may be amended by Expedia from time to time. Decolar may only make
Expedia Information and Expedia Travel Products available for display on the Partner’s Site if such Partner Site is not in such prohibited
geographic list;
(vi)
Decolar Partners shall distribute Expedia Travel Products consistent with the remarketing services Decolar
provides Expedia hereunder;
(vii)
Decolar is solely responsible for any compensation payable to the Decolar Partner;
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(viii)
Decolar shall co-operate with Expedia to technically support the tracking and identification of Travel Bookings
by each Decolar Partner, including but not limited to assisting with the setting up of an identification tag, and shall maintain said tag operational
throughout the term;
(ix)
Decolar shall procure that the terms and conditions of each Expedia Travel Product, as updated and notified to
Decolar from time to time, are made available to each End User by Decolar Partners prior to concluding a Travel Booking;
(x)
Decolar will be responsible for any monies owed to Expedia for Travel Bookings, including for Travel Bookings
made by Decolar Partners;
(xi)
Decolar may not cancel or amend any Travel Bookings made by Decolar Partners except (x) on the express
instruction of the End User, (y) due to a Force Majeure Event, and (z) as otherwise agreed by Decolar and Expedia from time to time. For clarity,
in no event will Decolar’s cancellation or amendment of any Travel Booking pursuant to the preceding sentence relieve Decolar from being
solely responsible for any cancelation or amendment fees, penalties or other charges in connection with such cancellation or amendment. In the
event that Decolar desires to cancel or amend any Travel Booking made by Decolar Partners due to the Decolar Partner’s nonpayment to
Decolar, then the parties may mutually discuss in good faith a potential resolution regarding whether to permit a cancellation or amendment;
(xii)
Decolar acknowledges that Expedia will not provide customer support to Decolar Partner agents and
accordingly, Decolar shall ensure that Decolar Partner agents do not contact Expedia directly;
(xiii)
Decolar Partners shall have no right to re-distribute Expedia Information and Expedia Travel Products. Decolar
shall use best commercial efforts to procure that Decolar Partners only make Expedia Information and Expedia Travel Products available on the
Partner Site and/or Partner Tool itself and via no other medium or channel whatsoever including their own API or allowing the Partner Tool to be
accessed by agents other than employees and staff of the Decolar Partner;
(xiv)
Decolar shall use all reasonable endeavors to procure that each Decolar Partner shall display and use Expedia
Travel Products for the sole purpose of procuring a Travel Booking on the Partner Sites and/or Partner Tools; and
(xv)
Decolar and Decolar Partners shall not, and Decolar shall use best commercial efforts to cause Decolar Partners
not to, provide any Travel Solution to any Third Party through (A) “instant book” or “direct booking” functionality on any metasearch site or
other third party medium or channel, including Travel Solutions, through which Travel Products are marketed through side-by-side price
comparison or (B) any global distribution system or other third-party aggregator or redistributor of supply. Notwithstanding the foregoing,
Decolar shall not be restricted from advertising any Travel Products on metasearch sites, provided that the rate at which such Expedia Travel
Product is displayed on such metasearch site or other price comparison mechanism shall not be less than the Room Rate and the other terms
applicable to Expedia Travel Products pursuant to Section 2.1.5 will apply to any such display.
Upon either (A) Expedia’s request therefor from time to time, (B) becoming aware of any non-compliance by a Decolar Partner with the
foregoing clauses, or (C) a Decolar Partner being listed on Schedule 1, Decolar immediately shall, and Expedia may take all necessary action to
(1) as soon as practicable, disable the distribution of the Expedia Information and Expedia Travel Products to and
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through the relevant Decolar Partner, via the Decolar Partner Solutions or otherwise, and (2) cancel any and all Expedia Sourced Travel
Bookings booked by or through such Decolar Partner via the Decolar Partner Solutions or otherwise (for which Decolar will be solely
responsible for any cancellation fees, charges, or otherwise). Notwithstanding the foregoing, reservations made prior to a Decolar Partner being
listed on Schedule 1 shall not be canceled on account of being listed thereon except if expressly required under applicable law. Upon
discontinuing access or termination of a Decolar Partner for any reason, Decolar shall use all reasonable endeavors to procure that such Decolar
Partner ceases to display Expedia Travel Products and Expedia Information on any Decolar Partner Solution, and promptly destroy or delete
from all of the Decolar Partner’s systems and/or devices (including all Decolar Partner Solutions), any and all originals, copies, reproductions,
adaptations, extracts and/or summaries of Expedia Travel Products and Expedia Information.
2.1.10 [***] Exclusivity. Expedia shall be the exclusive provider to Decolar and its Affiliates of lodging products and lodging-
like products offered by [***]. its Affiliates and the brands and franchises which they operate, license, or distribute, and Decolar shall not (and
will cause its Affiliates not to) contract with any entity other than Expedia for the provision of such products during the Term; provided that
Decolar shall be authorized to obtain lodging products provided by [***] from any providers, including Expedia. Notwithstanding anything
herein to the contrary, Expedia may share certain Initiative Data solely with [***] as part of the Initiative, provided that Expedia shall have
required [***] to agree to written terms that (i) limit the use of the Initiative Data to use in connection with the Initiative, which shall be
considered confidential information and (ii) are at least as protective of the Initiative Data as the terms of this Agreement. The Parties may in
good faith agree to participate when reasonably requested by the other Party in discussions among Decolar, Expedia and [***] regarding the
Initiative.
2.1.11 Acquisitions. If Decolar or any of its Affiliates acquires Control of any entity (“Acquired Entity”) by way of merger,
corporate reorganization or consolidation, acquisition of all or substantially all of its assets or otherwise, such Acquired Entity shall be
considered an Affiliate under this Agreement and shall be subject to all terms and conditions of this Agreement from the closing date of such
acquisition. Decolar shall use commercially reasonable efforts to incorporate into the Acquired Entity’s supply of Travel Products the Expedia-
Sourced Travel Products by no later than six (6) months after the closing date of such acquisition (the “Supply Requirement”); provided,
however, that such six-month period may be extended by an additional three-month period if Decolar is using commercially reasonable efforts to
complete such incorporation (such six-month period together with any extension, the “Transition Period”). Notwithstanding the foregoing,
during the Transition Period, Decolar will be excused from (a) any failure to comply with the Supply Requirement, and (b) its exclusivity
requirements under Sections 2.1.10 and 8.4.1(d), in each case to the extent resulting from agreements or arrangements in place by such Acquired
Entity with respect to it as of the date of the acquisition. No failure to incorporate Expedia-Sourced Travel Products into the Acquired Entity's
supply of Travel Products or the failure of the Acquired Entity to comply with Section 2.1.10 and 8.4.1(d), prior to the 12th month after such
acquisition shall be a breach entitling Expedia to the $125 million payment set forth in Section 11.3.2.
2.2
Lodging Supply to Expedia. During the Term, Decolar shall provide, in accordance with the Decolar Lodging Outsourcing
Agreement, dated August 17, 2016 (as amended, supplemented or otherwise modified from time to time), Expedia with access through the
Decolar API to all Decolar Travel Products (whether such Travel Products are offered on a standalone basis, in a Package or otherwise, other
than Expedia Travel Products which may be available through the Decolar API by virtue of the Expedia API) for properties located in the
Decolar Territory for use in all Expedia Travel Solutions,
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subject to the applicable Decolar API terms and conditions Decolar makes available to its partners governing Expedia’s use of the Decolar API.
2.3
[***].
2.3.1
[***]
2.3.2
Decolar agrees and acknowledges that it will have no input into or ability to participate in Expedia’s negotiations with
Expedia’s third-party suppliers and that the provision of Expedia Travel Products is subject to the terms of the applicable contracts between
Expedia or its Affiliates and the applicable Travel Supply Providers with respect to such Travel Products.
2.4
TravelAds.
2.4.1
The parties agree that Decolar may participate in an accommodation advertising program known as TravelAds
sponsored listings (“TravelAds”). In order to participate, Decolar will make a call to the Expedia API known as a ‘sponsored list call’ and
Expedia will return, in accordance with the call made by Decolar, a ranked order of Travel Supply Providers for Expedia Travel Products located
worldwide (other than the Decolar Territories), or agencies acting on their behalf, which have successfully bid for a TravelAd via the auction
model on the TravelAds platform. During any period that Expedia is the exclusive provider of accommodations listings pursuant to Section
2.4.4, Decolar will display [***]. Expedia will also provide advertising copy content for Decolar to use for such display, although such usage is
in Decolar’s sole discretion.
2.4.2
For any Consumed Travel Booking for which a TravelAd applied, in addition to the Marketing Fee Payments under this
Agreement, Expedia shall pay Decolar an amount equal to [***]% of the cost per click (“CPC”) received from the Travel Supplier after Expedia
has deducted [***]% of the CPC for Expedia’s cost of providing such advertising (“TravelAds Revenue”). TravelAds Revenue shall be paid
[***] in arrears at the same time as the Marketing Fee Payments due under this Agreement. For the avoidance of doubt, the TravelAds Revenue
shall not include revenue for any clicks for which Expedia or its Affiliates do not receive payment, for example, due to promotional and goodwill
credits which are provided to a Travel Supply Provider in Expedia’s sole discretion. Expedia may adjust the deduction set out in this paragraph to
take into account additional costs or losses incurred by Expedia or its Affiliates in connection with TravelAds.
2.4.3
Decolar shall use appropriate mechanisms to detect and blacklist users engaged in click-fraud, in order to reduce the
instances of click-fraud for which deductions would be needed. For the purpose of this clause, click fraud is bot activity, or other click fraud,
including systematic activity, such as shopping bots or similar activity, and malicious activity.
2.4.4
In addition, the following terms shall apply during the period beginning on the Effective Date [***] thereafter (the
“TravelAd Exclusivity Period”):
(a)
Expedia shall be the sole provider of accommodation advertising in the form of sponsored search listings on the Decolar
Platform outside the Decolar Territory other than advertising directly contracted between Decolar and advertisers through any travel ads or
sponsor listing solution;
(b)
Decolar may only display TravelAds on their customer facing Decolar Platforms operated by Decolar and, except as
otherwise advised by Expedia from time to time, on Decolar Partner solutions;
22
(c)
Decolar will comply with all applicable Law when participating in TravelAds and displaying any ranked Travel
Suppliers and advertising content, including using any required tagging or badging of advertising;
(d)
Decolar will return to Expedia in the Expedia API: the session ID for any display; the position of each TravelAd in
Decolar’s organic search results; and any performance data required by Expedia in connection with each TravelAd for the purposes of ensuring
accuracy and continuity of reporting to advertising and publishing partners, including but not limited to any associated bookings. If Decolar fails
to do so, it shall not accrue or be entitled to receive any TravelAds Revenue;
(e)
Decolar will not use the content or Expedia Information it accesses via the Expedia API for any purposes other than to
perform its obligations under this Agreement; and
(f)
Expedia makes no representations or warranties with regard to TravelAds or the integration of TravelAds and Expedia
expressly disclaims all implied warranties, obligations, and liabilities with respect thereto.
2.4.5
Expedia and, after the TravelAd Exclusivity Period, Decolar reserve the right in their sole discretion to cease to make
available or display TravelAds (as applicable), on [***] notice to the other party, for any or no reason, and without liability. Likewise, each party
further reserves the right to cease to immediately make TravelAds available or to display TravelAds without liability to address: (a) regulatory or
legal requirements, (b) in the case of force majeure; or (c) or in the case that external factors make the TravelAds Revenue not viable.
2.5
Vrbo Properties. From time to time, Expedia shall use good faith efforts to make available to Decolar, Travel Products via
separate client identification (“CIDs”) comprising of vacation rental properties which are also made available on Vrbo.com or connected
websites (“Vrbo Properties”), under the terms of this Agreement, all to the extent operationally and economically viable to Expedia. To the
extent Expedia makes available Vrbo Properties to other similarly situated Expedia partners, then Expedia will use such good faith efforts to
make the same available to Decolar, subject to the following terms:
2.5.1
Decolar will cooperate to ensure that separate CIDs, as requested by Expedia, are set up to allow Vrbo Transactions to
be separately identified;
2.5.2
Vrbo Properties shall be displayed solely on the Decolar Platform under any brand owned by Decolar and/or its
affiliates, or white label template website that Decolar owns and controls (“WLT”) and not on any other Travel Solutions through which Decolar
provides Travel Products to a third party. For the avoidance of doubt, they may not be redistributed to a Decolar Partner or otherwise pursuant to
Section 2.1.9, including as part of the Decolar API. It is also agreed that the exception for WLT shall only apply to WLTs where Decolar is the
merchant of record, Decolar is providing customer support and it is a subdomain of a Decolar Platform (e.g., partnerxxx.despegar.hotel, or as
Decolar may name the domain). Decolar shall remove Vrbo Properties from any WLT partner at any time upon Expedia’s request;
2.5.3
Notwithstanding Section 8.6 of the Agreement, Decolar shall ensure that customer terms and conditions applicable to
Vrbo Properties (as well as the applicable Vrbo privacy statement (as updated and notified to Decolar from time to time)) (together, the “Vrbo
T&Cs”), are made available to each End User in a durable format prior to concluding a Transaction. Decolar shall also
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ensure that any rental agreement, check-in instructions or other information provided to Decolar, is immediately passed to the End User;
2.5.4
Decolar shall not issue any form of tax invoice or payment receipt which may mislead End Users into believing that
Decolar is the facilitator of the Vrbo Booking(s);
2.5.5
Where Decolar collects payment, it does so on behalf of Vrbo and Vrbo will be solely responsible for authorization of
payments from the End User, and delivery of the TSF;
2.5.6
The Parties acknowledge and agree that whilst Decolar shall provide first line support to customers for Vrbo Properties,
Expedia (or Vrbo) agents will provide second line consultative support for customer care and if contacted by End Users, first line support
directly to End Users;
2.5.7
Decolar shall not display or advertise Expedia Information relating to Vrbo Properties on any metasearch site or other
third-party medium or channel through which lodging and other travel products are marketed through side-by-side or similar price comparison;
2.5.8
Decolar shall integrate Expedia’s “Vrbo availability rapid API” into the Decolar Platform in order to reduce shopping
calls to the API for non-available Vrbo Properties and to inform End Users of the minimum length of stay applicable to a Vrbo Property;
2.5.9
Decolar shall promptly provide Expedia or its Affiliates with a copy of any communications Decolar receives from any
regulatory or Governmental Authorities in relation to the Vrbo Properties;
2.5.10 Decolar acknowledges that vacation rentals are subject to strict regulatory requirements and that such requirements may
require us to make changes to the way certain Vrbo Properties are made available to Decolar, including availability, or updates to display
requirements; and certain jurisdictions may require the collection and provision of information from travelers, including personal data. Decolar
agrees to promptly implement any changes required as notified to it, including collecting and providing Expedia with such traveler information,
and Decolar agrees to refresh any cache of Vrbo Properties at least weekly and within 24 hours of any specific notice from Expedia to do so;
2.5.11 Decolar acknowledges and agrees that Vrbo Properties shall be displayed as “vacation rentals” or “rentals” (i.e., not
hotels) on the Decolar Platform. In addition, Decolar shall ensure that the following information (to be communicated to Decolar via the Expedia
API) is visible to End Users when displaying Vrbo Properties: (a) check-in instructions; special check-in instructions; fees; (b) Vrbo essential
stay content (post-booking); (c) guest ratings; (d) house rules; and (e) property registration number and private host registration; and
2.5.12 If Expedia chooses to stop making available any or all Vrbo Properties, Expedia will provide 30 days’ written notice
before doing so.
2.6
Guest Reviews.
2.6.1
Guest Reviews may be included within the Expedia Information, and where Decolar accesses them, it must also ensure
that:
(a) Except as otherwise advised by Expedia from time to time, Guest Reviews are solely displayed on the Decolar Platform
under any brand owned by Decolar and/or its affiliates and on white label sites powered by Decolar. For the avoidance of doubt, Guest Reviews
may not be
24
redistributed on any other Travel Solutions through which Decolar provides Travel Products to a third party, including the Decolar API;
(b) Guest Reviews are not cached within Decolar’s systems and are displayed in a manner that is non-indexable by internet
search engines. Notwithstanding the foregoing, Decolar may cache Guest Reviews within its systems for up to 48 hours for the sole purpose of
displaying them on the Decolar Platform and only where the Guest Reviews Decolar intends to cache have been received by Decolar following a
live call to the Expedia API as outlined in the Expedia Specifications;
(c) Guest Reviews are only displayed on the Decolar Platform in line with Expedia Specifications for such display,
including the specific disclaimers and requirements for any French or any other point of sale; and
(d) the correct attribution (e.g. ‘Hotels.com Trusted Review’ or ‘Expedia.com Trusted Review’) is displayed as per the
Expedia Specifications. Expedia grants Decolar a limited, non-exclusive, non-assignable, revocable and without right to grant sublicenses,
license to use the Affiliate’ trademarks and logos that are depicted in Guest Reviews within the Expedia Information, solely for the purpose of
displaying the Guest Reviews as permitted herein, and without edits, alteration, or modification.
2.6.2
Expedia reserves the right to remove or restrict Decolar’s access to Guest Reviews at any time on [***] days’ prior
written notice.
2.6.3
Where Expedia has made Guest Reviews available to Decolar, Decolar agrees (upon Expedia request) to make available
to Expedia and its Affiliates, and grant Expedia and its Affiliates any necessary licenses in order to display, any guest reviews Decolar has for
any accommodation for which we have Expedia Information.
2.6.4
Customers who provide Guest Reviews accept the terms and conditions of booking on one of the consumer brands of
Expedia which contains a license for Expedia and its partners to use, reproduce, modify, adapt, translate, distribute and publish such Guest
Reviews anywhere in the world.
2.6.5
Expedia will comply in accordance with applicable data protection Laws with respect to requests from Customers in the
event that they request to remove their Guest Reviews.
2.7
Coupons. Expedia acknowledges that Decolar may provide coupons on [***] to reduce the amount payable by End Users for
certain [***] (“Coupons”). Expedia agrees to such couponing on the following terms:
2.7.1
Expedia must provide its prior written consent to the properties and time period to which any Coupon applies. The
amount reduced by the Coupon (the “Discount”) must be no more than [***] of the Room Rate as per the [***]. Coupons shall not be applied to
[***]. Subject to this Agreement and applicable Law, Decolar shall determine at its sole discretion how it shall communicate to the End Users
the possibility of using the Coupons together with the name/code of the Coupon in the section of the booking path flow that Decolar deems
appropriate.
2.7.2
The Discounted Room Rate shall [***], with the Room Rate before Discount indicated with [***]. The above shall be
subject to the provisions of applicable Laws and the Parties shall review the characteristics that the promotion and its communication must meet
on each occasion, which
25
may vary depending on the country in which it will be implemented. For the avoidance of doubt, except on [***].
2.7.3
Decolar shall bear the cost for [***]. Accordingly, Decolar agrees that the Room Rate is not deemed modified for
purposes of [***]. For the avoidance of doubt, Decolar shall not receive any consideration from Expedia [***] and where Decolar offers a
Coupon, Decolar [***], unless otherwise agreed by the Parties.
2.7.4
Where Decolar provides [***], this will still be considered [***] for tax purposes, i.e. Decolar shall not make [***] on
its own behalf to any tax authority or any other party.
2.7.5
Expedia will from time to time provide Decolar in writing a list of properties with respect to which Decolar may not
provide Coupons. Decolar agrees not to provide Coupons to such properties.
3.
ECONOMIC TERMS
3.1
Marketing Fees.
3.1.1
For each Expedia-Sourced Travel Booking of a Travel Product that is Consumed (a “Consumed Travel Booking”),
Expedia will calculate and Decolar shall be entitled to the percentage of the Gross Profit set forth in Schedule 2 (the “Marketing Fees”)
applicable to such Consumed Travel Booking. Marketing Fees shall be paid only on Consumed Travel Bookings that are made through the
Expedia API and originate from the Decolar Platform. No Marketing Fees will be paid by Expedia on subsequent bookings by the same customer
unless such further booking is also made through the Expedia API and originates from the Decolar Platform.
3.1.2
Provision of CPF Numbers. Decolar shall provide to Expedia, in a manner as prescribed by Expedia from time to time
(any new such manner to be communicated fourteen (14) days in advance), the Cadastro de Pessoas Físicas (“CPF”) numbers for all travelers
corresponding to each EAC Oracle Reference Number within each Transaction Statement issued for Transactions on Decolar’s Brazilian POS at
the time of payment of such Transaction Statement for which Decolar pays Expedia in Brazil, including by BRL. Decolar shall ensure that all
CPF numbers provided to Expedia pursuant to this paragraph are complete, correct and accurate, in accordance with Expedia’s prescribed
manner for such information, and clearly correspondent to the correct EAC Oracle Reference Number. Decolar hereby indemnifies Expedia
against any loss or additional withholding taxes Expedia suffers as a result of Decolar’s failure to comply with any of its obligations under this
paragraph. Expedia shall be entitled to recover such losses by withholding payment due to Decolar under the Agreement, or deducting and
withholding on any payment to Decolar, or requesting further payment from Decolar, in order to comply with any obligations of Expedia or the
Affiliate of Expedia domiciled in Brazil (“Expedia’s Brazilian Subsidiary”) under applicable Brazilian tax Laws. All amounts withheld by
Expedia pursuant to this Section 3.1.2 shall be treated as paid to Decolar for all purposes. For the avoidance of doubt, the CPF numbers will be
considered Customer Personal Data, and Confidential Information for the purposes of this Agreement.
3.2
Marketing Fee Payments.
3.2.1
Property Collect and pre-NOC Affiliate Collect. Expedia shall pay to Decolar the Marketing Fees owed to Decolar
solely with respect to all Consumed Property-Collect Bookings and for Consumed Affiliate-Collect Bookings booked prior to the NOC
Transition Date for which
26
Compensation has been received by Expedia and its Affiliates during a given calendar month (the “Marketing Fee Payment”) within [***] days
following the end of such calendar month. All Marketing Fee payments made by Expedia to Decolar will be made in United States Dollars or the
relevant currency or currencies (such as Brazilian Real or Mexican Pesos) of the applicable Transaction Statement and sent via wire transfer to
the Decolar bank account specified in Decolar’s profile on Expedia’s portal (which Decolar may revise from time to time upon notice to
Expedia).
3.2.2
Net Marketing Fees. With respect to Consumed Affiliate-Collect Bookings booked on or after the NOC Transition Date
when paying the Transactions Statement pursuant to Section 3.3, Decolar shall remit the Room Revenue generated from Transactions with
respect to Consumed Affiliate-Collect Bookings less the Marketing Fees (“Net Room Revenue”) to Expedia and retain the Marketing Fees at
source. As a result, Decolar will not receive Marketing Fee payments from Expedia with respect to Consumed Affiliate-Collect Bookings and
instead will retain the amount of Marketing Fees. Notwithstanding the foregoing, Marketing Fees shall not be deducted from any Room Revenue
remittances with respect to remittances made from Brazil or from any other jurisdiction where netting is prohibited by Law, results in adverse
financial consequences to a Party, or is not technically practicable with Expedia’s then-existing systems.
3.3
Room Revenue. Decolar shall collect, on behalf, but not in the name, of Expedia, or any of its Affiliates, including Travelscape
LLC, the Gross Booking Value for any Affiliate-Collect Bookings of any Travel Products made by an End User and for which Decolar has acted
as the Merchant of Record, excluding any Service Fees and Taxes, in each case, imposed in excess of the Room Rate (the “Room Revenue”).
Decolar shall account for and remit all Room Revenue (for Travel Bookings in Chile, accountability obligation or "rendición de cuentas” as
determined in Article 2155 of the Chilean Civil Code), in accordance with the provisions set out below. Therefore, and for the avoidance of
doubt, Decolar, as agent, cannot legally bind Expedia while acting on its behalf, under Article 2151 of the Chilean Civil Code.
3.3.1
Transaction Statements. Expedia will deliver a statement to Decolar every [***] days setting forth the Room Revenue
(both in the aggregate and on a Transaction-by-Transaction basis) generated from Transactions with respect to [***] during the immediately
preceding [***]-day period (the “Transaction Statement”). Each Transaction Statement for the Room Revenue generated from Decolar’s
Consumed Travel Bookings booked on (i) Decolar’s Brazilian POS shall be stated in Brazilian Real only; (ii) Decolar’s Mexican POS shall be
stated in Mexican Pesos only; and (iii) all other points-of-sale in the Decolar Platform, in United States Dollars or, with respect to any Travel
Bookings made in other currencies available therefor via the Expedia API, in such other currencies, provided that the Parties agree to discuss in
good faith whether it is practicable to state such amounts in other currencies.
3.3.2
Payment Timing. Decolar shall pay to: Expedia the Net Room Revenue amount for Consumed Affiliate-Collect
Bookings to the extent permitted by Section 3.2.2 and the full Room Revenue amount for all other Bookings, in each case detailed on the
Transaction Statement (the “Room Revenue Payment”) within [***] days of the date of the Transaction Statement. Funds shall be paid by
Decolar to Expedia, Expedia’s Brazilian Subsidiary (for Brazilian POS Consumed Travel Bookings) or Expedia´s Mexican Subsidiary (for
Mexican POS Consumed Travel Bookings). In the event that any Room Revenue Payment due in respect of a Transaction Statement is not
received by Expedia in accordance with the terms hereof, in addition to Expedia’s rights under this Agreement and at Law, Expedia shall have
the right to: (a) cancel all un-stayed bookings; (b) suspend Decolar’s access to Expedia’s Travel Products immediately and/or (c) demand from
Decolar adequate assurance of due performance if Expedia reasonably believes that there will be a fundamental non-performance of
27
Decolar’s obligations hereunder. If Expedia has not received such adequate assurance within [***] Business Days from the date of delivery of its
request, Expedia may deliver a statement to Decolar for all Transactions [***]. Such statement shall be considered [***]. Decolar acknowledges
and agrees that Decolar is responsible for the payment of banking transfer fees in relation to the payment of the Transaction Statement. Expedia
acknowledges and agrees that Expedia is responsible for the payment of banking transfer fees in relation to the receipt of payments related to the
Transaction Statement.
3.3.3
Payment Currencies. Notwithstanding the above, the Parties agree that the payment of Transaction Statements for
Consumed Travel Bookings shall be made in the currency specified therefor in the relevant Transaction Statements pursuant to Section 3.3.1.
The parties may from time to time agree on additional currencies for the payment of Transaction Statements. Notwithstanding anything herein to
the contrary, in the event that accepting payments in a currency other than USD results or would result in increased costs as compared to
accepting USD, then upon Expedia’s request, such payments will be made instead in USD; provided, however, that prior to such request,
Expedia shall discuss alternative payment arrangements with Decolar in good faith.
3.3.4
Payment Accounts. In all cases, all payments made by Decolar to Expedia will be sent via wire transfer to the Expedia
bank account Expedia specifies from time to time in writing (the “Expedia Account”).
3.3.5
Expedia Setoff Right. Expedia shall have the right to set off from any Payments due and payable from it or its Affiliates
to Decolar any amounts owing to Expedia and/or its Affiliates from Decolar under the terms of this Agreement, provided that Expedia shall
promptly provide to Decolar a statement describing the amount of such setoff, the statements under which the setoff amounts are owed to
Expedia and the Payments owed to Decolar from which such amounts are being setoff. Any dispute by Decolar of Expedia’s setoffs shall be
made in accordance with Section 3.4.3.
3.4
Other Statements and Audits.
3.4.1
Monthly Marketing Fee Statements. Following the end of each calendar month during the Term, Expedia shall, with
respect to such completed month provide a statement (a “Marketing Fee Statement”) to Decolar setting out the Marketing Fee Payment which
is due to Decolar for such month for each Transaction describing in reasonable detail the components of Gross Profit for each such Transaction.
Each Marketing Fee Statement shall provide reasonable settlement information with respect to Expedia’s calculation of the Marketing Fee
Payment, including the total Gross Profit in respect of the Consumed Travel Bookings referred to in Section 3.1 for such month. In addition, the
Marketing Fee Statement shall set forth any required period-end accounting adjustments or adjustments for cancelled, refunded or charged-back
bookings (“Refund Fees”) with respect to the payments previously made pursuant to Section 3.2. Any modifications required with respect to the
previous month shall be added to, or set off from, as applicable, the next monthly payment made pursuant to Section 3.2.
The Parties acknowledge that Gross Profit excludes any amounts relating to fraud, cancellations, refunds or otherwise and following the
amendments set our herein, Transaction Statements may contain negative Marketing Fee values if the Gross Profit for any given Booking is
negative due to fraud, cancellations, refunds or otherwise. For clarity, in the event that the Gross Profit is negative or is otherwise insufficient to
cover the dollar amount of the Excess Insurance Cost, then Decolar shall pay to Expedia such amount within [***] days.
3.4.2
Quarterly Minimum Bookings Statements. Following the end of each calendar quarter during the Term, Decolar
shall, with respect to such completed calendar quarter, provide a
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statement (a “Quarterly Minimum Bookings Statement”) to Expedia setting forth all reasonable backup calculations necessary to arrive at the
Expedia Share of Wallet, including (a) the total number of (i) Expedia-Sourced Travel Bookings and (ii) Consumed Travel Bookings, in each
case made through the Decolar Platform and which were sourced pursuant to this Agreement during such Measurement Period and (b) the total
number of Travel Bookings made through the Decolar Platform during such calendar quarter.
3.4.3
Payment Disputes. Within thirty (30) days of the last day of each successive six (6)-month period, the recipient may
deliver to the other Party in writing its dispute (a “Dispute Notice”) of such Marketing Fee Statement, Transaction Statement, or Quarterly
Minimum Bookings Statement (collectively, the “Statements”), specifying in reasonable detail the nature of its dispute. Any right to dispute a
payment arising from Travel Booking for which the checkout date is prior to said six (6)-month period shall be considered waived by the Parties.
During the 30-day period after the delivery of such dispute notice to the other Party, the Parties shall attempt in good faith to resolve any such
dispute and finally determine the proper amounts to be reflected on such Statements. If, at the end of such thirty (30)-day period the Parties have
failed to reach agreement with respect to the matters addressed in the Dispute Notice, then the matter shall be submitted to the Accountant, which
shall act as arbitrator. The Accountant shall determine the proper amounts to be reflected on the Statements, as applicable, for such period in
accordance with the terms and conditions of this Agreement. The Accountant shall deliver to each Party, as promptly as practicable and in any
event within thirty (30) days after its appointment, a written report setting forth the resolution of the dispute for such period. Such report shall be
final and binding upon the Parties to the fullest extent permitted by applicable Law and may be enforced in any court having jurisdiction. Each
Party shall bear all the fees and costs incurred by it in connection with this arbitration, except that, if the Accountant determines that the
aggregate net adjustment to the applicable Statement was greater than five percent (5%), all fees and expenses relating to the foregoing work by
the Accountant shall be borne by the Party that does not prevail on the matters resolved by the Accountant. No Payment dispute shall give the
Party disputing such Payment the right to withhold any such Payment that is in dispute hereunder. For the avoidance of doubt, both Parties
acknowledge and agree that any right to dispute a payment arising from Travel Booking for which the checkout date is prior to the date which is
6 months prior to the date of this Agreement is hereby waived and neither Party owes any amounts to the other Party under said Travel Bookings.
3.5
Credit.
3.5.1
Defined Terms. The following terms shall have the following meanings:
“Decolar Obligations” means, as of any time of determination, the aggregate amount of unpaid financial obligations due and payable by
Decolar and its Affiliates to Expedia, including any Room Revenue on Travel Bookings.
“Required Collateral Amount” means, [***].
“Qualifying Insurance” means insurance obtained by Expedia insuring the due and prompt payment of the Decolar Obligations issued
by a Qualifying Insurer.
“Qualifying Letter of Credit” means an irrevocable standby letter of credit, reasonably acceptable to Expedia, (a) unconditionally
entitling Expedia to draw thereon, (b) issued or confirmed by a Pre-Approved Eligible Bank and delivered to Expedia, (c) whose terms provide
that it cannot terminate, expire or be cancelled prior to [***] days after the Term without Expedia’s consent.
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“Security Deposit” means cash received by Expedia, in an account designated by it, from Decolar and designated as a security deposit
by Decolar.
3.5.2
Required Collateral.
(a)
Decolar shall ensure that at all times the aggregate value of Posted Collateral is no less than the Required Collateral
Amount. Prior to the renewal period for any Qualifying Letter of Credit, Expedia shall notify Decolar of the amount of Decolar Obligations, the
Required Collateral Amount, and the amount of Qualifying Insurance.
(b)
If at any time, the aggregate value of the Posted Collateral is (i) less than the Required Collateral Amount, Decolar shall
promptly, but in any event within [***] days cure such deficit by delivering additional Qualifying Letters of Credit and or Security Deposit in
accordance with the terms hereof, or (ii) more than the Required Collateral Amount, Expedia shall at least every two months upon Decolar’s
request, return Security Deposit in the amount of such difference, and if the difference exceeds the Security Deposit, permit Decolar to amend or
replace a Qualifying Letter of Credit to reflect a reduced amount in the amount of such excess.
(c)
In addition to any other rights Expedia may have under this Agreement or applicable Law, Expedia may immediately
suspend Decolar’s access to Expedia’s Travel Products, restrict Decolar’s trading volume, and/or cancel Travel Bookings if either (i) a
Bankruptcy Event occurs, (ii) the aggregate value of Posted Collateral plus Qualifying Insurance is at any time less than the Decolar Obligations,
provided that Expedia may not restrict the trading volume of Travel Bookings other than Non-Refundable Bookings until the expiration of any
applicable Insurance Deficiency Notice Period, or (iii) Decolar fails to pay any amount of the Decolar Obligations as and when due; provided
that up to twice per calendar year, Decolar shall have [***] Business Days from Expedia’s written notice thereof to cure any occurrence
described in the foregoing clauses (ii) and (iii) unless Expedia in good faith determines that such cure period would result in a material risk or
harm to it.
3.5.3
Qualifying Insurance Deficiency.
(a)
To the extent that Expedia seeks but cannot obtain Qualifying Insurance from a Qualifying Insurer in amount equal to
the Decolar Obligations less the Posted Collateral or if Expedia has obtained such coverage, such coverage has been canceled by the relevant
insurance provider (a “Qualifying Insurance Deficiency”), then Expedia may provide written notice to Decolar (the date of such notice, the
“Insurance Deficiency Notice Date”). To the extent that Expedia does not have Qualifying Insurance in such an amount, Expedia shall seek
Qualifying Insurance at least every six months to remedy such Qualifying Insurance Deficiency.
(b)
Beginning on the Insurance Deficiency Notice Date and for a period of [***] days thereafter (the “Insurance
Deficiency Notice Period”): (i) Expedia shall request Qualifying Insurance from two additional Qualifying Insurers to remedy the Qualifying
Insurance Deficiency; and (ii) Decolar may, by written notice to Expedia, remedy the Qualifying Insurance Deficiency by delivering to Expedia
a Qualifying Letter of Credit and/or, to the extent permitted by the terms of Expedia’s existing insurance policies, obtaining Qualifying Insurance
in an amount equal to the Qualifying Insurance Deficiency.
(c)
In the event that Decolar delivers a Qualifying Letter of Credit pursuant to Section 3.5.3(b) during the Insurance Notice
Period and subsequently during such period, Expedia is able
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to cure the Qualifying Insurance Deficiency without resort to such Qualifying Letter of Credit, then any non-refundable costs for such insurance
will be equally split between the parties.
3.5.4
Holding Collateral. Expedia shall not be required to hold the Security Deposit or any letter of credit proceeds in a
separate account and may co-mingle them with Expedia’s other funds. Expedia owes no fiduciary obligations to Decolar in respect of the
Security Deposit, or such proceeds and Expedia shall not be obliged to pay Decolar any interest in respect thereof. Expedia will hold the Security
Deposit and such proceeds as Expedia’s property. In the event that Decolar is found to have any rights in the Security Deposit or such proceeds,
Decolar hereby grants Expedia a security interest therein as collateral.
3.5.5
Application of Collateral. Expedia may draw upon any letter of credit provided hereunder and apply the proceeds
thereof and of any Security Deposit (a) to satisfy any Decolar Obligations not paid as and when due, (b) in the event a letter of credit is not
renewed at least (i) [***] days prior to the stated expiration thereof or (ii) [***] days prior to the stated expiration date thereof if Expedia
determines in good faith that a draw is required to prevent material financial harm or risk to Expedia, (c) upon a Bankruptcy Event, and (d) upon
the termination or expiration of this Agreement for any reason if there are any Decolar Obligations which have not been fully and indefeasibly
paid or performed in full. The proceeds of any drawing on any Letter of Credit or any application of any Security Deposit not applied to Decolar
Obligations then outstanding shall be held by Expedia as security for any future Decolar Obligations.
3.5.6
Return of Collateral. In the event of any replacement of a Qualifying Letter of Credit, Expedia shall promptly return
the replaced Qualifying Letter of Credit to Decolar. Upon the termination or expiration of this Agreement and the indefeasible payment and
performance of all of Decolar’s and its Affiliates’ obligations hereunder, Expedia shall return any undrawn Qualifying Letter of Credit, any
proceeds thereof, and any Security Deposit not applied pursuant to Section 3.5.5 within [***] days of such termination, expiration, payment and
performance.
3.6
Costs Adjustments. At the end of each calendar year, the Parties shall review [***] in order to reasonably reflect reasonably
expected [***] based on the actual [***] incurred in the preceding year period. The Parties shall discuss the results of such reviews in good faith
including whether the amounts set out herein shall be modified.
3.7
Travel Products. For purposes of calculating the GBV of Travel Products for Bookings that consist of a lodging or lodging-like
product with at least one other Travel Product where the value of and such Booking was both acquired and sold by Decolar with a single price, if
the value of the lodging or lodging-like cannot be reasonably determined, then the GBV shall be [***]% of the Decolar sale price for such Travel
Booking. From time to time, within 30 days of Expedia’s request therefor, Decolar will provide Expedia a report within 30 days of such Travel
Booking describing in the details available to Decolar, the information related to each such Booking and the calculation of the value of the
lodging product.
3.8
Decolar Financial Information.
3.8.1
Decolar shall provide the following information regarding Decolar and its Affiliates at the corresponding Board meeting
(or upon Expedia’s written request therefor), which information Expedia will only share with those of its officers, employees and representatives
as are reasonably necessary for the purposes of determining the creditworthiness of Decolar:
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(a)
an unaudited income statement, statement of cash flows for each month and an unaudited balance sheet as of the end of
such month;
(b)
updated cash flow forecasts for the thirteen (13)-week period following the end of each month; and
(c)
updated high-level cash flow forecasts for six (6)-month period following the end of each month, including projected
drawn and undrawn amounts of any banking facilities and details of any bank or shareholder covenants with respect to any cash flows or
funding.
3.8.2
Decolar shall reasonably cooperate with Expedia and with Expedia’s insurance providers to deliver, as soon as
reasonably practicable, financial information regarding Decolar and its Affiliates as reasonably requested by such insurance providers.
4.
CONFIDENTIALITY
4.1
Definition of Confidential Information. As used herein, “Confidential Information” means all information of a Party
(“Disclosing Party”) that is disclosed to the other Party (“Receiving Party”) and identified as confidential or proprietary or that, due to the
nature of the information (such as conversion ratios or pricing information) or the circumstances surrounding disclosure, ought to be understood
to be confidential or proprietary in connection with the transactions contemplated by this Agreement; provided, however, that if such information
is disclosed orally or visually, it must be identified as confidential at the time of disclosure and reduced to writing and provided to the Receiving
Party within thirty (30) days of disclosure in order to be considered “Confidential Information” for the purposes of this Agreement. The
Confidential Information of (a) Decolar shall include the terms and conditions of this Agreement (but not the existence of the same) and all non-
public information regarding the Decolar Travel Products and (b) Expedia shall include the terms and conditions of this Agreement (but not the
existence of the same) and all non-public information regarding the Expedia Travel Products.
4.2
Confidentiality. The Receiving Party shall not (i) use any Confidential Information of the Disclosing Party for any purpose
other than to exercise its rights or to perform its obligations under this Agreement, or (ii) disclose, publish, or disseminate Confidential
Information of the Disclosing Party to anyone other than the Receiving Party’s personnel (including employees, contractors and consultants) who
have a need to know the Confidential Information for the purposes set forth in this Agreement and who are bound by a written agreement that
prohibits unauthorized disclosure or use of Confidential Information that is at least as protective of the Confidential Information as the Receiving
Party’s obligations hereunder. Notwithstanding the foregoing, the Receiving Party shall have the right to share the existence and nature of this
Agreement with such Party’s Affiliates and such Party’s and its Affiliates’ attorneys, accountants, bankers, financing sources, consultants or other
professional advisors in connection with a financing, merger, acquisition, corporate reorganization, consolidation, or sale of all or substantially
all of its assets, or as required by Law in accordance with Section 4.4 of this Agreement.
4.3
Protection. Each Party agrees to protect the confidentiality of the Confidential Information of the other Party in the same
manner that it protects the confidentiality of its own proprietary and confidential information of like kind, but in no event shall either Party
exercise less than reasonable care in protecting such Confidential Information. Notwithstanding the foregoing, the non-use and non-disclosure
restrictions set forth in this Section 4.3 shall not apply to any information that: (i) is or becomes generally known to the public without the
Receiving Party’s breach of any obligation owed to the Disclosing Party; (ii) was independently developed by the Receiving Party without use of
the Confidential Information and without the Receiving Party’s breach of any obligation owed to the
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Disclosing Party; or (iii) is received from a third party who obtained such Confidential Information without any third party’s breach of any
obligation that was known by the Receiving Party to be owed to the Disclosing Party at the time of such receipt.
4.4
Compelled Disclosure. The Receiving Party may disclose Confidential Information of the Disclosing Party to the extent (and
only that specific portion of such Confidential Information) required by Law (including any rule, regulation or policy statement of any national
securities exchange, market or automated quotation system on which the Receiving Party’s securities are listed or quoted), Governmental
Authority, subpoena, document request, other legal process or judicial or administrative proceeding; provided, however, that the Receiving Party
shall make reasonable efforts to provide the Disclosing Party with prior written notice of such compelled disclosure and reasonable assistance (at
Disclosing Party’s cost) if the Disclosing Party wishes to obtain protective treatment of the Confidential Information.
4.5
Confidentiality of Marketing Fee Statements. The Parties acknowledge that the Marketing Fee Statements (and any daily
version of such statement or similar information as well as the individual information contained therein) provided to Decolar pursuant to
Section 3.4.1 or otherwise and any fee related information provided by Expedia to Decolar via the Expedia API (together the “Fee
Information”) shall be considered Confidential Information for the purposes of this Agreement and, in addition to the other provisions of this
Section 4, shall be treated by Decolar in accordance with the following:
4.5.1
Decolar shall identify a group of named personnel (“Relevant Personnel”) to receive any or all of the Fee Information
who need to know such information for the purpose of (i) assessing the accuracy and completeness of such Marketing Fee Statements for
Decolar’s financial accounting purposes; (ii) general business planning and marketing purposes, and/or (iii) determining the Sort Order of the
Expedia Travel Products on the Decolar Platform (subject to Section 2.1.5). The Relevant Personnel shall: (a) have no commercial dealings
(directly or indirectly) with hotel suppliers in respect of any negotiation of specific commercial terms of the supply relationship between Decolar
and/or and any current or possible future hotel supplier; (b) be clearly identified; and (c) be the sole recipients of the Fee Information.
4.5.2
Decolar personnel who (i) work exclusively in any of the below functional business units within Decolar and (ii) satisfy
the requirement under Section 4.5.1(a) shall automatically be deemed to fulfill the requirement under Section 4.5.1(b):
(a)
Accounting/Accounts Payable/ Oracle team: reviews Fee Information received from Expedia and assures payments (or
disputes) and other administrative functions are in accordance with applicable contract terms;
(b)
Legal: ensures compliance with contract terms and other applicable compliance requirements;
(c)
Information Technology: executes website/application coding, API maintenance, AB testing on the technology
implementation side, sorting algorithm build-out;
(d)
Planning: assesses business performance and undertakes forecasting; and
(e)
Marketing: evaluates Decolar marketing spend across marketing channels (variable and other) and assesses return on
investments made by Decolar.
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4.5.3
The Relevant Personnel may share the following information contained in the Fee Information with other personnel of
Decolar in accordance with Sections 4.1 to 4.4: partner identifiers; itinerary and booking identifiers including book and stay dates and itinerary
number; lodging property identifiers including property name, market and country; and Gross Booking Value at a Travel Booking level.
4.5.4
The Relevant Personnel shall be prohibited from sharing the following information contained in the Fee Information
with other personnel of Decolar: Service Fee, COS percentage, COS amount, Gross Profit percentage, Gross Profit amount and Marketing Fee,
except if: (a) such information is aggregated in a manner which ensures that the information referred to above in this Section 4.5.4 is not
disclosed to any personnel of Decolar (other than the Relevant Personnel), either precisely or approximately, at an individual property level and
cannot be reversed engineered in any way, and in any event with at least 5 properties being included in any aggregated data set; and (b) the
recipients need to know the information for the purposes set forth in this Agreement. Decolar shall provide Expedia with details of any
aggregation rules applied under this Section 4.5.4 upon request.
5.
DATA; SECURITY
5.1
Data.
5.1.1
Decolar Privacy Policy. Decolar shall maintain a privacy policy that shall govern the collection, treatment, use and
disclosure of Customer Personal Data from End Users of the Decolar Platform (the “Decolar Privacy Policy”). Decolar shall adhere to the
Decolar Privacy Policy in connection with all collection, treatment, use, disclosure and retention of any Customer Personal Data, and shall
ensure that it permits Decolar to share Customer Personal Data with Expedia and its Affiliates for the purpose of fulfilling its obligations
hereunder with respect to procuring travel reservations or providing other services or functions on behalf of End Users or for Expedia on behalf
of End Users. Decolar shall ensure that it and its Affiliates have complied and at all times are in compliance with all applicable Laws, as well as
any of its own applicable privacy policies, with respect to any Customer Personal Data, including in connection with providing any historical
Customer Personal Data in its possession to Expedia pursuant to the terms of this Agreement. Decolar shall take all reasonable steps to ensure
that all End Users have agreed or consented to or are otherwise subject to appropriate data privacy policies which permit the transfer and
retention of the Customer Personal Data of such End Users by Decolar to Expedia. Decolar further agrees that in case of Customer Personal Data
that is collected, used, treated and/or retained in multiple jurisdictions, Decolar and its Affiliates shall apply to all such Customer Personal Data
the strictest privacy Laws set forth in any of those jurisdictions and without limiting the foregoing, each Party and its Affiliates shall comply with
Schedule 3 with respect to the collection, use, treatment and processing of Customer Personal Data.
5.1.2
Customer Personal Data.
(a)
Expedia acknowledges that, as between Expedia and Decolar, Decolar is the sole and exclusive owner of all Customer
Personal Data relating to any End User originated via any Decolar Platform (such Customer Personal Data, the “Decolar Customer Personal
Data”). [***] Expedia, its Affiliates and sublicensees shall not use the Decolar Customer Personal Data for purposes of soliciting, interacting
with, contacting or otherwise in any way marketing or promoting to Decolar customers products, Marks and Materials of Expedia or its
Affiliates. Notwithstanding anything in this Agreement (including this Section 5.1.2(a)) to the contrary, to the extent required to comply with tax
reporting requirements, Expedia shall have access to and shall be entitled to use any Decolar Customer Personal
34
Data collected or received by Decolar or any of its Affiliates in connection with any and all Travel Products made available through the Expedia
API.
(b)
Decolar acknowledges that, as between Decolar and Expedia, Expedia is the sole and exclusive owner of all Customer
Personal Data relating to any End User originated via an Expedia Travel Solution (the “Expedia Customer Personal Data”). During the Term
of this Agreement, Expedia hereby grants Decolar a worldwide, nonexclusive, royalty-free, sub-licensable right and license to use any Expedia
Customer Personal Data imported to, integrated with or collected by Decolar via the Decolar Application or any Decolar Platform and to use the
know-how and analytical results resulting therefrom in connection with the operation of the Decolar Platform and the enhancement,
improvement, and provision of the Decolar technology and derivatives thereof, without restriction. Decolar, its Affiliates and sublicensees shall
not use the Expedia Customer Personal Data for purposes of soliciting customers or performing marketing campaigns, and shall abide by the
confidentiality obligations set forth herein.
5.1.3
Transactional and Other Data.
(a)
Subject to Section 5.1.2(a), Decolar acknowledges that, as between Expedia and Decolar, Expedia is the sole and
exclusive owner of all data that Expedia collects, receives, generates, compiles, creates or processes in connection with this Agreement and the
operation of the Expedia API and any and all Expedia Travel Solutions and Expedia’s exercising of its rights and performance of its obligations
hereunder, including any and all purchase and transactional data resulting from End User transactions on or through the Expedia Platform or an
Expedia Travel Solution and notwithstanding the fact that any Decolar Customer Personal Data may be included in such transactional data (such
as the name of an End User) (collectively, “Expedia Transactional Data”). For the avoidance of doubt and notwithstanding anything to the
contrary herein, Expedia may retain and use any and all usage data and all analytics based on the Expedia Transactional Data for incorporating
into the Expedia Platform and for the furtherance of our business and for the operating and developing of Expedia’s partner program including
the Expedia API. In the event that such data and/or information is shared with third parties, it shall: (i) not contain the Decolar Customer
Personal Data; and (ii) shall be anonymized such that Decolar’s information is not easily identifiable (unless otherwise agreed between the
Parties or for Expedia or our Affiliates to provide reporting to Travel Supply Providers).
(b)
Subject to Section 5.1.2(b), Expedia acknowledges that, as between Decolar and Expedia, Decolar is the sole and
exclusive owner of all data collected or received by Decolar in connection with the operation of the Decolar Platform and Decolar’s exercising of
its rights and performance of its obligations hereunder, including any and all purchase and transactional data resulting from End User
transactions on or through the Decolar Platform and notwithstanding the fact that any Expedia Customer Personal Data may be included in such
transactional data (such as the name of an End User) (collectively, “Decolar Transactional Data”). For the avoidance of doubt, Decolar may
retain and use any and all usage data and all analytics based on the Decolar Transactional Data. Notwithstanding anything in this Agreement
(including this Section 5.1.3(b)) to the contrary, to the extent required to comply with tax reporting requirements, Expedia shall have access to
and shall be entitled to use any Decolar Transactional Data collected or received by Decolar or any of its Affiliates in connection with any and all
Travel Products made available through the Expedia API. Expedia, its Affiliates and sublicensees shall not use the Decolar Transactional Data
for purposes of soliciting customers or performing marketing campaigns and shall abide by the provisions set forth herein.
5.2
Security.
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5.2.1
Decolar shall use commercially reasonable efforts to abide by the Payment Card Industry Data Standard Security
Requirements throughout the Term.
5.2.2
Decolar shall adopt and implement industry standards and shall use commercially reasonable efforts to adopt and
implement best-in-class, security policies, procedures and requirements, including those relating to the prevention and detection of fraud or other
inappropriate use or access of systems and networks.
5.2.3
Penetration Testing.
(a)
During the Term, Expedia, its Affiliates or a third-party auditor appointed by Expedia or any of its Affiliates may carry
out penetration testing of any environment that is part of Decolar’s information technology systems, including associated data, interfaces,
databases, middleware, operating systems, network and storage infrastructure, peripherals, as well as third party software (whether packaged or
not), and hardware required to operate the foregoing to identify and analyze any potential security vulnerabilities, flaw or operational weaknesses
and review Decolar’s information security, data protection, disaster recovery, business continuity and confidentiality policies, procedures and
safeguards, provided that it coordinates the conduct of such testing with Decolar and uses reasonable efforts to minimize the disruption to
Decolar as a result of such testing. Expedia shall be permitted to conduct four (4) penetration tests in any rolling twelve (12)-month period.
(b)
In carrying out the penetration testing, Expedia may use a third-party contractor to perform the tests provided that such
third-party contractor has entered into a non-disclosure agreement with Expedia regarding the conduct and results of the penetration test.
(c)
Decolar will cooperate with Expedia in planning and performing penetration testing, as well as in the prompt
remediation of any vulnerabilities detected as a result of penetration testing.
(d)
All costs of any penetration testing carried out pursuant to this Section 5.2.3 shall be borne and paid solely and in their
entirety by Expedia.
6.
INTELLECTUAL PROPERTY; LICENSE
6.1
Display of Expedia Information.
6.1.1
During the Term, in connection with all Expedia Travel Products made available for booking or otherwise displayed or
listed on any Decolar Platform, Decolar shall display the appropriate trademark or copyright for third parties (including Travel Supply
Providers), information about or content describing the Expedia Travel Products, its material terms and conditions, seller of travel designations,
the cancellation policies, rules, disclosures, regulations, rates, prices, Taxes, Tax recovery charges, services fees and other charges and fees for all
offered Expedia Travel Products, as provided by Expedia, without addition to, revision, deletion or change of any sort whatsoever (“Expedia
Information”).
6.1.2
Decolar shall regularly refresh the Expedia Information on the Decolar Platform and, in any event, shall update the
Expedia Information promptly (including withdrawing any out-of-date Expedia Information) and within 5 Business Days of a specific written
request from Expedia to do so. Decolar will be liable for any claims brought by any third parties as a result of Decolar’s failure to update the
Expedia Information within 5 Business Days of a receipt of such a request.
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6.1.3
Decolar shall display the GBV in the currency which is provided in the Expedia API. Decolar may only convert the
GBV into any alternative currency if that currency has not been made available in the Expedia API, and in which case, Decolar must ensure that
any conversion into an alternative currency is calculated in accordance with the currency conversion rate published by Bloomberg (or another
credible conversion rate with Expedia’s prior written consent) at the time the Expedia Information is displayed on a Decolar Platform. Decolar
will be liable for any claims brought as a result of any currency conversion that breaches this Section 6.1.3.
6.2
Cross License in Trademarks and Materials. Subject to the terms of, and for the duration of this Agreement, each Party (the
“Licensor”) hereby grants the other Party (the “Licensee”) a non-exclusive, non-transferable (except as provided in Section 15.12), royalty-free,
worldwide license to use, distribute, reproduce, perform and display such of the Licensor’s and its Affiliates’ Trademarks and all images, text and
other copyrighted materials (collectively, “Materials”) Licensor furnishes to Licensee for use under this Agreement.
6.3
Expedia Intellectual Property. Subject to the terms and for the duration of the Agreement, Expedia hereby provides to Decolar
license rights in the intellectual property associated with the Expedia API, including, without limitation, the Expedia Travel Solution, Expedia
Travel Products, Expedia Specifications, Voyager Tool or any other Expedia content provided under this Agreement (collectively, the “Expedia
Intellectual Property”) to use such Expedia Intellectual Property in accordance with this Agreement. The license rights granted herein comprise
of a non-exclusive, non-transferable (except as provided in Section 15.12), royalty-free, worldwide license to use, distribute, reproduce, perform
and display Expedia Intellectual Property, Expedia Trademarks, Expedia’s Affiliate’s trademarks and all images, text and other content Expedia
furnishes to Decolar for use pursuant to this Agreement.
6.4
Use of Trademarks and Materials. During the Term, each Party will (a) submit to the other Party all proposed uses (other than
materials disseminated solely on an internal basis) of the other Party’s Trademarks or Materials, and (b) not publish or otherwise engage in any
use of the other Party’s Trademarks or Materials without the other Party’s prior written consent. Each Party will comply with the other Party’s
requirements regarding the format and placement of its Trademarks, including as set forth in any Trademark use guidelines provided in writing
by the other Party. Neither Party will take any action to register or otherwise challenge or interfere with the other Party’s interests in its
Trademarks. Unless specifically provided for herein, neither Party will adopt or otherwise use any Trademark that is similar to, or likely to be
confused with, any of the other Party’s Trademarks. All goodwill from each Party’s use of the other Party’s Trademarks will inure to the benefit
of the other Party.
6.5
Voyager Tool.
6.5.1
Expedia hereby grants to Decolar and its Affiliates a revocable, non-exclusive, non-transferable (except as provided in
Section 15.12), royalty-free, worldwide license to use the voyager tool developed by Expedia (“Voyager Tool”) solely for the purpose of
providing customer care and support pursuant to Section 2.1.8 of this Agreement related to Expedia Travel Products and booking of Expedia
Travel Products for End Users. Decolar may not use the Voyager Tool other than as specified in, and subject to, this Section 6.5 without the prior
written consent of Expedia. Decolar has no right (and shall not permit any third party) to copy, adapt, reverse engineer, decompile, disassemble,
modify, adapt or make error corrections to the Voyager Tool in whole or in part except to the extent that any reduction of the Voyager Tool to
human readable form (whether by reverse engineering, decompilation or disassembly) is necessary for the purposes of integrating the operation
of the Voyager Tool with the
37
operation of other software or systems used by Decolar in furtherance of the business arrangement described herein.
6.5.2
Decolar hereby acknowledges that the Voyager Tool as well as all accompanying materials including training and other
supporting documents (together the “Voyager Materials”) are the proprietary and confidential property of Expedia and Decolar shall not,
without Expedia’s consent, disclose the Voyager Tool or the Voyager Materials as well as the existence and use of it by Decolar in any manner
whatsoever, in whole or in part, and shall not be used other than as contemplated by this Agreement. Further, Decolar and its Affiliates will share
the Voyager Tool or the Voyager Materials only with those persons within its company (and its advisors) who need to know the Voyager Tool or
the Voyager Materials for the purpose of assisting in the performance of this Agreement and who are informed of, and agree to be bound by the
terms hereof as if a party to, this Agreement. In addition, access to the Voyager Tool and Voyager Materials shall be limited to those users in
receipt of access credentials provided by Expedia, which shall be strictly for use by the recipient only. Sharing of access credentials is strictly
prohibited. Without prejudice to any other rights or remedies available to Expedia or its Affiliates, if Decolar is in material breach of this
Section 6.5.2, Expedia will notify Decolar of such breach and allow Decolar ten days to remedy such breach. In the event that Decolar does not
remedy such breach within ten days, Expedia may restrict access to the Voyager Tool and the Voyager Materials with immediate effect. Expedia
shall have the right, in its sole discretion, to modify the access levels and permissions with respect to the actions Decolar and its Affiliates are
permitted to take in connection with their use of the Voyager Tool.
6.6
Reservation of Rights. Each Party reserves all rights not expressly granted herein. As between the Parties: (a) Decolar is the
owner of and reserves all right, title and interest in and to any Decolar Platform (other than Expedia’s Trademarks and Expedia’s Materials
therein), the Decolar Platform, the Decolar API, the Decolar Platform, Decolar’s Trademarks and all of Decolar’s Materials; and (b) Expedia is
the owner of and reserves all right, title and interest in and to the Expedia Specifications, the Expedia API, Expedia Travel Solution, Expedia’s
Trademarks and all Expedia’s Materials.
7.
REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1
Mutual Representations and Warranties. Each Party represents, warrants and covenants to the other Party that:
7.1.1
it has all necessary corporate or similar power, authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement;
7.1.2
the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate or similar action;
7.1.3
this Agreement constitutes a valid and binding obligation enforceable against it in accordance with its terms (assuming
due execution of this Agreement by the other Party), subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar Laws of general applicability relating to or affecting creditors’ rights and to general equity principles;
7.1.4
the execution and delivery of this Agreement does not violate any Laws of any jurisdiction or the terms or conditions of
any other contracts to which it is a party or by which it is otherwise bound; and
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7.1.5
no approval, order, consent of or filing with any Governmental Authority is required on the part of such Party in
connection with its execution and delivery of this Agreement or the performance of its obligations under this Agreement.
7.2
Sanctions Regimes.
7.2.1
Each of Decolar, Decolar Parent and Guarantors represents and warrants that it is not and will not provide the Expedia
Travel Products, or any information related thereto, to any entity incorporated in or resident in a country subject to economic or trade sanctions
by the U.S. State Department or U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) the United Nations Security Council,
the European Union and her Majesty’s Treasury or are listed as a Sanctions Target, except as permitted by Law, license or exemption.
7.2.2
The Parties agree that each shall take responsibility for screening individuals and entities with which it contracts, pays or
receives payment from in connection with this Agreement to ensure before dealing with them that such individuals and entities are not listed as
Sanctions Targets and to ascertain whether such individuals and entities are listed on OFAC’s Sectoral Sanctions Identifications List (“SSI List”)
and establish and operate a process to do so. Upon the other Party’s request, within 30 days, the requested party shall provide information and
documents regarding its screening processes and tool, its program for compliance with Sanctions & Trade Controls, and the results of its
screening activities to the requesting party or its designated representative for review. Expedia shall not provide to Decolar Expedia Travel
Products which contracted to Expedia by Sanctions Targets and Expedia will continue to screen against the pertinent lists, at such intervals as it
reasonably considers necessary, in order to ensure the above. In case any Expedia Travel Product is contracted to Expedia by Sanctions Target,
Expedia shall cease to offer to Decolar such Expedia Travel Product and shall relocate or otherwise remediate any affected travelers in
accordance with Expedia’s practices and policies.
7.2.3
Any material breach by Decolar, Decolar Parent, or any Guarantor of this Section 7.2 arising from a Travel Booking
shall be deemed a material breach of this Agreement, and Expedia may immediately terminate this Agreement unless such breach has been cured
within ten (10) days of notice of its occurrence.
7.3
Compliance with Laws. Each Party represents and warrants that it shall comply in all material respects with all Laws, including
Privacy Laws, applicable to the performance of such Party’s obligations pursuant to this Agreement.
7.4
EXPEDIA DISCLAIMER. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE EXPEDIA
SPECIFICATIONS, TRAVEL PRODUCTS AND THE EXPEDIA API ARE PROVIDED BY EXPEDIA AND ITS AFFILIATES “AS IS” AND
WHERE AVAILABLE, AND NEITHER EXPEDIA NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATIONS OR
WARRANTIES WITH REGARD TO THE SAME. EXPEDIA AND ITS AFFILIATES EXPRESSLY DISCLAIM ALL IMPLIED
WARRANTIES, OBLIGATIONS AND LIABILITIES ARISING BY LAW OR OTHERWISE, WITH RESPECT TO THE EXPEDIA
SPECIFICATIONS, THE EXPEDIA API AND THE EXPEDIA TRAVEL PRODUCTS, INCLUDING WITHOUT LIMITATION ANY:
(A) IMPLIED WARRANTY OF MERCHANTABILITY, SATISFACTORY QUALITY OR FITNESS FOR A PARTICULAR PURPOSE;
(B) IMPLIED WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; OR
(C) IMPLIED WARRANTY OF NON-INFRINGEMENT. NEITHER EXPEDIA NOR ANY OF ITS AFFILIATES WILL HAVE ANY
LIABILITY TO DECOLAR OR ANY OF ITS AFFILIATES OR ANY END USER RELATING TO: (1) ANY FAILURE OF THE SYSTEMS
OF EXPEDIA OR ITS AFFILIATES OR ANY THIRD
39
PARTY THAT RESULTS IN THE FAILURE OR INABILITY TO PROCESS A TRANSACTION; (2) THE QUALITY OF THE EXPEDIA
TRAVEL PRODUCTS PROVIDED BY TRAVEL SUPPLY PROVIDERS TO CUSTOMERS; OR (3) DECOLAR’S FAILURE TO MEET ITS
PAYMENT OBLIGATIONS.
7.5
DECOLAR DISCLAIMER. EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE DECOLAR TRAVEL
PRODUCTS AND THE DECOLAR API ARE PROVIDED HEREUNDER BY DECOLAR AND ITS AFFILIATES “AS IS” AND WHERE
AVAILABLE, AND NEITHER DECOLAR NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATIONS OR WARRANTIES WITH
REGARD TO THE SAME. DECOLAR AND ITS AFFILIATES EXPRESSLY DISCLAIM ALL IMPLIED WARRANTIES, OBLIGATIONS
AND LIABILITIES ARISING BY LAW OR OTHERWISE, WITH RESPECT TO THE DECOLAR SPECIFICATIONS, THE DECOLAR API
AND THE DECOLAR TRAVEL PRODUCTS, INCLUDING WITHOUT LIMITATION ANY: (A) IMPLIED WARRANTY OF
MERCHANTABILITY, SATISFACTORY QUALITY OR FITNESS FOR A PARTICULAR PURPOSE; (B) IMPLIED WARRANTY ARISING
FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE; OR (C) IMPLIED WARRANTY OF NON-
INFRINGEMENT. NEITHER DECOLAR NOR ANY OF ITS AFFILIATES WILL HAVE ANY LIABILITY HEREUNDER TO EXPEDIA OR
ANY OF ITS AFFILIATES OR ANY END USER RELATING TO: (1) ANY FAILURE OF THE SYSTEMS OF DECOLAR OR ITS
AFFILIATES OR ANY THIRD PARTY THAT RESULTS IN THE FAILURE OR INABILITY TO PROCESS A TRANSACTION; (2) THE
QUALITY OF THE DECOLAR TRAVEL PRODUCTS PROVIDED BY TRAVEL SUPPLY PROVIDERS TO CUSTOMERS; OR
(3) EXPEDIA’S FAILURE TO MEET ITS PAYMENT OBLIGATIONS.
8.
COMPLIANCE; PROHIBITED ACTIVITIES; TERMS AND CONDITIONS; ADDITIONAL COVENANTS
8.1
Licenses and Consents. Other than to the extent Expedia Travel Products are made available to book in single transactions
unrelated to the booking of any other travel product or service, Decolar undertakes and warrants to Expedia that Decolar, and not Expedia or its
Affiliates, shall be solely responsible for obtaining and maintaining all licenses, consents and other permissions (each, if any and whether
regulatory or otherwise) and all financial security arrangements necessary for the performance of its obligations under this Agreement in respect
of bookings of Expedia Travel Products in combination with other travel products and services provided and/or arranged by Decolar or any third
party, including as part of a Package. Decolar shall be solely responsible for its own costs of complying with this Section 8.1.
8.2
Expedia Licenses and Consents. Other than to the extent Decolar Travel Products are made available to book in single
transactions unrelated to the booking of any other travel product or service, Expedia undertakes and warrants to Decolar that Expedia, and not
Decolar or its Affiliates, shall be solely responsible for obtaining and maintaining all licenses, consents and other permissions (each, if any and
whether regulatory or otherwise) and all financial security arrangements necessary for the performance of its obligations under this Agreement in
respect of bookings of Decolar Travel Products in combination with other travel products and services provided and/or arranged by Expedia or
any third party, including as part of a Package. Expedia shall be solely responsible for its own costs of complying with this Section 8.2.
8.3
Prohibited Activities. Decolar shall not: (a) send unsolicited bulk e-mail or engage in other unethical or illegal marketing
activities; (b) place on any site linked to any site of Expedia or its Affiliates, or associate Expedia or its Affiliates with, any material that is
libelous or defamatory, capable
40
of interpretation as discriminatory or of promoting such views, inappropriate for general and family viewing (e.g., sexually explicit materials,
materials or opinions advocating violence, illegal activity or hatred, or any material the display of which may be unlawful in any jurisdiction) (c)
tamper with the operation of the Expedia API or Voyager Tool or act in a fraudulent, deceptive non-genuine or illegitimate manner when using
them or dealing with End Users; (d) not disparage us, our Affiliates or Travel Supply Providers; (e) not sell, redistribute, display, copy, adapt,
reverse engineer, decompile, disassemble, make derivative works or error corrections or use in any manner (directly or indirectly) the Expedia
API, Expedia Information, data or Websites (or our Affiliates websites) other than in accordance with this Agreement; (f) attempt to artificially
increase the Marketing Fees in any way; (g) not take any action that we may, in our sole discretion, determine as imposing an unreasonable or
disproportionately large load on the technology or infrastructure of the Expedia API, or attempt to circumvent or avoid any measure employed to
prevent or limit access to the Expedia API and/or Voyager Tool (including using robots or any other method to systematically request data from
us or our Affiliates); mislead or misrepresent to consumers as to the origin, affiliation or nature of its Websites, products or services, or
misrepresent who it is acting for when contacting End Users including without limitation leading End Users to believe that Decolar is directly
connected to any of the Travel Supply Providers. Decolar will allow and will take reasonable steps to prevent any direct or indirect extraction,
repurposing and/or aggregation of the Travel Product data made available to Decolar under this Agreement (e.g., inclusion of Travel Product data
in consolidated third party search results) without the prior written consent of Expedia. Decolar will not, without written consent from Expedia,
use, publish or display any data, materials or other content from any Website owned or operated by Expedia or its Affiliates which is not received
through the Expedia API.
8.4
Restrictions.
8.4.1
Decolar Restrictions. From and after the date of this Agreement, the following restrictions shall apply to Decolar:
(a)
Predatory Advertising. Decolar will not use and will prohibit the use of Decolar Predatory advertising methods in
relation to any Expedia Travel Product or Expedia brand in connection with the operation or promotion of the Decolar Platform. “Decolar
Predatory” advertising means any method that creates or overlays links or banners on Websites, mobile devices, social media or any other
channel through which the Decolar Platform allows access to the Expedia Travel Product (each a “Decolar Channel”), spawns browser
windows, or any method invented to generate traffic from a Decolar Channel without that Decolar Channel owner’s knowledge, permission, and
participation (e.g., keyword parsing browser plugins such as TopText and +Surf, banner replacement technology such as Gator, browser
spawning technology that is not Website dependent).
(b)
Restrictions on Online Use and Keyword Advertising. Decolar represents and warrants to Expedia that except for the
limited, personal right to use Expedia’s Trademarks as set forth in this Agreement, or according to applicable Law, Decolar shall not register,
display or use in any context or manner (directly or indirectly), any Expedia Trademark (including, without limitation, any misspelling, variant,
translation, transliteration or script substantially similar or confusingly similar thereto), in any manner whatsoever (including without limitation,
in any search engine marketing or optimization, in any domain name, social media handle, any other online/offline marketing, promotional
activities or advertising, press releases, etc.) without first obtaining prior written approval from Expedia. Without limiting the foregoing, Decolar
shall not engage in any paid marketing or promotional activities that have as their purpose to intentionally and knowingly divert customers or
traffic specifically from Expedia or its Affiliates, and Decolar will not bid on any names that are present in URLs or Trademarks owned or used
by Expedia or its Affiliates or any Expedia Travel Supply Provider, in each case in respect of the
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following brand names (and any other Expedia or affiliated brand names notified to Decolar from time to time): “Expedia”, “Expedia.co”,
“Expedia.com”, “hotels.com”, “hoteles.com”, “hotel.com”, “hotels.co”, “hotel.co”, “venere”, “venere.com”, “hotwire”, “hotwire.com”,
“egencia”, “trivago”, “carrentals.com”, “travelnow.com”, “condosavers.com”, “orlando.com” and “vacationspot.com” (and any misspelling or
substantially similar or confusingly similar version thereof) for placement in any cost per click search engine or other search engine, search
marketing platform, social media platform, or mobile applications’ digital distribution platform in which listing order or display is determined by
payment to the search engine or other third party. Further, Decolar will not use any Trademarks or names that are present in URLs owned by
Expedia or its Affiliates, in each case in respect of the following brand names: “Expedia”, “Expedia.co”, “Expedia.com”, “hotels.com”,
“hoteles.com” “hotel.com”, “hotels.co”, “hotel.co”, “venere”, “venere.com”, “hotwire”, “hotwire.com”, “egencia”, “trivago”, “carrentals.com”,
“travelnow.com”, “condosavers.com”, “orlando.com” and “vacationspot.com”, “travelocity”, “orbitz”, “cheaptickets”, “ebookers”, “wotif”,
“homeaway.com” “VRBO”, “VacationRentals.com”, “Homelidays”, “Ownersdirect”, “Abritel HomeAway”, “FeWo-direkt”, “Toprural”,
“bookabach”, “Stayz”, “travelmob” and “Alugue Temporada” (and any misspelling or substantially similar or confusingly similar version
thereof), in keyword meta tags on any pages of the Decolar Website(s) or any other Websites or channels owned and/or operated by Decolar. If
Expedia or its Affiliates receive a request from its or their suppliers requesting that Decolar cease bidding on a supplier Trademark or name or
names present in a URL owned by such supplier, then Decolar will, at the request of Expedia, either (i) cease bidding upon such name or names
or (ii) cease sourcing supplier’s inventory from Expedia and notify Expedia in writing of the same (it being agreed that such cessation shall in no
way affect Decolar’s obligations and restrictions under this Agreement).
(c)
Third Parties. Decolar’s rights hereunder are subject in all respects to the terms of any agreement or other arrangement
between Expedia or its applicable Affiliates, on the one hand, and any third-party supplier (e.g., travel supply provider, technology provider, or
service provider), and Decolar shall comply with the terms of such agreement to the extent Expedia communicates to Decolar in advance such
terms or restrictions contained in such agreement or the general principles underlying such terms or restrictions with reasonable specificity for
purposes of allowing Decolar to comply therewith. The Parties will cooperate to enable Expedia to communicate the restrictions set forth in such
agreements or the general principles underlying such terms and restrictions, as applicable, to Decolar and to enable the Parties to address any
issues of non-compliance by Decolar with such agreements. To the extent Decolar or any of its Affiliates or representatives breach any term or
restriction of any agreement or arrangement to which the first sentence of this Section 8.4.1 applies, Expedia and its Affiliates shall have the
right to immediately suspend that feature or other aspect of the services to which such breach relates until such time as the breach is cured or is
otherwise addressed to the reasonable satisfaction of Expedia, upon which (to the extent permitted by the applicable contract) Expedia shall
promptly restore the feature or other aspect of the service.
(d)
Exclusivity as to Certain Providers. [***].
(e)
Customers. Decolar shall not misrepresent who Decolar is acting for when contacting customers including (as an
example only) leading customers to believe that it is directly connected to any Travel Supply Provider. Decolar shall not make or allow Travel
Bookings other than in response to a specific request by a customer. Decolar also acknowledges that any Travel Booking is between the customer
and the Travel Supply Provider, and may not be canceled or otherwise amended without the consent of the serviced customer except as otherwise
provided herein. In addition, Decolar acknowledges that Travel Bookings of more than 8 rooms (unless otherwise stated) with the same Travel
Supply Provider for the same stay dates (a “Group Booking”) may not be made by Decolar, or customers
42
via the Expedia API. In the event a customer requires a Group Booking, Decolar will notify Expedia and follow its relevant process. Any Group
Booking made in breach of this clause may be canceled by Expedia and any applicable cancellation fees will be applied.
8.4.2
Restrictions on Online Use and Keyword Advertising. Expedia represents and warrants to Decolar that except for the
limited, personal right to use Decolar’s Trademarks as set forth in this Agreement, or according to applicable Law, Expedia shall not register,
display or use in any context or manner (directly or indirectly), the Decolar Trademarks (including, without limitation, any misspelling, variant,
translation, transliteration or script substantial similar or confusingly similar thereto), in any manner whatsoever (including without limitation, in
any search engine marketing or optimization, in any domain name, social media handle, any other online/offline marketing, promotional
activities or advertising, press releases, etc.) without first obtaining prior written approval from Decolar. Without limiting the foregoing, Expedia
shall not engage in any paid marketing or promotional activities that have as their purpose to intentionally and knowingly divert customers or
traffic specifically from Decolar or its Affiliates, and Expedia will not bid on any names that are present in URLs or Trademarks owned or used
by Decolar or its Affiliates or any Decolar Travel Supply Provider, in each case in respect of the following brand names (and any other Decolar
or its Affiliates’ brand names notified to Expedia from time to time): “Despegar”, “Despegar.com”; “Decolar”, “Decolar.com”, “Viajes
Falabella”, “Viajes Falabella.com”; “Best Day”, ”HotelDO”, “Stays”, “Koin”, “Viajanet” and all related domain extensions (including, without
limitation, any misspelling or substantially similar or confusingly similar version thereof) and any other domain extension of property of
Decolar, for placement in any cost per click search engine or other search engine, search marketing platform, social media platform, or mobile
applications’ digital distribution platform in which listing order or display is determined by payment to the search engine or other third party.
Further, Expedia will not use any Trademarks or names that are present in URLs owned by Decolar or its Affiliates, in each case in respect of the
following brand names (and any other Decolar or its Affiliates’ brand names notified to Expedia from time to time): “Despegar”,
“Despegar.com”; “Decolar”, “Decolar.com”, “Viajes Falabella”, “Viajes Falabella.com”, “Best Day”, “HotelDO”, “Stays”, “Koin”, “Viajanet”
and all related domain extensions (including, without limitation, any misspelling or substantially similar or confusingly similar version thereof)
and any other domain extension of property of Decolar, in keyword meta tags on any pages of the Expedia Website(s) or any other Websites or
channels owned and/or operated by Expedia. If Decolar or its Affiliates receive a request from its or their suppliers requesting that Expedia cease
bidding on a supplier Trademark or name or names present in a URL owned by such supplier, then Expedia will, at the request of Decolar, either
(i) cease bidding upon such name or names or (ii) cease sourcing supplier’s inventory from Expedia and notify Decolar of such in writing.
8.5
Packages and Room Rates. The provisions of Schedule 4 shall apply to Packages and use of Room Rates.
8.6
Expedia Terms and Conditions. In connection with the making available of and booking of the Expedia Travel Products by
End Users via the Expedia API on or through the Decolar Application or Decolar Platform, Decolar undertakes that the following terms and
conditions will be reflected in the terms and conditions or privacy policy (as applicable) under which Decolar will make available the Expedia
Travel Products to the End Users through the Decolar Application or Decolar Platform.
8.6.1
Cancellation Policy. The End User agrees that the accommodation booking made is subject to the cancellation policy
informed to End Users, which policy will conspicuously state that that Decolar’s suppliers may cancel bookings prior to their receiving payment
for the bookings.
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8.6.2
Contracting Party. Save as set out below, the End User acknowledges and agrees that: (1) Travelscape, LLC (or any
other Affiliate as we designate) shall be treated by any Tax authority in any pertinent jurisdiction as is the supplier to the End User in respect of
an Affiliate-Collect Booking or Expedia-Sourced Travel Booking and the accommodation component of a Package for VAT (Value Added Tax)
purposes as applied by Directive 2006/112/EC (where applicable); and (2) the applicable Travel Supply Provider is the supplier to the End User
in respect of a Property-Collect Booking. With respect to (1) only and with respect to End Users located in Brazil and travelling within Brazil,
Travelscape, LLC acts as a facilitator of the booking of the Expedia Travel Product, and the Travel Supply Provider is the supplier to the End
User.
8.6.3
Personal Data. The End User agrees that Decolar may transfer personal data belonging to the customer and other
persons on behalf of whom the customer is making a booking of Expedia Travel Products to Expedia and/or its Affiliates for the purposes of
facilitating the booking and providing after sales support (if any) of those Expedia Travel Products. These companies may be based outside of
the country in which the End User resides and/or the country in which the information is collected and may not have the equivalent data
protection standards to those where the information is originally located.
8.6.4
Decolar will ensure that End Users will be informed about the applicable terms and conditions for exemptions of Travel
Taxes, in countries that provide an exemption of such taxes for foreign tourists. Furthermore, Decolar will ensure the customer is informed that
additional Travel Taxes may be charged separately by the Travel Supplier at the time of check-out if the End User does not satisfy all conditions
for the provision of said exemption.
8.7
Decolar Terms and Conditions. In connection with the making available of and booking of the Decolar Travel Products by End
Users via the Decolar API and Expedia Application, Expedia undertakes that the cancellation policy terms and conditions will substantially be
reflected in the terms and conditions and privacy policy (as applicable) under which Expedia will make available the Decolar Travel Products to
the End Users via any Expedia Platform. Expedia will be solely liable for any variation between the cancellation policies provided to Expedia by
Decolar and those that are offered by Expedia to the End Users or displayed on the Expedia Platform.
8.8
Insurance. Decolar agrees to obtain as soon as reasonably practicable following the date of this Agreement, and in any event to
obtain no later than ninety (90) days, to the extent it is commercially reasonable to do so, customary casualty insurance coverage in effect in
respect of its operations in an amount that is consistent with best industry practice. Such insurance shall include cyber liability coverage, at limit
not less than [***] in aggregate. Once obtained, Decolar shall maintain such insurance coverage during the Term, and to the extent permitted by
Law, Decolar shall (i) name Expedia as an additional insured on any liability insurance policies on which it pays premiums, and deliver to
Expedia certificates of insurance that verify compliance with the preceding clause i, or (ii) provide other evidence of insurance acceptable to
Expedia in its sole discretion that indicates that Expedia will be covered by their insurance in the event of a claim relating to this Agreement.
8.9
Expedia Actions. Expedia agrees to take all necessary actions to cause Expedia to perform its obligations under this Agreement.
To the extent that Expedia is the beneficiary of any obligation under this Agreement, it shall be an express third-party beneficiary hereof and
shall have the right to enforce the obligations owed to it hereunder.
9.
INDEMNIFICATION
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9.1
Indemnification by Expedia. Expedia shall indemnify, defend and hold harmless Decolar, its Affiliates and its and their
respective directors, officers, employees, agents, subcontractors and assigns (collectively, the “Decolar Indemnified Parties”) from and against
any and all claims, suits, actions, demands, and proceedings of any kind threatened, asserted or filed by any third Person (collectively “Claims”)
against any Decolar Indemnified Party and any damages, losses, expenses, liabilities or costs of any kind (including reasonable legal fees,
witness fees and court costs) incurred in connection with such Claims, arising out of or relating to:
9.1.1
any infringement or misappropriation, or alleged infringement or misappropriation, of any Intellectual Property Right of
a third Person arising from Decolar’s or Expedia’s use, sale, display, performance, distribution, or other exploitation of the Expedia Travel
Products or Expedia Trademarks, including the rights and licenses granted under Section 6 hereof;
9.1.2
any breach by Expedia of its representations and warranties under Section 7.1, 7.2 or Section 7.3;
9.1.3
any contracts or arrangements between any third Person and Expedia and any of its Affiliates, including any breach or
alleged breach of the terms or conditions of such contracts and/or arrangements;
9.1.4
any display or use of the Decolar Travel Products that is not in accordance with the terms of this Agreement or in
compliance with Laws; and
9.1.5
any liabilities of Expedia for Taxes and Unclaimed Property Liabilities, including any liabilities for Taxes and
Unclaimed Property Liabilities for which Expedia is responsible pursuant to the terms of this Agreement, but excluding any liabilities for Taxes
and Unclaimed Property Liabilities for which Decolar is responsible pursuant to this Agreement.
9.2
Indemnification by Decolar. Decolar Parent shall indemnify, defend and hold harmless Expedia, its Affiliates and its and their
respective directors, officers, employees, agents, subcontractors and assigns (collectively, the “Expedia Indemnified Parties”) from and against
any and all Claims against any Expedia Indemnified Party and any damages, losses, expenses, liabilities or costs of any kind (including
reasonable legal fees, witness fees and court costs) incurred in connection with such Claims, arising out of or relating to Expedia:
9.2.1
any infringement or misappropriation, or alleged infringement or misappropriation, of any Intellectual Property Right of
a third Person arising from Expedia’s use, sale, display, performance, distribution, or other exploitation of the Decolar Travel Products and
Decolar Trademarks, including the rights and licenses granted under Section 6;
9.2.2
any breach by Decolar of Sections 7.1, 7.2 or 7.3;
9.2.3
any breach by Decolar, its Affiliates or any third party to which Decolar is allowed to redistribute Expedia Travel
Products, of the terms of its third party or Expedia’s Travel Supply Providers’ supplier contracts;
9.2.4
any display or use of the Expedia Information or the Expedia Travel Products that is not in accordance with the terms of
this Agreement or in compliance with Laws;
9.2.5
any liabilities of Decolar for Taxes and Unclaimed Property Liabilities, including any liabilities for Taxes and
Unclaimed Property Liabilities for which Decolar is responsible pursuant to
45
the terms of this Agreement, but excluding any liabilities for Taxes and Unclaimed Property Liabilities for which Expedia is responsible pursuant
to this Agreement; and
9.2.6
any breach by Decolar or its Affiliates, or any third party to which Decolar is allowed to redistribute Expedia Travel
Products, of the terms set forth in Section 8.
9.3
Process. If either Party seeks indemnification (the “Indemnified Party”) from the other Party (the “Indemnifying Party”)
pursuant to Section 9.1 or Section 9.2, as applicable, the Indemnified Party shall: (a) give prompt written notice to the Indemnifying Party of the
Claim; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under this Section 9
except to the extent that it has been materially prejudiced by such failure; and (b) grant to the Indemnifying Party sole control of the defense or
settlement of such Claim; provided, however, that (x) Expedia shall control any Claims relating to Expedia Travel Solution Taxes, any additional
Taxes imposed on or payable by Expedia or any of its Affiliates arising out of failure by Decolar, with respect to any Expedia-Sourced Travel
Bookings booked after the date of this Agreement, to display Taxes as provided by Expedia in accordance with Section 6.1, Expedia Incremental
Taxes and Expedia Travel Unclaimed Property Liabilities and shall keep Decolar reasonably informed about material developments with respect
to such Claims as reasonably requested by Decolar and (y) except with respect to Claims relating to Taxes described in clause (x) above, the
Indemnifying Party shall not settle any Claim without the Indemnified Party’s prior written approval (not to be unreasonably withheld) where
such settlement would involve an admission of wrongdoing by or result in continuing liability for the Claim on the Indemnified Party. The
Indemnified Party shall, at the Indemnifying Party’s expense, reasonably cooperate with the Indemnifying Party in the provision of any
information or assistance reasonably requested by the Indemnifying Party. The Indemnifying Party shall keep the Indemnified Party advised of
the status of any such Claim and of its defense or settlement negotiation efforts and shall afford the Indemnified Party a reasonable opportunity
to review and comment on significant actions planned to be taken by the Indemnifying Party on behalf of the Indemnified Party. The
Indemnified Party shall have the right to select its own counsel to participate at its own expense in any such defense without waiving the
indemnification provided by the Indemnifying Party; provided, however, that the Indemnifying Party retains sole control of the defense and,
solely with respect to the payment of monetary amounts and not with respect to any admission of liability or other requirement, the settlement of
such Claim to the extent covered by the indemnification provided herein.
9.4
Travel Solution Taxes.
9.4.1
For any Expedia-Sourced Travel Bookings booked after the date of this Agreement, the Parties agree and acknowledge
that (i) all Expedia Travel Solution Taxes shall be borne by Decolar in the same proportion as the Marketing Fee (not taking into account any
reduction pursuant to Section 9.4.2, any right of set-off or otherwise) bears to Gross Profit and (ii) all Expedia Incremental Taxes that are Travel
Solution Taxes will be borne solely by Decolar. Notwithstanding anything to the contrary in this Agreement, including other subsections of this
Section 9, (a) neither Party shall be required to indemnify, defend or hold harmless the other Party or its Affiliates or its and their respective
directors, officers, employees, agents, subcontractors and assigns for Travel Taxes (including Expedia Travel Solution Taxes) or Losses related to
Travel Taxes except pursuant to Sections 9.1.1, Section 9.1.5, Section 9.2.4, Section 9.2.6 and this Section 9.4, and (b) the indemnity obligations
of the Parties with respect to Travel Taxes are subject to this Section 9.4.1.
9.4.2
Payments.
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(a)
Decolar’s share of any and all Expedia Travel Solution Taxes, and any and all Expedia Incremental Taxes that are Travel
Solution Taxes, in each case, no matter when incurred, assessed or otherwise paid, will be taken into account in determining, and will reduce, the
Marketing Fees paid to Decolar pursuant to Section 3.2; provided that, for the avoidance of doubt, Decolar will not also have to pay any such
Expedia Travel Solution Taxes or Expedia Incremental Taxes that are Travel Solution Taxes (to the extent taken into account to reduce the
Marketing Fees paid to Decolar) directly to a taxing authority.
(b)
Each Party will be responsible for Travel Taxes (not including Expedia Travel Solution Taxes and Expedia Incremental
Taxes) with respect to its own bookings and shall indemnify the other Party for such non-Expedia Travel Solution/Incremental Travel Taxes.
9.4.3
Defense of Claims. Except as set forth in this Section 9.4.3, each of the Parties is responsible for defending Claims
against it or its Affiliates for Travel Taxes that are not Expedia Travel Solution Taxes or Expedia Incremental Taxes. Each Party is also
responsible for defending Claims filed against it before the date of this Agreement. If, after the date of this Agreement, a Claim is filed against
Decolar (i) that includes Expedia Travel Solution Taxes and other Travel Taxes (including with respect to bookings of Decolar made after the
Term), Decolar is responsible for defending that Claim to the extent it relates to such other Travel Taxes, and Expedia is responsible for
defending that Claim to the extent it relates to Expedia Travel Solution Taxes, or (ii) that includes Expedia Incremental Taxes and other Travel
Taxes (including with respect to bookings of Decolar made after the Term), Decolar is responsible for defending that Claim to the extent it
relates to such other Travel Taxes and Expedia is responsible for defending that Claim to the extent it relates to Expedia Incremental Taxes, or
(iii) solely with respect to bookings of Decolar other than Transactions (and not relating to any Expedia Travel Solution Taxes or Expedia
Incremental Taxes), Decolar is responsible for defending that Claim. For the avoidance of doubt and notwithstanding anything herein to the
contrary, Expedia shall have the sole right to control the conduct of any Claim (or portion thereof) in respect of or relating to Expedia Travel
Solution Taxes or Expedia Incremental Taxes and any Claim filed against Expedia or any of its Affiliates. Subject to the cost-sharing provisions
set forth in Section 9.4.4, the Party responsible for defending the Claim will bear the cost and expenses of defending that Claim. The Parties will
cooperate with each other to provide all transaction, data, contracts with third-party suppliers and other information with respect to relevant
bookings. Notwithstanding anything herein to the contrary, Decolar shall not be entitled to control the defense or settlement of any Claim
relating to the ’Expedia Travel Solution Taxes, Expedia Incremental Taxes or Expedia Travel Unclaimed Property Liabilities, or, unless required
by applicable Law, participate in the defense of such Claim.
9.4.4
Government Communications. Each Party shall provide prompt notice and a copy of any communications received
from a Governmental Authority to the other Party with respect to any audit or inquiry by a Governmental Authority, or other contest with respect
to any Expedia Travel Solution Tax, any additional Taxes imposed on or payable by Expedia or any of its Affiliates arising out of failure by
Decolar, with respect to any Expedia-Sourced Travel Bookings booked after the date of this Agreement, to display Taxes as provided by Expedia
in accordance with Section 6 or Expedia Incremental Tax. Decolar will not correspond with any Governmental Authority in relation to any
Expedia Travel Solution Tax, any additional Taxes imposed on or payable by Expedia or any of its Affiliates arising out of failure by Decolar,
with respect to any Expedia-Sourced Travel Bookings booked after the date of this Agreement, to display Taxes as provided by Expedia in
accordance with Section 6.1, or Expedia Incremental Tax without first consulting with Expedia, including allowing Expedia to review and
comment on such correspondence and to make any amendments that Expedia reasonably requires, to
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the extent permitted by applicable Law. Expedia will provide Decolar with such information as Decolar reasonably requires for the purposes of
such correspondence.
9.4.5
Financial Responsibility. Notwithstanding anything to the contrary contained herein, (i) if, pursuant to Section 9.4.3,
Expedia is responsible for defending and controlling a Claim that includes only Expedia Travel Solution Taxes, then Decolar will be financially
responsible for the costs and expenses incurred by Expedia in connection with such Claim in the same proportion as the Marketing Fee paid to
Decolar for the periods to which such Expedia Travel Solution Taxes relate (not taking into account any reduction pursuant to Section 9.4.2, any
right of set-off or otherwise) bears to Gross Profit for the periods to which such Expedia Travel Solution Taxes relate and (ii) if, pursuant to
Section 9.4.3, Expedia is responsible for defending and controlling a Claim that includes both Transactions and bookings other than
Transactions, then each Party will be financially responsible for the percentage of the costs and expenses incurred by Expedia equal to the
quotient of (x) the number of such Party’s bookings other than Transactions for the period at issue in such contest, (y) divided by the total
number of Transactions and bookings other than Transactions at issue in such contest for the same period. In addition, Decolar shall also pay a
portion of the costs and expenses incurred by Expedia related to defending the portion of any such Claim that relates to Transactions. The
amount of such additional costs and expenses to be paid by Decolar will be an amount equal to (x) the quotient of (i) the total number of
Transactions for the period at issue in such contest, divided by (ii) the total number of Transactions and bookings other than Transactions at issue
in such contest for the same period, (y) multiplied by the percentage obtained by dividing the Marketing Fee paid to Decolar with respect to the
same period by the Gross Profit with respect to such period, (z) multiplied by the costs and expenses incurred by Expedia. Notwithstanding any
of the foregoing or anything else herein to the contrary, Decolar shall be financially responsible for any and all costs and expenses incurred by
Expedia relating to the defense and conduct of any Claim (or portion thereof) that relates to Expedia Incremental Taxes (and the application of
the foregoing provisions of this Section 9.4.5 shall be appropriately modified to give effect to this sentence). Any reimbursement of legal fees to
be paid by one Party to the other Party pursuant to this Section 9.4.6 shall be paid within thirty (30) days of receiving a copy of the invoices
provided to the controlling party for such fees and confirmation from the controlling party that it is required to pay such fees.
9.4.6
Filing of Returns. The Parties acknowledge and agree that Expedia shall determine, in its discretion, the amount of, and
any requirements to withhold, collect or remit, any Expedia Travel Solution Taxes and any Expedia Incremental Taxes and shall take all actions
it deems necessary or appropriate in connection therewith. Subject to the preceding sentence, Decolar (or its relevant Affiliate) shall collect any
and all Expedia Travel Solution Taxes and Expedia Incremental Taxes (in its capacity as Merchant of Record), prepare and timely file all Tax
Returns required to be filed by Decolar or its relevant Affiliate to any Expedia Travel Solution Taxes or Expedia Incremental Taxes and timely
remit the Taxes shown as due on such Tax Returns. If Decolar is required by Law to file any such Tax Returns, subject to the first sentence of this
Section 9.4.6, the Parties shall cooperate in good faith and in a commercially reasonable manner to determine the appropriate course of action.
The Parties shall cooperate with each other to the extent reasonably requested and legally permitted to minimize any Expedia Travel Solution
Taxes or Expedia Incremental Taxes.
9.4.7
Reserved Liabilities. With respect to any liability or potential liability for Expedia Travel Solution Taxes, Expedia
Incremental Taxes or Expedia Travel Unclaimed Property Liabilities (and, in each case, any Losses relating thereto) for which Expedia has
established a reserve pursuant to FASB Accounting Standards Codification 450, or any successor thereto, as amended or revised from time to
time, in accordance with the Accounting Policies and Procedures (a “Reserved Liability”), Decolar shall not be entitled to dispute, except
pursuant to the audit rights provided under
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Section 2.1.3(d) of this Agreement, the amount of its share of such Expedia Travel Solution Taxes, Expedia Incremental Taxes or Expedia Travel
Unclaimed Property Liabilities determined by Expedia pursuant to this Section 9.4.7 or Section 12.2 relating to such Reserved Liability. As soon
as commercially practicable after the end of each fiscal quarter, Expedia shall inform Decolar of the aggregate amount of any Reserved
Liabilities, as well as the aggregate amount of any Reserved Liabilities that have been released. Notwithstanding anything to the contrary in this
Agreement, none of Expedia, its Affiliates or its Representatives shall be required to disclose any information relating to the foregoing to
Decolar, its Affiliates, its Representatives or any other third party if such disclosure would, on advice of Expedia’s counsel: (x) jeopardize any
attorney-client or other privilege; or (y) contravene any applicable Law, fiduciary duty or binding agreement. Upon Expedia’s reasonable request
in connection with any audit of Expedia’s financial statements, Decolar will confirm in writing its liability for its share of any Expedia Travel
Solution Taxes, Expedia Incremental Taxes and Expedia Travel Unclaimed Property Liabilities (and in each case, any Losses relating thereto)
determined by Expedia pursuant to this Section 9.4.7 or Section 12.2 relating to any such Reserved Liability. Decolar’s liability for its share of
any Expedia Travel Solution Taxes, Expedia Incremental Taxes and Expedia Travel Unclaimed Property Liabilities (and, in each case, any
Losses relating thereto) shall survive the termination of this Agreement. Without limiting Expedia’s rights pursuant to this Section 9 or
Section 12, with respect to any Reserved Liability, Decolar will pay its share of such Expedia Travel Solution Taxes, Expedia Incremental Taxes
and Expedia Travel Unclaimed Property Liabilities (and, in each case, any Losses relating thereto) within ten (10) days of written notice of a
Final Determination with respect to such Reserved Liability, regardless of whether such Final Determination occurs before or after termination
of this Agreement; provided, however, that Decolar shall not be required to pay any amount pursuant to this Section 9.4.7 until such time as
Expedia is actually required to pay such Taxes to the relevant Governmental Authority. Nothing in this Section 9.4.7 shall be interpreted as
limiting Expedia’s rights under this Agreement to reduce, or set off any amounts against, the Marketing Fee Payable to Decolar. For the
avoidance of doubt, this Agreement, including this Section 9.4.7, except as otherwise provided in Section 9.4.3, allows Decolar to control the
defense or settlement of any Claim relating to bookings of Decolar that are not Transactions, whether made prior to, during or after the Term.
10.
LIMITATION OF LIABILITY
10.1
Disclaimer of Consequential Damages. IN NO EVENT WILL ANY PARTY OR ITS AFFILIATES BE LIABLE TO THE
OTHER PARTY OR ITS AFFILIATES FOR ANY SPECIAL, INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
DAMAGES OF ANY NATURE, INCLUDING FOR ANY LOST REVENUE OR LOST PROFITS OR ANY COST OF PROCUREMENT OF
SUBSTITUTE GOODS OR SERVICES, ARISING OUT OF OR RELATED TO THIS AGREEMENT, EVEN IF ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES, AND REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN CONTRACT, TORT
(INCLUDING NEGLIGENCE), STRICT LIABILITY OR ANY OTHER THEORY OF LIABILITY; PROVIDED, HOWEVER, THAT THE
LIMITATIONS OF LIABILITY SET FORTH IN THIS SECTION 10 SHALL NOT APPLY TO ANY LIABILITY OF A PARTY ARISING
FROM (a) ACTIONS THE LIABILITY FOR WHICH CANNOT BE LIMITED UNDER LAW, SUCH AS A PARTY’S FRAUD,
INTENTIONAL MISREPRESENTATION, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, (b) AN AWARD OF DAMAGES AGAINST
AN INDEMNIFIED PARTY IN CONNECTION WITH A THIRD-PARTY CLAIM OR (c) ANY AMOUNT OF DAMAGES SPECIFICALLY
PROVIDED FOR IN THIS AGREEMENT. THE TOTAL AGGREGATE LIABILITY OF EXPEDIA FOR ALL CLAIMS ARISING IN
CONTRACT, EQUITY OR OTHERWISE (INCLUDING, WITHOUT LIMITATION, BREACH OF WARRANTY, NEGLIGENCE AND
STRICT LIABILITY IN TORT) ARISING OUT OF OR RELATED TO THIS AGREEMENT WILL NOT EXCEED THE GREATER OF:
(A) THE TOTAL
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MARKETING FEES PAID OR PAYABLE BY EXPEDIA TO DECOLAR UNDER THIS AGREEMENT IN THE MOST RECENT TWELVE
(12) MONTH PERIOD PRECEDING THE EVENTS GIVING RISE TO SUCH LIABILITY; AND (B) ONE-HUNDRED THOUSAND
DOLLARS ($100,000).
11.
TERM AND TERMINATION
11.1
Term. The initial term of this Agreement will commence on the Effective Date and will terminate on December 31, 2034 (the
“Initial Term”). The Agreement will be automatically renewed thereafter for successive one-year terms (each, a “Renewal Term”) unless either
Party provides at least thirty (30) days advance written notice of non-renewal (the Initial Term and any Renewal Terms, collectively, the
“Term”).
11.2
Termination.
11.2.1 Mutual Termination. This Agreement may be terminated at any time by the mutual written consent of Expedia and
Decolar. In addition, after the Initial Term, either party may terminate this Agreement for convenience upon 30 days’ written notice to the other
party. After the termination of the Initial Term, the Termination Payment will not apply, under any circumstances.
11.2.2 Termination by Decolar. This Agreement may be terminated by Decolar by providing written notice of such
termination to Expedia in the following circumstances:
(a)
Transaction Shares. On or after the first date on which Expedia or any of its Affiliates ceases, collectively, to hold all
of the Transaction Shares, unless the disposition of such Transaction Shares was (i) approved by a majority of the Decolar board of directors that
were not designated by Expedia, (ii) involuntary or (iii) the result of an action taken by Decolar or any of its Affiliates (e.g., a stock buyback,
reverse stock split, merger, share exchange or other transaction resulting in the change in form of the Transaction Shares).
(b)
Obligations under Other Transaction Agreements. If Expedia or any of its Affiliates materially breaches its
obligations, if any, under Section 3.14 of the Investors' Rights Agreement, which breach is not cured within 60 days' written notice.
(c)
For Convenience. At any time upon 30 days’ written notice if concurrently with such termination Decolar pays or
causes to be paid to Expedia by wire transfer of immediately available funds to such account as Expedia shall designate, an amount equal to
$125 million; provided, however that such $125 million payment obligation will expire for any terminations after the Initial Term.
(d)
Minimum Service Level. The Expedia API is at all times non-responsive to the Decolar Platform for a period of three
consecutive months.
(e)
Material Breach. If Expedia materially breaches or defaults in the obligation to make any payment when due
hereunder, and such default is not remedied within thirty (30) days of the receipt of written notice from Decolar.
For the avoidance of doubt, in the event of termination by Decolar pursuant to the foregoing clauses (a), (b), (d) or (e), Decolar shall not
be required to make the payment of the $125 million as described in this Agreement.
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11.2.3 Termination by Expedia. This Agreement may be terminated by Expedia by providing written notice of such
termination (specifying the date on which such termination is to occur) to Decolar in the following circumstances:
(a)
Obligations under Other Transaction Agreements. If Decolar or any of its Affiliates materially breaches its
obligations under any other Transaction Agreement (it being agreed that any breach of Section 3.7(b) of the Investors’ Rights Agreement shall be
deemed to be material), which such breach is not cured within 60 days after receipt of written notice from Expedia to Decolar concerning such
breach.
(b)
Minimum Bookings. If the Expedia Share of Wallet is less than [***]% for a given Measurement Period or less than
[***]% for two Measurement Periods during the Term (each, a “SoW Termination Event”); provided that, in the event that Decolar acquires
any Acquired Entity, Expedia’s right to terminate the Agreement pursuant to this Section 11.2.3(b) shall be temporarily suspended for a 12-
month period after such acquisition to the extent the SoW Termination Event is caused by Acquired Entity Travel Bookings which have not been
transitioned as contemplated by Section 2.1.11.
(c)
Change of Control of Decolar. If a Change of Control occurs, provided that for the purposes of this Section 11.2.3(c),
the date specified in the written notice of termination shall occur no sooner than three (3) months after the date that such Change of Control
occurs, and after such termination, Expedia shall consider reasonable extensions of such date up to an aggregate of six (6) months from the date
of the termination notice to provide additional time for the integration of a new lodging supplier (any such period which this Agreement
continues pursuant to this Section 11.2.3(c), the “Transition Term”); provided, further, that if Expedia terminates this Agreement pursuant to
this Section 11.2.3(c), then during the Transition Term and any time thereafter, (i) Decolar shall not disclose, make available or otherwise
provide any Expedia Customer Personal Data, or any analytics derived therefrom, to any Strategic Party, any direct or indirect Affiliate of a
Strategic Party, or their respective directors, employees, managers or representatives; and (ii) any Strategic Party that acquires Decolar will have
no right to modify, amend or otherwise revise any of the terms of this Agreement.
(d)
Marketing Fees. If the Marketing Fees payable by Expedia are less than [***].
(e)
Material Breach. If Decolar materially defaults in the performance of, or fails to perform in a material manner, any of
the following obligations, and such default is not remedied within thirty (30) days of the receipt of written notice from Expedia:
(i)
Decolar’s obligation to make any payment when due hereunder;
(ii)
Decolar’s representation set forth in Section 7.2 (Sanctions Regimes) shall cease to be true and correct;
(iii)
Decolar’s obligations under Section 6.1, Section 8.1, Section 8.3, Section 8.4.1(d), Section 8.6, and Section 8.8;
or
(f)
Bankruptcy Event. Upon a Bankruptcy Event.
11.3
Effect of Termination; Survival.
11.3.1 Upon the expiration of the Term, the obligations of the Parties hereunder shall terminate and there shall be no liability on
the part of any Party with respect thereto, except (a) any
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provision which expressly or by its nature survives termination of this Agreement shall survive such termination of this Agreement, and (b) no
termination of this Agreement shall relieve any Party of any liability for damages from a material breach prior to such termination.
11.3.2 If this Agreement is terminated by Expedia pursuant to Sections 11.2.3(a), 11.2.3(b), 11.2.3(d) or 11.2.3(e), prior to the
end of the Initial Term, then Expedia may, in its sole and absolute discretion, by providing written notice thereof in connection with such
termination, in lieu of seeking its available remedies at Law or equity, require Decolar to pay, or caused to be paid, to Expedia by wire transfer of
immediately available funds, an amount equal to $125 million (the “Termination Payment”); provided that notice of such termination and
demand for the Termination Payment must be delivered to Decolar no later than 60 days (or as otherwise mutually agreed by the parties)
following Expedia’s actual knowledge of the event giving rise to such termination. In the event that Expedia fails to provide such 60 days’ notice
(or a notice period as otherwise mutually agreed by the parties) pursuant to the preceding proviso, then Expedia may not use the applicable event
as the basis for asserting a termination right under Section 11.2.3 after such 60-day period. Decolar shall make payment of the Termination
Payment within sixty (60) days of receiving written notice of termination by Expedia. Decolar agrees that the agreements in this Section 11.3.2
are an integral part of this Agreement, and that, without these agreements, Expedia would not enter into this Agreement. Accordingly, if Decolar
fails promptly to pay the amount due under this Section 11.3.2 and, in order to obtain such payment, Expedia commences a suit that results in a
judgment against Decolar for such amounts, Decolar shall pay interest on such amounts from the date the payment of such amounts was due to
the date of actual payment at the Interest Rate in effect on the date such payment was due, together with the reasonable expenses of Expedia in
connection with such suit.
12.
TAXES.
12.1
Transaction Taxes on Payments Between the Parties. Notwithstanding any provision in this Agreement to the contrary:
12.1.1 Transaction Tax Responsibility. Decolar shall be responsible for, and shall pay when due (as Decolar shall determine
in its reasonable discretion are required to be paid under applicable Law), any Transaction Taxes incurred with respect to any amounts payable or
deemed payable to Decolar pursuant to this Agreement and all related Losses. Notwithstanding anything to the contrary herein and for the
avoidance of doubt, all sums payable or deemed to be payable by Expedia to Decolar pursuant to this Agreement shall be deemed to be inclusive
of any Transaction Taxes. Subject to Section 12.1.3, (i) Expedia shall be responsible for, and shall pay when due (as Expedia shall determine in
its reasonable discretion are required to be paid under applicable Law), any Transaction Taxes incurred with respect to any amounts payable or
deemed payable to Expedia pursuant to this Agreement and all related Losses and (ii) for the avoidance of doubt, all sums payable or deemed to
be payable by Decolar to Expedia pursuant to this Agreement shall be deemed to be inclusive of any Transaction Taxes.
12.1.2 Transaction Tax Returns. Each Party shall prepare and timely file, at such Party’s own expense, all required U.S.
federal, state, local and non-U.S. returns, estimates, information statements and reports (“Tax Returns”) related to any Transaction Taxes and,
subject to Section 12.1.1, shall timely pay the Transaction Taxes shown as due on such Tax Returns, which filings and payments shall be
determined under Law by such Party in its reasonable discretion. The Parties shall cooperate with each other in a commercially reasonable
manner to the extent reasonably requested and legally permitted (i) to minimize any Transaction Taxes and (ii) with regard to the preparation and
filing of any Tax Return related to Transaction Taxes. Each Party shall be responsible for any penalties or additions arising from
52
such Party’s (i) failure to file or to timely file a Tax Return related to Transaction Taxes and (ii) failure to pay or to timely pay to a Governmental
Authority any Transactions Taxes.
12.1.3 If and to the extent that Expedia (and/or its Affiliates) is deemed to make a supply to Decolar for Transaction Tax
purposes and Transaction Tax is or becomes chargeable in respect of such supply, the consideration for such supply shall be deemed to be
exclusive of such Transaction Taxes. In addition to any other consideration for such supply, Decolar shall pay to Expedia (and/or Expedia’s
Affiliate) a sum equal to the amount of any Transaction Taxes chargeable.
12.1.4 The Parties anticipate, and shall use all reasonable efforts to secure, that the Marketing Fees payment to Decolar are not
subject to Transaction Taxes in any jurisdiction. Decolar shall charge any Transaction Taxes on any supplies it makes to Expedia only if and to
the extent that a tax authority in the relevant jurisdiction subjects such supplies to Transaction Taxes.
12.1.5 Except as otherwise required by applicable Law, Decolar shall not issue any invoices which expressly or implicitly state
that Decolar is making a supply of Expedia’s Travel Products, whether on a standalone basis or as part of a Package, to the customer.
12.1.6 Neither Decolar nor any of its Affiliates shall account to any Tax authority for Travel Tax on the basis that it (or any of
its Affiliates) are the supplier to the End User of the accommodation underlying the Bookings.
12.2
Taxes and Unclaimed Property Liabilities on Transactions by or for End Users of Decolar.
12.2.1 Expedia Travel Solution Taxes. The Parties agree and acknowledge that all responsibility for Expedia Travel Solution
Taxes and Expedia Incremental Taxes that are Travel Taxes are addressed by the provisions of Section 9.4.
12.2.2 Expedia Unclaimed Property Liabilities. The Parties agree and acknowledge that with respect to Unclaimed Property
Liabilities, if any, relating to or associated with Transactions or Expedia-Sourced Travel Bookings (“Expedia Travel Unclaimed Property
Liabilities”), Decolar shall be responsible for such Expedia Travel Unclaimed Property Liabilities, if any, in the same proportion as the
Marketing Fee (not taking into account any reduction pursuant to Section 9.4.2, any right of set-off or otherwise) bears to Gross Profit. Expedia
shall be responsible, at its own expense, for the preparation and filing of any returns, forms or similar documents and filings in connection with
Expedia Travel Unclaimed Property Liabilities, if any.
12.2.3 Expedia Incremental Taxes. The Parties agree and acknowledge that Decolar shall be responsible for any and all
Expedia Incremental Taxes.
12.2.4 Withholding. Expedia and Decolar shall be entitled to deduct and withhold from any payment required to be made
pursuant to this Agreement any Taxes that are required to be deducted or withheld with respect to such payment under any applicable Law (a
“Withholding Tax”). Each Party shall deliver to the other Party, prior to receipt of any payment hereunder, duly completed and signed copies of
any necessary Tax forms, including Internal Revenue Service Forms W-9, W-8BEN-E or W-8ECI or other appropriate version of Form W-8, as
applicable, or any similar information satisfactory to the other Party to establish that the payment is not subject to any Withholding Tax,
including backup withholding, or is entitled to an exemption from, or reduction of, such withholding, as applicable. Thereafter, the Parties shall
(a) promptly notify each other of any change in circumstances of which they
53
become aware that would cause any withholding to apply or would modify or render invalid any claimed exemption or reduction of withholding,
and (b) take any commercially reasonable action that may be necessary to avoid any requirement to make any deduction or withholding. All
amounts deducted and withheld pursuant to this Section 12.2.4 shall be treated as paid to the Party receiving payment for purposes of Section 3.
To the extent that any amounts paid pursuant to this Agreement are not reduced by such deductions or withholdings, the Party receiving payment
shall indemnify the other Party and its Affiliates for any amounts imposed by any Governmental Authority, together with any costs and expenses
related thereto (including any related Losses), except in the case of penalties, interest, additions to Tax and related costs to the extent that such
failure to withhold is the result of gross negligence or willful misconduct of such other Party. Notwithstanding any of the foregoing, (x) to the
extent that any payments to Expedia hereunder are made by any Person other than Decolar or a U.S. Affiliate of Decolar (including, for the
avoidance of doubt, any non-U.S. Affiliate of Decolar) or out of any jurisdiction other than the United States or Uruguay, and any Withholding
Tax is required to be deducted or withheld with respect to such payment, such Person shall pay such additional amounts to Expedia as may be
necessary such that Expedia receives, after all deduction or withholding for any applicable Withholding Taxes (including any Withholding Taxes
deducted or withheld with respect to any payment of additional amounts required to be paid pursuant to this sentence), such amount as Expedia
would have received had no Withholding Tax been required to be so deducted or withheld and (y) to the extent that any payments to Decolar
hereunder are made by any Person other than Expedia or a U.S. Affiliate of Expedia (including, for the avoidance of doubt, any non-U.S.
Affiliate of Expedia) or out of any jurisdiction other than United States, and any Withholding Tax is required to be deducted or withheld with
respect to such payment, such Person shall pay such additional amounts to Decolar as may be necessary such that Decolar receives, after all
deduction or withholding for any applicable Withholding Taxes (including any Withholding Taxes deducted or withheld with respect to any
payment of additional amounts required to be paid pursuant to this sentence), such amount as Decolar would have received had no Withholding
Tax been required to be so deducted or withheld.
12.3
Right of Set-Off. Notwithstanding any provision in this Agreement to the contrary, Expedia shall have the right to reduce any
amount payable to Decolar pursuant to this Agreement by (i) any Transaction Taxes required to be paid by Decolar hereunder, (ii) Decolar’s
share of any Expedia Travel Solution Taxes, any Expedia Incremental Taxes (to the extent such Taxes were not already taken into account to
reduce Decolar’s Marketing Fee) and Expedia Travel Unclaimed Property Liabilities and Decolar shall have the right to reduce any amount
payable to Expedia pursuant to this Agreement by any Transaction Taxes required to be paid by Expedia hereunder.
12.4
Survival. The provisions of this Section 12 and Section 9 shall survive with respect to any particular Tax or Claim for
Unclaimed Property Liabilities until the later of (i) the expiration of the statute of limitations applicable to such Tax or Claim or (ii) a Final
Determination with respect to such Tax or Claim. For purposes of this Agreement, a “Final Determination” means (a) a decision, judgment,
decree or other order by any court of competent jurisdiction, which has become final and is either no longer subject to appeal or for which a
determination not to appeal has been made, (b) a closing agreement made under Section 7121 of the Code or any comparable provision of state,
local or foreign Tax Law, (c) a final disposition by any Governmental Authority of a claim for refund, or (d) any other written agreement which
results in an adjustment becoming final and prohibits such Governmental Authority from seeking any further legal or administrative remedies
with respect to an adjustment.
12.5
Cooperation. The Parties agree to cooperate with each other in a commercially reasonable manner with regard to Taxes.
12.6
Refunds.
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12.6.1 Transaction Taxes. Decolar shall be entitled to all refunds of any Transaction Taxes that Decolar has paid to any
Governmental Authority, including any interest paid with respect thereto and Expedia shall be entitled to all other refunds of Transaction Taxes.
Expedia will consider in good faith taking such actions as Decolar reasonably requests (at Decolar’s expense) to obtain any refund of Transaction
Taxes to which Expedia is entitled under the Laws of the relevant taxing jurisdiction.
12.6.2 Expedia Travel Solution Taxes. The Parties acknowledge and agree that Expedia shall determine, in its discretion, all
actions that it deems necessary or appropriate in connection with any refunds of Expedia Travel Solution Taxes or Expedia Incremental Taxes.
12.7
Reimbursement. If either Party receives a refund of Expedia Travel Solution Taxes, Expedia Incremental Taxes or Transaction
Taxes (including any interest related thereto), such Party shall reimburse the other Party for such other Party’s share of such refund of
Transaction Taxes, Expedia Travel Solution Taxes or Expedia Incremental Taxes paid by such other Party (such share to take into account
Section 9.4, 12.1 or 12.2 as the case may be, and any other reimbursements made by one Party to the other Party) within sixty (60) Business
Days of receipt of such refund.
12.8
Tax Remittance. If any jurisdiction’s Tax Laws require the platform facilitating the Bookings, whether referred to as a
marketplace facilitator, accommodations platform, hosting platform, intermediary, or other similar term, to remit Tax on the Booking transaction,
the following provisions apply:
12.8.1 The parties agree that Expedia will be deemed the platform facilitating the Travel Booking responsible for Travel Tax,
even if the payment is facilitated by Decolar.
12.8.2 Regardless of whether Expedia exercises its exclusive right to control the defense or settlement of any legal or
administrative investigation, audit or other proceeding related to Travel Taxes under Section 9.4.3, if a taxing authority asserts Decolar or any of
its Affiliates is responsible for Taxation, Expedia will provide an attestation that it is registered and remitting Travel Taxes as the platform
facilitating the Booking, upon request.
13.
DISPUTE RESOLUTION
13.1
Dispute Resolution Process. In the case of any Disputes under this Agreement, the Parties shall first attempt in good faith to
resolve all Disputes by informal discussions before initiating any legal action. Representatives of each Party shall meet to discuss the resolution
of the Dispute. If they are unable to do so within thirty (30) days of notice from one Party to the other Party regarding the Dispute and requesting
a meeting, the Dispute shall be escalated to the senior divisional management of each Party, and if unresolved at the end of ten (10) Business
Days thereafter, the Parties shall submit the Dispute to binding arbitration in accordance with the terms and conditions of Section 13.2.
13.2
Arbitration. Without prejudice to Section 15.4, any Dispute arising out of or relating to this Agreement, or the breach thereof,
which cannot otherwise be resolved as provided above shall be resolved by binding arbitration conducted in accordance with the commercial
arbitration rules of the American Arbitration Association (the “Arbitrator”) (or, solely to the extent the Arbitrator is no longer operating at the
time of such Dispute, any other major international arbitration institution agreed by the Parties) and judgment upon the award rendered by the
arbitral tribunal may be entered in any court of competent jurisdiction. The arbitration shall be conducted by a single arbitrator appointed in
accordance with such rules; provided, however, that if either Party requests the arbitration to be conducted by a panel of three arbitrators, one
will be appointed by each Party and the third will be appointed in accordance
55
with such rules. The place of arbitration shall be New York, New York, United States of America, unless the Parties shall have agreed to another
location within fifteen (15) calendar days from the first referral of the dispute to the Arbitrator. The decision or award made by the arbitrator or
arbitrators shall be written, final and binding, and the Parties waive any right to appeal the arbitral award, to the extent a right to appeal may be
lawfully waived. The costs of any arbitration, including administrative fees and fees of the arbitrator or arbitrators, shall be shared equally by the
Parties, unless otherwise specified by the arbitrator or arbitrators. If the Party initiating the arbitration is determined in the arbitral award to have
lost the Dispute, such Party shall pay the other Party’s attorneys’ and expert fees. Otherwise, each Party shall bear the cost of its own attorneys’
and expert fees. Each Party retains the right to seek judicial assistance: (a) to compel arbitration; and (b) to enforce any decision of the arbitrator,
including the final award. The arbitration proceedings contemplated by this Section 13.2 shall be as confidential and private as permitted by Law.
To that end, the Parties shall not disclose the existence, content or results of any proceedings conducted in accordance with this Section 13.2, and
deem that all materials submitted in connection with such proceedings are for the purpose of settlement and compromise; provided, however,
that this confidentiality provision shall not prevent a petition to vacate or enforce an arbitral award, and shall not bar disclosures required by Law
(including any rule, regulation or policy statement of any national securities exchange, market or automated quotation system on which the
Receiving Party’s securities are listed or quoted).
14.
RELEASES/PUBLICITY
Neither Party shall issue or make, or permit to be issued or made, any publicity, advertising, press release, public statement or
announcement or public communication of any kind, in whatever form, regarding this Agreement, or any aspect or terms thereof, or the
relationship between the Parties without the Parties’ joint prior written approval except as may be required by applicable Law or any rule,
regulatory or policy of a national securities exchange, in which case commercially reasonable efforts to consult with the other Party shall be
made prior to any such release or public statement.
15.
GENERAL
15.1
Compliance with Anti-Corruption Laws. In connection this Agreement, the parties hereto agree to (i) comply with the
provisions of the United States Foreign Corrupt Practices Act of 1977, the UK Bribery Act, and any amendments thereto, as well as any other
applicable anti-corruption Laws adopted by countries where services are being performed, and (ii) not knowingly allow a third party to make any
improper payments or to perform any act in violation of such Laws. Each party represents and warrants to the other that it has not been found by
a court in any jurisdiction to have violated any such Laws.
15.2
Non-Disparagement. During the Term and for a period of 2 (two) years following the expiration or earlier termination of the
Term, each of the Parties, and any of their attorneys, agents, employees, representatives, assigns, contractors, successors in interest, related
parties, or parties acting at their direction, agree that they shall not disparage or otherwise negatively comment on any of the other Party’s
reputation, business operations, products, services or relationship with one another. This provision shall not preclude the Parties from making
truthful statements when requested to do so in the normal course of business.
15.3
Non-Solicitation. Each of the Parties agrees that, during the Term and for a period of one (1) year thereafter, neither Expedia nor
Decolar (Expedia, on the one hand, and Decolar, on the other hand, each an “Employer” with respect to its Restricted Employee) shall, on
behalf of itself or any other person, entity or organization, directly, or through its officers, directors, employees, agents or others,
56
cause any other person to: (i) solicit or otherwise induce or influence any Restricted Employee to discontinue his or her employment or other
relationship with his or her Employer or to enter into an employment or service arrangement of any kind with any person or entity other than his
or her Employer, (ii) initiate contact with any Restricted Employee for the purpose of employing, soliciting for employment, or otherwise
seeking to employ or retain such person, or (iii) assist or facilitate any person or business other than the applicable Employer in the hiring or
recruitment of any Restricted Employee; provided, however, that the foregoing restriction is not being intended to prohibit any person from
providing reference to a third party with respect to a Restricted Employee. “Restricted Employee” means any person who is an employee of
Employer with whom the other Party has first come into contact in the course of their dealings under this Agreement. The foregoing restriction
shall not apply to (i) the distribution of a job posting or other advertisement for a job in the ordinary course of business and the hiring of an
employee that responds to such job posting or other advertising, (ii) the solicitation or hiring of an employee that has been terminated or has
otherwise terminated or ceased his or her employment with that Employer prior to the solicitation or hiring or (iii) the employment of an
employee who contacts an Employer on his or her own initiative.
15.4
Governing Law. This Agreement shall be governed by and construed in accordance with the Laws of the State of New York
applicable to agreements made and to be performed entirely within such State, without regard to the conflict of Laws principles of such State
(other than Section 5-1401 of the New York General Obligations Law).
15.5
Right to Specific Performance. The Parties hereby expressly recognize and acknowledge that immediate, extensive and
irreparable damage would result, no adequate remedy at law would exist and damages would be difficult to determine in the event that any
provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Each Party further acknowledges
that a breach or violation of this Agreement cannot be sufficiently remedied by money damages alone and, accordingly, each Party shall be
entitled, without the need to post a bond or other security, in addition to damages and any other remedies provided at law or in equity, to specific
performance, injunctive and other equitable relief in order to enforce or prevent any violation. Each Party agrees not to oppose the granting of
such equitable relief, and to waive, and to cause its representatives to waive, any requirement for the securing or posting of any bond in
connection with such remedy.
15.6
Records. In accordance with standard records retention business practices and policies in the industry, and in accordance with
applicable generally accepted accounting standards, each Party shall keep all usual and proper records related to the performance of such Party’s
obligations under this Agreement.
15.7
Existing Agreement; Entire Agreement. This Agreement amends and restates the Existing Agreement, and all existing rights,
obligations and payments thereunder, shall be governed by this Agreement as if this Agreement had been in effect at the time such rights,
obligations and payments arose. This Agreement (including all Schedules thereto) constitutes the entire agreement between the Parties, and
supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, as to the subject matter hereof.
15.8
Schedules. The schedules to this Agreement listed below are an integral part of this Agreement:
57
Schedule
Description
1
RESTRICTED LIST
2
3
4
GROSS PROFIT SHARE
DATA PROTECTION
ROOM RATES
15.9
Notices. Any notice, consent or approval required or permitted to be given in connection with this Agreement (in this
Section 15.9 referred to as a “Notice”) shall be in writing and shall be sufficiently given if delivered (whether in person, by courier service or
other personal method of delivery), or if transmitted by facsimile or through e-mail:
in the case of a Notice to Decolar at:
[***]
in the case of a Notice to Expedia at:
[***]
Any Notice delivered or transmitted to a Party as provided above shall be deemed to have been given and received on the day it is
delivered or transmitted; provided, however, that it is delivered or transmitted on a Business Day prior to 5:00 p.m. local time in the place of
delivery or receipt. If the Notice is delivered or transmitted after 5:00 p.m. local time or if the day is not a Business Day, then the Notice shall be
deemed to have been given and received on the next Business Day. Any Party may, from time to time, change its address by giving Notice to the
other Party in accordance with the provisions of this Section 15.9.
15.10
Relationship of Parties. The Parties are independent contractors and nothing in this Agreement will be deemed to create a
partnership, joint venture, franchise or any agency relationship between any of the Parties. This Agreement is solely for the benefit of, and will
be solely enforceable by, the Parties. This Agreement is not intended to confer any right or benefit on any third party. Except as set forth in
Section 8.9, no action may be commenced or prosecuted against a Party by any third party claiming as a third-party beneficiary of this
Agreement or any of the transactions contemplated by this Agreement.
15.11
Waiver. Unless explicitly set forth in this Agreement, no waiver of any term, condition or obligation of this Agreement will be
valid unless made in writing and signed by the Party to which such performance is due. No failure or delay by any Party at any time to enforce
one or more of the terms, conditions or obligations of this Agreement will (a) constitute waiver of such term, condition or obligation,
(b) preclude such Party from requiring performance by the other Party at any later time, or (c) be deemed to be a waiver of any other subsequent
term, condition or obligation, whether of like or different nature.
15.12
Assignment. This Agreement may not be assigned either directly or indirectly by operation of law or otherwise, by either Party
without the prior written consent of the other Party; except, that either Party may assign this Agreement without consent to (a) an Affiliate or
(b) in connection with a merger, reorganization, acquisition, sale of all or substantially all assets, or other Change of Control, in
58
each case, provided the assignee agrees in writing to assume and be bound by this Agreement. Subject to the foregoing, this Agreement inures to
the benefit of and is binding upon the Parties and their respective successors and permitted assigns, and, following such succession or
assignment, all references to a “Party” in this Agreement shall be deemed to include such successors and permitted assigns.
15.13
Amendment. Except as otherwise expressly stated herein, this Agreement may be amended only in writing signed by Decolar
and Expedia.
15.14
Expenses. Except as otherwise provided in this Agreement, each Party shall pay all costs and expenses (including the fees and
disbursements of legal counsel and other advisers) it incurs in connection with the negotiation, preparation and execution of this Agreement and
the transactions contemplated by this Agreement.
15.15
Further Assurances. The Parties shall, with reasonable diligence, do all things and provide all such reasonable assurances as
may be reasonably required to consummate the transactions contemplated by this Agreement, and each Party shall provide such further
documents or instruments reasonably required by any other Party as may be reasonably necessary or desirable to effect the purpose of this
Agreement and carry out its provisions.
15.16
Conflicts. In the event of any conflict or ambiguity between any term of this Agreement and any other Transaction Agreement or
any other agreement with respect to the subject matter hereof, the terms of this Agreement will prevail.
15.17
Force Majeure. Neither Party shall be liable to the other for any failure or delay in the performance of its obligations under this
Agreement (save in respect of any obligation to pay any monies due) to the extent that such failure or delay arises due to reasons beyond such
Party’s reasonable control (“Force Majeure Event”) which that Party is unable to reasonably avoid or provide against, provided always that the
affected Party promptly notifies the other (where possible, in advance or within 48 hours from the event) of the cause and likely duration of the
failure or delay and takes all reasonable steps, including (without limitation) implementation of its business continuity and disaster recovery plan
to overcome the failure or delay as soon as possible. If either Party fails to perform or is delayed in performing its obligations due to a Force
Majeure Event for 90 days or more, then the other Party shall be entitled to terminate this Agreement forthwith upon written notice.
15.18
Guarantee.
15.18.1 Decolar Parent and Decolar PubCo each agree (each, a “guaranteeing party”) that it irrevocably, absolutely and
unconditionally guarantees to Expedia each and every obligation and liability of each other guaranteeing party hereunder, and the full and timely
payment and performance of each other guaranteeing party’s obligations hereunder, in each case during the Term (the “Decolar Guaranteed
Obligations”). This is a guarantee of payment and performance, and not merely of collection, and each of guaranteeing party acknowledges and
agrees that the aforementioned guarantees are full and unconditional, and no release or extinguishment of any guaranteeing party’s obligations or
liabilities under this Agreement, whether by decree in any bankruptcy proceeding or otherwise, shall affect the continuing validity and
enforceability of these guarantees. Each guaranteeing party as a guarantor of the Decolar Guaranteed Obligations, hereby waive for the benefit of
Expedia, (a) any right to require Expedia, as a condition of its payment or performance under this Section 15.18.1, to proceed against Decolar,
Decolar Parent, any Guarantor or any other person or pursue any other remedies whatsoever, (b) to the fullest extent permitted by Law, any
defenses or benefits that may be derived from or afforded by Law that limit the liability of or exonerate guarantors or sureties, (c) any and all
59
promptness, diligence, notice of the creation, renewal, extension or accrual of any of the Decolar Guaranteed Obligations and notice of or proof
of reliance by Expedia upon this guarantee or acceptance of this guarantee and (d) any claim, right (including right of set-off), deduction or
defense of any kind that any guaranteeing party may have or may assert under this Agreement. Each of the guaranteeing parties understands that
Expedia is relying on the foregoing guarantee and joint and several liability in entering into this Agreement.
15.18.2 Without limiting the generality of the foregoing, each of Decolar Parent and each Guarantor authorizes Decolar in its
sole and absolute discretion, without any notice to or consent of each of Decolar Parent and each Guarantor and without in any way discharging,
terminating, releasing, affecting or impairing the obligations of each of Decolar Parent and each Guarantor hereunder, to (a) amend, modify,
extend or accelerate the time or manner of payment for or performance of the Decolar Guaranteed Obligations or otherwise amend or modify
any other terms of provisions of this Agreement in accordance with its terms, (b) release, discharge, compromise or make any settlement with
Expedia in respect of the Decolar Guaranteed Obligations or (c) exercise any right or power conferred in this Agreement, or fail or omit to
enforce any such right or power, or waive any covenant or condition therein provided or any default thereunder.
15.18.3 Each of Decolar Parent and each Guarantor represents and warrants to Expedia that (a) it has full corporate power and
authority to enter into this Agreement and to perform its obligations hereunder, (b) the execution and delivery by each of Decolar Parent and
each Guarantor of this Agreement has been duly authorized by all necessary corporate action and no other proceedings are necessary to authorize
the execution and delivery of this Agreement, and (c) this Agreement has been duly and validly executed and delivered by each of Decolar
Parent and each Guarantor and, assuming due authorization and delivery by the other Parties, is a valid and binding agreement, enforceable
against each of Decolar Parent and each Guarantor in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar Laws of general applicability relating to or affecting creditors’ rights and to general equitable principles.
15.19
Effectiveness. This Agreement shall become effective, and amend and restate the Existing Agreement in its entirety, on the
Effective Date; provided that (a) Sections 2.1.10 and 8.4.1(d) (except with respect to Decolar’s provision of hotel or travel products supply to, or
acquisition of hotel or travel products supply from or marketing agreements with, an Excluded Provider pursuant to any agreements in effect as
of the date hereof, which may continue until the Effective Date) shall become effective on the date hereof (b) Sections 3.3.2 and 3.5 shall amend
and restate Sections 3.3.2 and 3.6 of the Existing Agreement on the date hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
60
TRAVEL RESERVATIONS S.R.L
By________________________________
Name:
Title:
DECOLAR.COM, INC.
By________________________________
Name:
Title:
DESPEGAR.COM, CORP.
By________________________________
Name:
Title:
[Signature Page to Second Amended and Restated Lodging Outsourcing Agreement]
EXPEDIA, INC.
By________________________________
Name:
Title:
[Signature Page to Second Amended and Restated Lodging Outsourcing Agreement]
SCHEDULE 1
RESTRICTED LIST
[***]
S-1-1
SCHEDULE 2
GROSS PROFIT SHARE
[***]
S-1-2
SCHEDULE 3
DATA PROTECTION
1.
Data Protection and PCI. Decolar and Expedia agree that, for the purposes of Applicable Data Protection Law:
a)
in respect of the API End Customer Data, Expedia shall be processor and Decolar shall be the controller and we shall each comply with the
data protection requirements as they apply to each of them (as applicable) (the “RAPID API Requirements”) set out in the ‘RAPID API –
Processor DPA’ which can be found by following this link: https://legal.expediagroup.com/dfwes; and
b)
Decolar and Expedia agree that for purposes of Applicable Data Protection Law in respect of the Merchant of Record Data (if applicable)
each shall act as autonomous and independent controllers and shall each comply with the data protection requirements (the “MoR
Requirements” and together with the RAPID Requirements, collectively, the “Requirements”) set out in the ‘Merchant of Record Data –
Controller to Controller Agreement’ which can be found by following this link: https://legal.expediagroup.com/cpyzq.
Each link above may be amended from time to time provided that any changes to the Requirements will only be deemed to take effect under this
Agreement upon notice pursuant to Section 15.9 of the Agreement. The Requirements are hereby incorporated by reference into this Agreement
and a material breach of a Requirement shall be considered a material breach of this Agreement. Terms not defined in this Agreement including
this Schedule 3 will have the meaning given to them in the relevant Requirements.
S-3-1
SCHEDULE 4
ROOM RATES
1.
Definitions
“Approved Transport Component” means one of the following travel services, separately provided by Decolar or Decolar third-party supplier:
(i) air travel, (ii) rail travel which constitutes a substantial portion of the Package, (iii) car rental which constitutes a substantial portion of the
Package or for at least the full duration of the stay period of the Travel Booking, (iv) an overnight cruise; or (v) bus where the length of the bus
trip is 3 hours or more; and is equal or more in value to 25% of the Travel Booking.
“Closed User Group” means (i) any group of End Users that are members of and logged into a Decolar Approved Website (either on a session-
by-session basis [***]), or (ii) Decolar internal call center agents who are logged into a Decolar Travel Platform.
“Cross Sell Package Rate” a rate (including Taxes) for an Expedia Travel Product which can be displayed to End Users solely in accordance
with paragraph 2.2 of this Schedule 4 and which must not be modified by Decolar.
“Decolar Approved Website” any Website owned and operated by Decolar and/or its Affiliates.
“Mobile Rates” a promotional rate (including Taxes) for an Expedia Travel Product which can be displayed to End Users solely in accordance
with paragraph 2.4 of this Schedule 4 and which must not be modified by Decolar.
“Fenced Rates” a promotional rate (including Taxes) for an Expedia Travel Product which can be displayed to End Users solely in accordance
with paragraph 2.3 of this Schedule 4 and which must not be modified by Decolar.
“Package” means a booking made available to End Users consisting of a Travel Booking together with an Approved Transport Component; or
(as applicable) a Travel Booking together with another Travel Booking in each case in accordance with this Agreement.
“Standard Package Rate” means a rate (including Taxes) for an Expedia Travel Product solely for use as part of a Package, in accordance with
the restrictions in this Agreement and which must not be modified by Decolar.
2.1 Room Rates
2. Expedia shall make available to Decolar the following Room Rates in accordance with the Expedia Specifications, the Agreement
and the provisions below:
2.2 Standard Package Rates
Decolar shall: (a) not display nor make available Standard Package Rates to End Users for booking except as part of Packages
(b) not display separate pricing of Standard Package Rates to customers at any time during the booking or confirmation processes (c) ensure that
the final booking price for Standard Package Rates is equal to the Room Rate provided to Decolar by Expedia (provided that Decolar remains
responsible for the final price of the Package); (d) ensure the Standard Package Rate can only applied in relation to the same trip to which the
Approved Transport Component within the Package
S-4-1
relates (including having no more rooms booked than the number of people to which the Approved Transport Component relates); and (e) retain
proof of the inclusion of the Approved Transport Component within the Package for at least 30 days after the Transaction is made.
2.3 Cross Sell Package Rates
(a) Cross Sell Package Rate with an Approved Transport Component.
Decolar may only display or make Cross Sell Package Rates available to End Users who have booked an Approved Transport
Component via a Decolar Platform (“Transport Eligible End Customers”); as a separate transaction to the Approved Transport Component
(which is clearly communicated to the Transport Eligible End User); and provided that: (i) the property to which the Cross Sell Package Rate
relates is [***] (ii) the Cross Sell Package Rate can only be booked in relation to the same trip to which the Approved Transport Component
relates and so must be within the same travel window; (iii) Decolar retains proof of the inclusion of the Approved Transport Component within
the Package for at least 30 days after the Transaction is made; and (iv) Decolar retains reports of attachment rates of Cross Sell Package Rates
with each Approved Transport Component. For the avoidance of doubt, [***], Decolar shall not display the rate for a Cross Sell Package Rate in
any open and public marketing or promotional materials (whether written, oral or otherwise) whatsoever including in the cross-sell email to End
Users without Expedia’s prior written consent.
(b) Cross Sell Package Rate with a hotel Booking.
Decolar may only display or make Cross Sell Package Rates available to End Users who have made a Travel Booking via a
Decolar Platform (“Hotel Eligible End Customers”); as a separate transaction to the Travel Booking (which is clearly communicated to the
Hotel Eligible End User); and provided that: (i) [***]; (ii) [***]; (iii) Decolar retains proof of the inclusion of the Travel Booking for at least 30
days after the Transaction is made; and (iv) Decolar retains reports of attachment rates of Cross Sell Package Rates with each Travel Booking.
Decolar shall: use a unique and separate profile for all Transactions of Cross Sell Package Rates; audit and manage Transactions under this
Section and have the ability to restrict, upon Expedia’s prior written request any property or chain from Transactions under this Section. Expedia
may provide notice at any time that Fenced Rates shall be used by Decolar for Transactions under this Section (being Packages created by a
Travel Booking combined with a Travel Booking) rather than Cross Sell Package Rates and Decolar shall make all corresponding changes to a
Decolar Platform to effect this change. Once this occurs, the provisions of Schedule 4, paragraph 4 shall apply. For the avoidance of doubt,
[***], Decolar shall not display the rate for a Cross Sell Package Rate in any open and public marketing or promotional materials (whether
written, oral or otherwise) whatsoever including in the cross-sell email to End Users without Expedia’s prior written consent
2.4 Fenced Rates
Decolar may only display Fenced Rates to End Users who have elected to participate in a Closed User Group. For the avoidance
of doubt, [***], Decolar shall not display the rate for a Fenced Rate in any open and public marketing or promotional materials (whether written,
oral or otherwise) whatsoever without Expedia’s prior written consent. Without prejudice to any other rights or remedies available to Expedia or
its Affiliates, if Decolar is in material breach of this Section, Expedia will notify Decolar of such breach and allow Decolar five (5) Business
Days to remedy such breach. If Decolar does not remedy such breach within five (5) Business Days, Expedia may restrict or completely
withdraw access to Fenced Rates with immediate effect and, if any Travel Supply Provider terminates its agreement
S-4-2
with Expedia as a result of such breach, Expedia may permanently restrict or completely withdraw access to such Fenced Rates.
2.5 Mobile Rates
Decolar may not display or make available such Mobile Rates to End Users except only through the Decolar Platform
application for mobile devices or a mobile-device optimized version of the Decolar Platform.
(a) [***]
(b) From time to time Expedia may make available to Decolar [***], subject to following conditions:
(c) Decolar shall treat the existence of such [***];
(d) Decolar shall not commence marketing (whether written, oral or otherwise) [***] and, in any event, Decolar shall
never display [***] in any marketing or promotional materials (whether written, oral or otherwise) whatsoever;
(e) Decolar shall ensure that the final [***] price is equal to [***];
(f) Expedia reserves the right to [***]; and
(g) Decolar may not include [***].
3. [***]
4. Breach
Without prejudice to any other rights or remedies available to Expedia or its Affiliates, if Decolar is in material breach of this Schedule 4,
Expedia will notify Decolar of such breach and allow Decolar five (5) Business Days to remedy such breach. If Decolar does not remedy such
breach within five (5) Business Days, Expedia may restrict or completely withdraw access to access to any Room Rates, comprising an
individual hotel, group or chain of hotels as well as any Room Rates with immediate effect and, if any Travel Supply Provider terminates its
agreement with Expedia as a result of such breach, Expedia may permanently restrict access to any Room Rates. In addition, Expedia may from
time to time require internal Decolar collaboration to demonstrate its ongoing compliance with this Schedule 4. Decolar shall upon written
request from Expedia, send copies of booking confirmations, booking details and give access to such other information, systems and/or
documentation as is reasonably necessary to demonstrate Decolar’s compliance. Failure by Decolar to do so shall be deemed a breach of this
Schedule 4. Furthermore, if Expedia receives a complaint or request from a Travel Supply Provider, Expedia may restrict or completely
withdraw access to any Room Rates, comprising an individual hotel, group or chain of hotels as well as a Room Rate under Schedule 4 with
immediate effect.
S-4-3
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii)
CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
[***] indicates the redacted confidential portions of this exhibit.
LODGING OUTSOURCING AGREEMENT
between
DECOLAR.COM, INC.
and
HOTELBEDS USA INC.
dated as of January 27, 2025
EXHIBITS
Exhibit 1 (Definitions)
Exhibit 2 (Deferred Payment Terms)
Exhibit 3 (Personal Data Protection Laws)
Exhibit 4 (Decolar Termination for Convenience Penalty)
Exhibit 5 (HBX Termination for Convenience Penalty)
Exhibit 6 (API Integration)
Exhibit 7 (HBX Lodging Products Terms and Conditions)
Exhibit 8 (Right to repent)
Exhibit 9 [***]
LODGING OUTSOURCING AGREEMENT
This Lodging Outsourcing Agreement, effective as of January 1, 2025 (the “Effective Date”), is between Decolar.com Inc.
(“Decolar”), a Delaware entity, and Hotelbeds USA Inc. (“HBX”), a Delaware entity (each, a “Party” and collectively, the
“Parties”).
WHEREAS, Decolar currently operates travel solutions in which it has access to and markets lodging reservations; and
WHEREAS, Decolar and HBX have an existing API integration agreement, by and between themselves and other Affiliates
signatories thereto, which is in effect since December 28, 2018 (the “API Agreement”) and now intend to supersede and terminate
such API Agreement with respect to the provision of Lodging Products;
WHEREAS, Decolar wishes HBX to provide rates and availabilities to be distributed through the Decolar Platform for
properties located in and outside the Territory (as defined in this Agreement) as set forth herein via an API integration;
WHEREAS, [***]
WHEREAS, the Parties entered into certain term sheet dated as of November 1, 2024 (the “Term Sheet”) in which the
Parties stated the main terms and conditions for a lodging outsourcing agreement; and
WHEREAS, as intended in accordance with the Term Sheet, this Agreement sets forth the terms and conditions pursuant to
which Decolar shall display and make HBX lodging products and services available for booking on the Decolar Platform (as defined
below).
THEREFORE, for good and valuable consideration, the receipt and sufficiency of which each of the Parties hereby
acknowledge, the Parties hereby agree as follows:
1.
DEFINITIONS AND STRUCTURE
1.1
Definitions
Defined terms used in this Agreement have the meanings set forth in Exhibit 1 (Definitions). Other capitalized terms used in this
Agreement but not defined in Exhibit 1 (Definitions) shall have the meaning ascribed to such terms where they are used in this
Agreement.
1.2
Structure
This Agreement sets forth the general terms and conditions governing the contractual relationship between Decolar and HBX.
Included as part of this Agreement, are Exhibits that contain specific provisions that apply to the Services. All Exhibits, and
amendments (as applicable) to this Agreement are incorporated herein by reference and made a part of this Agreement.
2.
SERVICES
2.1
Scope of Services.
Starting on the Effective Date and continuing during the Term, HBX shall perform and deliver the Services in accordance with this
Agreement. The “Services” consist of the following:
(a)
making the then-current version of the HBX-API available to Decolar for use by Decolar and its Affiliates in accordance with
the provisions of this Agreement, in order to provide access to Decolar and its Affiliates to the HBX Lodging Products
located in and outside the Territory (as defined in this Agreement). In such sense, HBX hereby appoints Decolar and its
Affiliates for the intermediation of the HBX Lodging Products through the Decolar Platform.
The provision of the Services must comply with the quality standards, technical specifications and delivery times established in this
Agreement. HBX shall be responsible for any and all costs associated with the development and operation of the HBX-API in the
form delivered to Decolar and Decolar is not required to cover or reimburse any HBX abovementioned costs or expenses.
(b)
HBX hereby grants Decolar and its Affiliates a worldwide, irrevocable (solely during the Term), fully paid-up, royalty-free,
non-exclusive, and non-transferable license to access and use the HBX-API during the Term to the extent necessary to use
and receive the Services and comply with Decolar’s obligations under this Agreement.
HBX will be solely responsible for providing all Services and performance of HBX’ obligations under this Agreement. HBX will be
responsible (including administratively and financially) for obtaining any consents, rights and licenses required to provide Decolar
access to and use of HBX resources related to the Services (including the HBX-API and HBX Lodging Products).
Except as otherwise expressly set forth in this Agreement, each Party will be solely responsible for its own facilities and personnel,
and all costs and expenses associated with the performance of its obligations under this Agreement.
2.2
Service Delivery Environment.
(a)
HBX will maintain the Service Delivery Environment at the level required by or specified in this Agreement or, if this
Agreement does not specify a level of Service Delivery Environment, at a reasonable level consistent with Good Industry
Practice and with other applicable terms of this Agreement.
(b)
As more specifically described elsewhere in this Agreement and appropriate to the Services to be provided under this
Agreement, the Service Delivery Environment will include certain tools, interfaces, templates, methodologies and/or other
information, which HBX will use to provide the Services and, where appropriate, update and/or make available for use by
Decolar under the license rights granted by HBX in section 2.1.(b).
2
2.3
HBX-API. Service Level Agreement.
(a)
At all times during the Term, HBX shall make the then-current version of the HBX-API available to Decolar and its Affiliates
for use by Decolar and its Affiliates in accordance with this Agreement. Any Bookings made under this Agreement shall be
through the HBX-API.
(b)
Currency of API Calls. Decolar shall ensure that any call to the HBX-API via the Decolar Platform for HBX Lodging
Products shall be made solely in the following currencies: (i) for the Decolar Platform with a Brazilian country code top-level
domain (being .br or com.br or any variation thereof) (“Brazilian POS”), in Brazilian Real, (ii) for the Decolar Platform with
a Mexican country-code top-level domain (being .mx or .com.mx or any variation thereof) (“Mexican POS”), Mexican
Pesos, and (iii) for any other Decolar Platform in such currency as HBX may make available therefor via the HBX-API.
(c)
Decolar obligations.
(i)
Decolar shall ensure that its Decolar Platform or any other Decolar application which interfaces with the then-current
version of the HBX-API to enable the exchange of data regarding HBX Lodging Products is at all times consistent
with the then-current version of the HBX-API in accordance with the HBX-API specifications, provided that such
specifications: (a) are consistent with the then-current version of the HBX-API, and (b) are reasonable, and have been
provided to Decolar in advance and in writing.
(ii)
To confirm a Booking, it is necessary that all rooms have at least the name of one End-User and in case HBX and/or
the Lodging End-Providers requires the information of all individuals included in the Booking, those names will be
provided by Decolar.
(iii)
By using the HBX-API, Decolar is confirming that accepts the content of Exhibit 7 (HBX Lodging Products Terms
and Conditions) and that End-Users will be informed and accept its relevant content accordingly through the Decolar
Platform (in the format to be defined at Decolar’s sole discretion). Information relating to the services offered by the
Lodging End-Provider, cancellation policy, costs and details applicable to the Booking will be displayed to the End-
User by Decolar prior to processing the payment of its reservation.
(d)
Unless Lodging End-Provider policy has a higher threshold (in which case such higher threshold shall apply) the End-User is
only permitted to book up to [***] rooms per stay. Should the End-User submit a Booking of [***] or more rooms per stay,
either in one or several individual Bookings, then this will be considered a “Group Booking”. Group Bookings will be
subject to confirmation by the Lodging End-Provider and may result in modification or cancellation of such Booking or
Booking terms at the Lodging End-Provider discretion.
3
(e)
HBX, through the HBX-API, will provide the codes and descriptions of categories, meal arrangements, room types, available
in the system and which are specific for each lodging service and/or Booking. HBX shall provide updated and complete
information and Decolar shall keep its system properly mapped and updated with such information. HBX will accept no
liability to the extent such liability directly results from any failure by Decolar to comply with the obligations in this section
(e).
(f)
The rate informed to Decolar via HBX-API does not include any additional service other than those specified in the Booking
offer.
(g)
Service Level Agreement.
If at any time during the Term, HBX systems necessary for integration (including, but not limited to, the HBX-API): (a) fail
completely to respond to the Decolar integration for a period in excess of [***] continuous minutes or (b) fail to respond within
[***]seconds for [***] of availability requests or within [***]seconds for [***] of check rate or check hotels requests or within
[***] seconds for [***] of booking requests made by any Decolar Platform in conjunction with completing a transaction for a period
in excess of [***]continuous minutes, then Decolar shall notify HBX about the issue and may obtain inventory from any other
sources without penalty. Decolar will attempt to reconnect to HBX systems every ten (10) minutes, validating whether the
aforementioned criteria is solved. Once the HBX system meets the required performance levels, Decolar will promptly restore
connectivity. If, in any given month, the total downtime (in minutes) of HBX systems exceeds [***] of the month, the Bookings
made via Decolar Platform during the equivalent period in the previous Measurement Year plus the growth rate of the respective
Measurement Year, will be included in the calculation of the achievement of the Measurement Year Volume Target.
2.4
Access Codes.
(a)
HBX will grant the use of the HBX-API to Decolar by providing a unique HBX-API key and secret(s) to the HBX-API (the
“Access Code”). The Access Code is strictly personal and can only be used by the authorized representatives, employees,
officers and directors of Decolar and its Affiliates exclusively for use in the scope and accordance with this Agreement.
Decolar shall take all the necessary steps to maintain strict confidentiality and robust security of the Access Code consistent
with section 7. No Access Code can be transferred or disclosed to any third party, except as contemplated in section 7.6.
(b)
HBX will not be liable for the unauthorized access to the HBX-API by any third party using Decolar’s Access Code caused
by a misuse attributable to Decolar and/or its Affiliates. Decolar shall be solely and entirely responsible for the
confidentiality, security and use of the Access Code and the acts and omissions of anyone using the Access Codes, including
but not limited to with respect to any unauthorized or fraudulent use of the Access Code (i.e. including stolen Access Codes)
as though such act and omissions of Decolar were authorized by Decolar, as long as such act or omissions are due to an
attributable misuse of Decolar and/or its Affiliates. Decolar shall immediately
4
notify HBX in writing if it becomes aware of an unauthorized release, use or other compromise of any Access Code.
(c)
HBX reserves the right to change Decolar’s Access Code for security reasons. In this case Decolar will be informed with
sufficient time in advance to avoid any inconveniences. If a misuse attributable to Decolar and/or its Affiliates of the Access
Code has been proven or is reasonably suspected by HBX, or upon a breach by Decolar of the section immediately above this
paragraph, then, in addition to any rights or remedies HBX may have under this Agreement or at law or in equity, HBX shall
be entitled to deny or suspend any further access to the HBX-API. When the Parties confirm that the abovementioned risks
have been mitigated, in accordance with the provisions of this Agreement, and until a new Access Code is granted by HBX
(the “Reactivation Period”), the average value of Bookings made during the corresponding period of the previous calendar
year, which is comparable to the Reactivation Period (i.e. same period of previous calendar year) shall be added for purposes
of calculating the achievement of the Measurement Year Volume Target for the relevant Measurement Year, plus the growth
rate of the respective Measurement Year, pursuant to section 5 of this Agreement.
(d)
Decolar shall not:
(i)
post, transmit or disseminate any information on or via HBX-API which is or may be harmful, obscene, defamatory
or otherwise illegal, or may cause an infringement of the rights of any other;
(ii)
make any other unauthorized, false or fraudulent Booking. Decolar will be solely liable for the Bookings and/or
modifications made and for any administrative procedures carried out using HBX-API as well as any other operations
carried out by Decolar;
(iii)
use any software, routine or device to interfere or attempt to interfere electronically or manually with the operation or
functionality of HBX-API including, but not limited to, uploading or making available files containing corrupt data or
viruses via whatever means;
(iv)
deface, alter or interfere with the appearance and layout of the HBX-API or the underlying software code;
(v)
take any action that imposes an unreasonable or disproportionately large load on the HBX-API or related
infrastructure.
Without prejudice of the above, HBX shall as well comply with the abovementioned obligations in this section 2.4 with respect to
HBX scope of responsibility over the HBX-API and Access Code.
5
2.5
Health & Safety.
HBX’s total aggregate liability for any responses, information, contents, acts, omissions, or any breaches of any Lodging End-
Providers in relation to health & safety matters at their lodging (hereinafter “H&S”) shall not exceed the Cap (as defined in section
14 herein below). HBX shall make its best Commercially Reasonable Efforts so that the Lodging End-Providers comply with H&S
applicable laws. HBX shall provide to Decolar H&S information that it may receive from the Lodging End-Providers if reasonably
requested by Decolar, unless otherwise required by applicable laws (in which case HBX shall send such information to Decolar via
HBX-API, when feasible). Decolar accepts that all the information related to H&S is Confidential Information hereunder provided
that Decolar may share the H&S information when required by law.
2.6
Security.
(a)
In case HBX has access to credit card data of Decolar’s or Decolar’s Partner’s End-Users at any time during this Agreement,
HBX shall be responsible for the safe storage and/or data processing of such data received in connection with the provision
of Services under this Agreement. To this end, HBX represents and warrants to Decolar that: (i) it complies and will comply
throughout the Term of the Agreement with the Payment Card Industry Data Security Standard (“PCI DSS”); and (ii) it has
and will have throughout the Term of the Agreement with an attestation of compliance certifying compliance with the PCI
DSS standards (indicating date and version of such rules), which shall be sent to Decolar when required; and (iii) the
obligations under this section are applicable to all credit card data for transactions that HBX manages, processes, stores or
transmits, in connection with the Services provided under this Agreement.
(b)
HBX shall, during the Term and in accordance with Good Industry Practice, implement and maintain:
(i)
a contingency business continuity plan (“BCP”) against events which could reasonably and materially adversely
affect the ability of HBX to perform and provide the Services in accordance with this Agreement, including loss of
systems, loss of equipment, industrial relations problems with HBX personnel, and the failure of equipment (each, a
“BC Event”). A BC Event shall not be considered a Disaster (as defined below); and
(ii)
a disaster recovery plan (“DRP”) and provide disaster recovery and backup capabilities and facilities through which it
will be able to render the Services with minimal disruptions or delays following the occurrence of any Force Majeure
Event or any other event that constitutes a disaster under the DRP (each, a “Disaster”).
(c)
Changes to the Plans. HBX shall make changes from time to time as shall be required to reasonably maintain the BC/DR
Plans consistent with Good Industry Practice, and to reasonably ensure the BC/DR Plans align with changing technology
conditions and
6
operational requirements; provided, however, that in no event will HBX make any change to the BC/DR Plans that does or
would reasonably be expected to have a material adverse impact to Decolar, and any change (other than a non-substantive
change) that does or would reasonably be expected to have a material adverse impact to Decolar, to the BC/DR Plans must be
approved in writing by the Parties.
2.7
Rates.
(a)
Rate Errors.
(i)
If an HBX-Sourced Booking is confirmed for an End-User with an incorrect rate due to an act or omission of HBX,
HBX hereby guarantees such Booking and will be liable for covering the rate difference. Also, the Lodging End-
Provider may not charge the End-User any additional fees or charges other than those informed when making the
reservation.
(ii)
Obvious errors and mistakes (including misprints, typographical errors and errors in calculating currency
conversion, errors in pricing in general, etc.). In case there is a rate lower than [***] of the usual rate price, unless
advertised as a promotion, it will be assumed to be a pricing error. HBX will inform Decolar as soon as said error is
identified and Decolar will suspend the publication of such rate. Additionally, HBX shall intermediate with the
Lodging-End Providers to comply with the Bookings at the informed rate. In case the Lodging End-Provider requests
for the payment of any additional amount to maintain the affected Bookings, HBX shall negotiate with the Lodging
End-Provider to minimize the impact of rate differences. As long as the rate error is not directly attributable to an act
or omission of HBX, HBX and Decolar will pay such rate difference equally in order to avoid cancelling of the
Booking and harming the End-User. Under no circumstances may HBX or the Lodging End-Provider cancel the
Booking unilaterally, except with prior written request from Decolar. If the reservation is canceled either by HBX
and/or the Lodging-End Provider, provisions regarding Overbooking and Cancellations in section 3.7.(d) shall apply.
(b)
[***]
(c)
[***]
2.8
[***].
2.9
HBX’ Lodging Products Information.
(a)
HBX shall ensure the existence of all Lodging End-Providers and will do its best Commercially Reasonable Efforts so that
their main services and features exist and are correct.
7
(b)
HBX will provide to Decolar the information about the HBX Lodging Products through the HBX-API, including, but not
limited to, images, photographs, description of the facilities and services, qualification of the establishment under the
applicable law and/or international standards commonly accepted in the industry, rates (informing applicable Taxes),
availability, type of rooms, location, cancellation policies, no-show conditions, check-in and check-out times, and other
conditions, policies and restrictions, as well as other details relative to the establishment that determines the End-User’s
expectation in relation to the travel experience when choosing the establishment, as provided by the Lodging End-Providers.
For the avoidance of doubt, the parties declare that Exhibit 7 (HBX Lodging Products Terms and Conditions) in no aspect
replaces HBX’ responsibility to send every information contained therein, as well as any other applicable information, as
provided by the Lodging End-Providers, via HBX-API.
(c)
HBX declares it requires proper R&W from its Lodging End-Providers regarding intellectual property (“IP”) rights of the
materials and contents on the HBX-API. HBX total aggregate liability for any act, omission, negligence or breach of third-
parties IP rights directly caused by the Lodging End-Providers promoted in HBX-API or any damage or expense resulting
from the aforementioned breach shall not exceed the Cap (as defined in section 14 herein below).
(d)
HBX shall be fully responsible and liable to Decolar for any and all acts, omissions, breaches or damages caused by Lodging
End-Providers, as if such acts, omissions, breaches, or damages were performed or incurred by HBX itself, up to the Cap
established in section 14. In such sense, HBX agrees to indemnify, defend, and hold Decolar harmless from any claims,
losses, liabilities, or expenses arising from any action or failure to act by Lodging-End Providers, within the scope of the Cap
specified in section 14. Decolar may translate, edit or delete such information in case it is not accurate. Decolar cannot make
any changes to the information shared by HBX. Should Decolar make any changes, it shall be responsible for such, unless
those changes were previously approved by HBX in writing.
(e)
HBX declares that, prior to sharing the information, photographs and images, it has obtained the corresponding assignments
and/or authorizations regarding copyrights and/or intellectual property rights, including without limitation, image copyrights.
3.
BOOKINGS
3.1
Payment Methods.
3.1.1
DEFERRED PAYMENT TERMS: HBX grants to Decolar and its Affiliates the right to defer the payments of Consumed
Bookings as per the provisions set forth in Exhibit 2 (Deferred Payment Terms). In case the Deferred Payment Terms are in force,
section 3.2 shall apply regarding Payment Terms. Non-gratuitous cancellations or non-gratuitous no-show Bookings, should be paid
based on the original check-in date of the Booking. In the event that Bookings are created whilst the Deferred Payment Terms are
suspended (in accordance with provisions under Exhibit 2), the payment terms included in next paragraphs will apply.
8
3.1.2
PRE-PAYMENT:
(a)
Upon suspension of the Deferred Payment Terms, Decolar must make the payment of any unpaid Bookings made prior to the
suspension of the Deferred Payment Terms that have already reached the Special Due Date within ten (10) days, otherwise
the Bookings may be cancelled by HBX. “Special Due Date” shall be the date in which cancellation fees are applied.
For the Bookings created while Deferred Payment Terms are suspended, all payments must be made before incurring
cancellation fees, otherwise the Bookings may be cancelled by HBX (the “Pre-Payment Terms”).
In such cases, HBX shall inform Decolar in advance and in writing so Decolar may pay the outstanding amounts in order to
avoid cancellation of the Bookings.
(b)
The aforementioned prior notice period of ten (10) days shall not apply and HBX shall be entitled to cancel all Bookings,
including all future Bookings not paid, regardless if they have been incurred in cancellation costs or not, in case of: (i) default
regarding payment terms not due to a Force Majeure Event and not receiving a clear confirmation on when the default on
payment is going to be repaired or (ii) imminent or actual insolvency situation or ceased of operations of Decolar. Decolar
cannot claim any compensation from HBX in case of cancellation of Bookings under the abovementioned scenarios,
assuming Decolar the duty to inform End-Users and looking for a satisfactory lodging alternative or satisfactory alternative
solution for End-Users, holding harmless HBX.
(c)
HBX shall be entitled to restrict access, suspend or deactivate the HBX-API in the event where Decolar has failed to comply
with Pre-Payments Terms for a period of time of ten (10) days. In such case, HBX shall provide a ten (10) days prior written
notice for Decolar to comply with pending payments. In the event that payment is not made within the aforementioned
period, section 9.2.3.2.(c) shall apply.
(d)
Non-refundable Bookings and Bookings made at the time they accrue cancellation fees, will be deactivated when in Pre-
Payment Terms except if a specific payment is made by Decolar to maintain those Bookings active.
3.1.3
Decolar understands and agrees that HBX and its following Affiliates will provide the document required under applicable
tax legislation for Bookings applicable to the point of sale and destination region, as follows. For the avoidance of doubt, the Parties
state that the following applies both to Deferred Payment Terms and Pre-Payment Terms.
9
HBX SELLING ENTITY
DECOLAR ENTITY
DESTINATION AND POINT OF SALE
[***]
Despegar.com México S.A. de C.V.
Mexican travel services and Mexican
source markets (i.e. Mexico as point of
sale and destination)
[***]
Decolar.com Ltda
Brazilian travel services and Brazilian
source markets (i.e. Brazil as point of sale
and destination)
[***]
Decolar.com Ltda
All non-Brazilian travel services and
Brazilian source markets (i.e. Brazil as
point of sale, whatever the destination
excluding Brazil as destination)
[***]
Travel Reservations SRL
Territory (i.e. any territory other than the
above)
The above information is provided for reference purposes only. Each Party reserves the right to modify its selling and invoicing
structure at any time for any reason at its sole discretion with prior written notice to the other Party of at least fifteen (15) days. If
such change impacts either Party, both Parties will mutually agree on a solution.
3.2
Payments and Disputes Resolutions.
(a)
During the Term, for each HBX-Sourced Booking of a HBX Lodging Product that is a Consumed Booking (or the relevant
Booking in case of Pre-Payment Terms), HBX shall send to Decolar the document required under applicable tax legislation
of the relevant Booking and Decolar will pay all Consumed Bookings Statements except the ones that are disputed as per
section 3.2.(c) below. Such documents (including the details and via the systems and payment conditions of the relevant
Booking as per section 3 and Exhibit 2 – Deferred Payment Terms) will be issued and sent daily by HBX.
(b)
HBX will share with Decolar a statement every [***] containing the details of the Net Amount of Consumed Bookings. In
case Deferred Payments Terms are suspended or cancelled, HBX shall share the statement every day (the “Consumed
Bookings Statement”). Each Consumed Booking Statement shall be stated in: (i) Brazilian Real only when corresponding to
Decolar’s Brazilian point of sale (“POS”); (ii) Mexican Pesos only when corresponding to Decolar’s Mexican POS; and (iii)
all other points-of-sale available in the Decolar Platform, in United States Dollars or, with respect to any
10
Bookings made in other currencies available therefor via the HBX-API, in such other currencies.
(c)
In case of disagreement by Decolar regarding the Consumed Bookings Statement, Decolar may deliver to HBX’ relevant
department [***] or via any other mechanism that may be agreed by the Parties, in writing, a dispute notice (a “Dispute
Notice”) with respect to such Statement. Such Dispute Notice shall provide relevant evidence supporting the nature and
amount of the dispute. As soon as possible and within a maximum period of one (1) month after the delivery of such Dispute
Notice, the Parties shall attempt in good faith to resolve any such dispute and finally determine the proper amounts to be
reflected on such statements. The disputes that could not be solved as per the abovementioned reconciliation process will be
addressed via an Accountant process within fifteen (15) days from the finalization of the reconciliation. The Accountant shall
determine the proper amounts to be reflected on the Statements, as applicable, for such period in accordance with the terms
and conditions of this Agreement. The Accountant shall deliver to each Party, as promptly as practicable and in any event
within thirty (30) days after its appointment, a written report setting forth the resolution of the dispute for such period. Such
report shall be final and binding upon the Parties to the fullest extent permitted by applicable Law and may be enforced in
any court having jurisdiction. Each Party shall bear all the fees and costs incurred by it in connection with this arbitration,
except that, if the Accountant determines that the aggregate net adjustment to the applicable Statement was greater than
[***], in which case all fees and expenses relating to the foregoing work by the Accountant shall be borne by the Party that
does not prevail on the matters resolved by the Accountant. No Payment dispute shall give the Party disputing such Payment
the right to withhold any such Payment that is in dispute hereunder. If the dispute is solved by the Accountant in favor of
HBX, Decolar shall pay HBX as per agreed payment terms. For the avoidance of doubt, both Parties acknowledge and agree
that any right to dispute a payment arising from a Booking for which the checkout date is prior to the date which is twelve
(12) months prior to the date of this Agreement is hereby waived and neither Party owes any amounts to the other Party
under said Bookings. This provision including the waiver hereinabove does not apply to Bookings that are being disputed
prior to, or as of, the Effective Date (“Pre-Existing Dispute”), such as any dispute between the Parties with respect to 2023
reconciliation under the current API Agreement.
(d)
In case Deferred Payment Terms apply, Decolar shall pay to HBX the amount corresponding to the Net Amount of
Consumed Bookings as follows: (a) for Consumed Bookings within [***], Decolar shall pay HBX by the [***]; and (b) for
Consumed Bookings within [***] Decolar shall pay HBX by the [***], in each case, following the receipt and validation of
the respective Consumed Bookings Statement.
(e)
Payment Currencies. The Parties agree that the payment of amounts set forth in this section shall be made in the currency
specified therefore in the relevant Statement. The Parties may from time to time agree in writing on additional currencies for
such payments. In such sense, all payments made by Decolar to HBX will be made in United
11
States Dollars or the relevant currency or currencies (such as Brazilian Real or Mexican Pesos) of the applicable Consumed
Booking Statement. In the event that the Parties decide to pay in a currency other than that of the Consumed Booking
Statements, the conversion will be made according to the Bloomberg BGN exchange rate corresponding to the payment date.
(f)
Both Parties agree to reconcile the accounts on a quarterly basis as per following sequence: first month of each quarter both
Parties should have fully reconciled the period of quarter -2 (i.e. in January of the relevant year, September should be
reconciled). The disputes that could not be solved as per the abovementioned reconciliation process will be addressed via the
Accountant Process within fifteen (15) days from the finalization of the reconciliation.
(g)
End-User Claims: In case Decolar disputes a Statement due to End-User Claims, Decolar shall provide copy of the written
complaint made by the End-User plus evidence sent by the End-User, if any (i.e. pictures, videos, medical certificates, etc.).
Under no circumstances may Decolar retain payments as a consequence of any Claims filed by End-Users, and the dispute
resolution process set forth in the Agreement shall apply.
3.3
[***]
3.4
[***]
3.5
[***]
3.6
Decolar Partners.
Decolar may make the HBX Lodging Products available for booking through third parties, including whole-sale partners, (each, a
“Decolar Partner”). For the purpose of this Agreement, Decolar Partner’s sales channels shall be deemed included into the
definition of Decolar Platform.
[***]
3.7
Customer Care.
(a)
During the Term, Decolar shall provide first line support to its End-Users (or to Decolar Partners, if applicable) regarding the
Bookings made through the Decolar Platform in accordance with Good Industry Practice.
(b)
HBX will provide second-line support for customer care and support issues with respect to the HBX Lodging Products
booked via the HBX API in accordance with Good Industry Practice. HBX acknowledges that it has direct contact with the
Lodging End-Providers and shall act as intermediary with the relevant Lodging End-Providers to address End-User’s claims
and requests. In such sense, HBX shall use Commercially Reasonable Efforts to ensure that Lodging-End Providers accept
liability and indemnify, when reasonably applicable, from and against any claims of Decolar’s End-Users arising
12
from the provision of their services. Therefore, Decolar hereby commits, that in case the claim and/or request occurs while
End-User is at destination, Decolar shall make its best Commercially Reasonable Efforts so that the request shall be filed by
the End-User directly with the Lodging End-Provider. If the claim and/or request occurs after the check-out date, HBX will
be contacted by Decolar to review the claim with the Lodging End-Provider. In all cases, Decolar shall contact HBX before
offering a resolution to the End-User. To that end, HBX shall collaborate with Decolar as reasonably requested by Decolar.
Both Parties agree to consistently review the customer operations process if needed, to mutually optimize whatever is agreed.
Notwithstanding the foregoing and provisions in section 13, HBX’s total aggregate liability for any claims of Decolar’s End-
Users arising from the provision of the services of HBX and/or of the Lodging End Providers shall not exceed the Cap (as
defined in section 14 herein below).
(c)
Without limiting the generality of the foregoing, Decolar will: (a) transmit to End-Users, without substantial revision,
deletion or change of any sort, all information transmitted by HBX or its Affiliates to Decolar for re-delivery to such End-
Users (e.g., Booking confirmation e-mails and other customer support communications) including but not limited the terms
and conditions applicable to the HBX Lodging Products and (b) transmit to HBX all communications, without substantial
revision, deletion or change of any sort, received by Decolar or its Affiliates from End-Users relating to HBX Lodging
Products if needed (e.g., Booking requests and other customer service inquiries).
(d)
Overbooking and Cancellations. Under no circumstances may HBX and/or the Lodging End-Providers cancel a confirmed
Booking without prior notice to Decolar and obtaining Decolar’s prior written consent, unless such cancellation is
specifically regulated under other provisions of this Agreement. Decolar shall forward to HBX any complaints and claims
received from End-Users regarding unilateral cancellations, overbookings or relocation needs related to HBX Lodging
Products. In case HBX’ delays for more than three (3) hours the offering of an equal or higher quality solution, Decolar will
be able to solve at HBX expense and request refund from HBX, notwithstanding HBX indemnity obligations and applicable
Cap under this Agreement.
3.8
Right to repent.
In the event that according to consumer protection laws applicable in the End-User’s country, the End-User has and exercises its
right to repent, HBX undertakes to respect said right and return the funds received as if the Booking had never been made, without
fine or penalty whatsoever, even when the Lodging Product’s cancellation policy is restrictive and does not allow gratuitous
cancellations. In the event that HBX does not comply with this section, Decolar may withhold any pending payment to HBX and
apply it to pay the refund to the End-User, and HBX shall not make any claim to Decolar for such reason. As a reference, see in
Exhibit 8 (Right to repent) the terms for exercising the right to repent in certain countries, effective as of the date of this Agreement.
13
3.9
Force Majeure Event.
If due to a Force Majeure Event the Booking is not consumed by the End-User, HBX will not charge for the part of the Booking that
was not consumed by the End-User, nor Decolar, affected by such Force Majeure Event nor any other amounts, including non-
refundable rates that can be recovered by HBX from the Lodging End-Providers.
3.10
Anti-fraud control.
Decolar has an anti-fraud system pursuant to which it monitors the transactions made through the Decolar Platforms. Decolar
reserves the right to cancel the Bookings, without cost or penalty when there are suspicions of fraudulent activity of the End-User
and/or of the Lodging-End Provider. Cancellations under this section shall be made prior booking confirmation or cancellation with
fees dates.
4.
COMPLIANCE
4.1
Compliance with Laws.
(a)
HBX will, at its cost and expense, obtain all necessary regulatory approvals, licenses, and permits applicable to HBX and its
Affiliates’ businesses to the extent related to this Agreement or otherwise necessary for HBX to provide the Services and
comply with its obligations under this Agreement.
(b)
Decolar will, at its cost and expense, obtain all necessary regulatory approvals, licenses, and permits applicable to Decolar
and its Affiliates’ businesses to the extent related to this Agreement or otherwise necessary for them to receive and use the
Services and comply with its obligations under this Agreement.
(c)
Also, each Party and its personnel will comply (and cause its subcontractors to comply) at all times with: (i) all Laws
applicable to the Party’s and its Affiliates’ businesses to the extent related to this Agreement and (ii) all Laws applicable to
the provision or receipt of the Services (as applicable) and execution of this Agreement in connection with its obligations
contemplated herein.
(d)
If any change in applicable Law materially impacts on the provisions of this Agreement, then the Parties shall discuss in good
faith to determine what modifications to the Agreement may be required.
4.2
Sanctions and Anti-Corruption Laws.
(a)
Each of the Parties represents and warrants that, to the best of its knowledge, it and its Affiliates and/or directors and/or
shareholders have not violated and are in compliance with all anti-corruption laws in relevant jurisdictions, including but not
limited to, the United States Foreign Corrupt Practices Act, the United Kingdom Bribery Act and other similar laws (the
“Anti-Corruption Laws”).
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(b)
Each of the Parties represents and warrants that are in compliance with Sanctions, and neither it nor any of its Affiliates
and/or directors and/or shareholders is a Sanctioned Person. Each Party warrants that to the best of its knowledge, and for the
past five (5) years, neither it nor its Affiliates and/or directors and/or shareholders have been convicted of, have been, or are
subject of any enforcement by or proceeding before any governmental, administrative, or regulatory body regarding
Sanctions or Anti-Corruption Laws.
(c)
Neither of the Parties and its respective Affiliates shall violate or take any action to cause the other Party to violate any
Sanctions or Anti-Corruption Laws.
(d)
HBX shall not provide Decolar any commodities, software, technology, materials, HBX Lodging Products and/or services
involving, directly or indirectly, any Sanctioned Person or Sanctioned Country.
(e)
HBX shall obtain any and all regulatory authorizations, including export licenses, required for the export, reexport, or in-
country transfer of commodities, software, technology, Services, or materials to Decolar before providing such commodities,
software, technology, Services, materials to Decolar.
(f)
HBX represents and warrants that it shall not source, supply, or deliver goods or services under this Agreement from, to, or
through any Sanctioned Country or Sanctioned Person. HBX agrees to exercise due diligence at its sole cost in ensuring that
no part of its inventory or distribution process violates any Sanctions or involves any Sanctioned Persons. If HBX detects
that it and/or any of its Affiliates and/or any HBX Lodging Products does not comply with Sanctions, it will be removed from
HBX portfolio of Lodging End-Providers and it shall immediately inform Decolar in writing.
(g)
If any HBX Lodging Product is or becomes a and/or is or becomes related with a Sanctioned Person or is related with a
Sanctioned Country, HBX shall immediately cease to supply such HBX Lodging Product to Decolar.
(h)
If at any time during the Term, more than [***] of HBX Lodging Products located in the Territory offered by HBX via the
HBX-API become targeted by any Sanctions, whether introduced before or after such date, then the Parties will proceed as
follows (additionally to HBX obligation in section (g) above):
-
From written notification by Decolar to HBX in writing of the above threshold being met, HBX will have a
maximum term of sixty (60) days to cure such breach.
-
If not cured, both Parties, within a maximum period of thirty (30) days, will negotiate on how the Measurement
Year Volume Target for the relevant Measurement Year and/or the Estimated Target Date shall be adjusted.
15
-
In case no agreement is reached within such thirty (30) day-period, section 9.2.2.2 shall apply, without prejudice
of Decolar’s rights and remedies at law and in equity.
(i)
Notwithstanding the above, HBX shall (subject to the Cap as defined in section 14 hereinbelow) indemnify, defend, and hold
harmless Decolar from and against any Claims, damages, Losses, expenses, liabilities, or costs of any kind (including
reasonable legal fees, witness fees and court costs) incurred in connection with such Claims, in each case arising from or out
of any supply of any Sanctioned or Sanctions related person, notwithstanding Decolar’s right to terminate the Agreement in
accordance with section 9.2.2.2.
(j)
Each of the Parties shall maintain accurate processes to verify its compliance with Anti-Corruption Laws and Sanctions and
to provide to the other Party if reasonably requested sufficient evidence of such compliance.
Neither Party shall be liable in any way whatsoever for any damages incurred by the other Party or its Affiliates, arising from
activities performed by the other Party or its Affiliates which are in breach of any Sanctions or Anti-Corruption Laws.
4.3
Corporate Sustainability.
HBX is committed to Corporate Sustainability, as evidenced by its “Corporate Sustainability Policy”, which Decolar hereby
acknowledges to have read: https://corporate.hotelbeds.com/policy/hotelbeds-corporate-sustainability-policy-external.pdf
5.
ECONOMIC TERMS [***]
6.
DATA SECURITY MEASURES
6.1
Data treatment.
(a)
HBX acknowledges that, as between HBX and Decolar, Decolar is the sole and exclusive owner of all Decolar Data. HBX
shall not possess or assert any lien or other right against or to Decolar Data. HBX, its Affiliates and/or Lodging End-
Providers shall not: (i) use or process any Decolar Data for any purpose other than in connection with providing the provision
of the Services and as authorized under this Agreement; (ii) sell, assign, lease or otherwise dispose of Decolar Data; (iii) de-
identify, pseudonymize, or anonymize Decolar Data; or (iv) commercially exploit Decolar Data.
(b)
HBX and its Affiliates will not, and will not permit any third-party (including Lodging End-Providers) to: (i) access, adapt,
align, alter, collect, combine, compile, consult, create, derive, destruct, dispose, disseminate, intercept, maintain, make
available, organize, record, restrict, retain, structure, use, store, erase, copy, disclose, transfer, transmit or otherwise process
any data or sets of data, any operations or any set of operations, whether or not by automated means (collectively, “Process”)
Decolar Data for any purpose other than to provide the Services and comply with the Booking; or (ii)
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disclose any Decolar Data to a third-party for any other purpose than to provide the Services and comply with the Booking
(including Affiliates, Lodging Providers, independent contractors or third-parties providing goods or services to HBX in
connection with this Agreement) without first obtaining Decolar’s written consent to such disclosure.
(c)
HBX shall maintain a privacy policy that shall govern the collection, treatment, Processing, use and disclosure of Decolar
Personal Data (the “HBX Privacy Policy”).
(d)
In addition to the foregoing, each Party shall implement, maintain, and comply with industry standards and adopt and
implement a comprehensive, best-in-class written information security program (“Information Security Program”) which
shall comply with all applicable Laws, and include all necessary measures, including the establishment and maintenance of
policies and procedures, and technical, physical, organizational and administrative safeguards designed to:
(i)
ensure the security and confidentiality of the other Party’s Data;
(ii)
protect against any foreseeable threats, fraud, or hazards to the security or integrity of the other Party’s Data;
(iii)
protect against accidental, unauthorized or unlawful: access or damage to, or use, processing, loss, destruction,
alteration or disclosure of the other Party’s Data or systems or networks;
(iv)
ensure secure and appropriate disposal of the other Party’s Data; and
(e)
Each Party shall regularly test key controls, systems and procedures relating to the Information Security Program. The
frequency and nature of such tests shall be determined by each Party’s risk assessment team.
(f)
HBX must carry out penetration tests on the systems used to provide the Services, through a contracted third-party, at least
once a year and HBX will provide to Decolar a summary of penetration tests undertaken and its results if requested in writing
by Decolar. If vulnerabilities are identified as a result of said tests, they must be remedied within a reasonable period of time
according to their criticality.
6.2
Security Incidents.
(a)
Each Party shall promptly (but no later than forty-eight (48) hours after its occurrence) notify the other Party of any actual
Security Incident when involving the other Party’s Data, and with respect to each Security Incident, the informing Party
shall:
(i)
investigate such Security Incident;
17
(ii)
with respect to a Successful Security Incident, provide the other Party with a detailed written statement describing the
circumstances surrounding such Successful Security Incident;
(iii)
with respect to a Successful Security Incident, cooperate with the other Party with respect to the investigation and
reporting of such incident, including reporting information relating to the Successful Security Incident to
Governmental Authorities (including law enforcement and regulatory authorities); and
(iv)
with respect to a Successful Security Incident, provide and implement as promptly as practicable, a remediation plan,
to address such Successful Security Incident including to prevent its recurrence.
(b)
If a notification to any Governmental Authority and/or individuals affected by a Successful Security Incident is required
under any Law or any of the Party’s customary policies and procedures, then notifications to all Governmental Authority and
individuals who are affected by the same event (as reasonably determined by the other Party) shall be considered legally
required.
(c)
The informing Party shall reimburse the other Party for all Notification Related Costs incurred by such party arising out of or
in connection with any Successful Security Incident to the extent caused by the informing Party’s, or any of its
subprocessors’, acts or omissions (such Successful Security Incident, a “Security Incident”) and resulting in a requirement
for required notifications under Law.
(d)
HBX shall make its Commercially Reasonable Efforts to require its Lodging End-Providers to implement and maintain
security data measures and privacy incident reporting processes for reporting of Security Incidents to HBX consistent with
HBX’s obligations under this Agreement. If Decolar’s Data is compromised by lack of compliance by the Lodging End
Providers regarding the implementation of such measures and processes, HBX shall be responsible towards Decolar in
accordance with HBX’ capacity as data processor.
(e)
Decolar shall make its Commercially Reasonable Efforts to require its Decolar Partners to implement and maintain security
data measures and privacy incident reporting processes for reporting of Security Incidents to Decolar consistent with
Decolar’s obligations under this Agreement. If HBX’s Data is compromised by lack of compliance by Decolar Partners
regarding the implementation of such measures and processes, Decolar shall be responsible towards HBX in accordance with
Decolar’ capacity as data controller.
6.3
Additional Requirements with Respect to Personal Data.
Without diminishing each Party’s obligations in this Agreement, each Party shall comply with the Personal Data provisions set forth
in Exhibit 3 (Personal Data Protection Laws). To the extent any of the provisions in Exhibit 3 (Personal Data Protection Laws)
conflict with other
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provisions of this Agreement that relate to Personal Data, the provisions in Exhibit 3 (Personal Data Protection Laws) shall control
over such other provisions.
7.
CONFIDENTIAL INFORMATION
7.1
Definition.
“Confidential Information” of a Party means any and all non-public proprietary information and materials of whatever nature
(whether in oral, written, electronic or other form), which a Party or its Affiliates discloses, provides or otherwise makes available,
or on whose behalf such information and material is disclosed, provided or otherwise made available (the “Furnishing Party”),
whether prior to or after the Effective Date, to the other Party or that the other Party otherwise learns (the “Receiving Party”) in
connection with this Agreement, and which is either marked or identified in writing as confidential, proprietary, secret or with
another designation sufficient to give notice of its sensitive nature, or is of a type that a reasonable person would recognize it to be
non-public proprietary information or materials. “Confidential Information” shall include but not be limited to: (a) all information
concerning the operations, affairs and businesses of the Furnishing Party and its Affiliates (including their financial affairs, providers
lists, customer lists, customer information, account information, business plans, or marketing activities); (b) Service Level data and
detailed supporting information; and (c) the Furnishing Party’s Data.
7.2
Obligations of Confidentiality.
(a)
Each Party’s Confidential Information shall remain the property of that Party except as otherwise expressly provided in this
Agreement.
(b)
As necessary to accomplish the purposes of this Agreement, the Receiving Party may disclose Confidential Information of
the Furnishing Party to any employee, officer, director, contractor, service provider, subcontractor, agent or representative of
the Receiving Party who has a legitimate need to know the Confidential Information in question for purposes of this
Agreement and who is bound by the Receiving Party to protect the confidentiality of such Confidential Information in a
manner substantially equivalent to that required of the Receiving Party hereunder.
(c)
The Receiving Party will keep the Confidential Information of the Furnishing Party confidential and will protect it from
unauthorized use or disclosure by using at least the same degree of care as the Receiving Party employs to avoid
unauthorized use or disclosure of its own Confidential Information of a similar nature, but in no event less than reasonable
care.
(d)
Neither Party may:
-
make any use of the Confidential Information of the Furnishing Party except as required to perform its obligations
or exercise its rights under this Agreement;
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-
disclose the Confidential Information of the Furnishing Party to third-parties except as expressly permitted herein;
-
possess or assert any lien or similar right against or to the Confidential Information of the Furnishing Party; or
-
sell, assign, lease, or otherwise transfer to third-parties or commercially exploit the Confidential Information of
the Furnishing Party.
7.3
Exceptions.
The foregoing obligations of confidentiality do not apply to any information or materials of the Furnishing Party (other than Personal
Data) that the Receiving Party can demonstrate: (a) was in the possession of, or was rightfully known by, the Receiving Party
without an obligation to maintain its confidentiality prior to receipt from the Furnishing Party; (b) lawfully was or has become
generally available to the public other than as a result of disclosure by the Receiving Party or its agents; (c) after disclosure to the
Receiving Party, was received from a third-party who, to the Receiving Party’s knowledge, had a lawful right to disclose such
information to the Receiving Party without any obligation to restrict its further use or disclosure; or (d) was independently developed
by the Receiving Party without use of or reference to any Confidential Information of the Furnishing Party.
7.4
Loss of Confidential Information.
If any unauthorized disclosure, loss of, or inability to account for any Confidential Information of the Furnishing Party occurs on
account of the Receiving Party (or any entity or person for whom the Receiving Party is responsible), the Receiving Party will
promptly so notify the Furnishing Party and will cooperate with the Furnishing Party and take such actions as may be reasonably
necessary or reasonably requested by the Furnishing Party to minimize the extent of any unauthorized disclosure or use of such
Confidential Information and any resulting damage.
7.5
No Implied Rights.
Nothing contained in this section will be construed as obligating a Party to disclose its Confidential Information to the other Party, or
as granting to or conferring on a Party, expressly or by implication, any rights or licenses to the Confidential Information of the
Furnishing Party. Any such obligation or grant will only be as expressly provided in any other provisions of this Agreement.
7.6
Compelled Disclosure.
If the Receiving Party becomes legally compelled to disclose any Confidential Information of the Furnishing Party in a manner not
otherwise permitted by this Agreement, the Receiving Party will provide the Furnishing Party with prompt written notice of the
request (unless legally precluded from doing so) so that the Furnishing Party may seek a protective order or other appropriate
remedy. If a protective order or similar order is not obtained by the date by which
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the Receiving Party must comply with the request, the Receiving Party shall make its Commercially Reasonable Efforts to limit the
disclosure to the minimum amount that is legally required.
7.7
Public Disclosures.
All media releases, public announcements and public disclosures by either Party relating to this Agreement or the subject matter of
this Agreement, including promotional or marketing material, but not including announcements intended solely for internal
distribution or disclosures to the extent required to meet legal or regulatory requirements beyond the reasonable control of the
Furnishing Party, will be coordinated with and approved by the other Party prior to release, which approval shall not be unreasonably
withheld.
7.8
Return or Destruction.
Promptly following the Furnishing Party’s written request, or the expiration or termination of this Agreement for any reason, the
Receiving Party shall either return to the Furnishing Party or destroy and delete all Confidential Information, including all copies,
extracts, summaries, recordings, translations or derivative works thereof to the extent containing or incorporating such Confidential
Information, and certify in writing to the Furnishing Party that the Receiving Party has complied with its obligations under this
section; provided, however, that the Receiving Party: (a) may retain one (1) copy of any Confidential Information necessary for its
legal, regulatory or audit purposes, and (b) shall not be required to return, destroy or delete such Confidential Information that is
archived or otherwise stored in accordance with the Receiving Party’s back-up or document retention policies or procedures, if only
employees, contractors, agents or representatives whose functions are primarily related to the Receiving Party’s information
technology have access to such Confidential Information; provided, further, that such retained Confidential Information shall remain
subject to the obligations and restrictions contained in this Agreement.
7.9
Confidential Treatment of this Agreement.
This Agreement is a confidential agreement between HBX and Decolar. The Parties shall not reproduce or show copies of this
Agreement to third-parties without the other Party’s consent, except as may be permitted under this section. Notwithstanding the
foregoing, each Party may disclose a general summary of this Agreement due to applicable laws and regulations; provided that such
general summary of this Agreement shall not contain any terms or details regarding the other Party’s specific agreements with the
Furnishing Party regarding exclusivity and pricing.
8.
INTELLECTUAL PROPERTY RIGHTS
8.1
Definition.
“Intellectual Property Rights” means all technology, intellectual property or other similar proprietary rights in any jurisdiction
(including People’s Republic of China) including: (i) rights in, arising out of, or associated with published and unpublished works of
authorship, including
21
rights in audiovisual works, collective works, computer programs (whether in source code or executable form and whether in open
source or proprietary form), documentation, compilations, databases, derivative works, literary works, maskworks, and sound
recordings, and rights granted under the Copyright Act or any similar Law of another jurisdiction; (ii) rights in, arising out of, or
associated with databases, data compilations and collections and technical data; (iii) rights in, arising out of, or associated with
inventions, discoveries, improvements, business methods, compositions of matter, machines, methods and processes and new uses
for any of the preceding items, including rights granted under the Patent Act or any similar Law of another jurisdiction; (iv) rights in,
arising out of, or associated with Trademarks, including without limitation rights granted under the Lanham Act or any similar Law
of another jurisdiction and under the common law; (v) rights in, arising out of, or associated with information that is not generally
known or readily ascertainable through proper means, whether tangible or intangible, including algorithms, customer lists, designs,
formulas, know-how, methods, processes, programs, prototypes, systems and techniques, including rights granted under the Uniform
Trade Secrets Act or any similar Law of another jurisdiction; (vi) rights in, arising out of, or associated with a person’s name, voice,
signature, photograph, persona, or likeness, including rights of personality, privacy, and publicity; (vii) rights of attribution and
integrity and other moral rights of an author; and (viii) rights in, arising out of, or associated with domain names, social media
handles and other identifiers, web addresses and websites.
8.2
Display of HBX Information.
(a)
During the Term, in connection with all HBX Lodging Products made available for booking or otherwise displayed or listed
on any Decolar Platform, Decolar shall display the appropriate trademark or copyright for third parties (including Lodging
End-Providers), information about or content describing the HBX Lodging Products, its material terms and conditions, seller
of travel designations, the cancellation policies, rules, disclosures, regulations, rates, prices, Taxes, Tax recovery charges,
services fees and other charges and fees for all offered HBX Lodging Products, as provided by HBX, without addition to,
revision, deletion or change of any sort whatsoever except as otherwise established in this Agreement (“HBX Information”).
(b)
Decolar shall display the rate on the Decolar Platforms in the currency which is provided in the HBX-API. Decolar may
convert the rate into any alternative currency if that currency has not been made available in the HBX-API, and in which
case, Decolar must ensure that any conversion into an alternative currency is calculated in accordance with the currency
conversion rate published by Bloomberg BGN (or another credible conversion rate) at the time the HBX Lodging Product is
displayed on a Decolar Platform and Decolar shall be solely liable for any inaccuracy with respect to any such conversion.
8.3
Cross License in Trademarks.
During the Term, each Party will: (a) only have license to use the other Party’s trademarks for the sole purpose of complying with its
obligations under this Agreement (b) except as covered under section (a), not publish or otherwise engage in any use of the other
Party’s trademarks without the other Party’s prior written consent; provided that the Parties may expressly agree in
22
writing on any additional proposed uses of the other Party’s trademarks. Each Party will comply with the other Party’s requirements
regarding the format and placement of its trademarks, including as set forth in any trademark use guidelines provided in writing by
the other Party.
Neither Party will take any action to register or otherwise challenge or interfere with the other Party’s interests in its trademarks.
Unless specifically provided for herein, neither Party will adopt or otherwise use any trademark that is similar to, or likely to be
confused with, any of the other Party’s trademarks.
8.4
HBX Intellectual Property.
Subject to the terms and for the duration of the Agreement, HBX hereby grants to Decolar and its Affiliates a license of use
associated with the HBX-API, including, without limitation, the HBX-API, HBX Lodging Products or any other HBX Information
and content provided from time to time under this Agreement, (collectively, the “HBX Intellectual Property”) to use such HBX
Intellectual Property solely in accordance with this Agreement, including to make the HBX Lodging Products available to potential
End-Users. The license rights granted herein comprise of an irrevocable (solely during the Term), non-exclusive, non-transferable,
royalty-free, worldwide license to use, distribute, reproduce, perform and display HBX Intellectual Property, HBX’ Affiliate’s
trademarks and all images, text and other content HBX furnishes from time to time to Decolar for use pursuant to this Agreement.
Nevertheless, the Parties acknowledge that HBX shall revoke the usage licenses regarding HBX Lodging Products in the event that
any Lodging End-Provider revokes HBX license to share their content or HBX considers there is a risk of infringement on third-
party IP rights, and HBX will inform Decolar accordingly as soon as possible.
HBX declares that it recognizes and is aware that Decolar may share the Intellectual Property of HBX and Lodging-End Providers
with Decolar Partners for use by the Decolar Partners in accordance with this Agreement.
In the event that there is any misuse of any Intellectual Property of HBX and/or Lodging End-Providers by Decolar and/or Decolar
Partners, Decolar shall indemnify and hold harmless HBX and its Affiliates from Losses arising out of or related to a breach on HBX
and its Lodging End-Providers IP, in accordance with sections 13 and 14 of this Agreement.
8.5
Reservation of Rights.
Each Party reserves all rights not expressly granted herein. As between the Parties: (a) Decolar is the owner of and reserves all right,
title and interest in and to the Decolar Platform, Decolar’s trademarks and all of Decolar’s intellectual property rights; and (b) HBX
is the owner of and reserves all right, title and interest in and to the HBX-API, and HBX’ trademarks and all HBX’ Intellectual
Property rights.
In the event that there is any misuse of any Intellectual Property (including without limitation all trademarks, service marks, logos,
commercial names, etc.) without the corresponding Party’s
23
consent or license, the Party reserves the right to take any legal action to protect its legitimate interests regarding its Intellectual
Property.
9.
TERM AND TERMINATION.
9.1
[***]
10.
AUDITS
(a)
Decolar shall have the right to directly audit, or have an agent, accountant or other representative, audit, all activity in
connection with the Agreement, including, but not limited to, the Mark-Up Limit and the Preferred Supplier Agreements (a
“Decolar Audit”) upon providing at least thirty (30) days’ prior written notice to HBX. Decolar Audits shall not be more than
twice per year, unless non-compliance by HBX is detected in at least [***] of the material points audited in one (1) of those
audits. In such case, Decolar Audits shall be four (4) per year.
(b)
The Parties shall schedule a mutually convenient time for the Audit; provided that any Decolar Audit shall be conducted
during normal business hours and in a manner that is not disruptive to HBX’ business. Also, the Audit shall not be biased
towards a specific portion of HBX’ business and needs to be representative enough of the portion of the HBX business that is
relevant for Decolar to achieve the Total Volume Target. HBX will provide aggregated and annualized information in
connection with the Decolar Audit. The Decolar Audit shall encompass HBX and all of its Affiliates, if those Affiliates are
invoicing Decolar under the Agreement or are party to any of the lodging agreements of HBX Lodging Products distributed
through the HBX-API.
(c)
HBX shall have the right to directly audit Decolar, or have an agent, accountant or other representative, audit all activity in
connection with the Agreement, including, but not limited to, the Total Volume Target, Excluded Lodging Providers (an
“HBX Audit” and collectively, with the Decolar Audit, an “Audit”) upon providing at least thirty (30) days’ prior written
notice to Decolar. HBX Audits shall not be more than twice per year, unless non-compliance by Decolar is detected in at least
[***] of the material points audited in one (1) of those audits. In such case, HBX Audits shall be four (4) per year.
(d)
The Parties shall schedule a mutually convenient time for the HBX Audit; provided that any HBX Audit shall be conducted
during normal business hours and in a manner that is not disruptive to Decolar’s business and needs to be representative
enough of the portion of the Decolar business related with this Agreement. Decolar will provide aggregated and annualized
information in connection with the HBX Audit. The HBX Audit shall encompass Decolar and all of its Affiliates, if those
Affiliates are purchasing HBX Lodging Products distributed through the HBX-API.
(e)
The Audit shall be at the sole cost of the auditing Party unless the Audit determines non-compliance by the non-auditing
Party or its relevant Affiliates, in which case, the non-auditing Party shall bear all costs of the Audit and the auditing Party for
the damages
24
caused to the auditing Party by such non-compliance. If the Audit determines material non-compliance by the non-auditing
Party or its relevant Affiliates, such material non-compliance shall be remedied within a period of sixty (60) days from the
date in which the non-auditing Party was informed in writing by the auditing Party of the detected non-compliance. In case of
independent auditor that access Confidential Information, the Auditing Party shall ensure that the auditor will comply with all
applicable confidentiality obligations and shall not disclose any Confidential Information to the other Party or any third party
without the prior written consent of the audited Party, except as required by law or regulation.
(f)
Both Parties agree to work together in a cooperative and collaborative manner to achieve the objectives outlined in this
Agreement. For this purpose, each Party shall use its Commercially Reasonable Efforts to share applicable information with
the other Party, as reasonably necessary.
11.
DECOLAR ACQUISITIONS
(a)
If Decolar or any of its Affiliates acquires Control of any entity (“Acquired Entity”) by way of merger, corporate
reorganization or consolidation, acquisition of all or substantially all of its assets or otherwise during the Term, and Decolar
desires for the Acquired entity to be considered an Affiliate under the Agreement, then Decolar shall provide written notice to
HBX with sufficient evidence of said acquisition, and requesting that the Acquired Entity be considered an Affiliate under the
Agreement. The Acquired Entity will be considered an Affiliate for purposes of this Agreement if approved in writing by
HBX.
(b)
HBX, with prior discussion with Decolar, will define the volume contribution of the Acquired Entity to the Total Volume
Target and the date from which such contribution shall be taken into account, on a case-by-case basis. In case approval in
writing is granted by HBX as per previous paragraph, HBX will cooperate with Decolar as reasonably requested by Decolar
in order to finalize the integration of the Acquired Entity, including with respect to the connection of HBX’ systems into the
Acquired Entity’s systems, if applicable.
(c)
Also, in case approval in writing is granted by HBX as per above, except for sections on Confidential Information and Data
Security Measures, which will be binding on, and apply to the Acquired Entity as of the Acquisition Date, the Acquired
Entity shall be excused from the compliance with the provisions of this Agreement for a maximum period of nine (9) months
as from the approval date by HBX.
12.
REPRESENTATIONS, WARRANTIES AND COVENANTS
12.1
Each Party represents, warrants and covenants to the other Party that:
(a)
It has all necessary corporate or similar power, authority and capacity to enter into this Agreement and to carry out its
obligations under this Agreement;
25
(b)
The execution and delivery of this Agreement and the consummation of the transactions contemplated herein have been duly
authorized by all necessary corporate or similar action;
(c)
This Agreement constitutes a valid and binding obligation enforceable against it in accordance with its terms;
(d)
The execution and delivery of, or the performance of its obligations under this Agreement do not violate any laws of any
jurisdiction or the terms or conditions of any other contracts to which it is a Party or by which it is otherwise bound; and
(e)
No approval, order, consent of or filing with any governmental authority is required on the part of such Party in connection
with its execution and delivery of this Agreement or the performance of its obligations under this Agreement.
12.2
Disclaimer.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, OR IN THE HBX-API, NEITHER PARTY NOR SUCH
PARTY’S AFFILIATES MAKE ANY REPRESENTATIONS OR WARRANTIES, AND EACH OF THE PARTIES AND THEIR
AFFILIATES HEREBY EXPRESSLY DISCLAIM, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ALL WARRANTIES,
EXPRESS OR IMPLIED, WRITTEN OR ORAL, STATUTORY OR OTHERWISE, INCLUDING WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, AND WARRANTIES OF NON-INFRINGEMENT.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE HBX-API, FOR THE SERVICES PROVIDED
UNDER THIS AGREEMENT OR IN THE HBX-API, ARE PROVIDED ON AN “AS IS” BASIS.
13.
INDEMNIFICATION
13.1
Indemnification
Each Party and its Affiliates (the “Indemnifying Party”) shall indemnify, defend, and hold harmless the other Party, its affiliates,
officers, directors, employees, and agents (collectively, the “Indemnified Party”) from and against any and all Losses arising out of
or related to:
(a)
any Claim arising from a breach of the Indemnifying Party and/or its Affiliates of section 6, including any breach resulting in
a Security Incident;
(b)
any Claim arising from any failure of the Indemnifying Party and/or its Affiliates to comply with applicable Laws, including
Sanctions and Anti-Corruption Laws, in its performance under this Agreement;
(c)
any Claim arising from a breach of Indemnifying Party and/or its Affiliates of Exhibit 3 (Personal Data Protection Laws);
26
(d)
any Claim arising from the fraud, gross negligence or willful misconduct of: (i) in the case of HBX, Lodging End-Providers,
HBX Affiliates, or HBX or its Affiliates’ officers, directors, employees, agents; and (ii) in the case of Decolar of its End-
Users, Decolar Affiliates and Decolar Partners or Decolar or its Affiliates’ officers, directors, employees and/or agents;
(e)
any Claim alleging that the use of any Intellectual Property, or any embodiment of Intellectual Property Rights or content
provided made available by the Indemnifying Party to the Indemnified Party, in accordance with this Agreement infringes,
misappropriates or otherwise violates the Intellectual Property Rights of any third party;
(f)
any breach or inaccuracy of any representation or warranty made by the Indemnifying Party under this Agreement;
(g)
any Claim for taxes (and interest and penalties resulting therefrom) assessed against the Indemnified Party that the
Indemnifying Party is attributable for in connection with this Agreement.
For the avoidance of doubt, and subject to section 14, the Parties state that HBX and its Affiliates shall be fully liable towards
Decolar for the acts and omissions of Lodging End-Providers and that Decolar and its Affiliates shall be fully liable towards HBX
for the acts or omissions of its End-Users and Decolar Partners.
13.2
Indemnification Procedures.
The Indemnified Party agrees to give the Indemnifying Party prompt written notice of any Claim for which indemnification is sought
under this section. Failure to give such notice shall not abrogate or diminish the Indemnifying Party’s obligation under this section to
the extent that such failure does not prejudice the Indemnifying Party’s ability to defend the Claim. In any Claim for which
indemnification is sought, the Indemnifying Party will have the right to defend the Claim and to select legal counsel to represent the
Indemnified Party (said counsel to be reasonably satisfactory to the Indemnified Party) and to otherwise control the defense of such
Claim. For any Claim the defense of which is controlled by the Indemnifying Party, the Indemnified Party will at all times have the
right to participate in the defense at its own expense. If the Indemnifying Party, within fifteen (15) Business Days after receipt of
such notice, notifies the Indemnified Party in writing that it will not exercise its right, or otherwise fails, to defend the Claim, the
Indemnified Party will have the right, but not the obligation, to undertake the defense of and to compromise or settle the Claim on
behalf, for the account, and at the risk of the Indemnifying Party. The Indemnified Party will make available information and
assistance as the Indemnifying Party may reasonably request, at the Indemnified Party’s expense. The Indemnifying Party may
neither: consent to the entry of any judgment or enter into any settlement that provides for injunctive or other non-monetary relief
affecting Indemnified Party, without the prior written consent of the Indemnified Party which consent will not be unreasonably
withheld, conditioned or delayed, nor (b) consent to the entry of any judgment or enter into any settlement without the prior written
consent of the Indemnified Party unless such judgment or settlement provides for the unconditional and full release of the
Indemnified Party,
27
in respect of such Claim and does not diminish any of the Indemnified Party’s rights under this Agreement or result in additional fees
or costs to the Indemnified Party or other payments by the Indemnified Party.
The indemnity obligations set forth in this section shall survive the termination of this Agreement for any reason, for the statute of
limitation of the legal actions.
14.
GENERAL LIABILITY PROVISIONS. LIMITATION OF LIABILITY AND INDEMNIFICATION OBLIGATIONS.
NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY LOSSES ARISING FROM OR RELATED TO THIS
AGREEMENT THAT ARE IN THE NATURE OF LOST PROFITS, LOSS OF BUSINESS, OR CONSEQUENTIAL, SPECIAL,
PUNITIVE, SPECULATIVE, INCIDENTAL OR INDIRECT DAMAGES, REGARDLESS OF WHETHER SUCH DAMAGE
WAS FORESEEABLE AND WHETHER EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. THE TOTAL AGGREGATE LIABILITY OF ONE PARTY TO THE OTHER PARTY FOR ANY AND ALL
DAMAGES, LOSSES AND CAUSES OF ACTION AND INDEMNIFICATION OBLIGATIONS (WHETHER IN CONTRACT,
EQUITY, TORT INCLUDING, WITHOUT LIMITATION, BREACH OF WARRANTY, NEGLIGENCE, STRICT LIABILITY, OR
OTHERWISE, ARISING OUT OF OR RELATED TO THIS AGREEMENT, WILL NOT EXCEED [***] IN ANY CALENDAR
YEAR DURING THE TERM (THE “CAP”). THIS SECTION SHALL SURVIVE THE TERMINATION OF THE AGREEMENT
FOR THE STATUTE OF LIMITATION OF THE LEGAL ACTIONS. FOR THE AVOIDANCE OF DOUBT: (I) ANY AMOUNTS
OWED BY DECOLAR TO HBX PURSUANT TO SECTION 3 OR EXHIBIT 2; AND (II) TERMINATION PAYMENTS DUE
UNDER THIS AGREEMENT (SUCH AS PAYMENTS UNDER SECTION “TERM AND TERMINATION”) SHALL, IN EACH
CASE, NOT BE SUBJECT TO THE ABOVEMENTIONED MONETARY CAP.
15.
TAXES.
15.1
Withholding Taxes
If any Party is required by any applicable Law to withhold Taxes from any payment due under this Agreement (such Party, the
“Withholding Party”), then the Withholding Party shall make such withholding and provide the other Party (such Party, the
“Recipient Party”) with documentation reasonably requested by the Recipient Party (including but not limited to resale exemption or
other certificates) supporting the payment of such withholding to the applicable taxing authority.
15.2
Tax Cooperation
The Parties shall cooperate, as reasonably requested by the other Party, to optimize the amount of Taxes payable in connection with
any payments under this Agreement, including by claiming any available exemption or any available refund, credit or other recovery,
and by executing and filing any document required under applicable tax legislation, forms or certificates (including residency
certificates) reasonably required. The Parties shall provide each other with any
28
information reasonably requested in order to comply with applicable Laws or in connection with the reporting of any Taxes payable
pursuant to this Agreement or any audit relating to any such Taxes.
Except as otherwise stated herein, HBX is not the supplier, vendor, or co-vendor for collecting and remitting Taxes to the applicable
Taxing authorities. Decolar shall collect, on behalf, but not in the name of HBX, the Net Amount of Consumed Bookings of any
HBX Lodging Product made by an End-User and for which Decolar has acted as the merchant of record, excluding any service fees
and Taxes, in each case, imposed in excess of the HBX Rate (the “Room Revenue”). Decolar shall account for and remit all Room
Revenue (for Bookings in Chile, accountability obligation or “rendición de cuentas” as determined in Article 2155 of the Chilean
Civil Code). Therefore, and for the avoidance of doubt, Decolar, as agent, cannot legally bind HBX while acting on its behalf, under
Article 2151 of the Chilean Civil Code.
Each Party will be responsible for all taxes, fees and other contributions derived from its activities related to the performance of its
obligations hereunder. Neither Party shall be liable for any sales taxes, occupancy taxes, or similar taxes imposed by any jurisdiction
that are owed by third parties. Notwithstanding the foregoing, in the event that either Party receives a request for information, notice,
or is required to pay any taxes, including any penalties and/or interests, that a third party has failed to pay, the Party with the
relationship with such third party shall promptly provide all necessary cooperation, assistance and documentation to ensure that the
other Party, which is not primarily responsible for the payment of such tax is held harmless and indemnified from any liabilities
related to the tax obligation.
In some countries, there is a local tax known as “visitors’ tax”, “city tax” “tourist tax” (or similar) and other fees including (but not
limited to) resort fees or service charges, which shall be paid directly by the End-User to the Lodging End-Provider and/or at the
airport. HBX shall use reasonable endeavors to provide, at the time of booking offer, an estimation of the applicable fees and/or local
tax(es) attributable to each individual booking and payable at the time of booking and/or locally on arrival (“Local Tax/Fee
Estimation”). Notwithstanding the foregoing, HBX does not warrant that the Local Tax/Fee Estimations shall be accurate and
Decolar acknowledges and agrees that the Local Tax/Fee Estimations are provided as estimates only. Decolar further acknowledges
that Local Taxes and Fee Estimations, may change from time to time. As a result, HBX cannot be held liable for any loss, costs or
damages incurred as a result of the provision of such Local Taxes/Fee Estimations. Confirmation of and the accuracy of the Local
Taxes/or Fee Estimations is ultimately the responsibility of Decolar.
15.3
Taxes on Price Margin.
With respect to the difference between the amount charged by Decolar to the End-User and the amount paid to HBX by Decolar for
a Lodging Product pursuant to this Agreement (such difference, the “Price Margin”), Decolar shall be solely responsible for the
collection of the Taxes applicable to the Price Margin and remittance and accounting of such Taxes to the applicable Taxing
Authority.
29
“Tax” or “Taxes” shall mean all United States federal, state, or local gross receipts, sales, use, excise, goods and services, value
added tax, or any other tax, custom, duty or governmental fee, or other like assessment or charge of any kind whatsoever levied on
the sale of a Lodging Product to the End-User, together with any interest, penalties, fines, related liabilities or additions to tax that
may become payable in respect thereof imposed by any Taxing Authority. “Taxing Authority” shall mean any governmental
authority (including, any state, municipality, political subdivision or governmental agency) responsible for the imposition of any
Tax.
16.
FORCE MAJEURE
16.1
Definition.
Force Majeure Event means any incident or event reasonably beyond the control of either Party to prevent or avoid including, but
not limited to: civil turmoil (such as war, military conflict or military operations, acts of terrorism, riots, insurrection, public
demonstration or other civil disturbances of any kind), actions of the Governmental Authorities (nationalizations, moratorium, etc.)
when these prevent the normal fulfillment of contractual obligations (political risk), strikes, lockouts, calamities, acts of God, health-
related crises such as virus, illness, death disease, pandemic, epidemic or epidemic outbreak of contagious diseases. For avoidance of
doubt, the following will not be considered Force Majeure Events: strikes, lockouts or labor disputes associated with labor unions
used by HBX or Decolar in performing or receiving the Services.
16.2
Consequences of a Force Majeure Event.
Neither Party shall be liable to the other for failure to perform any of the duties or obligations required of such Party herein if the
failure or delay in performance is caused by a Force Majeure Event. If a Force Majeure Event continues for more than[***], the
Agreement shall be suspended until the termination of such Force Majeure Event; provided that such suspension shall last for a
maximum period of [***](the “Suspension Period”). Upon expiration of the Suspension Period, the Parties shall negotiate in good
faith whether to: (i) extend the Suspension Period or (ii) reactivate the Agreement. If the Parties cannot reach an agreement within
thirty (30) days of expiration of the Suspension Period, this Agreement shall terminate, and Decolar shall, within sixty (60) days
after the effective termination date, pay to HBX a fee in the amount of [***] of the amount of Gross Booking Value remaining to
reach the Total Volume Target as of such termination date (the “Force Majeure Payment”).
17.
GOVERNANCE AND DISPUTES
17.1
Informal Dispute Resolution.
In the event of a dispute between the Parties arising out of or relating to this Agreement, including with respect to the interpretation
of any provision of this Agreement or with respect to performance or non-performance under this Agreement, the Parties will first
attempt in good faith to resolve their dispute informally.
30
17.2
Injunctive Relief.
Notwithstanding section 17.4, either Party may seek, without having to go through the procedures set forth in section 17.4: (a) a
preliminary injunction, attachment, or other provisional judicial relief if such action is necessary to avoid irreparable damage or to
preserve the status quo, or (b) other equitable relief. The Parties further agree that no bond or other security or proof of damages will
be required in obtaining such relief.
17.3
Governing Law.
This Agreement, including its formation, interpretation, performance, enforcement and termination, and all aspects of the Parties’
relationship under this Agreement, together with any related Claims (whether sounding in contract, tort or otherwise) and disputes,
will be interpreted and construed in accordance with the substantive laws of the United States of America and the State of New York,
USA without regard to any provisions of its choice of law rules that would result in a different outcome. The Parties intend to avail
themselves of the benefit of Section 5-1401 of the New York General Obligations Law.
17.4
Forum of Disputes.
(a)
Except to the extent necessary to obtain jurisdiction over a third-party, each Party irrevocably agrees that any legal action,
suit or proceeding brought by it in any way arising out of this Agreement shall be brought solely and exclusively in any state
or federal court located within New York County, State of New York and irrevocably accepts and submits to the sole and
exclusive jurisdiction of each of the aforesaid courts in personam, generally and unconditionally with respect to any action,
suit or proceeding brought by it or against it by the other Party.
(b)
The Parties further consent to the jurisdiction of any state or federal court located within a district that encompasses assets of
a Party against which a judgment (or award) has been rendered, for the enforcement of the judgment (or award) against the
assets of such Party.
(c)
The Parties unconditionally waive any right to a jury trial for any legal action, suit or proceeding relating to this Agreement.
17.5
Continued Performance.
In the event of a dispute between Decolar and HBX, the Parties shall continue to perform their respective obligations under this
Agreement in good faith during the attempted resolution of such dispute unless and until this Agreement is terminated or expires in
accordance with its terms.
18.
MISCELLANEOUS
18.1
Waiver.
No failure or delay by a Party to exercise any right, remedy or power it has under this Agreement shall impair or be construed as a
waiver of such right, remedy or power. A waiver by any Party
31
of any provision or any breach of any provision shall not be construed to be a waiver of such provision in any other instance or any
succeeding breach of such provision or a breach of any other provision. All waivers shall be in writing and signed by an authorized
representative of the waiving Party.
18.2
Remedies Cumulative.
All remedies provided in this Agreement are cumulative and in addition to and not in lieu of any other remedies available to a Party
under this Agreement, at law, or in equity.
18.3
Assignment.
Neither Party may assign its rights or obligations under this Agreement, unless the other Party expressly consents in writing.
Notwithstanding, any of the Parties may assign their rights and obligations under this Agreement to an Affiliate company, a
subsidiary that is controlled, controlling or under common control of said Party, notifying said assignment in writing to the other
Party. In case of assignment to an Affiliate, both the assignor and the assignee shall remain jointly and severally liable for the full
performance of all obligations under this Agreement.
This Agreement shall be binding on, and inure to the benefit of, the respective successors and permitted assigns of the Parties.
18.4
[***]
18.5
Relationship of Parties.
Each Party (including its Affiliates) is acting as an independent contractor and is not a servant, employee, legal representative,
partner or joint venturer of the other Party or any of its Affiliates. Nothing in this Agreement shall be deemed to create a joint
venture or partnership between HBX and Decolar or their Affiliates. Each Party has the sole right and obligation to supervise,
manage, contract, direct, procure, perform or cause to be performed, all work to be performed by its personnel under this Agreement.
Neither Party has authority to represent or bind the other Party as to any matters except as expressly authorized in this Agreement.
18.6
Notices.
(a)
Except as otherwise specified in this Agreement, all notices, requests, demands, approvals and communications under this
Agreement (other than routine operational communications) (collectively, “Notices”) shall be in writing; shall be delivered in
person, or by mail, postage prepaid, for delivery as registered or certified mail, return receipt requested, or by a nationally
recognized overnight courier, and addressed to the other party as follows; and shall be deemed effective when received:
In the case of Decolar:
[***]
32
In the case of HBX:
[***]
(b)
A Party may from time to time change its address or designee for notification purposes by giving the other Party prior written
notice of the new address or designee in the manner provided above and the date on which it will become effective.
(c)
The Parties may mutually agree that certain types of routine approvals and notices of a non-legal nature may be given by
electronic mail.
18.7
Interpretation.
(a)
Unless otherwise indicated, section references are to sections of the document in which the reference is contained.
References to numbered (or lettered) sections will be deemed to also refer to and include all subsections of the referenced
section.
(b)
For purposes of this Agreement, (i) any obligations of a Party hereunder may be satisfied by any Affiliate of such Party, and
(ii) any performance by an Affiliate, or any permitted contractor or subcontractor, of a Party shall be deemed to be
performance by such Party for all purposes under this Agreement; provided, however, that any Party’s rights under this
Agreement may only be exercised or otherwise enforced by such Party and solely against the other Party.
(c)
The section headings in this Agreement are intended to be for reference purposes only and shall in no way be construed to
modify or restrict any of the terms or provisions of this Agreement.
(d)
This Agreement will be deemed to have been written by both Parties.
(e)
This Agreement is in the English language only, which language shall be controlling in all respects, and all versions of this
Agreement in any other language shall be for accommodation only and shall not be binding upon the Parties. All
communication, notices, or other documents to be made, given, or approved pursuant to this Agreement shall be made in the
English language.
(f)
Unless the context requires otherwise, (i) “including” (and any of its derivative forms) means including but not limited to,
(ii) “may” means has the right, but not the obligation to do something and “may not” means does not have the right to do
something, (iii) “will” and “shall” are expressions of command, not merely expressions of future intent or expectation, (iv)
“or” is not exclusive, (v) “written” or “in writing” is used for emphasis in certain circumstances, but that will not derogate
from the general application of the notice requirements set forth in section 18.6 in those and other circumstances, (vi) use of
the singular imports the plural and vice versa, and (vii) use of a specific gender imports the other gender(s).
33
(g)
The terms and conditions of this Agreement are the result of negotiations between the Parties. The Parties intend that this
Agreement shall not be construed in favor of or against any Party by reason of the extent to which any Party or its
professional advisors participated in the preparation or drafting of this Agreement.
(h)
All references to a “day” or “days” shall mean a calendar day or days unless otherwise specified (e.g., Business Day), and all
references to “month” or “months” shall mean a calendar month or months.
18.8
No Publicity.
(a)
Notwithstanding section 7.9 of this Agreement, no news releases, public announcements, advertising materials, or
confirmation of any media or third-party inquiry, concerning the existence of this Agreement, any part of this Agreement, or
the relationship of Decolar and HBX as evidenced by this Agreement may be issued or made by either Party without the prior
written approval of the other Party in each instance.
(b)
Neither Party shall in any advertising, social media, sales materials, customer lists, service or product endorsements, use any
of the names, logos, trademarks or service marks of the other Party or its Affiliates without the prior written approval of the
other Party.
18.9
Severability.
If any provision of this Agreement is found by a court of competent jurisdiction to be invalid, illegal, or otherwise unenforceable, the
same shall not affect the other terms or provisions of this Agreement, but such term or provision shall be deemed modified to the
extent necessary in the court’s opinion to render such term or provision enforceable, and the Parties’ rights and obligations shall be
construed and enforced accordingly, preserving to the fullest permissible extent the Parties’ intent and agreements set forth in this
Agreement.
18.10 Counterparts.
This Agreement may be executed in separate counterparts, including by electronic means such as electronic signature or the
exchange of signature page files via email, and by the different Parties on the same or separate counterparts. Any signed copy of this
Agreement made by reliable means (e.g., photocopy or electronic means) will be considered an original, and all signed counterparts
will constitute one and the same instrument, and will become effective (except as otherwise provided therein) when signed by each
Party and delivered to the other Party.
18.11 Third Party Beneficiaries.
This Agreement is entered into solely between Decolar and HBX and will not be deemed to create any rights in any third parties or
to create any obligations of either Decolar or HBX to any third-parties.
34
18.12 Contract Amendments and Modifications.
Any terms and conditions varying from this Agreement on any order or written notification from either Party will not be effective or
binding on the other Party. This Agreement may be amended or modified solely in a writing signed by an authorized representative
of each Party.
18.13 Entire Agreement.
This Agreement constitutes the sole and entire agreement among the Parties with respect to the matters dealt with herein, and
merges, integrates and supersedes all prior and contemporaneous discussions, agreements and understandings between the Parties,
whether oral or written, with respect to such matters. As from the Effective Date, the current API Agreement and its addendums or
annexes and any other agreement signed by and between the Parties and/or any of their Affiliated in relation with the purpose of this
Agreement will immediately cease to be in effect with respect to the provision of Lodging Products. Notwithstanding the above, the
current API Agreement will remain in force with respect to other travel products provided by HBX to Decolar (such as transfers,
excursions, tours, car rental and attraction tickets). However, the Parties commit to execute a separate agreement to govern the
provision of such products as soon as practicable. For the avoidance of doubt, the agreement regarding HotelDo as provider of
lodging products to HBX shall not be impacted by this section or any other provision of this Agreement whatsoever.
(Signature page follows)
35
IN WITNESS WHEREOF, each of Decolar and HBX have executed or caused this Agreement to be executed as of the date set
forth below by its duly authorized representative.
Decolar.com, INC
By: /s/ Damian Scokin
Name: Damian Scokin
Title: Sole Director and CEO
Date: 01/27/2025 | 9:13:02 AM PST
Hotelbeds USA INC
By: [***]
Name: [***]
Title: [***]
Date: 01/27/2025 | 10:49:54 AM PST
EXHIBIT 1
DEFINITIONS
This Exhibit 1 (Definitions) does not contain all the defined terms used in this Agreement. Certain other definitions may be found
throughout the Agreement, the Exhibits or amendments in which such terms are used, or otherwise in the particular context in which
they are used.
Term
Definition
Accountant
Means a certified public accounting firm chosen by the Parties from one of: (i) KPMG, (ii)
Ernst & Young, (iii) Deloitte and (iv) PricewaterhouseCoopers.
Acquired Entity
Has the meaning given in section 11 of the Agreement.
Affiliate
Means, with respect to an entity, any other entity or person directly or indirectly Controlling,
Controlled by or under common Control with such entity.
Agreement
Means this Lodging Outsourcing Agreement, which consists of these terms and conditions,
together with the Exhibits, amendments and other appendices thereto, and any other
documents incorporated herein or therein by reference.
[***]
[***]
Bankruptcy Event
Means with respect to any Party, (i) such Party commences a Bankruptcy Proceeding with
respect to itself, (ii) has commenced against it a Bankruptcy Proceeding which remains
unstayed or undismissed for a period of thirty (30) days or more, (iii) becomes generally
unable to, or admits in writing its inability to, pay its debts as they become due, or (iv) except
as otherwise permitted in this Agreement, suspends or ceases to carry on (or threatens to
suspend or cease to carry on) all or a material part of its business (v) takes any action in
furtherance of, or indicating its consent to, any of the acts described in sections (i) through
(iv).
Bankruptcy Proceeding
Means any proceeding or other action under any law relating to bankruptcy, insolvency,
liquidation of assets, assignment for the benefit of creditors, conservatorship, moratorium,
receivership or otherwise providing temporary or permanent relief to a debtor, in each case
with respect to a Party or an Affiliate thereof.
BC Event
Has the meaning given in section 2.6.(b) i of the Agreement.
Term
Definition
BC/DR Plans
Has the meaning given in section 2.6.(c) of the Agreement.
BCP
Has the meaning given in section 2.6.(b) i of the Agreement.
Booking or HBX Sourced Booking
Means a Booking of a HBX Lodging Product through Decolar Platform.
Business Day
Means any day on which banks in New York, New York, USA, and Buenos Aires, Argentina
are open for commercial banking business during normal banking hours, other than Saturday,
Sunday or any federal or national holiday in the United States or Argentina. For payment
purposes, Business Day shall refer to the place of issuance of payment, which may be Brazil,
Mexico, Uruguay, USA or any other that the Parties may agree on from time to time.
Change of Control
Means (a) the sale, lease or transfer, in one or a series of related transactions, of all or
substantially all the assets of Decolar and its Affiliates, taken as a whole, to any third party or
(b) the acquisition by any third party, in a single transaction or in a related series of
transactions, by way of merger, consolidation or other business combination or purchase of
beneficial ownership, of more than fifty percent (50%) of the total voting or economic power
of the securities of Decolar or any direct or indirect parent of Decolar.
Circuit Providers
Providers selling pre-set products that may or may not include lodging and do not have a
price for each of the components of the product.
Claim
Means any civil, criminal, administrative or investigative claim, action or proceeding
(including arbitration) commenced against an entity or person by a third party.
Closed User Group
Means a group of users who have restricted access to certain benefits or discounts, for
example via: (i) membership (e.g., employees of a certain company, members of an airline
frequent flyer program); (ii) subscription (a member must opt-in, have access to the group
with a password-protected login, and create a member profile); (iii) purchase of a certain
product or service (e.g., customers who have booked a certain number of trips or have a
certain level of spending, those that wish to complement a previous purchase); or (v) meeting
certain loyalty or engagement criteria (e.g., customers who have been with the company for a
certain amount of time or who frequently interact with the company’s social media or email
marketing campaigns).
Term
Definition
Commercially Reasonable Efforts
Means taking such steps and performing in such a manner as a well-managed similar
company in the same industry would undertake where such company was acting in a diligent,
prudent and reasonable manner to achieve a particular desired result for its own benefit.
Confidential Information
Has the meaning given in section 7.1 of the Agreement.
Consumed Booking
Means checked-in Bookings and non-gratuitous cancellations or non-gratuitous no-show
Bookings.
Consumed Bookings Statement
Has the meaning given in section 3.2.(b) of the Agreement.
Control
Means, with regard to any entity, the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such entity. A person who holds the
legal or beneficial ownership, directly or indirectly, of fifty percent (50%) or more of the
shares (or other ownership interest, if not a corporation) of such entity through voting rights
or through the exercise of rights pursuant to agreement shall be presumed to have control of
such entity, in the absence of proof by a preponderance of the evidence to the contrary.
Decolar
Has the meaning given in the Preamble of the Agreement.
Decolar Audit
Has the meaning given in section 10.(a) of the Agreement.
Decolar Data
Means any data or information, (other than HBX Data) that: (a) is provided to, accessed by,
or obtained by HBX, any HBX Lodging End-Provider or HBX’ personnel in connection with
the performance of its services under this Agreement; (b) is created, collected or processed
by or on behalf of HBX in connection with this Agreement; or (c) resides in, is accessed or
transmitted by or through, or is otherwise transferred to, software, equipment or systems
provided, operated, supported, or used by HBX in connection with the Services. Decolar
Data also includes data or information derived from any of the aforementioned data and/or
information. Decolar Data includes Personal Data. For clarity, all data and information from
all employees, customers and prospective customers of Decolar and its Affiliates services
shall be Decolar Data.
Decolar Partner
Has the meaning given in section 3.6 of the Agreement.
Term
Definition
Decolar Platform
Means any platform owned, operated, accessed or utilized by, or on behalf of, Decolar and its
Affiliates to offer bookings of lodging products and services, including Decolar’s desktop
and mobile websites, telesales services and systems, mobile applications, off-line channels,
Decolar Partners and any other tools or mediums now or hereafter developed.
Disaster
Has the meaning given in section 2.6.(b) of the Agreement.
DRP
Has the meaning given in section 2.6.(b).ii of the Agreement
Effective Date
Has the meaning given in the Preamble of the Agreement.
[***]
[***]
End-User
Means a Person that made a Booking of a HBX Lodging Product.
[***]
[***]
Force Majeure Event
Has the meaning given in section 16.1 of the Agreement.
Force Majeure Payment
Has the meaning given in section 16.2 of the Agreement.
Furnishing Party
Has the meaning given in section 7.1 of the Agreement.
Good Industry Practice
Means practices and standards observed by the leading providers of bed bank and lodging
products sourcing services when performing similar services for other customers in the travel
sourcing industry.
Governmental Authority
Means any international, national, state, municipal, local, territorial or other: (a)
governmental department or governmental agency; (b) regulatory authority or regulatory
body; (c) generally recognized self-regulatory organization to which a Party or any of its
Affiliates belongs; (d) judicial or administrative body which has or asserts jurisdiction over a
Party or any of its Affiliates.
[***]
[***]
HBX
Has the meaning given in the Preamble of the Agreement.
HBX Audit
Has the meaning given in section 10.(c) of the Agreement.
HBX-API
Means HBX-XML application protocol interface, or any future method, conduit or medium
of delivery or access, which makes HBX Lodging Products available for booking by End-
Users on the Decolar Platform.
Term
Definition
HBX Data
Means any data or information of HBX and its Affiliates’ employees, that (a) is provided to,
accessed by, or obtained by Decolar, any Decolar customer or Decolar’ personnel in
connection with this Agreement; (b) is collected or processed by Decolar or on behalf of
Decolar in connection with this Agreement; or (c) resides in, is accessed or transmitted by or
through, or is otherwise transferred to, software, equipment or systems provided, operated,
supported, or used by Decolar in connection with the Services. HBX Data also includes data
or information derived from any of the aforementioned data and/or information, including
any aggregation or optimization of such data and/or information. HBX Data includes
Personal Data about HBX and its Affiliates’ employees. For clarity, all data relating to HBX
and its Affiliates’ employees shall be deemed HBX Data.
HBX Lodging Product
Means a Lodging Product offered via the HBX-API.
HBX Preferred Lodging Partners
[***]
HBX Rate
Means the [***] plus [***].
H&S
Means the health and safety practices and procedures legally required to be implemented by
a Lodging End-Provider to ensure the well-being and safety of End-Users, including to
prevent accidents, injuries, and health hazards within the applicable Lodging Product.
Indemnified Party
Has the meaning given in section 13.1 of the Agreement.
Indemnifying Party
Has the meaning given in section 13.1 of the Agreement.
Information Security Program
Has the meaning given in section 6.1.(d) of the Agreement.
Intellectual Property Rights
Has the meaning given in section 8.1 of the Agreement.
Law
Means any statute, regulation, ordinance, guideline, rule, order, decree or governmental
requirement enacted, promulgated or imposed by any Governmental Authority.
Term
Definition
Lodging End-Provider/s
Means third-party/ies engaged by HBX from time to time during the Term of this Agreement
to supply the Lodging Product/s that are made available through the HBX-API under this
Agreement.
Lodging End-Provider Rate
Means [***].
Lodging Product
Means lodging products and services (available now or hereafter during the Term) whether as
a standalone product or a package, which may be offered for booking by HBX during the
Term and/or in the future, via an addendum to this Agreement in writing.
Losses
Means any and all damages, fines, penalties, deficiencies, losses, (including death or bodily
injury, or the damage, loss or destruction of real or tangible personal property), liabilities
(including settlements and judgements) and expenses (including interest, court costs,
reasonable and actually incurred fees and expenses of attorneys, accountants and other
experts or other reasonable and actually incurred fees and expenses of litigation or other
proceedings or of any Claim).
[***]
[***]
[***]
[***]
[***]
[***]
[***]
[***]
Notices
Has the meaning given in section 18.6 of the Agreement.
Notification Related Costs
Means each Party’s and its Affiliates’ external reasonable (under the circumstances) costs
associated with addressing and responding to a Security Incident.
Opaque Rate/s
Means the rate to be used in a closed and/or fenced user group.
Package Rate/s
Means the rate provided for the offering of a Lodging Product combined with any other
product.
Party (ies)
Has the meaning given in the Preamble of the Agreement.
Person
Means any individual, sole proprietorship, partnership, firm, entity, unincorporated
association, unincorporated syndicate, unincorporated organization, trust, body corporate or
Governmental Authority.
Term
Definition
Personal Data
Means any data or information that constitutes “personal information”, “personal data”,
“sensitive personal information”, “personally identifiable information” or any similar term
under any Applicable Data Protection Laws, including any data or information that relates to
an identified or identifiable individual, household or device, including, but not limited to,
name, address, telephone number, email address, username and password, photograph,
government-issued identifier, or any other data used or intended to be used to identify,
contact or precisely locate an individual, household or device.
Preferred Supplier Agreement
Means any in force Strategic Partnership Agreement (SPA) entered into by HBX with an
HBX Preferred Lodging Partner.
[***]
[***]
Receiving Party
Has the meaning given in section 7.1 of the Agreement.
Recipient Party
Has the meaning given in section 15.1 of the Agreement.
Restricted Employee
Has the meaning given in section 18.4 of the Agreement.
Sanctioned Country
Any country or territory targeted by comprehensive, country-wide or territory-wide
Sanctions, as of this date including Cuba, Iran, North Korea, Syria, the Crimea region of
Ukraine, and the so-called Donetsk People’s Republic and the so-called Luhansk People’s
Republic and any other that may be included or excluded under Sanctions and Anti-
Corruption Laws.
Sanctioned Person
Any person: (i) appearing on a list of Sanctions targets administered by the United States, the
United Kingdom, the European Union, or the United Nations, including but not limited to
(A) the List of Specially Designated Nationals and Blocked Persons, maintained by the US
Treasury Department’s Office of Foreign Assets Control; (B) the Consolidated List of
Designated Parties, maintained by the European Union; (C) the Consolidated List of Asset
Freeze Targets, maintained by HM Treasury (UK); the Entity List or the U.S. Denied Persons
List, maintained by the U.S. Commerce Department’s Bureau of Industry and Security; or
(D) any list of parties subject to asset-freezing measures issued by the United Nations; (ii) is
fifty percent (50%) or more owned or controlled, directly or indirectly, individually or in the
aggregate, by any one or more parties on the foregoing lists; (iii) is organized, resident, or
ordinarily located in a Sanctioned Country; or (iv) is otherwise targeted by Sanctions.
Term
Definition
Sanctions
Economic or financial sanctions, export controls, or other trade restrictions implemented by
the United States, the United Kingdom, the European Union, the United Nations, or any
other Governmental Authority with jurisdiction over the Parties or their respective Affiliates.
Security Incident
Means (a) the loss, theft, or unauthorized alteration, destruction, use, Processing or
disclosure, of any of the Parties Data; or (b) any unauthorized access to, or any act or attempt
(successful or unsuccessful) to gain unauthorized access to any of the Parties Data.
Service Delivery Environment
Means collectively, the equipment, software, systems, communications networks and
connectivity, interfaces, APIs, facilities, and other infrastructure components owned,
controlled, or operated by HBX (or its subcontractors or third-party licensors) and used by
HBX in the provision of the Services.
Services
Has the meaning given in section 2.1 of the Agreement.
[***]
[***]
Successful Security Incident
Means (a) the loss, theft, or unauthorized alteration, destruction, use, Processing, or
disclosure, of any of the Parties Data; or (b) any unauthorized access to, or any successful act
or successful attempt to gain unauthorized access to any of the Parties Data.
Suspension Period
Has the meaning given in section 16.2 of the Agreement.
[***]
[***]
Territory
Means all countries of the world, other than the following: [***]
Verified Damages
Refer to losses or any other harm that can be supported by through evidence or
documentation, including but not limited to a report or assessment from an expert
independent third-party, the cost of which shall be borne by the Party alleging the loss or
harm. Such damages can be assessed without the need for judicial proceedings, as long as
they are supported by verifiable calculations or evaluations that establish the extent of the
damage as verified by the expert independent third-party.
[***]
[***]
[***]
[***]
Term
Definition
[***]
[***]
Withholding Party
Has the meaning given in section 15.1 of the Agreement.
Year One
Means the period of time that commences on January 1, 2025 and ends on March 31, 2026.
“$” or “USD”
Means United States dollars, the lawful currency of the United States of America.
EXHIBIT 2
DEFERRED PAYMENT TERMS
The following terms and conditions (the “Deferred Payment Terms”) apply in relation to deferred payment plan. In the event of a
conflict, inconsistency or ambiguity between any term or provision set forth in these Deferred Payment Terms and the Agreement,
the Deferred Payment Terms shall control and supersede any such conflict, inconsistency or ambiguity. Capitalized terms used but
not defined in this Exhibit 2 shall have the respective meanings ascribed thereto in the Agreement.
1.
Scope.
Subject to section 3.1 of the Agreement, Decolar may defer payment of a maximum aggregate amount to be confirmed in writing by
HBX within four (4) business days from signature of this Agreement (the “Limit”) to cover the payment of Net Amount of
Consumed Bookings under this Agreement. For the avoidance of doubt, the Parties state and agree that such Limit will apply jointly
to the Lodging Services under this Agreement and to the payment of bookings of other travel products provided by HBX to Decolar
(such as transfers, excursions, tours, car rental and attraction tickets) under the current API Agreement.
2.
Modification or suspension.
HBX may, by written notification to Decolar and effective upon receipt thereof, increase or decrease the Limit and/or modify the
term and conditions of payment.
HBX reserves the right to modify, suspend or cancel these Deferred Payment Terms:
(a)
Upon a default or breach of the Lodging Outsourcing Agreement that may lead to a termination by HBX as per section
9.2.3.2.
(b)
Immediately upon default of the Deferred Payment Terms by Decolar. Before applying suspension of the Deferred Payment
Terms both Parties will try to seek for an urgent remediation of the default.
(c)
Upon exceeding the Limit in accordance with the below:
-
Once Decolar reaches [***] of consumption of the Limit, HBX will notify in writing to Decolar that the Limit is
close to excess and both Parties will work to explore options to increase the Limit.
-
In any case, if Decolar exceeds the amount of the Limit, Decolar shall immediately make a payment to HBX to
cover such excess.
-
If such excess is not remedied immediately, HBX may review and ultimately suspend or cancel the Deferred
Payment Terms.
The proof of funds transfer sent by Decolar shall serve as sufficient receipt and formal evidence of payment.
(d)
Immediately upon a Bankruptcy Event with respect to Decolar.
(e)
Upon any material adverse effect (i) on either the financial conditions of Decolar and/or its Affiliates taken as a whole;
subject to prior written notice to Decolar of at least ten (10) days to provide options to maintain the Limit.
(f)
Upon a Change of Control materially increasing the risk profile of Decolar.
(g)
In addition, HBX may reassess, suspend or cancel these Deferred Payment Terms for any reason that materially increases
Decolar risk profile, upon twenty-one (21) days’ advanced written notice to Decolar in order for Decolar to provide options
to maintain the Limit.
Upon remediation of sections above, except for section (d) above, HBX will reinstate the Limit.
Decolar may offer any remedy that seems applicable to remedy the suspension, reduction or cancellation of the Limit (such as bank
guarantee, cash deposit, etc.). In the event that a cash deposit is made, it may be replaced by Decolar at any time by a sufficient bank
guarantee, and the refund of such deposit may be requested.
If new financial information is provided increasing Decolar solvency scoring, HBX may reassess the Limit.
3.
Effect of suspension of the Deferred Payment Terms.
Upon termination or cancellation of these Deferred Payment Terms the Pre-Payment Terms on section 3.1 of the Agreement shall
apply, as follows:
Upon suspension of the Deferred Payment Terms, Decolar must make the payment of any unpaid Bookings made prior to the
suspension of Deferred Payment Terms that have already reached the Special Due Date within ten (10) days, otherwise the Bookings
may be cancelled by HBX. “Special Due Date” shall be the date in which cancellation fees are applied.
For the Bookings created while Deferred Payment Terms are suspended, all payments must be made before incurring cancellation
fees, otherwise the Bookings may be cancelled by HBX. In such cases, HBX shall inform Decolar in advance and in writing so
Decolar may pay the outstanding amounts in order to avoid cancellation of the Bookings.
The aforementioned prior notice period of ten (10) days shall not apply and HBX shall be entitled to cancel all Bookings, including
all future Bookings not paid, regardless if they have been incurred in cancellation costs or not in case of: (i) default regarding
payment terms not due to a Force Majeure Event and not receiving a clear confirmation on when the default on payment is going to
be repaired or (ii) imminent or actual insolvency situation or ceased of operations of Decolar. Decolar cannot claim any
compensation from HBX in case of cancellation of Bookings
under the abovementioned scenarios, assuming Decolar the duty to inform End-Users and looking for a satisfactory lodging
alternative or satisfactory alternative solution for End-Users, holding harmless HBX.
HBX shall be entitled to restrict access, suspend or deactivate the HBX-API in the event where Decolar has failed to comply with
Pre-Payments Terms for a period of time of ten (10) days. In such case, HBX shall provide a ten (10) days prior written notice for
Decolar to comply with pending payments. In the event that payment is not made within the aforementioned period, section 9.2.3.2.
(c) shall apply.
Non-refundable Bookings and Bookings made at the time they accrue cancellation fees, will be deactivated when in Pre-Payment
Terms conditions except if a specific payment is made by Decolar to maintain those Bookings active.
HBX shall send to Decolar the document required under applicable tax law for any expenses generated on the cancellation of future
Bookings that have already incurred in cancellation costs.
HBX shall not be liable for the termination or the cancellation of the Deferred Payment Terms in accordance with these terms.
4.
Payments and withholding.
(a)
In case Deferred Payment Terms are in force, Decolar will pay Consumed Bookings in accordance with section 3.2.(d) of the
Agreement. Decolar hereby commits to identify the Bookings to which the payment is referred to in accordance with section
5 below.
(b)
Payments for all Bookings should be ordered in the corresponding billing currency by wire transfer in funds that shall be
immediately and irrevocably available to HBX on the date the payment shall be due pursuant to the following instructions:
Payments in United States Dollars:
[***]
Payments in MXN-Mexican Pesos:
[***]
Payments in BRL-Brazilian Real:
[***]
Whenever any payment to be made hereunder would, without this provision, be due and payable on a day which is not a Business
Day, it shall be due on the Business Day immediately after the due date. The Parties agree that there may occur delays in receipt of
payments due to reasons out of the Party’s control. In such case, the proof of funds transfer sent by Decolar shall serve as sufficient
receipt and formal evidence of payment.
In the event that Decolar is required by law to withhold or deduct any sum from payments required hereby, Decolar shall provide
HBX with a certificate of the amount that is has been required to withhold by law and to provide this within thirty (30) days to HBX.
5.
Payments on account.
Decolar shall indicate to which Bookings and/or Statements and/or documents applicable under applicable tax law the payments
apply. If HBX does not receive the details indicated above, HBX shall provide to Decolar a period of at least twenty-one (21) days to
provide the outstanding information. If not provided within such period, HBX may apply the payment to the oldest outstanding
Bookings.
6.
Invoicing and remittance of tax documents. Settlement.
Section 3 of the Agreement shall apply.
7.
Offsetting.
The Parties agree that either Party may offset amounts, whereby any amounts owed by one Party to the other may be offsetted
against any amounts owed by the other Party, so that only the net balance be payable. Amounts to be offset include but are not
limited to: any payments due to services providers which may be payable by Decolar, any amounts corresponding to any override
commission that may have accrued up to that point, if in place, and any amounts corresponding to marketing contributions for any
advertising campaigns, but always limited to debts and credits arising under this Agreement.
8.
Financial information.
Solely in the case Decolar’s financial information ceases to be publicly available at any time during the Term, HBX may, upon
reasonable written request, require Decolar to furnish to HBX within fifteen (15) days from HBX request, any information
reasonably requested regarding its business affairs or financial condition, including audited annual financial statements and interim
financial statements prepared in accordance with generally accepted accounting principles consistently applied and certified (subject
to change in interim statements resulting from year-end adjustments).
EXHIBIT 3
PERSONAL DATA PROTECTION LAWS
1.
The Parties themselves and on behalf of their employees, agents, representatives, contractors and subcontractors, undertake
to maintain the secrecy, and not disclose, copy or use, at any time, even after this Agreement’s termination, technical,
commercial and industrial information owned by the other Party or third-parties, as well as Personal Data shared by the other
Party (which shall be considered Confidential Information) to which it may have access, voluntarily or involuntarily, under
this Agreement. The Parties must limit the disclosure and access to Confidential Information to as few individuals as
possible, so that only employees, agents, representatives, contractors and subcontractors whose access to Confidential
Information is essential to the fulfillment of the purpose of this Agreement will have access to the Confidential Information.
The Parties also undertake to keep the Confidential Information inaccessible to all employees, agents, representatives,
contractors and subcontractors who do not directly participate in the provision of the Services of this Agreement and whose
access to the Information Confidentiality is not strictly necessary to fulfill its purpose.
2.
Each Party acknowledges that employee and representative Personal Data, exchanged for service delivery under this
Agreement, will be processed by the other Party to perform, manage, and verify the contractual relationship. This processing
of employee and representative Personal Data is based on fulfilling the obligations under the Agreement. Personal Data of
each party’s employees and representatives will be retained while the contract is active and afterwards, until any applicable
period expires. Personal Data of both Parties employees and representatives may also be used for legitimate commercial
contact purposes. Personal Data of each Party’s employees and representatives may be shared with relevant Governmental
Authorities solely to comply with legal obligations. Each party’s employees and representatives whose Personal Data is
processed pursuant to this Agreement, may request their data protection rights and, where applicable, file a complaint with
the data protection authority. Both Parties shall promptly notify the other Party of any data subject requests from the other
Party’s employees and representatives in writing, and adhere to any data subject requests from the other Party’s employees or
representatives in accordance with applicable Laws. Each Party shall ensure that its employee and representative privacy
notices accurately notifies its employees and representatives of the foregoing in according with applicable Laws.
3.
The Parties hereby acknowledge the provisions of the data privacy and data security laws, rules and regulations (whether in
the United States of America or, where applicable, elsewhere in the applicable territory, and in any other laws or federal,
state, municipal, national or foreign regulations, that address the protection and secrecy of “Personal Data”, (collectively,
“Applicable Data Protection Laws”) and that have extraterritorial effects on the collection, production, reception,
classification, use, distribution, processing, archive, storage, elimination, assessment, control, modification, communication,
transfer, diffusion, extraction or, in any other way, the processing of
Personal Data (each and all of the activities above mentioned shall be individually referred to as “Processing”, “Processing
Activity” and, jointly, as “Processing Activities”) under this Agreement, or that are applicable to any Processing Activities.
The Parties hereby represent and warrant that they will Process Personal Data under this Agreement in accordance with
Applicable Data Protection Laws. Without limiting the foregoing, both Parties agree that they will only Process Personal
Data for legitimate and explicit purposes, for which the Data Subjects have prior, accurate notice in accordance with
Applicable Data Protection Laws, have provided consent where required by Applicable Data Protection Laws, and that such
Processing is always limited to the minimum amount to fulfill such purpose, in a proportional and non-excessive manner.
4.
The Parties are considered, for the purposes of the Applicable Data Protection Laws, as controllers (“Controllers”) or
processors (“Processors”), according to the roles they assume in connection to the Personal Data Processing Activities under
this Agreement. The Parties hereby acknowledge that, pursuant to the Applicable Data Protection Laws, (i) Processor is the
legal entity that carries out Personal Data Processing Activities on behalf of the Controller (under the Agreement); and (ii)
Controller is the legal entity entitled to make decisions related to the Personal Data Processing Activities. Decolar shall be
deemed the Controller of Decolar Data and all other Personal Data Processed under this Agreement, and HBX shall be
deemed the Processor of Decolar Data. Specifically in the case of the personal data of Decolar’s employees and/or
representatives, HBX will be considered Data Controller as stated below Each Party, where applicable and within the
contractual and legal limits, and its representative/s, are informed that their Personal Data will be processed by the other
Party for the purpose of allowing the correct development, compliance and control of the agreed provision of Services, with
the basis of the processing being the fulfilment of the contractual relationship between the Parties. Either Party’s
identification is a necessary requirement in order to formalize this Agreement. The Parties state that Personal Data of
employees shall only refer to the data that is received due to the negotiation and/or execution workflow of this Agreement
(and limited to the complete name and email of each Party’s employees).
4.1
The Controller is responsible for instructing the Processor with regards to the Personal Data Processing Activities, through
explicit orders that are in compliance with the Applicable Data Protection Laws, this Agreement and any other laws and
regulations applicable to the Processing Activity. The Processor is responsible for complying with the Controller’s explicit
instructions and shall only Process Personal Data within the limits of the instructions provided by the Controller, under the
Applicable Data Protection Laws, the Agreement, and any other laws and regulations applicable to the Processing Activity.
Any time the Processor carries out Personal Data Processing Activities that are not in strict compliance to the Controller’s
instructions and orders, or Processes Personal Data for purposes not covered by the Controller’s instructions and orders, the
Processor shall be considered in breach of the Agreement.
5.
The Parties represent and warrant that they adopt security, technical, physical and organizational measures in accordance
with Applicable Data Protection Laws to protect Personal Data Processed under this Agreement from, including but not
limited to, unauthorized access, accidental or illegal situations of loss, destruction, alteration, communication or any form of
inappropriate or illegal Personal Data Processing.
6.
The Parties are entitled to hire specialized Processors to perform Personal Data Processing Activities, provided that the
respective Processor undertakes, by executing a data processing agreement or an equivalent instrument, to comply with the
obligations set forth in this Agreement and Applicable Data Processing Laws with regards to the applicable Personal Data
Processing Activities, before any transfer of Personal Data and the beginning of the Processing Activity by said Processor.
Each Party is liable for the non-compliance of its [Sub]-Processors with the obligations described in this Agreement, and
Applicable Data Processing Laws.
7.
The Parties represent and warrant that any Personal Data Processing Activities that involve the international transfer of
personal data (“International Transfer”) must be conducted according to the provisions in the Applicable Data Protection
Laws.
8.
If the Processor receives any Data Subject request, it shall not respond, and shall forward the Data Controller as soon as
possible before the deadline to respond under applicable laws by email and never exceeding fifteen (15) days (or a shorter
period if the applicable law so requires) [***] in the case of HBX and [***] and [***] in the case of Decolar. The Parties
agree to indemnify, defend and fully exempt the other Party, its directors, managers, employees and representatives for and
against any and all losses, damages, fees, expenses, fines and costs of any nature, including attorney and judicial fees, arising
from any claims related to: (i) effective or alleged violation of the Data Protection Applicable Laws or of the Confidential
Information; (ii) loss or misuse of Confidential Information; and (iii) any other breach to the obligations set forth in this
section. These obligations are independent of any rights under this Agreement, LGPD, the Applicable Data Protection Laws,
or any other Law.
9.
However, the Data Processor shall not be held liable for any damages or breaches arising from compliance with the
instructions provided by the Data Controller. In such cases, the Data Controller shall assume responsibility and shall
indemnify the Data Processor for any penalties, claims, or damages that may result from those instructions. If the Data
Processor’s breach is a direct result of compliance with instructions issued by the Data Controller, the Data Processor shall be
exempt from liability, and the Data Controller shall be responsible for the consequences of such non-compliance, including
any financial penalties imposed by the competent data protection authority. In this case, the Data Controller shall indemnify
the Data Processor for any damages incurred. All of the above, to the extent provided in section 14.
10.
By the termination of this Agreement for any cause, except to the extent strictly necessary to comply with legal and
regulatory obligations, including with regards to the retention periods of Confidential Information and Personal Data, the
Parties must (i) return to the
other Party or, pursuant to the other Party’s instruction, destroy all the Confidential Information and Personal Data transferred
or deduced from the Processing Activities under this Agreement within up to thirty (30) days as of the termination date and,
in any event, (ii) immediately cease any Personal Data Processing Activities or the processing of Confidential Information.
The obligations set forth in this section are irrevocable and irreversible and will remain indefinitely effective after the termination of
this Agreement.
11.
Databases (files with Decolar Data and any other Personal Data except HBX Data) shall be exclusively owned by Decolar, as
well as any tests or similar procedures conducted in connection to them under this Agreement. The Parties declare that such
Data is confidential and, therefore, subject to the confidentiality set forth in this Agreement, even upon the termination of this
Agreement. The Parties state that in the event of any discrepancy between the provisions for confidential information and
those required under Data Protection Applicable Laws, the latter shall prevail with respect to Personal Data. Notwithstanding
the above, any aggregated and anonymized Decolar Data can be used by HBX for its own purposes, provided that no
Personal Data shall be used and that no reversal of the anonymization process shall be allowed and possible. Otherwise, HBX
must destroy the data.
EXHIBIT 4
DECOLAR TERMINATION FOR CONVENIENCE PENALTY
[***]
EXHIBIT 5
HBX TERMINATION FOR CONVENIENCE PENALTY
[***]
EXHIBIT 6
HBX-API INTEGRATION
During the term of this Agreement, Decolar shall maintain the same certifications and credentials as were obtained by and granted to
Decolar from HBX pursuant to the API Agreement.
WORKFLOW
The Workflow establishes the correct number and order of calls to the system to carry out the different operations available.
Before Decolar starts implementing the HBX-API, Decolar must provide HBX with the flowchart to be implemented. In the event of
having several distribution channels with different flows, an explanation must be provided for each one.
●
The correct Workflow to make a reservation is as follows:
Availability request;
CheckRate request (if necessary);
Booking request.
●
Use of “Availability request” should be kept to a minimum. To do this:
The call (“Availability request”) should not be repeated in the remaining steps to make a reservation (“CheckRates” and
“Booking request”).
As many hotels and other accommodation establishments as possible should be informed in a single call, without
exceeding the limit of 2000 hotels / other accommodation establishments per call.
All rooms requested for a reservation should be reported in the same call.
●
Use of “CheckRates” should be kept to a minimum. To do this:
The call to “CheckRates” should only be made if the selected rate is “rateType=RECHECK”.
As many rates as possible should be reported in a single call, without exceeding the limit of 10 rates per call.
This call should not be made for rates that are the desired rates to be reserved. Do not make the call for all rates returned
by “Availability request”.
VOUCHER
For all confirmed reservations, it is mandatory to generate and send a voucher containing all the information relating to the
reservation. The required information is as follows:
1.
Hotel / accommodation establishment information: Name, category, address, location and telephone number.
2.
End consumer information: Holder name (or lead end consumer) and at least one pax name per room. In the event of
reservations with one room, the holder name is sufficient.
3.
Reservation information:
HBX reference for the reservation, and agency reference, if applicable.
CheckIn and CheckOut dates.
Room type and meal arrangement.
Rate comments if applicable.
4.
Payment information:
For reservations not payable at the destination:
The reservation price cannot be shown.
The following text should appear, correctly reporting fields XXX, YYY and ZZZ: “Payable through
XXX, acting as agent for the service operating company, details of which can be provided upon
request. VAT: YYY Reference: ZZZ”.
For reservations payable at the destination, the text that HBX sends to Decolar should be shown, correctly
reporting all fields that appear.
SYSTEM RESPONSES
HBX-API Integration uses standard HTTP response codes, therefore:
●
Correct requests return a 2xx code.
●
Requests that contain errors caused by Decolar return a 4xx code. This type of error is caused by the request made by
Decolar and must be solved by Decolar.
Any other error response code refers to the system. To solve this, the HBX-API Integration department should be contacted.
DISCONNECTION
HBX may suspend HBX-API in the event of improper use by Decolar repeatedly exceeding the assigned quotas, as well as for the
use of any of the following techniques:
Price storing: A technique that consists of launching availability requests or checkrates into the system in order to
obtain all prices in the system.
Possibility scanning: A technique that consists of launching availability requests or checkrates into the system in
order to obtain all available tourist services. Duplicate requests: Repeating calls to the system within a short period of
time.
When the Parties can confirm that the abovementioned risks have been mitigated, in accordance with the provisions of this
Agreement and until a new Access Code is granted by HBX (the “Reactivation Period”), the average value of Bookings made
during the corresponding period of the previous calendar year, which is comparable to the Reactivation Period (i.e. same period of
previous calendar year) shall be added for purposes of calculating the achievement of the Measurement Year Volume Target for the
relevant Measurement Year, pursuant to section 5 of this Agreement.
RE-CERTIFICATION PROCESS REQUEST
To request the re-certification process, Decolar must comply with the mandatory aspects indicated in this Agreement and technical
points detailed in this Exhibit, as well as providing the following information:
●
Completion of Technical Optimization Analysis
●
Access to the demo website
●
User name and password to access the link, if necessary
●
Information to pay for a reservation, if necessary
●
User guide for the application, in case the site to be verified is not in English
●
In case there is more than one provider, information on how to identify the HBX-API product
●
Any other information that Decolar considers appropriate to take into account in the certification process
Decolar agrees that in case of not developing any of the points mentioned above, HBX may at its discretion not certify the API
Integration.
In case HBX agrees to certify Decolar (even when Decolar has not implemented any of the points mentioned above), Decolar
expressly accepts all responsibility, having to assume all costs and/or expenses that may arise as a result of the failure to implement
the points which allows HBX-API Integration.
EXHIBIT 7
HBX LODGING PRODUCTS TERMS AND CONDITIONS
These terms and conditions do not supersede but complete and add to the provisions on this Agreement.
GENERAL
The End-User shall be liable for obtaining the documentation required at destination (such as visas, ID’s, passport, medical
documents etc.) and HBX shall not be liable for any circumstance or expense incurred due to lack of documentation or non-
compliance with any requirements. It is understood that the End-User shall carry with him/her all his/her luggage and personal
belongings and such luggage and personal belongings are carried at his/her own risk. HBX will not be responsible for the end
consumer’s luggage.
Prices quoted are per person per night or per unit per night.
Price does not include any extra services such as telephone calls, insurance, laundry service, minibar, parking, etc., which shall be
paid directly by the End-User.
LODGING SERVICES
Children
Special conditions for children are agreed upon with each Lodging End-Provider and are not based on any one criterion; therefore
and given that each Lodging End-Provider applies its own special conditions or discounts, the End-User shall enquire about this
point when making his/her booking. Such discounts or special conditions must be understood as applicable only when children share
a room with two (2) adults.
COTS (UK) / CRIBS (US) – Cots/cribs and its availability is subject to the Lodging End-Provider’s confirmation. In the event that
this service is required, End-User shall indicate this when making the Booking, as some Lodging End-Providers have a limited
availability of such items. This extra service can be paid by the End-User directly to the Lodging End-Provider, if required.
Third Person
Almost all Lodging End-Providers will treat a Booking for a third person as a double room with an extra bed. The End-User shall
consult the supplement and/or discount applicable for an extra bed to be occupied by an adult, as this varies depending on the
Lodging End-Provider. There are Lodging End-Providers with very few available extra beds, so it is imperative that the End-User
ensures their availability when making his/her Booking. Failure to do this may result in non-availability of the extra bed at the
Lodging End-Provider establishment, with no right to claim any service provision or amount whatsoever from HBX.
No Show
No show by End-User at the Lodging End-Provider establishment without prior warning shall be considered a cancellation.
HBX shall inform Decolar of charges payable, which may range from the cost of one (1) night to one hundred percent (100%) of the
cost of the booking.
Modifications
Unless dully processed by HBX, Decolar shall not be allowed to reduce the reserved period of stay or requested service, nor change
the names of the End-User once Booking has been confirmed.
Any such changes without HBX prior confirmation shall be deemed to be a cancellation of the Booking.
Modifications to extend the reserved period shall be subject to availability; in the event of an extension, the price shall be modified
accordingly.
Cancellations
In the event of withdrawal of the services purchased, Decolar shall have the right to be returned all amounts paid with deduction of
the amounts, if any, which may have accrued in terms of cancellation charges.
Cancellation costs may vary depending on the destination, dates and relevant Lodging End-Provider.
If for exceptional reasons the cancellation is not made via the HBX-API, it must be sent in writing to HBX detailing the destination
and Booking number. HBX shall send an acknowledgement of receipt and inform of all the charges, if any, which may be applicable.
Decolar shall be responsible for obtaining the confirmation and/or acknowledgement of receipt of the cancellation of the Booking by
HBX. Any charges for cancellations made directly by the End-User with the Lodging End-Provider which are charged by the
Lodging End-Provider to HBX shall be paid, in turn, by Decolar to HBX.
Claims for reimbursement by an End-User leaving the Lodging End-Provider establishment before the reserved departure date (early
check-out), must be addressed, to HBX within twenty (20) days of the effective date of departure, together with written confirmation
from the Lodging End-Provider of time and date of departure.
For no-shows or early check-outs, the Lodging End-Provider may charge the full amount of the original Booking, in which case
reimbursement to the End-User shall not apply.
Bookings may be cancelled by request of either Party with no penalty whatsoever in a Force Majeure Event (as defined in this
Agreement), which may affect the various destinations and,
specifically, the location of the Lodging End-Provider at destination, as well as the country of origin of the End-Users.
IMPORTANT
●
Throughout the Term, some Lodging End-Providers may change name or trade name, which shall not be construed as a
change of the Lodging End-Provider or modification of the Booking.
●
In some countries, there is a local tax known as “visitors’ tax”, “city tax” “tourist tax” (or similar) and other fees
including (but not limited to) resort fees or service charges, which shall be paid directly by the End-User to the Lodging
End-Provider and/or at the airport. HBX shall use reasonable endeavours to provide, at the time of booking offer, an
estimation of the applicable fees and/or local tax(es) attributable to each individual booking and payable at the time of
booking and/or locally on arrival (“Local Tax/Fee Estimation”). Notwithstanding the foregoing, HBX does not warrant
that the Local Tax/Fee Estimations shall be accurate and Decolar acknowledges and agrees that the Local Tax/Fee
Estimations are provided as estimates only. Decolar further acknowledges that Local Taxes and Fee Estimations, may
change from time to time. As a result, HBX cannot be held liable for any loss, costs or damages incurred as a result of the
provision of such Local Taxes/Fee Estimations. Confirmation of and the accuracy of the Local Taxes/or Fee Estimations
is ultimately the responsibility of Decolar.
●
The categories of the Lodging End-Providers have been provided by the Lodging End-Providers themselves and are in
accordance with specific regulations applicable in each country. A Lodging End-Provider in one country, therefore, may
not be similar in terms of services and quality to a Lodging End-Provider in another, despite belonging to the same
category.
●
HBX provides the information supplied by the Lodging End-Provider regarding the existence of material works of
refurbishment or renovation of the establishment, as well as duration thereof.
●
In some countries the legal adult age may differ depending on the relevant local legislation. It will be the sole
responsibility of the End-User to ensure that he/she is at least of legal age in order to check in to the Lodging End-
Provider.
●
Most Lodging End-Providers may request a holding deposit on credit or debit card from End-Users upon arrival for
incidental charges incurred during the End-User’s stay, including but not limited to, long distance telephone charges,
room service, resort fees, in-room movies, damage or theft of property belonging to the Lodging End-Provider
establishment, mini bar usage and other such amenities. Decolar is obliged to inform about this requirement to End-User.
EXHIBIT 8
RIGHT TO REPENT
Country
Term from Booking date
creation
Applicable law
Comments
Argentina
10 days
Law N° 24.240 – Consumer
Protection
If the expiration date of the
term is a non-business day, the
term is extended to the next
business day.
Brazil
7 days
Consumer Protection Code and
Civil Code
-
Colombia
5 business days
Law N° 1480 of 2011
Unless the service is provided
within 5 business days of the
purchase.
Costa Rica
8 days
Law N° 7472
If the expiration date of the
term is a non-business day, the
term is extended to the next
business day.
Ecuador
3 days
Law N° 21 – Organic Law on
Consumer Protection
If the expiration date of the
term is a non-business day, the
term is extended to the next
business day.
Mexico
5 business days
Federal Consumer Protection
Law
Unless the service is provided
within 10 business days of the
purchase.
Uruguay
5 days
Law N° 17.250
If the expiration date of the
term is a non-business day, the
term is extended to the next
business day.
EXHIBIT 9
[***]
January 27, 2025
Messrs.
HOTELBEDS USA INC.
Ref: Offer letter
Dear sir or madam,
We address you in relation to the Lodging Outsourcing Agreement signed on January 27th, 2025 (the “Agreement”) between
Decolar, Inc. (“Decolar”) and Hotelbeds USA, Inc. (“HBX”), and hereby declare that each of the undersigned entities: is a Decolar
“Affiliate” (as such term is defined in the Agreement) and for so long as it remains a Decolar Affiliate undertakes to comply in all
material respects with all of Decolar’s covenants and agreements set forth in the Agreement that are applicable to such Affiliate, as
contemplated in Section 18.7 thereof. Any Decolar affiliate not listed herein shall not be considered an “Affiliate” (as such term is
defined under the Agreement) unless otherwise agreed by the Parties in a signed writing.
AGREED TO BY:
Decolar.com, Inc.
Travel Reservations S.R.L.
/s/ Damian Scokin
/s/ Damian Scokin
Name: Damian Scokin
Name: Damian Scokin
Date: 01/28/2025
Date: 01/28/2025
Despegar.com.ar S.A.
Decolar.com Ltda.
/s/ Paula Cristi
/s/ Daniela de Araujo Pereira
Name: Paula Cristi
Name: Daniela de Araujo Pereira
Date: 01/27/2025
Date: 01/27/2025
/s/ Joao Pinheiro
Name: Joao Pinheiro
Date: 01/27/2025
Despegar.com Chile SpA.
Despegar Columbia S.A.S.
/s/ Dirk Zandee
/s/ Pablo Ignacio Jaitman Labaton
Name: Dirk Zandee
Name: Pablo Ignacio Jaitman Labaton
Date: 01/28/2025
Date: 01/27/2025
DespegarEcuador S.A.
Despegar.com México S.A. de C.V.
/s/ Andres Meneses
/s/ Santiago Elijovich
Name: Andres Meneses
Name: Santiago Elijovich
Date: 01/28/2025
Date: 01/27/2025
Viajes Beda S.A. de C.V.
Despegar.com Perú
/s/ Santiago Elijovich
/s/ Dirk Zandee
Name: Santiago Elijovich
Name: Dirk Zandee
Date: 01/27/2025
Date: 01/28/2025
Despegar.com USA, Inc.
Holidays S.A.
/s/ Monica Alexandra Soares da Silva
/s/ Sebastian Mackinnon
Name: Monica Alexandra Soares da Silva
Name: Sebastian Mackinnon
Date: 01/28/2025
Date: 01/27/2025
January 28 , 2025
Messrs.
Decolar.com Inc and its Affiliates
Ref.: Acceptance letter
Dear sir or madam,
We hereby fully accept your offer letter and its terms dated as of January 27 , 2025.
Sincerely,
/s/[***]
Name: [***]
Capacity: [***]
th
th
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii)
CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
[***] indicates the redacted confidential portions of this exhibit.
NEW YORK, NEW YORK,
December 13, 2024
Decolar.com, Inc. and its affiliates
5201 Blue Lagoon Drive, Suite F927
MIAMI FL 33126
RE: IRREVOCABLE OFFER AMLOA 001/2024
Ref: Amendment to the Lodging Outsourcing Agreement
Dear Sir or Madam,
Reference is hereby made to the Amended and Restated Lodging Outsourcing Agreement dated 15 November 2019 by and among Expedia, Inc.,
a Washington corporation (“Expedia”, “we”, “us” or “our”), Travel Reservations S.R.L, a Uruguay corporation, Decolar.com, Inc., a Delaware
Corporation and each of the subsidiaries of Decolar Parent set forth therein (together “Decolar”) (as amended, supplemented or otherwise
modified from time to time, the “LOA Agreement”).
We hereby present you with an offer to amend the LOA Agreement as set forth in Annex A.
This Offer shall terminate at 5:00 p.m. (New York time) on 13 December 2024 (the “Expiration Time”), unless accepted prior
thereto.
This Offer shall be deemed unconditionally and irrevocably accepted by Decolar if Decolar sends to Expedia a letter accepting this Offer, issued
in accordance with Section 15.9 of the LOA Agreement on or before the Expiration Time. Should this Offer be accepted, the terms and
conditions attached as Annex A will be valid and binding.
Sincerely,
Expedia, Inc.
By: /s/ Mindy Rehse
Name: Mindy Rehse
Title: VP, Commercial Partnerships, Americas
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii)
CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
[***] indicates the redacted confidential portions of this exhibit.
ANNEX A
AMENDMENT TO THE AMENDED AND RESTATED LODGING OUTSOURCING AGREEMENT
This amendment letter (“Letter”) to the LOA Agreement is effective as of the Expiration Time of the Offer (the “Amendment Date”).
The Parties desire to amend the LOA Agreement on the terms of this Letter. In consideration of their continued performance of their respective
obligations under the LOA Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the Parties hereby agree to amend the LOA Agreement on the terms set out below.
A. The Parties acknowledge that, as at the date of this Letter: (i) Decolar owes Expedia [***]; (ii) Expedia owes Decolar [***]; and (iii)
the Parties have agreed to offset the aforementioned amounts such that Decolar owes Expedia an amount equal to [***] (the
“Outstanding Amount”).
B. Expedia hereby agrees that Decolar shall reimburse the Outstanding Amount in the form [***]. For the purposes of this Letter, the
[***] shall mean [***].
C. The maximum value of each of the Coupons shall equal to a [***], including applicable Taxes, for [***]. Following the end of the
[***], Decolar shall provide to Expedia a list of [***]. For the avoidance of doubt, the Parties agree that should Decolar be unable to
[***], Expedia shall be entitled to [***]. The Parties agree that this clause (C) shall survive termination of the LOA Agreement.
D. Decolar agrees that it shall create at least one banner advertisement and one landing page to advertise the [***] to customers. Decolar
shall cooperate with Expedia in good faith on the look and feel of the advertisements. Notwithstanding, Decolar shall comply with
applicable customer protection laws when designing the banner advertisements and/or landing page pursuant to this Letter.}
E. Expedia agrees that it shall provide [***]. When using the [***], Decolar shall (i) ensure that [***]; (ii) not alter, modify or amend the
[***] in any way; and (iii) comply with any usage guidelines Expedia may issue to Decolar in relation to [***]. Notwithstanding the
foregoing, Decolar may translate and/or edit the format and design of the [***] in order to adapt them to the language of the customer’s
country and to the look and feel of its sales channels.
All capitalized terms, where not defined in this Letter, shall have the meanings set out in the LOA Agreement. All terms and conditions of the
LOA Agreement remain in full force and effect, and this Letter in no way amends, alters, modifies, or otherwise changes the terms and/or
conditions of the LOA Agreement.
CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii)
CUSTOMARILY AND ACTUALLY TREATS THAT INFORMATION AS PRIVATE OR CONFIDENTIAL.
[***] indicates the redacted confidential portions of this exhibit.
December 13, 2024
Messrs.
Expedia, Inc.
1111 Expedia Group Way W.
Seattle, United States of America
RE: IRREVOCABLE OFFER AMLOA 001/2024
Ref: Amendment to the Lodging Outsourcing Agreement –
Acceptance letter
Dear sir or madam,
We hereby accept on behalf Decolar.com, Inc. and its affiliate companies your Irrevocable Offer AMLOA 001/2024 dated as of December 13,
2024.
Sincerely,
Decolar.com, Inc.
By: /s/ Monica Alexandra Soares da Silva
Name: Monica Alexandra Soares da Silva
Title: Secretary of the Board of Directors
Exhibit 8.1
SUBSIDIARIES OF THE REGISTRANT
Name of Subsidiary
Jurisdiction of Incorporation or Organization
AM BD GP JV, S.A.P.I. de C.V. *
Mexico
Badurey S.A.
Uruguay
Click Hoteles.com, LLC
Delaware, United States of America
Decolar.com Ltda.
Brazil
Decolar.com, Inc.
Delaware, United States of America
Despegar Colombia S.A.S.
Colombia
DespegarEcuador S.A.
Ecuador
Despegar.com Chile SpA.
Chile
Despegar.com México, S.A. de C.V.
Mexico
Despegar.com Perú S.A.C.
Peru
Despegar.com USA, Inc.
Delaware, United States of America
Despegar.com.ar S.A.
Argentina
DFinance Holding Ltda.
Brazil
Holidays S.A.
Uruguay
Jamiray International S.A. *
Uruguay
Koin Administradora de Cartões e Meios de Pagamento S.A.
Brazil
Koin (BVI) Limited
British Virgin Islands
Rivamor S.A.
Uruguay
Ruotej S.A.
Uruguay
Ruselmy S.A.
Uruguay
Satylca S.C.A.
Uruguay
Servicios Online 3351 de Venezuela C.A.
Venezuela
South Net Turismo S.A.U.
Argentina
Stays S.A.
Brazil
Travel Reservations S.R.L.
Uruguay
Viajes Beda, S.A. de C.V.
Mexico
Xirex Contigo S.A.P.I. de C.V. SOFOM, E.N.R.
Mexico
n process of dissolution
Exhibit 12.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Damián Scokin, certify that:
1.I have reviewed this annual report on Form 20-F of Despegar.com, Corp. (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a, 15(f) and 15d-15(f)) for the Company
and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d)
disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the
annual report that has materially affected, or is reasonably likely to materially affect the Company’s internal control over financial reporting;
and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control
over financial reporting.
Date: April 30, 2025
By: /s/ Damián Scokin
Name: Damián Scokin
Title: Chief Executive Officer
Exhibit 12.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Amit Singh, certify that:
1. I have reviewed this annual report on Form 20-F of Despegar.com, Corp. (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange
Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a, 15(f) and 15d-15(f)) for the Company
and have:
(a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
(b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
(c)
evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;
(d)
disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the
annual report that has materially affected, or is reasonably likely to materially affect the Company’s internal control over financial reporting;
and
5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the
Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
(a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably
likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control
over financial reporting.
Date: April 30, 2025
By: /s/ Amit Singh
Name: Amit Singh
Title: Chief Financial Officer
Exhibit 13.1
Certification of Chief Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of Despegar.com, Corp. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2024, as filed with the
U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Damián Scokin, Chief Executive Officer, certify, pursuant to 18 U.S.C. section
1350, as adopted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(i)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and
(ii)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 30, 2025
By: /s/ Damián Scokin
Name: Damián Scokin
Title: Chief Executive Officer
Exhibit 13.2
Certification of Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of Despegar.com, Corp. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2024, as filed with the
U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Amit Singh, Chief Financial Officer, certify, pursuant to 18 U.S.C. section
1350, as adopted pursuant to section 906 of the U.S. Sarbanes-Oxley-Act of 2002, that to the best of my knowledge:
(i)
the Report fully complies with the requirements of Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and
(ii)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 30, 2025
By: /s/ Amit Singh
Name: Amit Sing
Title: Chief Financial Officer
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-271577) of Despegar.com, Corp. of our report dated
April 30, 2025, relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/ PRICE WATERHOUSE & CO. S.R.L.
/s/ Walter Rafael Zablocky (Partner)
Walter Rafael Zablocky
Buenos Aires, Argentina
April 30, 2025
Exhibit 97
DESPEGAR.COM, CORP.
Incentive Compensation Clawback Policy
(As Adopted on August 10, 2023 Pursuant to NYSE Rule 303A.14)
1. Overview. The Nomination and Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Despegar.com, Corp. (the
“Company”) has adopted this Incentive Compensation Clawback Policy (the “Policy”) which requires the recoupment of certain incentive-based compensation
in accordance with the terms herein and is intended to comply with Section 303A.14 of The New York Stock Exchange Listed Company Manual, as such
section may be amended from time to time (the “Listing Rules”). Capitalized terms not otherwise defined herein shall have the meanings assigned to such
terms under Section 12 of this Policy.
2. Interpretation and Administration. The Committee shall have full authority to interpret and enforce the Policy; provided, however, that the Policy
shall be interpreted in a manner consistent with its intent to meet the requirements of the Listing Rules. As further set forth in Section 10 below, this Policy is
intended to supplement any other clawback policies and procedures that the Company may have in place from time to time pursuant to other applicable law,
plans, policies or agreements.
3. Covered Executives. The Policy applies to each current and former Executive Officer of the Company who serves or served as an Executive
Officer at any time during a performance period in respect of which Incentive Compensation is Received, to the extent that any portion of such Incentive
Compensation is (a) Received by the Executive Officer during the last three completed Fiscal Years or any applicable Transition Period preceding the date that
the Company is required to prepare a Restatement (regardless of whether any such Restatement is actually filed) and (b) determined to have included
Erroneously Awarded Compensation. For purposes of determining the relevant recovery period referenced in the preceding clause (a), the date that the
Company is required to prepare a Restatement under the Policy is the earlier to occur of (i) the date that the Board, a committee of the Board, or the officer or
officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is
required to prepare a Restatement or (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare a Restatement. Executive
Officers subject to this Policy pursuant to this Section 3 are referred to herein as “Covered Executives.”
4. Recovery of Erroneously Awarded Compensation. If any Erroneously Awarded Compensation is Received by a Covered Executive, the
Company shall reasonably promptly take steps to recover such Erroneously Awarded Compensation in a manner described under Section 5 of this Policy.
5. Forms of Recovery. The Committee shall determine, in its sole discretion and in a manner that effectuates the purpose of the Listing Rules, one or
more methods for recovering any Erroneously Awarded Compensation hereunder in accordance with Section 4 above, which may include, without limitation:
(a) requiring cash reimbursement; (b) seeking recovery or forfeiture of any gain realized on the vesting, exercise, settlement, sale, transfer or other disposition
of any equity-based awards; (c) offsetting the amount to be recouped from any compensation otherwise owed by the Company to the Covered Executive; (d)
canceling outstanding vested or unvested equity awards; or (e) taking any other remedial and recovery action permitted by law, as determined by the
Committee. To the extent the Covered Executive refuses to pay to the Company an amount equal to the Erroneously Awarded Compensation, the Company
shall have the right to sue for repayment and/or enforce the Covered Executive’s obligation to make payment through the reduction or cancellation of
outstanding and future compensation. Any reduction, cancellation or forfeiture of compensation shall be done in compliance with Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
6. No Indemnification. The Company shall not indemnify any Covered Executive against the loss of any Erroneously Awarded Compensation for
which the Committee has determined to seek recoupment pursuant to this Policy.
7. Exceptions to the Recovery Requirement. Notwithstanding anything in this Policy to the contrary, Erroneously Awarded Compensation need not
be recovered pursuant to this Policy if the Committee (or, if the Committee is not composed solely of Independent Directors, a majority of the Independent
Directors serving on the Board) determines that recovery would be impracticable as a result of any of the following:
i.
the direct expense paid to a third party to assist in enforcing the Policy would exceed the amount to be recovered; provided that, before
concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on expense of enforcement,
the Company must make a reasonable attempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to
recover, and provide that documentation to the Exchange;
ii.
recovery would violate home country law where that law was adopted prior to November 28, 2022; provided that, before concluding that it
would be impracticable to recover any amount of Erroneously Awarded Compensation based on violation of home country law, the Company
must obtain an opinion of home country counsel, acceptable to the Exchange, that recovery would result in such a violation, and must
provide such opinion to the Exchange; or
iii.
recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the
Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and the regulations thereunder.
8. Committee Determination Final. Any determination by the Committee with respect to the Policy shall be final, conclusive and binding on all
interested parties.
9. Amendment. The Policy may be amended by the Committee from time to time, to the extent permitted under the Listing Rules.
10. Non-Exclusivity. Nothing in the Policy shall be viewed as limiting the right of the Company or the Committee to pursue additional remedies or
recoupment under or as required by any similar policy adopted by the Company or under the Company’s compensation plans, award agreements, employment
agreements or similar agreements or the applicable provisions of any law, rule or regulation which may require or permit recoupment to a greater degree or
with respect to additional compensation as compared to this Policy (but without duplication as to any recoupment already made with respect to Erroneously
Awarded Compensation pursuant to this Policy). This Policy shall be interpreted in all respects to comply with the Listing Rules.
11. Successors. The Policy shall be binding and enforceable against all Covered Executives and their beneficiaries, heirs, executors, administrators or
other legal representatives.
12. Defined Terms.
“Covered Executives” shall have the meaning set forth in Section 3 of this Policy.
“Erroneously Awarded Compensation” shall mean the amount of Incentive Compensation actually Received that exceeds the amount of
Incentive Compensation that otherwise would have been Received had it been determined based on the restated amounts, and computed without regard to any
taxes paid. For Incentive Compensation based on stock price or total shareholder return, where the amount of erroneously awarded Incentive Compensation is
not subject to mathematical recalculation directly from the information in a Restatement:
i.
The calculation of Erroneously Awarded Compensation shall be based on a reasonable estimate of the effect of the Restatement on
the stock price or total shareholder return upon which the Incentive Compensation was Received; and
ii.
The Company shall maintain documentation of the determination of that reasonable estimate and provide such documentation to the
Exchange.
“Exchange” shall mean The New York Stock Exchange.
“Executive Officer” shall mean the Company’s president, principal financial officer, principal accounting officer (or if there is no such
accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division, or function (such as sales, administration,
or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company.
Executive officers of the Company’s parent(s) or subsidiaries shall be deemed executive officers of the Company if they perform such policy-making functions
for the Company.
“Financial Reporting Measures” shall mean measures that are determined and presented in accordance with the accounting principles used
in preparing the Company’s financial statements, and any measures
that are derived wholly or in part from such measures, including, without limitation, stock price and total shareholder return (in each case, regardless of
whether such measures are presented within the Company’s financial statements or included in a filing with the Securities and Exchange Commission).
“Fiscal Year” shall mean the Company’s fiscal year; provided that a Transition Period between the last day of the Company’s previous fiscal
year end and the first day of its new fiscal year that comprises a period of nine to 12 months will be deemed a completed fiscal year.
“Incentive Compensation” shall mean any compensation (whether cash or equity-based) that is granted, earned, or vested based wholly or in
part upon the attainment of a Financial Reporting Measure, and may include, but shall not be limited to, performance bonuses and long-term incentive awards
such as stock options, stock appreciation rights, restricted stock, restricted stock units, performance share units or other equity-based awards. For the avoidance
of doubt, Incentive Compensation does not include awards that vest exclusively upon completion of a specified employment period, without any performance
condition, and bonus awards that are discretionary or based on subjective goals or goals unrelated to Financial Reporting Measures. Notwithstanding the
foregoing, compensation amounts shall not be considered “Incentive Compensation” for purposes of the Policy unless such compensation is Received (1) while
the Company has a class of securities listed on a national securities exchange or a national securities association and (2) on or after October 2, 2023, the
effective date of the Listing Rules.
“Independent Director” shall mean a director who is determined by the Board to be “independent” for Board or Committee membership, as
applicable, under the rules of the Exchange, as of any determination date.
“Listing Rules” shall have the meaning set forth in Section 1 of this Policy.
Incentive Compensation shall be deemed “Received” in the Company’s fiscal period during which the Financial Reporting Measure specified
in the Incentive Compensation award is attained, even if the payment or grant of the Incentive Compensation occurs after the end of that period.
“Restatement” shall mean an accounting restatement due to the material noncompliance of the Company with any financial reporting
requirement under the securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is
material to the Company’s previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current
period or left uncorrected in the current period.
“Transition Period” shall mean any transition period that results from a change in the Company’s Fiscal Year within or immediately
following the three completed Fiscal Years immediately preceding the Company’s requirement to prepare a Restatement.
Adopted on: August 10, 2023
Acknowledgment of Incentive Compensation Clawback Policy
Reference is made to the Despegar.com, Corp. Incentive Compensation Clawback Policy (as adopted on August 10, 2023 pursuant to NYSE Rule
303A.14) (the “Policy”). Capitalized terms used herein without definition have the meanings assigned to such terms under the Policy.
By signing below, the undersigned acknowledges, confirms and agrees that:
•
the undersigned has received and reviewed a copy of the Policy;
•
the undersigned is, and will continue to be, subject to the Policy to the extent provided therein;
•
the Policy may apply both during and after termination of the undersigned’s employment with the Company and its affiliates; and
•
the undersigned agrees to abide by the terms of the Policy, including, without limitation, by returning any Erroneously Awarded Compensation to the
Company pursuant to the Policy.
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Signature
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Print Name
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Date