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2022 Annual Report
BOARD OF DIRECTORS
OFFICERS
Barry Diller
Chairman and Senior Executive
Peter Kern
Vice Chairman and Chief
Executive Officer
Julie Whalen
Executive Vice President and
Chief Financial Officer
Robert Dzielak
Chief Legal Officer and Secretary
Lance Soliday
Senior Vice President,
Chief Accounting Officer
and Controller
DIRECTOR EMERITUS
Jonathan Dolgen
Principal
Wood River Ventures, LLC
Barry Diller
Chairman and Senior Executive
Expedia Group, Inc. and IAC Inc.
Peter Kern
Vice Chairman and
Chief Executive Officer
Expedia Group, Inc.
Samuel Altman
Chief Executive Officer
Open AI
Beverly Anderson
President and Chief Executive Officer
BECU
M. Moina Banerjee
Chief Financial Officer
JBG Smith Properties
Chelsea Clinton
Vice Chair
Clinton Foundation
Henrique Dubugras
Co-Chief Executive Officer
Brex Inc.
Craig Jacobson
Partner
Hansen, Jacobson, Teller, Hoberman,
Newman, Warren, Richman, Rush,
Kaller, Gellman, Meigs and Fox, L.L.P.
Dara Khosrowshahi
Chief Executive Officer
Uber Technologies, Inc.
Patricia Menendez Cambo
Senior Advisor
Softbank Group International
Alex von Furstenberg
Founder and Chief Investment Officer
Ranger Global Advisors, LLC
Julie Whalen
Executive Vice President and
Chief Financial Officer
Expedia Group, Inc.
STOCKHOLDER INFORMATION
Annual Meeting
The 2023 Annual Meeting will be held via
audio webcast on May 31, 2023 at 10:30
a.m. Pacific time. Online audio webcast:
www.virtualshareholdermeeting.com/
EXPE2023
Stock Market Listing
Expedia Group, Inc.’s common stock is
traded on the Nasdaq Global Select Market
under the symbol “EXPE”
Registrar and Transfer Agent
Computershare
Stockholder correspondence should be
mailed to:
Computershare
P.O. Box 505000
Louisville, KY 40233
Overnight correspondence should be
mailed to:
Computershare
462 South 4th Street Suite 1600
Louisville, KY 40202
Computershare stockholder website:
https://www-us.computershare.com/
-investor
Computershare stockholder
online inquiries:
https://www-us.computershare.com/
-Investor/Contact
Computershare
Toll Free Number 866-202-9254
U.S. 781-575-2694
Independent Registered
Public Accounting Firm
Ernst & Young LLP
920 5th Avenue
Suite 900
Seattle, WA
98104
Investor Inquiries
All inquiries can be directed
as follows:
206-481-3759
ir@expediagroup.com
Corporate Headquarters
1111 Expedia Group Way W.
Seattle, WA 98119
206-481-7200
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This annual report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements reflect the views of our management regarding expectations about future events and are based on then available information. Actual results could
differ materially. The use of words such as "anticipates," "estimates," "expects," "intends," "plans" and "believes," among others, generally identify forward-looking
statements; however, these words are not the exclusive means of identifying such statements. These forward-looking statements are inherently subject to
uncertainties, risks and changes in circumstances that are difficult to predict. Please carefully review and consider the various disclosures made in our Annual
Report on Form 10-K enclosed herein and in our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the
risks and factors that may impact future results.
The logos on the front cover are service marks or trademarks of Expedia, Inc. and/or its affiliated companies.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
☑
☐
For the transition period from to
Commission file number: 001-37429
_______________________________________________
EXPEDIA GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
20-2705720
(I.R.S. Employer
Identification No.)
1111 Expedia Group Way W
Seattle, WA 98119
(Address of principal executive office) (Zip Code)
Registrant’s telephone number, including area code:
(206) 481-7200
_______________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common stock, $0.0001 par value
EXPE
Nasdaq Stock Market LLC
(Nasdaq Global Select Market)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes þ No ¨
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ¨ No þ
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 þ No ¨
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 þ No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated
filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☑
Non-accelerated filer
☐
Accelerated filer
☐
Smaller reporting company ☐
☐
Emerging growth company
If an emerging growth company, 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
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. ☑
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.
☐
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). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act). Yes ☐ No ☑
As of June 30, 2022, the aggregate market value of the registrant’s common equity held by non-affiliates was
approximately $14,349,625,000. For the purpose of the foregoing calculation only, all directors and executive officers of
the registrant are assumed to be affiliates of the registrant.
Class
Common stock, $0.0001 par value per share
Class B common stock, $0.0001 par value per share
Documents Incorporated by Reference
Portions of the registrant's definitive Proxy Statement relating to its 2023 Annual
Meeting of Stockholders are incorporated by reference into Part III of this Annual
report on Form 10-K where indicated.
Outstanding Shares at
January 27, 2023 were
approximately,
147,824,882 shares
5,523,452 shares
Parts Into Which Incorporated
Part III
Expedia Group, Inc.
Form 10-K
For the Year Ended December 31, 2022
Contents
Item 1
Business
Item 1A Risk Factors
Item 1B Unresolved Staff Comments
Item 2
Properties
Item 3
Legal Proceedings
Item 4 Mine Safety Disclosures
Part I
Part II
Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6
Reserved
Item 7 Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A Quantitative and Qualitative Disclosures About Market Risk
Item 8
Consolidated Financial Statements and Supplementary Data
Item 9
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A Controls and Procedures
Item 9B Other Information
Item 9C Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Item 10 Directors, Executive Officers and Corporate Governance
Item 11 Executive Compensation
Part III
Item 12 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13 Certain Relationships and Related Transactions, and Director Independence
Item 14 Principal Accountant Fees and Services
Item 15 Exhibits, Consolidated Financial Statements and Financial Statement Schedules
Part IV
Item 16 Form 10-K Summary
Signatures
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Expedia Group, Inc.
Form 10-K
For the Year Ended December 31, 2022
Note About Forward-Looking Statements
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements reflect the views of our management regarding current
expectations and projections about future events and are based on currently available information. Actual results could
differ materially from those contained in these forward-looking statements for a variety of reasons, including, but not
limited to, those discussed in the section entitled “Risk Factors” as well as those discussed elsewhere in this report.
COVID-19, and the volatile regional and global economic conditions stemming from it, and additional or unforeseen
effects from the COVID-19 pandemic, could also give rise to or aggravate these risk factors, which in turn could materially
adversely affect our business, financial condition, liquidity, results of operations (including revenues and profitability) and/
or stock price. Further, COVID-19 may also continue to affect our operating and financial results in a manner that is not
presently known to us or that we currently do not consider to present significant risks to our operations. Other unknown or
unpredictable factors also could have a material adverse effect on our business, financial condition and results of
operations. Accordingly, readers should not place undue reliance on these forward-looking statements. The use of words
such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “goal,” “intends,” “likely,” “may,” “plans,” “potential,”
“predicts,” “projected,” “seeks,” “should” and “will,” or the negative of these terms or other similar expressions, among
others, generally identify forward-looking statements; however, these words are not the exclusive means of identifying
such statements. In addition, any statements that refer to expectations, projections or other characterizations of future
events or circumstances are forward-looking statements. These forward-looking statements are inherently subject to
uncertainties, risks and changes in circumstances that are difficult to predict. We are not under any obligation to, and do not
intend to, publicly update or review any of these forward-looking statements, whether as a result of new information, future
events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by
those forward-looking statements will not be realized. Please carefully review and consider the various disclosures made in
this report and in our other reports filed with the Securities and Exchange Commission ("SEC") that attempt to advise
interested parties of the risks and factors that may affect our business, prospects and results of operations.
We refer to Expedia Group, Inc. and its subsidiaries collectively as “Expedia Group,” the “Company,” “us,” “we”
and “our” in this Annual Report on Form 10-K.
Part I. Item 1. Business
COVID-19 Update
The COVID-19 pandemic, and measures to contain the virus, including government travel restrictions and quarantine
orders, had an unprecedented impact on the global travel industry and materially and negatively impacted our business,
financial results and financial condition. With the evolution of milder COVID-19 variants, availability of multiple vaccine
booster doses and increasing familiarity with the virus, many COVID-19 related travel restrictions have been lifted, and
countries around the world reopened their borders for foreign travel. In 2022, we experienced a strong recovery in travel
demand. However, we note that the recovery has been uneven with different regions experiencing different rates of
recovery. Despite positive developments, the full duration and total impact of COVID-19 remains uncertain, and therefore
it is difficult to predict any future impact on the travel industry and, in particular, our business.
Overview
Expedia Group, Inc. is an online travel company, and our mission is to power global travel for everyone, everywhere.
We believe travel is a force for good. Travel is an essential human experience that strengthens connections, broadens
horizons and bridges divides. We leverage our supply portfolio, platform and technology capabilities across an extensive
portfolio of consumer brands, and provide solutions to our business partners, to empower travelers to efficiently research,
plan, book and experience travel.
At the end of 2022, we had approximately 3 million lodging properties available, including over 2 million online
bookable alternative accommodations listings through Vrbo, approximately 900,000 hotels and alternative
accommodations through our other brands, over 500 airlines, packages, rental cars, cruises, insurance, as well as activities
and experiences.
Travel suppliers distribute and market products via our apps, desktop and mobile offerings, as well as through
alternative distribution channels, our business partnerships and our call centers in order to reach our extensive global
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audience. In addition, our advertising and media businesses help other businesses, primarily travel providers, reach a large
multi-platform audience of travelers around the globe.
Historical Development
Over 25 years ago, we began operations as one of the first online travel agencies (“OTAs”) and played a significant
role in revolutionizing and democratizing travel, by empowering customers to manage their own travel plans. We did so by
building and then leveraging proprietary technology to connect partners and their respective inventory to those travelers,
while unlocking the marketplace for travel to other businesses as well. Since then, the travel industry has experienced
significant transformation, including the material shift from offline to online travel booking. This transformation led to
many years of exciting growth for OTAs along with increased competition. In order to remain innovative and competitive,
we made several strategic acquisitions, which materially expanded the breadth and depth of our Company. Much of our
strategy leading up to the COVID-19 pandemic focused on our brands competing aggressively for share all the around the
world, each with their own offerings and benefits. However, it also created certain complexities and inefficiencies over
time.
To reduce complexity and improve operations, in 2020, we shifted to a platform operating model, which enabled us
to deliver more scalable services and operate much more efficiently. For example, we now manage our marketing
investments holistically across the entire brand portfolio, allowing us to optimize our spend to achieve better returns, and
run on a unified marketing technology platform, improving our performance by scaling our marketing capabilities. We also
shifted to a unified brand strategy within our Retail business where we have a combined team making decisions across all
our brands. These changes were made in an effort to simplify and streamline our organization, improve our cost structure,
and the operation of our business.
Moreover, to streamline activities and enhance focus on our core businesses, we shut down or sold a number of
businesses since the beginning of 2020, including Egencia, a travel management company focused on corporate travel. On
November 1, 2021, the sale of Egencia to American Express Global Business Travel (“GBT”) was completed. As part of
the transaction, Expedia Group received a minority ownership position in the combined business and entered into a 10-year
lodging supply agreement with GBT. Both Egencia pre-closing and the GBT lodging supply agreement impact our B2B
segment financials. The result of these cumulative actions enable more focus on improving the overall experience for our
travelers.
In 2021, we began evolving our consumer retail strategy from being largely transactionally focused, where we were
primarily focused on acquiring customers through performance marketing channels to building direct, longer-lasting
relationships with our customers. With that goal in mind, we focused towards increasing customer loyalty and app adoption
as loyalty members and app users typically experience higher repeat rates, gross profits and bookings relative to non-
loyalty members and non-app users. Further, we aim to provide our customers with a high-quality product experience,
strong membership benefits and broad multi-product supply offering, all of which encourages higher conversion, repeat
rates and engagement.
Market Opportunity and Business Strategy
Expedia Group is one of the world’s largest online travel companies, yet our gross bookings represent a single-digit
percentage of total worldwide travel spending highlighting the size of our market opportunity. Phocuswright estimates
global travel spending, inclusive of alternative accommodations and tours and activities, at approximately $1.6 trillion in
2023.
Our focus is to: leverage our brand, supply, and platform technology strength, to provide greater services and value
to our travelers, suppliers and business partners, and build longer-lasting direct relationships with our customers.
Leverage Brand and Supply Strength to Power the Travel Ecosystem. We believe the strength of our core brand
portfolio and consistent enhancements to product and service offerings, combined with our global scale and broad-based
supply, drive increasing value to customers and customer demand. With our significant global audience of travelers, and
our deep and broad selection of travel products, we are also able to provide value to supply partners seeking to grow their
business through sophisticated technology, a better understanding of travel retailing and reaching consumers in markets
beyond their reach. Our deep product and supply footprint allows us to tailor offerings to target different types of
consumers and travel needs, employ geographic segmentation in markets around the world, and leverage brand
differentiation, among other benefits. We also market to consumers through a variety of channels, including internet search,
metasearch and social and digital media.
Our portfolio of brands, operated and organized by reportable segment are as follows:
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Retail. Our Retail segment provides a full range of travel and advertising services to our worldwide customers
through recognized consumer brands that target a variety of customer segments and geographic regions with tailored
offerings. Our portfolio of retail brands include:
•
Brand Expedia. Brand Expedia is a leading full-service online travel brand in a wide range of countries around the
world offering a wide selection of travel products and services.
• Hotels.com. Hotels.com focuses on marketing lodging accommodations.
•
Vrbo. Vrbo operates an online marketplace for the alternative accommodations industry. The Vrbo portfolio
includes the vacation rental website, Vrbo, which operates localized websites around the world as well as other
regional brands.
• We have multiple other brands including, but not limited to, Orbitz, Travelocity, ebookers and Wotif Group.
While we maintain a large portfolio of consumer brands, we put the majority of our marketing efforts towards our
three core consumer brands: Expedia, Hotels.com, and Vrbo.
In 2021, we announced plans to unify and expand our existing loyalty programs into one global rewards platform
called “One Key” spanning all our main brands, which we expect to launch in 2023. We also market to consumers through
a variety of channels, including internet search, metasearch and social and digital media.
B2B. Our B2B segment encompasses our Expedia Partner Solutions business. Expedia Partner Solutions partners
with businesses in a wide spectrum of countries across a wide range of travel and non-travel verticals including airlines,
offline travel agents, online retailers, corporate travel management and financial institutions, who market Expedia Group
rates and availabilities to their travelers. Expedia Partner Solutions' partners can benefit from our technology and supply in
the way that best suits their business. This includes connecting to Expedia Group's travel content through Expedia Partner
Solutions’ API, Rapid; adopting one of Expedia Partner Solutions’ customized white label or co-branded ecommerce
template solutions; or a powerful agent booking tool, Expedia Travel Affiliate Agent Program (TAAP). Prior to its sale on
November 1, 2021, our B2B segment also included Egencia, which was our full-service travel management company. We
also offer an “optimized distribution” product to help hotel suppliers distribute wholesale rates through authorized
channels. Our B2B segment also includes room nights, gross bookings, and associated economics from our lodging supply
agreement we entered into with GBT in conjunction with the sale of Egencia.
trivago. Our trivago segment generates advertising revenue primarily from sending referrals to online travel
companies and travel service providers from its hotel metasearch websites. trivago is our majority-owned hotel metasearch
company, based in Dusseldorf, Germany. The online platform gives travelers access to price comparisons from hundreds of
booking websites for millions of hotels and other accommodations. Officially launched in 2005, trivago is a leading global
brand in hotel search and can be accessed worldwide. The company is listed on the Nasdaq Global Select Market and
trades under the symbol "TRVG."
Leverage Our Platform to Deliver More Rapid Product Innovation Resulting in Better Traveler Experiences.
During 2020, Expedia Group unified its technology, product, data engineering, and data science teams to build services and
capabilities that can be leveraged across our business units to provide value-add services to our travel suppliers and serve
our end customers. The unified team structure enables us to deliver more scalable services and operate more efficiently. All
of our transaction-based businesses also now benefit from our shared platform infrastructure, including customer servicing
and support, data centers, search capabilities, payment processing, and fraud operations.
As we continue to evolve our shared platform infrastructure, our focus is on developing technical capabilities that
support various travel products while using simpler, standard architecture and common applications and frameworks. We
believe this strategy will enable us to: simultaneously build pieces of technology that work in tandem; ship products faster;
create more innovative solutions; and achieve greater scale. Ultimately, we believe this will result in faster product
innovation and therefore better traveler experiences. In addition, over time, as we execute on our streamlined application
development framework, we believe we can unlock additional platform service opportunities beyond the scope of our
internal brands and business travel partners.
In 2021, we began migrating our core Retail brands (Brand Expedia, Hotels.com and Vrbo) onto one unified
technology front-end infrastructure, to increase operating efficiencies. In 2022, we completed the migration of the
Hotels.com front-end technology stack on to the Brand Expedia platform, which allowed us to apply our learnings from
testing and optimization across our traditional lodging portfolio at much greater scale. In late 2022, we began the
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technology migration of our Vrbo business onto the Brand Expedia front-end and expect that work to be largely complete
in 2023.
We provide 24-hour-a-day, seven-day-a-week traveler sales and support by our virtual agent platform, telephone,
chat, or e-mail. For purposes of operational flexibility, we use a combination of outsourced and in-house contact centers.
Our contact centers are located in several countries throughout the world. We invested significantly in our contact center
technologies, with the goal of improving customer experience and increasing the efficiency of our contact center agents and
we expect to continue reaping the benefits of these investments going forward. In addition, we have continued to invest in
our customer service platform technology, which leverages technology and artificial intelligence to provide our customers
with online customer service options and self-service capabilities.
Today our websites and apps are powered through a combination of legacy company-owned data centers and
increasingly via cloud platforms. We are nearing the end of a multi-year project to migrate our products, data storage and
functionality to public cloud computing services. For our legacy company-owned data centers, our systems infrastructure
and web and database servers are housed in various locations, mainly in the United States, which have 24-hour monitoring
and engineering support. These data centers have their own generators and multiple back-up systems. For some critical
systems, we have both production and disaster-recovery facilities. Our technology systems are subject to certain risks,
which are described below in Part I, Item 1A — Risk Factors.
Business Models
We make travel products and services available both on a stand-alone and package basis, primarily through the
following business models: the merchant model, the agency model and the advertising model.
• Merchant Model. Under the merchant model, we facilitate the booking of hotel rooms, alternative
accommodations, airline seats, car rentals and destination services from our travel suppliers and we are the
merchant of record for such bookings. For example, we provide travelers access to book hotel room reservations
through our contracts with lodging suppliers, which provide us with rates and availability information for rooms
but for which we have no control over the rooms and do not bear inventory risk. Our travelers pay us for merchant
hotel transactions prior to departing on their trip, generally when they book the reservation. The majority of our
merchant transactions relate to lodging bookings.
Agency Model. Under the agency model, we facilitate travel bookings and act as the agent in the transaction,
passing reservations booked by the traveler to the relevant travel provider. We receive commissions or ticketing
fees from the travel supplier and/or traveler. We record revenue on air transactions when the traveler books the
transaction, as we do not typically provide significant post booking services to the traveler and payments due to
and from air carriers are typically due at the time of ticketing. Additionally, we generally record agency revenue
from the hotel when the stayed night occurs as we provide post booking services to the traveler and, thus consider
the stay as when our performance obligation is satisfied. The majority of our agency gross bookings relate to air
bookings.
Advertising Model. Under the advertising model we offer travel and non-travel advertisers access to a potential
source of incremental traffic and transactions through our various media and advertising offerings across several
of our transaction-based websites, as well as on our majority-owned metasearch site, trivago.
•
•
For the year ended December 31, 2022, we had total revenue of $11.7 billion, with merchant, agency and advertising,
media and other accounting for 66%, 26%, and 8% of total revenue, respectively.
Our Expedia Traveler Preference (ETP) program offers, for participating hotels, customers the choice of whether to
pay Expedia Group in advance under our merchant model (Expedia Collect) or pay at the hotel at the time of the stay under
the agency model (Hotel Collect).
In addition, through various of our Expedia Group-branded and other multi-product websites, travelers can
dynamically assemble multiple component travel packages for a specified period at a lower price as compared to booking
each component separately. Travelers typically select packages based on the total package price or by purchasing one
product and receiving a discounted price to attach additional products. The use of the merchant travel components in
packages and multi-product purchases enable us to make certain travel products available at prices lower than those
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charged on an individual component basis by travel suppliers without impacting their other pricing models. In addition, we
also offer pre-assembled package offerings, further broadening our scope of products and services to travelers. We expect
the package product to continue to be marketed primarily using the merchant model.
Marketing and Promotions
Our marketing programs are intended to build and maintain the value of our retail brands, drive traffic and ultimately
bookings while optimizing ongoing traveler acquisition costs. Our long-term success and profitability depend on our
continued ability to maintain and increase the overall number of traveler transactions flowing through our brand and shared
global platforms in a cost-effective manner, as well as our ability to attract repeat customers and customers that come
directly to our brands. We manage our marketing investments holistically across the brand portfolio in our Retail segment
to optimize results for the Company and make decisions on a market by market and customer segment basis that we think
are appropriate based on the relative growth opportunity, the expected returns and the competitive environment.
Our marketing channels primarily include brand advertising through online and offline channels, loyalty programs,
mobile apps, search engine marketing and optimization as well as metasearch, social media, direct and/or personalized
traveler communications on our websites as well as through direct e-mail communication with our travelers. Our marketing
programs and initiatives include promotional offers such as coupons as well as seasonal or periodic special offers from our
travel suppliers based on our supplier relationships. Our current traveler loyalty programs include Hotels.com Rewards on
Hotels.com global websites and Expedia® Rewards on a wide array of Brand Expedia points of sale, as well as Orbitz
Rewards on Orbitz.com. In 2021, we announced plans to unify and expand our existing loyalty programs into one global
rewards platform called “One Key” spanning all our main brands, which we expect to launch in 2023.
We also make use of affiliate marketing. Several of our branded websites receive bookings from consumers who
have clicked through to the respective websites through links posted on affiliate partner websites. In exchange for this
traffic, we pay the affiliate partner a commission.
Travel Suppliers
We make travel products and services available from a variety of hotel companies, property owners and managers,
large and small commercial airlines, car rental companies, cruise lines, destination service providers, and other travel
partners. We seek to build and maintain long-term, strategic relationships with travel suppliers and global distribution
system (“GDS”) partners. An important component of the success of our business depends on our ability to maintain our
existing, as well as build new, relationships with travel suppliers and GDS partners.
We strive to deliver value to our travel supply partners through a wide range of innovative, targeted merchandising
and promotional strategies designed to generate consumer demand and increase their revenue, while simultaneously
reducing their overall marketing transaction and customer service costs. Our strategic account managers and local hotel
market managers work directly with travel suppliers to optimize the exposure of their travel products and brands through
our points of sale, including participation in need-based, seasonal and event-driven promotions and experimentation within
the new channels we are building.
We developed proprietary technology to assist both hotel and alternative accommodation suppliers in managing, and
marketing their supply, whether this is direct through our proprietary central reservation tools or through third-party
channel managers. Our “direct connect” technology allows suppliers to upload information about available products and
services and rates directly from their central reservation systems and dynamically manage reservations and traveler needs
through our messaging and chat platforms. Marketing tools assist hotels and alternative accommodations in tailoring
demand to their requirements and our revenue management product provides pricing insights. We also offer an “Optimized
Distribution” product to help hotel suppliers distribute wholesale rates through authorized channels. Our suite of white
label website offerings power hotel, and package booking on suppliers' own websites.
Vrbo's alternative accommodation listing services offers our supply partners a set of tools to help them manage an
availability calendar, respond to customer inquiries, edit the content of a property listing, as well as provide various other
services to manage reservations or drive incremental sales volume.
Distribution Partners. GDSs, also referred to as computer reservation services, provide a centralized, comprehensive
repository of travel suppliers’ ‘content’ — such as availability and pricing of seats on various airline point-to-point flights,
or ‘segments.’ The GDSs act as intermediaries between the travel suppliers and travel agencies, allowing agents to reserve
and book flights, rooms or other travel products. Our relationships with GDSs primarily relate to our air business. We use
Amadeus and Sabre as our GDS segment providers in order to ensure the widest possible supply of content for our
travelers.
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Competition
Our brands compete in rapidly evolving and intensely competitive markets. We believe international markets
represent especially large opportunities for Expedia Group and those of our competitors that wish to expand their brands
and businesses to achieve global scale. We also believe that Expedia Group is one of only a few companies that are focused
on building a truly global, travel marketplace. Our competition, which is strong and increasing, includes online and offline
travel companies that target leisure and corporate travelers, including travel agencies, tour operators, travel supplier direct
websites and their call centers, consolidators and wholesalers of travel products and services, large online portals and
search websites, certain travel metasearch websites, mobile travel applications, social media websites, as well as traditional
consumer ecommerce and group buying websites. We face these competitors in local, regional, national and/or
international markets. In some cases, competitors are offering more favorable terms and improved interfaces to suppliers
and travelers which make competition increasingly difficult. We also face competition for customer traffic on internet
search engines and metasearch websites, which impacts our customer acquisition and marketing costs.
Retail. We differentiate ourselves from our competitors primarily based on the multiple channels we use to generate
demand, quality and breadth of travel product supply, product features and usability of our websites and mobile apps, price
or promotional offers, customer service as well as offline brand efforts. The emphasis on one or more of these factors
varies, depending on the brand or business and the related target demographic. We face increasing competition from travel
supplier direct websites. In some cases, supplier direct channels offer advantages to travelers, such as long standing loyalty
programs, complimentary services such as Wi-Fi, and better pricing. Our websites feature travel products and services from
numerous travel suppliers and allow travelers to combine products and services from multiple providers in one transaction.
We face competition from airlines, hotels, alternative accommodation websites, rental car companies, cruise operators and
other travel service providers, whether working individually or collectively, some of which are suppliers to our websites.
Our business is generally sensitive to changes in the competitive landscape, including the emergence of new competitors or
business models, and supplier consolidation.
B2B. We are one of the leading players in the global B2B travel space today servicing a wide range of customers
across both travel and non-travel verticals including corporate travel management, airlines, offline travel agents, online
retailers and financial institutions. We face competition from travel consolidators and wholesalers of travel products, other
OTAs with B2B offerings, and other technology and content providers. We differentiate ourselves from our B2B
competitors primarily with our breadth and depth of global supply, dedicated partner and traveler support, and market
leading travel technology through our Rapid API, white label or co-branded template offerings, and Expedia Travel
Affiliate Agent Program (TAAP), a powerful agent booking tool. We also offer an “optimized distribution” product to help
hotel suppliers distribute wholesale rates through authorized channels. Our extensive work building out our global supply
has allowed us to negotiate competitive pricing with suppliers and provide added value to travelers. We intend to continue
to grow the business via a combination of increasing our wallet share with existing customers, winning contracts with new
customers, as well as the introduction of additional products and services.
Intellectual Property Rights
Our intellectual property and appurtenant rights, including our patents, trademarks, copyright rights, domain names,
trade dress, proprietary technology, and trade secrets, are important components of our business. For example, we rely
heavily upon our intellectual property and proprietary information in our content, brands, domain names and website
URLs, software code, proprietary technology, ratings indexes, informational databases, images, graphics and other
components that support and make up our services. We have acquired some of our intellectual property rights and
proprietary information through acquisitions, as well as licenses and content agreements with third parties.
We protect our intellectual property and proprietary information through registration and by relying on our terms of
use, confidentiality procedures and contractual provisions, as well as international, national, state and common law rights.
In addition, we enter into confidentiality and invention assignment agreements with employees and contractors, and license
and confidentiality agreements with other third parties. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use our trade secrets or our intellectual property and proprietary information without
authorization which, if discovered, might require the uncertainty of legal action to correct. In addition, there can be no
assurance that others will not independently and lawfully develop substantially similar properties.
We maintain our trademark portfolio by filing trademark applications with national trademark offices, maintaining
appropriate registrations, securing contractual trademark rights when appropriate, and relying on common law trademark
rights when appropriate. We also register copyrights and domain names as we deem appropriate and necessary,
respectively. We protect our trademarks, copyrights and domain names with an enforcement program and use of
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intellectual property licenses. Trademark and intellectual property protection may not be available or may not be sought,
sufficient or effective in every jurisdiction where we operate. Contractual disputes or limitations may affect the use of
trademarks and domain names governed by private contract.
We have established a formal patent program with a newly-formed Patent Review Committee for evaluating our
innovations and determining the appropriateness of filing for patents to protect inventions and obtaining licenses in patents
as circumstances may warrant, and we anticipate continuing to devote greater resources to seeking patent protection for
Expedia Group’s innovations.
In connection with our copyrightable content, we post and institute procedures under the Digital Millennium
Copyright Act and similar Host Privilege statutes worldwide to gain immunity from copyright liability for photographs,
text and other content uploaded by users. However, differences between statutes, limitations on immunity, and moderation
efforts may affect our ability to claim immunity.
From time to time, we may be subject to legal proceedings and claims in the ordinary course of our business,
including claims of alleged infringement or infringement by us of the trademarks, copyrights, patents and other intellectual
property rights of third parties. In addition, litigation may be necessary in the future to enforce our intellectual property
rights, protect our trade secrets or determine the validity and scope of proprietary rights claimed by others. Any such
litigation, regardless of outcome or merit, could result in substantial costs and diversion of management and technical
resources, any of which could materially harm our business.
Regulation
We must comply with laws and regulations relating to the travel industry, the alternative accommodation industry,
internet businesses, and the provision of travel services, including registration in various states as “sellers of travel” and
compliance with certain disclosure requirements and participation in state restitution funds In addition, our businesses are
subject to regulation by the U.S. Department of Transportation and must comply with various rules and regulations
governing the provision of air transportation, including those relating to advertising and accessibility. We are also
increasingly subject to new and evolving short-term rental laws and regulations that impose additional property
registration, disclosure and data provision requirements.
In international markets, we are increasingly subject to laws and regulations applicable to travel agents or tour
operators in those markets, including, in some countries, pricing display requirements, licensing and registration
requirements, mandatory bonding and travel indemnity fund contributions, industry specific value-added tax regimes and
laws regulating the provision of travel packages. For example, the European Economic Community Council Directive on
Package Travel, Package Holidays and Package Tours imposes various obligations upon marketers of travel packages, such
as disclosure obligations to consumers and liability to consumers for improper performance of the package, including
supplier failure. Additionally, we must comply with an expanding array of international laws and regulations aimed at
online businesses, including the European Union’s Digital Services Act and DAC7, which impose new information
gathering and reporting requirements as well as obligations to respond to inquiries about website content.
We are also subject to consumer protection, privacy and consumer data, payments, labor, economic and trade
sanction programs, tax, and anti-trust and competition laws and regulations around the world that are not specific to the
travel industry. For example, the California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights
Act (CPRA) came into force in January 2023 and applies enhanced data protection requirements in the State of California
similar to those that have existed since 2018 under the European Union's General Data Protection Regulation (GDPR). Five
other U.S. states have passed similar laws, and data protection laws have been passed or are being discussed in a number of
other jurisdictions. These data protection/privacy laws add compliance complexity, risks, and costs.
Compliance with these laws, rules and regulation has not had, and is not expected to have, a material effect on our
capital expenditures, results of operations and competitive position as compared to prior periods. However, certain laws
and regulations have not historically been applied in the context of online travel companies, so there can be uncertainty
regarding how these requirements may relate to our business in the future.
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Human Capital Management
People, Company Culture and Benefits
At Expedia Group, our mission is to power global travel for everyone, everywhere. We believe travel is a force for
good, and we are committed to making it more accessible and enjoyable for everyone. As of December 31, 2022, we have a
team of 16,500 employees across more than 50 countries focused on using our extensive data and technology to create
amazing travel experiences. As of December 31, 2022, over one half of our people work in technology roles.
We aim to go above and beyond to take care of our people – by providing opportunities for them to grow and
develop, benefits that fuel their passion for travel and resources that foster their well-being. While competition for talent is
fierce, particularly in the United States and in Seattle where our headquarters are located, we believe we offer something
different: an opportunity to strengthen connections, broaden horizons and bridge divides through travel. We know the
power of travel and understand the amazing things we can achieve by making it more accessible to everyone. And we are
focused on attracting and retaining the best and brightest people to help us do that. To that end, we offer competitive
compensation, talent development and training opportunities and differentiated benefits, including healthcare and
retirement programs, a wellness and travel allowance, an employee assistance program, financial education tools, a global
resource for diverse maternity and family building advice, an employee stock purchase program, time-off programs,
volunteer days off, a transportation program, onsite medical care and travel discounts, among others.
Inclusion and Diversity
To best serve our employees, customers, partners and community, we aim to build inclusive and diverse workplaces
that promote belonging, respect, voice and equal opportunity with initiatives such as:
•
•
Employee-led Inclusion Business Groups focused on promoting awareness related to race, ethnicity, sexual
orientation, military status, disability and gender, as well as allyship for underrepresented identities;
Educational programs designed to identify and mitigate bias and exclusive practices in traditional recruitment,
hiring, talent review, promotion and marketing processes;
•
Recruiting and assessment processes based on skills and designed to limit the impact of unconscious bias;
• Dedicated diversity sourcing, marketing, and recruiting teams focused on engaging underrepresented talent and
increasing representation in top of funnel and interview slates;
• An onboarding program that includes a focus on intercultural awareness, ally skills and our inclusion resources;
•
Employment and hiring targets for women to occupy 50% of leadership roles by the end of 2025 and for 25% of
U.S. external hires to come from racially and ethnically underrepresented groups;
•
Pay fairness evaluation tools and additional budgets to ensure employees are compensated fairly;
• Direct and easy access to accessibility tools enabling people with different needs to thrive at work;
• Using employee surveys and external benchmarking to understand identity-based trends, set clear goals, develop
strategies and measure progress towards increased headcount, hiring, compensation, advancement and retention of
underrepresented employee groups; and
Programs with our travel partners that focus on underserved travelers, drive industry engagement related to
inclusion and diversity, and promote related outreach efforts in local and global communities.
•
COVID-19 Response
Throughout the COVID-19 pandemic, our employees have remained focused on providing positive experiences for
travelers. After reopening our global offices with enhanced health and safety measures, we adopted a hybrid work model
for most of our offices in April 2022, designed to make the most of the productivity and collaborative energy that comes
from working together in our offices while preserving the convenience and flexibility of working from home. In parallel,
we augmented benefits programs to support employees with the transition, including expanding the scope of our travel and
wellness allowance to include home office expenses and a broader range of mental and emotional health services; offering
new telehealth, wellness education, and family support services; and making existing resources and services easier to
access via online channels.
Equity Ownership and Vote
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As of December 31, 2022, there were approximately 147.8 million shares of Expedia Group common stock and
approximately 5.5 million shares of Expedia Class B common stock outstanding. Expedia Group stockholders are entitled
to one vote for each share of common stock and ten votes for each share of Class B common stock outstanding. As of
December 31, 2022, Mr. Diller and The Diller Foundation d/b/a The Diller - von Furstenberg Family Foundation (the
“Family Foundation”), on whose board of directors Mr. Diller and certain of his family members serve as directors,
collectively owned 100% (5.5 million shares) of Expedia Group’s outstanding Class B common stock (and, assuming
conversion of all shares of Class B common stock into shares of common stock, collectively owned approximately 4% of
Expedia Group’s outstanding common stock), representing approximately 27% of the total voting power of all shares of
Expedia Group common stock and Class B common stock outstanding. We refer to the shares of Expedia Class B common
stock held by Mr. Diller and the Family Foundation as the "Class B Shares."
In connection with the Company’s acquisition in 2019 of Liberty Expedia Holdings, Inc. (the “Liberty Expedia
Transaction”), the Company and Mr. Diller entered into a Second Amended and Restated Governance Agreement, which
provides that, subject to limited exception, no current or future holder of Class B Shares may participate in, or vote in favor
of, or tender shares into, any change of control transaction involving at least 50% of the outstanding shares or voting power
of capital stock of the Company, unless such transaction provides for the same per share consideration and mix of
consideration (or election right) and the same participation rights for shares of Class B common stock and shares of
Expedia Group common stock. At the 2019 Annual Meeting of the Company’s stockholders, the Company's stockholders
approved a proposal to amend the Company's certificate of incorporation to reflect these restrictions, which amendment
became effective on December 3, 2019.
On November 2, 2021, in connection with the settlement of stockholder litigation relating to the Liberty Expedia
Transaction, Mr. Diller, the other defendants, the Special Litigation Committee of the board of directors, and the Company
entered into a Stipulation of Compromise and Settlement (the “Settlement Agreement”) providing for certain governance
and related provisions including, among others, (1) both before and after Mr. Diller’s departure from all roles at the
Company (“Mr. Diller’s departure”), specified limits on the number of immediate family members of Mr. Diller who may
serve at any one time on the Company’s board of directors, and, following Mr. Diller’s departure, on other positions in
which Mr. Diller’s immediate family members may serve, and (2) following Mr. Diller’s departure, (a) with respect to any
extraordinary transaction requiring Company stockholder approval and the election of any director-nominee not supported
by a majority of the board of directors, the voting percentage cast by Class B Shares held or controlled by Mr. Diller, his
family members and certain related parties (collectively with Mr. Diller and his family members, “Diller-related persons”)
will be limited to 20% of the total voting power of the outstanding common shares (with any excess shares to be voted as
specified in the Settlement Agreement), (b) a right of first offer on the part of the Company in connection with any sale by
Mr. Diller or other Diller-related persons of Class B Shares representing 10% or more of the Company’s total voting power
and (c) the Company’s agreement to cooperate reasonably in connection with any sale of Class B Shares by Mr. Diller or
other Diller-related persons.
As a result of his ownership interests and voting power, Mr. Diller is in a position to influence, and potentially
control, significant corporate actions, including corporate transactions such as mergers, business combinations or
dispositions of assets.
The foregoing summary is qualified in its entirety by reference to the full text of the Settlement Order entered
January 19, 2022, and the Stipulation of Compromise and Settlement dated November 2, 2021 filed as Exhibit 99.1 and
Exhibit 99.2, respectively, to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021,
filed on February 11, 2022.
Additional Information
Company Website and Public Filings. We maintain a corporate website at www.expediagroup.com. Except as
explicitly noted, the information on our website, as well as the websites of our various brands and businesses, is not
incorporated by reference in this Annual Report on Form 10-K, or in any other filings with, or in any information furnished
or submitted to, the SEC. We make available, free of charge through our website, our Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to those reports, filed or furnished
pursuant to Sections 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably
practicable after they have been electronically filed with, or furnished to, the SEC. In addition, the SEC’s
website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC. The content on the SEC's website referred to above in this Form 10-K is not incorporated by
reference in this Form 10-K unless expressly noted.
9
Code of Ethics. We have adopted a Code of Business Conduct and Ethics for Directors and Senior Financial Officers
(the “Code of Ethics”) that applies to our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and
Controller, and is a “code of ethics” as defined by applicable rules of the SEC. The Code of Ethics is posted on our
corporate website at www.expediagroup.com/Investors under the “Corporate Governance” tab. If we make any substantive
amendments to the Code of Ethics or grant any waiver, including any implicit waiver, from a provision of the Code of
Ethics to our Chief Executive Officer, Chief Financial Officer, or Chief Accounting Officer and Controller, we will
disclose the nature of the amendment or waiver on that website or in a report on Form 8-K filed with the SEC.
Part I. Item 1A. Risk Factors
You should carefully consider each of the following risks and uncertainties associated with our company and the
ownership of our securities. If any of the following risks occur, our business and/or financial performance could be
materially adversely affected. Additional risks and uncertainties not presently known to us or that we currently deem
immaterial may also impair our business and/or financial performance.
COVID-19 Pandemic and Travel Industry Risks
The COVID-19 pandemic had, and may continue to have, a material adverse impact on the travel industry and our
business, financial performance and liquidity position.
Since early 2020, the COVID-19 pandemic and efforts to contain it have severely restricted the level of economic
activity around the world and have had an unprecedented effect on the global travel industry. Containment measures have
included, and in some cases continue to include, travel restrictions, bans and advisories, social distancing measures,
curfews, quarantine restrictions after travel in certain locations, border closures “shelter-in-place” orders, required closures
of non-essential businesses, vaccination mandates or requirements for businesses to confirm employees’ vaccination status,
and other restrictions.
The pandemic had, and may continue to have, a number of material adverse impacts on our business, financial
performance and liquidity position. For example, in 2020, we experienced significantly reduced levels of new bookings,
significantly heightened levels of cancellations, and instigated traveler-centric modifications to our cancellation policies.
As a result, we experienced a significant increase in refunds, which led to materially negative cash flow that negatively
impacted our cash balance and overall liquidity position. The pandemic also had a significant adverse effect on many of the
partners on which our business relies, including accommodation providers and airlines, as well as on the traveling public
generally and our employees.
In addition, the pandemic impeded global economic activity for an extended period and could continue to do so,
leading to a continuation of the already significant decrease in per capita income and disposable income, increased and
sustained unemployment or a decline in consumer confidence, all of which would significantly reduce discretionary
spending on travel. In turn, that could have a negative impact on demand for our services and could lead our partners, or us,
to reduce prices or offer incentives to attract travelers. We also cannot predict the long-term effects of the COVID-19
pandemic on our partners and their business and operations or the ways that the pandemic may fundamentally alter the
travel industry or consumer habits. In particular, we may need to adapt to a travel industry with fewer and different
suppliers as well as structural changes to certain types of travel.
Our mitigation efforts in response to the impacts of COVID-19 on our businesses have had, or may continue to have,
negative impact. For example, in response to the spread of COVID-19 in early 2020, we incurred significant additional
indebtedness and took other actions, including the ultimate adoption of a hybrid work policy, that could lead to disruptions
in our business, reduced employee morale and productivity, increased attrition, and problems retaining existing and
recruiting future employees, all of which could have a material adverse impact on our business, financial condition, results
of operations and cash flows.
The ultimate extent of the impact of the pandemic, including as a result of possible subsequent outbreaks of
COVID-19 or of new variants thereof and measures taken in response thereto, will depend on future developments, which
remain highly uncertain and cannot currently be predicted. Additional impacts and risks that we are not currently aware of
may arise. It is therefore difficult to estimate with accuracy the impact to our future revenues, results of operations, cash
flows, liquidity or financial condition, but such impacts have been, and may continue to be, significant and could continue
to have a material adverse effect on our business, financial condition, results of operations, cash flows and liquidity
position for the foreseeable future.
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We operate in an intensely competitive global environment and we may be unable to compete successfully with our
current or future competitors.
The market for the services we offer is intensely competitive. We compete with both established and emerging online
and traditional providers of travel-related services, including online travel agencies; alternative accommodation providers;
wholesalers and tour operators; travel product suppliers (including hotels, airlines and car rental companies); search
engines and large online portal websites; travel metasearch services; corporate travel management service providers;
mobile platform travel applications; social media websites; eCommerce and group buying websites; and other participants
in the travel industry.
Online travel agencies and alternative accommodations providers. In particular, we face intense competition from
other OTAs and alternative accommodations in many regions, such as Booking Holdings (through its Booking.com,
Priceline.com and Agoda.com websites), Airbnb, and Trip.com, any of which may have more favorable offerings for
travelers or suppliers, including pricing and supply breadth. Our OTA competitors are increasingly expanding the range of
travel services they offer and the global OTA segment continues to consolidate, with certain competitors merging or
forming strategic partnerships. Airbnb, Booking Holdings and other providers of alternative accommodations provide an
alternative to hotel rooms and compete with alternative accommodation properties available through Expedia Group
brands, including Vrbo. The continued growth of alternative accommodation providers could affect overall travel patterns
generally, and the demand for our services specifically, in facilitating reservations at hotels and alternative
accommodations. Furthermore, Airbnb has, and similar providers could, increasingly look to add other travel services, such
as tours, activities, hotel and flight bookings, any of which could further extend their reach into the travel market as they
seek to compete with the traditional OTAs.
Travel suppliers. Travel suppliers, such as hotels, airlines and rental car companies, may offer products and services
on more favorable terms to consumers who transact directly with them. Many of these competitors have been steadily
focusing on increasing online demand on their own websites and mobile applications in lieu of third-party distributors
through favorable rates and bonus or loyalty points for direct bookings, surcharges for booking outside of the supplier’s
own website or preferred booking technologies, suppliers combining to establish a single search platform and other tactics
to drive traffic directly to supplier websites.
Search engines and large online portal websites. We also face intense competition from Google and other search
engines. There could be a material adverse impact on our business and financial performance to the extent that Google
continues to use its market position to disintermediate online travel agencies through its own offerings or capabilities, refer
customers directly to suppliers or other favored partners, increase the cost of traffic directed to our websites, offer the
ability to transact on its own website, or promote its own competing products by placing its own offerings at the top of
organic search results.
In recent years, search engines have increased their focus on acquiring or launching travel products that provide
increasingly comprehensive travel planning content and direct booking capabilities, comparable to OTAs. For example,
Google has continued to add features and functionality to its Google Travel, Google Flights”, and Hotel Ads travel
metasearch products. In addition, Google may be able to leverage the data they collect on users to the detriment of us and
other OTAs. Search engines may also continue to expand their voice and artificial intelligence capabilities. To the extent
these actions have a negative effect on our search traffic or the cost of acquiring such traffic, our business and financial
performance could be adversely affected.
In addition, our brands, or brands in which we hold a significant ownership position, including trivago, compete for
advertising revenue with these search engines, as well as with large internet portal sites that offer advertising opportunities
for travel-related companies. Competition could result in higher traffic acquisition costs, reduced margins on our
advertising services, loss of market share, reduced customer traffic to our websites and reduced advertising by travel
companies on our websites.
Travel metasearch websites. Travel metasearch websites, including Kayak.com (a subsidiary of Booking Holdings),
trivago (a majority-owned subsidiary of Expedia Group), TripAdvisor, Skyscanner and Qunar (both are subsidiaries of
Trip.com), aggregate travel search results for a specific itinerary across supplier, travel agent and other websites. In
addition, some metasearch websites have looked to add various forms of direct or assisted booking functionality to their
sites in direct competition with certain of our brands. To the extent metasearch websites limit our participation within their
search results, or consumers utilize a metasearch website for travel services and bookings instead of ours, our traffic-
generating arrangements could be affected in a negative manner, or we may be required to increase our marketing costs to
maintain share, either of which could have an adverse effect on our business and results of operations. In addition, as a
result of our majority ownership interest in trivago, we also compete more directly with other metasearch engines and
content aggregators for advertising revenue. To the extent that trivago’s ability to aggregate travel search results for a
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specific itinerary across supplier, travel agent and other websites is hampered, whether due to its affiliation with us or
otherwise, or if OTA advertisers or suppliers choose to limit their participation in trivago’s metasearch marketplace,
trivago’s business and therefore our results of operations could be adversely affected and the value of our investment in
trivago could be negatively impacted.
Corporate travel management service providers. By virtue of our minority ownership stake in, and long-term supply
agreement with, GBT, we compete indirectly with online and traditional corporate travel providers, as well as vendors of
corporate travel and expense management software and services. Our brands also compete to attract unmanaged business
travelers.
Mobile and other platform travel applications. The demand for and functionality of smartphones, tablet computers
and home assistants continue to grow and improve significantly. If we are unable to offer innovative, user-friendly, feature-
rich mobile applications and mobile-responsive websites for our travel services, along with effective marketing and
advertising, or if our mobile applications and mobile-responsive websites are not used by consumers, we could lose share
to existing competitors or new entrants and our future growth and results of operations could be adversely affected.
Applications and social media websites. Applications and social media websites, including Facebook, continue to
develop search functionality for data included within their websites and mobile applications, which may in the future
develop into alternative research and booking resources for travelers, resulting in additional competition.
eCommerce and group buying websites. Traditional consumer eCommerce platforms, including Amazon and
Alibaba, and group buying websites have periodically undertaken efforts to expand their local offerings into the travel
market. For example, traditional consumer eCommerce and group buying websites may add hotel offers or other travel
services to their sites. To the extent our travelers use these websites, these websites may create additional competition and
could negatively affect our businesses.
Other participants in the travel industry. Other participants or existing competitors may begin to offer or expand
other services to the travel industry that compete with the services we offer to our travelers, our travel industry affiliates
and partners, or our corporate clients. For example, ride-sharing apps increasingly compete with traditional car rental
services and travel services continue to proliferate. To the extent any of these services gain market share over time, it may
create additional competition and could negatively affect our businesses.
In general, increased competition has resulted in, and may continue to result in, reduced margins, as well as loss of
travelers, transactions and brand recognition and we cannot assure you that we will be able to compete successfully against
any current, emerging and future competitors or on platforms that may emerge, or offer differentiated products and services
to our travelers. Increasing competition from current and emerging competitors, the introduction of new technologies and
the continued expansion of existing technologies, such as metasearch and other search engine technologies, may force us to
make changes to our business models, which could affect our financial performance and liquidity. Some of our competitors
may also have other significant advantages, such as greater financial resources or name recognition, more favorable
corporate structures, or a broader global presence, among others.
Declines or disruptions in the travel industry could adversely affect our business and financial performance.
In addition to the impact of the COVID-19 pandemic and other potential pandemic or health-related events, our
business and financial performance are affected by the overall health of the worldwide travel industry. Factors that could
negatively affect the travel industry in general and our business in particular, potentially materially, include:
macroeconomic concerns, including recessions, political instability and geopolitical conflicts (such as the war in Ukraine),
trade disputes, significant fluctuations in currency values, sovereign debt issues, bans on travel to and from certain
countries, significant changes in oil prices, continued air carrier and hotel chain consolidation, reduced access to discount
fares, travel strikes or labor unrest, labor shortages, whether due to the impact of the COVID-19 pandemic or otherwise,
bankruptcies or liquidations, increased incidents of actual or threatened terrorism, natural disasters, travel-related accidents
or grounding of aircraft due to safety concerns, and changes to visa and immigration requirements or border control
policies.
Our business is also sensitive to fluctuations in hotel supply, occupancy and Average Daily Rates (“ADRs”), changes
in airline capacity and airline ticket prices and the imposition of taxes or surcharges by regulatory authorities, all of which
we have experienced historically.
Because these events or concerns, and the full impact of their effects, are largely unpredictable, they can dramatically
and suddenly affect travel behavior by consumers and decrease demand. Decrease in demand, depending on its scope and
duration, together with any future issues affecting travel safety, could significantly and adversely affect our business,
working capital and financial performance over the short and long-term. In addition, the disruption of the existing travel
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plans of a significant number of travelers upon the occurrence of certain events, such as severe weather conditions, actual
or threatened terrorist activity, war or travel-related health events, could result in significant additional costs and decrease
our revenues leading to constrained liquidity, particularly if we, as we often have done historically in the case of severe
weather conditions and travel-related health events, provide relief to affected travelers by refunding the price or fees
associated with airline tickets, hotel reservations and other travel products and services.
Our business depends on our relationships with travel suppliers and other B2B partners.
An important component of our business success depends on our ability to maintain and expand relationships with
travel suppliers (including owners and managers of alternative accommodation properties), GDS partners and other B2B
partners. A substantial portion of our revenue is derived from compensation negotiated with travel suppliers, in particular
lodging suppliers, airlines and GDS partners for bookings made through our channels. Each year we typically negotiate or
renegotiate numerous supplier contracts. No assurances can be given that travel suppliers will elect to participate in our
platform, or that our compensation, access to inventory or access to inventory at competitive rates will not be further
reduced or eliminated in the future, or that travel suppliers will not reduce the cost of their products or services (for
example, ADRs or ticket prices); attempt to implement costly direct connections; charge us for or otherwise restrict access
to content; increase credit card fees or fees for other services; fail to provide us with accurate booking information or
otherwise take actions that would increase our operating expenses. Likewise, no assurance can be given that our other B2B
partners will elect to participate in our platform or that our compensation will not be reduced.
Any of these actions, or other similar actions, could reduce our revenue and margins thereby adversely affecting our
business and financial performance.
Financial Risks
We may experience constraints in our liquidity and may, whether due to the COVID-19 pandemic or other factors
out of our control, be unable to access capital when necessary or desirable, either of which could harm our financial
position.
If our liquidity is materially diminished, we may not be able to timely pay debts or leases or comply with material
provisions of our contractual obligations. Although our cash flows from operations and available capital, including the
proceeds from financing transactions, have been sufficient to meet obligations and commitments to date, we cannot predict
how the COVID-19 pandemic and resulting economic impacts could affect our liquidity in the future. Our indebtedness,
the availability of assets as collateral for loans or other indebtedness, and market conditions may make it difficult for us to
raise additional capital on commercially reasonable terms to meet potential future liquidity needs.
In addition to the impact of the COVID-19 pandemic and other potential pandemic or health-related events, we have
experienced, and may experience in the future, declines in seasonal liquidity and capital provided by our merchant hotel
business, which has historically provided a meaningful portion of our operating cash flow and is dependent on several
factors, including the rate of growth of our merchant hotel business and the relative growth of businesses which consume
rather than generate working capital, such as our agency hotel, and advertising businesses, and payment terms with
suppliers. If, as was the case during the COVID-19 pandemic, our merchant hotel business declines, it would likely result
in further pressure on our working capital cash balances, cash flow over time and liquidity.
Our ability to raise financing depends in significant measure on characteristics of the capital and credit markets and
liquidity factors over which we exert no control. Due to uncertainty in the capital and credit markets, we cannot guarantee
that sufficient financing will be available on desirable, or any terms, to fund investments, acquisitions, stock repurchases,
dividends, debt refinancing or other actions or that our counterparties in any such financings would honor their contractual
commitments. In addition, any downgrade of our debt ratings by Standard & Poor’s, Moody’s Investor Service, Fitch or
similar ratings agencies, deterioration of our financial condition, increase in general interest rate levels and credit spreads
or overall weakening in the credit markets could increase our cost of capital (including, with respect to ratings downgrades,
the interest rate applicable to certain of our outstanding senior notes).
Our indebtedness could adversely affect our business and financial condition.
As of December 31, 2022, we have outstanding long-term indebtedness, excluding current maturities, with a face
value of $6.3 billion and we have an essentially untapped revolving credit facility of $2.5 billion. Risks relating to our
indebtedness include:
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Increasing our vulnerability to general adverse economic and industry conditions;
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Requiring us to dedicate a portion of our cash flow from operations to payments on our indebtedness, thereby
reducing the availability of cash flow to fund working capital, capital expenditures, acquisitions and investments and
other general corporate purposes;
Making it difficult for us to optimally capitalize and manage the cash flow for our businesses;
Limiting our flexibility in planning for, or reacting to, changes in our businesses and the markets in which we
operate;
Placing us at a competitive disadvantage compared to our competitors that are less levered;
Requiring us to use cash and/or issue shares of our Class A common stock to settle any conversion obligations of our
convertible notes;
Diluting our earnings per share as a result of the conversion provisions in our convertible notes; and
Limiting our ability to borrow additional funds or to borrow funds at undesirable rates or terms we find acceptable.
The agreements governing our indebtedness contain various covenants that may limit our ability to effectively
operate our businesses, including those that restrict our ability to, among other things:
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Cause or permit certain subsidiaries to borrow money, and guarantee or provide other support for
indebtedness of third parties including guarantees;
Grant certain liens on certain of our assets;
Enter into certain asset sale transactions; and
Enter into sale and leaseback transactions.
In addition, our revolving credit facility contains a leverage ratio covenant, which effectively limits our ability to
incur and/or maintain indebtedness.
Any failure to comply with the restrictions of our credit facility or any agreement governing our other indebtedness
(including the indentures governing our outstanding senior notes) may result in an event of default under those agreements.
Such default may allow the creditors to accelerate the related debt, which acceleration may trigger cross-acceleration or
cross-default provisions in other debt. In addition, lenders may be able to terminate any commitments they had made to
supply us with further funds. In addition, it is possible that we may need to incur additional indebtedness in the future in
the ordinary course of business or otherwise. The terms of our revolving credit facility and the indentures governing our
outstanding senior notes allow us to incur additional debt subject to certain limitations. If new debt is added to current debt
levels, the risks described above could intensify.
Operational Risks
Our business could be negatively affected by changes in search engine algorithms and dynamics or other traffic-
generating arrangements.
We rely heavily on internet search engines, such as Google, through the purchase of travel-related keywords and
through organic search, to generate a significant portion of the traffic to our websites and the websites of our affiliates.
Search engines frequently update and change the logic that determines the placement and display of results of a user’s
search, such that the placement or cost of links to our websites and those of our affiliates can be negatively affected. In
addition, a significant amount of traffic is directed to our websites and those of our affiliates through participation in pay-
per-click and display advertising campaigns on search engines, including Google, and travel metasearch websites,
including Kayak, TripAdvisor and trivago. Pricing and operating dynamics for these traffic sources can change rapidly,
both technically and competitively. Moreover, a search or metasearch engine could, for competitive or other purposes, alter
its search algorithms or display of results which could cause a website to place lower in search query results or inhibit
participation in the search query results. In particular, Google has in the past, and may continue to in the future, change its
algorithms or results in a manner that negatively affects the search engine ranking, paid and unpaid, of our websites, the
websites of our affiliates and those of our third-party distribution partners, which adversely impacts our business and
financial performance. Google has also increasingly added its own travel search functionality and content at the expense of
traditional paid listings and organic search results, which may continue to reduce the amount of traffic to our websites or
those of our affiliates. If Google or other search or metasearch companies continue to pursue these or similar strategies,
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which is out of our control, or we do not successfully manage our paid and unpaid search strategies, we could face a
significant decrease in traffic to our websites and/or increased costs related to replacing unpaid traffic with paid traffic.
We rely on the value of our brands, and the costs of maintaining and enhancing our brand awareness are
increasing.
We invest considerable financial and human resources in our brands in order to retain and expand our customer base
in existing and emerging markets. We expect that the cost of maintaining and enhancing our brands will continue to
increase and given current economic uncertainty and unpredictability, decisions we make on investing in brands could be
less effective and costlier than expected.
In recent years, certain online travel companies and metasearch websites expanded their offline and digital
advertising campaigns globally, increasing competition for share of voice, and we expect this activity to continue in the
future.
Our efforts to preserve and enhance consumer awareness of our brands may not be successful, and, even if we are
successful in our branding efforts, such efforts may not be cost-effective, or as efficient as they have been historically,
resulting in less direct traffic and increased customer acquisition costs. Moreover, branding efforts with respect to some
brands within the Expedia Group portfolio have in the past and may in the future result in marketing inefficiencies and
negatively impact growth rates of other brands within our portfolio. In addition, our decisions over allocation of resources
and choosing to invest in branding efforts for certain brands in our portfolio at the expense of not investing in, or reducing
our investments in, other brands in our portfolio could have an overall negative financial impact. If we are unable to
maintain or enhance consumer awareness of our brands and generate demand in a cost-effective manner, it could have a
material adverse effect on our business and financial performance.
We are subject to payments-related risks.
Payments Regulations. The processing and acceptance of a variety of payment methods is subject to various laws,
rules, regulations, legal interpretations, and regulatory guidance, including those governing cross-border and domestic
money transmission and funds transfers; foreign exchange; payment services; and consumer protection. If we were found
to be in violation of applicable laws or regulations, we could be subject to additional requirements and civil and criminal
penalties, or forced to cease providing certain services.
Moreover, for existing and future payment options we offer to both our customers and suppliers, we are and may
increasingly be subject to additional regulations and compliance requirements including obligations to implement enhanced
authentication processes, such as the EEA’s Revised Payment Services Directive (“PSD2”), which came into effect on
January 1, 2021. PSD2 imposed new standards for payment security and strong customer authentication (“SCA”) that have
and may increasingly make it more difficult and costly to carry out a payment transaction successfully. The lack of industry
wide adoption of SCA may continue to add to the complexity of payment transactions for us and our suppliers.
Third-Party Payment Service Providers. We rely on agreements with third-party service providers to process our
voluminous customer credit and debit card transactions and for the facilitation of customer bookings of travel services from
our travel suppliers. Upon the occurrence of specified events, including material adverse changes in our financial condition,
these agreements may allow the payment processors to withhold a significant amount of our cash (referred to as a
“holdback”), require us to otherwise post security equal to a portion of bookings that have been settled by a provider but
where the traveler has have not traveled, or suspend their processing services. An imposition of a holdback or suspension
of payment processing services by one or more of our payment processors could materially reduce our liquidity. Further,
the software and services provided by payment processors may fail to meet our expectations, contain errors or
vulnerabilities, be compromised, or experience outages. Any of these risks could cause us to lose our ability to process
payments, and our business and operating results could be adversely affected.
Payment Card Networks. The payment card networks, such as Visa, MasterCard and American Express, may
increase the interchange fees and assessments that they charge for each transaction that accesses their networks and may
impose special fees or assessments on such transactions. Certain of our payment processors also have the right to pass any
increases in interchange fees and assessments on to us, which could significantly increase our costs and thereby adversely
affect our financial performance.
In addition, the payment card networks have adopted rules and regulations that apply to all merchants who process
and accept payment cards and include payment card association operating rules, the Payment Card Industry Data Security
Standards, or the PCI DSS. Moreover, the payment card networks could adopt new operating rules or interpret or
reinterpret existing rules that we or our payment processors might find difficult or even impossible to comply with, or
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costly to implement. If we fail to comply with these rules or requirements, or if our data security systems are breached or
compromised, we may lose our ability to accept credit and debit card payments from our customers, or facilitate other types
of online payments, and be liable for card issuing banks’ costs, subject to fines and higher transaction fees, and our
business and operating results could be adversely affected.
We are subject to payments-related fraud risks.
Our results of operations and financial positions have been negatively affected by our acceptance of fraudulent
bookings made using credit and debit cards or fraudulently obtained loyalty points. We are sometimes held liable for
accepting fraudulent bookings on our websites or other bookings for which payment is subsequently disputed by our
customers both of which lead to the reversal of payments received by us for such bookings (referred to as a “charge back”).
In addition, the payment card networks have rules around acceptable charge back ratios. Accordingly, we calculate and
record an allowance for the resulting credit and debit card charge backs. Our ability to detect and combat fraudulent
schemes, which have become increasingly common and sophisticated, may be negatively impacted by the adoption of new
payment methods, the emergence and innovation of new technology platforms (such as historically occurred with the
introduction of smartphones, tablet computers and in-home assistants), and our global expansion, including into markets
with a history of elevated fraudulent activity. In addition, we have not broadly adopted certain protective capabilities across
our platform, such as mobile application-based multi-factor authentication or third-party identify verification, which
approach could result in significantly increased fraudulent activity on our platform in the future.
If we are unable to effectively combat fraudulent bookings on our websites or mobile applications or if we otherwise
experience increased levels of charge backs, we may also be subject to significant fines and higher transaction fees or
payment card networks may revoke our access to their networks meaning we would be unable to continue to accept card
payments, either of which could have a material adverse effect on our results of operations and financial positions.
In addition, we may be subject to fraudulent supplier schemes. For example, when onboarding suppliers to our
websites, 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, 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.
We work closely with various business partners and rely on third-parties for many systems and services, and
therefore could be harmed by their activities.
We have numerous significant commercial arrangements with business partners and we rely on third-party service
providers for a broad ranges of key services, including both external, customer-facing services such as customer support
and booking fulfillment and internal services related to our operations, technology development and infrastructure. If these
partners or service providers fail to meet our requirements or legal or regulatory requirements, it could damage our
reputation, make it difficult for us to operate some aspects of our business, or expose us to liability for their actions.
Likewise, if one of our third-party service providers were to cease operations, face financial distress or other business
disruption, we could suffer increased costs and disruption to our own business operations until an equivalent alternative
could be sourced or developed, any of which could also have an adverse impact on our business and financial performance.
Our international operations involve additional risks and our exposure to these risks will increase as our business
expands globally.
We operate in a number of jurisdictions outside of the United States and intend to continue to expand our
international presence. Laws and business practices that favor local competitors or prohibit or limit foreign ownership of
certain businesses or our failure to adapt our practices, systems, processes and business models effectively to the traveler
and supplier preferences (as well as the regulatory and tax landscapes) of each country into which we expand, could slow
our growth or prevent our ability to compete effectively in certain markets. For example, to compete in certain international
markets we have in the past, and may in the future, adopt locally-preferred payment methods, which has increased our costs
and instances of fraud. Certain international markets in which we operate have lower margins than more mature markets,
which could have a negative impact on our overall margins if the proportion of our overall revenue from these markets
grow over time. Additionally, some countries have enacted or are considering enacting various regulations, such as data
localization laws, that make competition by foreign companies costly or operationally difficult in those markets.
In addition to the risks outlined elsewhere in this section, our international operations are also subject to a number of
other risks, including:
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Exposure to local economic or political instability and threatened or actual acts of terrorism;
Compliance with U.S. and non-U.S. regulatory laws and requirements relating to anti-corruption, antitrust or
competition, economic sanctions, data content and privacy, consumer protection, employment and labor laws, health
and safety, information reporting and advertising and promotions;
Weaker enforcement of our contractual and intellectual property rights;
Lower levels of credit card usage and increased payment and fraud risk;
Longer payment cycles, and difficulties in collecting accounts receivable;
Preferences by local populations for local providers;
Restrictions on, or adverse tax and other consequences related to the repatriation of cash, the withdrawal of non-U.S.
investments, cash balances and earnings, as well as restrictions on our ability to invest in our operations in certain
countries;
Changes to trade policy or agreements that limit our ability to offer, or adversely affect demand for, our products and
services;
Our ability to support technologies or marketing channels that may be prevalent in a particular international market and
used by local competitors, but are not scalable for an international company offering services in many markets around
the world; and
Uncertainty regarding liability for services and content, including uncertainty as a result of local laws and lack of
precedent.
Acquisitions, investments, divestitures or significant commercial arrangements could result in operating and
financial difficulties.
We have acquired, invested in, divested or entered into significant commercial arrangements with a number of
businesses in the past, and our future success may depend, in part, on such transactions, any of which could be material to
our financial condition and results of operations. Certain financial and operational risks related to such transactions that
may have a material impact on our business are:
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Diversion of management’s attention or other resources from our existing businesses;
Use of cash resources and incurrence of debt and contingent liabilities in funding and after consummating acquisitions
may limit other potential uses of our cash, including stock repurchases, dividend payments and retirement of
outstanding indebtedness;
Amortization expenses related to acquired intangible assets and other adverse accounting consequences, including
changes in fair value of contingent consideration;
Expected and unexpected costs incurred in pursuing acquisitions, if unsuccessful could result in unexpected litigation
or regulatory exposure, unfavorable accounting treatment, unexpected increases in taxes due, a loss of anticipated tax
benefits or other adverse effects on our business, operating results or financial condition;
Impairment of relationships with employees, suppliers, customers, vendors and affiliates of our business and the
acquired business;
The assumption of known and unknown debt and other liabilities and obligations of the acquired company;
Difficulties and expenses in integrating or separating, as the case may be, the operations, products, technology, privacy
protection systems, information systems or personnel of an acquired or divested company, including in the case of a
divestiture our reliance on performance by the acquiring company;
Failure of the acquired company to achieve anticipated integration synergies, traffic, transactions, revenues, earnings or
cash flows or to retain key management or employees;
Failure to generate adequate returns on our acquisitions and investments, or returns in excess of alternative uses of
capital;
Entrance into markets or segments in which we have no direct prior experience resulting in increased complexity in
our business;
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Challenges relating to the structure of an investment, such as governance, accountability and decision-making conflicts
that may arise in the context of a joint venture or other majority ownership investments;
Costs associated with remediating fraud, information security, or other similar incidents at an acquired company;
Impairment of goodwill or other intangible assets such as trademarks or other intellectual property arising from our
acquisitions;
Costs associated with litigation or other claims arising in connection with the acquired company;
Increased or unexpected costs or delays to obtain governmental or regulatory approvals for acquisitions;
Divestitures of functions, assets or operations may impede our ability to successfully operate our business, result in
liability to purchasers, or consume significant resources;
Divested assets may be worth more than the consideration we receive in respect thereof;
Increased competition amongst potential acquirers for acquisition targets could result in a material increase in the
purchase price for such targets or otherwise limit our ability to consummate acquisitions;
Increased regulatory scrutiny of our core or acquired business; and
Adverse market reaction to divestitures, acquisitions or investments or failure to consummate such transactions.
Moreover, we often rely heavily on the representations and warranties and related indemnities provided to us by the
sellers of acquired private companies, including as they relate to creation, ownership and rights in intellectual property and
compliance with laws and contractual requirements. Our failure to address these risks or other problems encountered in
connection with past or future acquisitions and investments could cause us to fail to realize the anticipated benefits of such
acquisitions or investments, incur unanticipated liabilities and harm our business generally.
We rely on the performance of our employees and, if we are unable to retain, motivate or hire qualified personnel,
our business would be harmed.
Our performance is largely dependent on the talents and efforts of our employees. Our future success depends on our
continuing ability to identify, hire, develop, motivate and retain highly skilled personnel for all areas of our organization.
Competition for well-qualified employees is intense in almost all categories, including for software engineers, developers,
product management personnel, development personnel, and other technology professionals, and in all geographies. The
competition for talent is also exacerbated by an increased willingness of certain companies to offer flexible and remote
working policies, which expands the pool of candidates from which our competitors may attract talent. This could continue
in the future due to other companies recruiting and hiring our employees, an actual or perceived slower pace of recovery of
the travel industry as a result of the COVID-19 pandemic than other industries and other factors beyond our control. If we
do not succeed in attracting and retaining well-qualified employees, our business, our ability to execute and innovate, our
competitive position, and results of operations would be adversely affected. The current labor market is highly competitive
and our personnel expenses to attract and retain key talent are increasing and may increase further, which may adversely
affect our results of operations.
In addition, the contributions of Barry Diller, our Chairman and Senior Executive, Peter Kern, our Vice Chairman
and Chief Executive Officer, as well as other members of our travel leadership team are critical to the overall management
of the company. Expedia Group cannot ensure that it will be able to retain the services of Mr. Diller, Mr. Kern or any other
member of our senior management or key employees, the loss of whom could seriously harm our business. We do not
maintain any key person life insurance policies.
We may not achieve some or all of the expected benefits of our strategic initiatives or our efforts to increase our
operational efficiencies, which may adversely affect our business.
In recent years, we have undertaken a number of significant, multi-year strategic initiatives to provide greater
services and value to our travelers, suppliers and business partners. The most significant of these initiatives are described
below in Part I. Item 1. Business, under the caption “Market Opportunity and Business Strategy.” We may not realize the
benefits we expect to achieve from these and our other strategic initiatives or our efforts may negatively impact our
business and operations due to a variety of factors, including, but not limited to, unexpected delays, operational or
technological challenges, or higher than expected costs or expenses. As a result, our business operations, financial
condition and results of operations could be materially and adversely impacted.
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We are exposed to various counterparty risks.
We are exposed to the risk that various counterparties, including financial entities, will fail to perform. This creates
risk in a number of areas, including with respect to our bank deposits and investments, foreign exchange risk management,
insurance coverages, letters of credit, and for certain of our transactions, the receipt and holding of traveler payments and
subsequent remittance of a portion of those payments to travel suppliers. As it relates to deposits, as of December 31, 2022,
we held cash in bank depository accounts of approximately $3.8 billion and held term deposits of approximately $18
million. Additionally, majority-owned subsidiaries held cash of approximately $96 million and held term deposits of
approximately $218 million. As it relates to foreign exchange, as of December 31, 2022, we were party to forward
contracts with a notional value of approximately $2.8 billion, the fair value of which was a net asset of approximately $15
million. We employ forward contracts to hedge a portion of our exposure to foreign currency exchange rate fluctuations. At
the end of the deposit term or upon the maturity of the forward contracts, the counterparties are obligated, or potentially
obligated in the case of forward contracts, to return our funds or pay us net settlement values. If any of these counterparties
were to liquidate, declare bankruptcy or otherwise cease operations, it may not be able to satisfy its obligations under these
term deposits or forward contracts, our ability to recover losses or to access or recover our assets held may be limited by
the counterparty’s liquidity or the applicable laws governing the insolvency or bankruptcy proceeding, and the receipt and
remittance of payments via such counterparties would be severely limited or cease. In addition, we face significant credit
risk and potential payment delays with respect to non-financial contract counterparties including our B2B and Vrbo
partners, which may be exacerbated by economic downturns. The realization of any of these risks could have an adverse
impact on our business and financial performance.
We have foreign exchange risk.
We face exposure to movements in currency exchange rates (particularly those related to the Euro, British pound,
Canadian dollar, Australian dollar, Brazilian real, and Swiss Franc currencies) that revalue our cash flows, monetary assets
and liabilities, and translate our foreign subsidiary financial results to U.S. dollars. In particular, we face exposure related
to fluctuations in accommodation revenue due to relative currency movements from the time of booking to the time of stay
as well as the impact of relative exchange rate movements on cross-border travel such as from Europe to the United States
and the United States to Europe.
Depending on the size of the exposures and the relative movements of exchange rates, if we choose not to hedge or
fail to hedge effectively our exposure, we could experience a material adverse effect on our financial statements and
financial condition. We make a number of estimates in conducting hedging activities including in some cases cancellations
and payments in foreign currencies. In addition, an effective exchange rate hedging program is dependent upon effective
systems, accurate and reliable data sources, controls and change management procedures. In the event our estimates differ
significantly from actual results or if we fail to adopt effective hedging processes, we could experience greater volatility as
a result of our hedging activities.
Legal and Regulatory Risks
Our alternative accommodations business is subject to legal and regulatory risks, which could have a material
adverse effect on our operations and financial results.
Our alternative accommodations business has been, and continues to be, subject to regulatory developments that
affect the alternative accommodation industry and the ability of companies like us to list those alternative accommodations
online. For example, certain domestic and foreign jurisdictions have adopted or are considering statutes or ordinances that
prohibit or limit the ability of property owners and managers to rent certain properties for fewer than 30 consecutive days,
or that regulate platforms’ ability to list alternative accommodations, including prohibiting the listing of unlicensed
properties. Other domestic and foreign jurisdictions may introduce similar regulations. Many homeowners, condominium
and neighborhood associations have adopted rules that prohibit or restrict short-term rentals. In addition, many of the laws
that impose taxes or other obligations on travel and lodging companies were established before the growth of the internet
and the alternative accommodation industry, which creates a risk of those laws being interpreted in ways not originally
intended that could burden property owners and managers or otherwise harm our business.
These new and evolving regulatory schemes may decrease listings available on our sites and add significant
compliance risks to our business, including the risk of fines for noncompliance, as well as substantial internal costs and the
allocation of resources to develop new internal compliance systems and processes. These obligations include gathering
information about property owners, verification of registration status of properties and the ongoing provision of
information to governments about short-term rental owners and operators and requirements to withhold and report taxable
income to governments. For example, short-term rental regulations currently under consideration in the European Union
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could require us to provide data to governments about short-term rentals listed on our sites in multiple EU countries. We
may also remove properties from our websites if alternative accommodation owners or operators do not provide
information we require to comply with applicable regulations.
We are not in a position to eliminate risks, such as personal injury, robbery or other harm, at alternative
accommodation properties and we do not inspect or verify safety, such as fire code compliance or the presence of carbon
monoxide detectors, which could result in claims of liability based on events occurring at properties listed on our
platforms.
We have also experienced instances where properties listed on our sites are copied and travelers booking these
properties outside of our websites are the subject of fraudulent requests for payment. In other cases, travelers have been
asked to pay for their booking of properties listed on our website directly to the alternative accommodation operator and
outside of our website, resulting in loss of revenue for us and increased risk of fraud for the traveler.
These risks could have a material adverse effect on our alternative accommodations business, including impacting
our reputation and brand, as well as the results of operations of our alternative accommodations business, which in turn
could have a material adverse effect on Expedia Group’s operations and financial results.
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, financial performance, results of operations or business
growth.
Our business and financial performance could be adversely affected by changes in or interpretations of existing laws,
rules and regulations or the promulgation of new laws, rules and regulations applicable to us and our businesses, including
those relating to travel and alternative accommodation licensing and listing requirements, the provision of travel packages,
the internet and online commerce, internet advertising and price display, consumer protection, licensing and regulations
relating to the offer of travel insurance and related products, anti-corruption, anti-trust and competition (including our
contractual provisions regarding pricing and travel suppliers), economic and trade sanctions, tax, banking, data security, the
provision of payment services and privacy. For example, there are, and will likely continue to be, an increasing number of
laws and regulations pertaining to the internet and online commerce that may relate to liability for information retrieved
from or transmitted over the internet, display of certain taxes and fees, online editorial and user-generated content, user
privacy, behavioral targeting and online advertising, taxation, liability for third-party activities and the quality of products
and services, and our contractual relationships with travel suppliers who list on our sites. Additionally, some jurisdictions
have implemented or are considering implementing regulations that restrict or could restrict access to city centers and
popular destinations as well as impact our ability to offer accommodations, such as by limiting the construction of new
hotels or renting of alternative accommodations. Also, compliance with the European Economic Community (“EEC”)
Council Directive on Package Travel, Package Holidays and Package Tours could be costly and complex, and could
adversely impact our ability to offer certain packages in the EEC.
Likewise, the SEC, Department of Justice (“DOJ”) and Office of Foreign Assets Controls (“OFAC”), as well as
foreign regulatory authorities, have continued to increase the enforcement of economic sanctions and trade regulations,
anti-money laundering, and anti-corruption laws, across industries. As regulations continue to evolve and regulatory
oversight continues to increase, we cannot guarantee that our programs and policies will be deemed compliant by all
applicable regulatory authorities. For example, on May 17, 2019, we entered into a settlement agreement with OFAC
regarding 2,221 potentially non-compliant Cuba-related travel transactions that occurred between 2011-2014, which we
voluntarily disclosed to OFAC in 2014. In connection with the settlement agreement, we made significant enhancements to
our economic sanctions' compliance program and associated controls. OFAC agreed to release us, without any finding of
fault, from all civil liability in connection with the potential violations. In the event our controls should fail or are found to
be out of compliance for other reasons, we could be subject to monetary damages, civil and criminal money penalties,
litigation and damage to our reputation and the value of our brands. We also have been subject, and we will likely be
subject in the future, to inquiries or legal proceedings from time to time from regulatory bodies concerning compliance
with economic sanctions, consumer protection, competition, tax and travel industry-specific laws and regulations, including
but not limited to investigations and legal proceedings relating to the travel industry and, in particular, parity provisions in
contracts between hotels and online travel companies, including Expedia Group, and the presentation of information to
consumers, as described in Part I. Item 3. Legal Proceedings — Competition and Consumer Matters. 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.
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Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities.
The application of domestic and international income and non-income tax laws, rules and regulations to our products
and services is subject to interpretation by the relevant taxing authorities. The taxing authorities have become more
aggressive in their interpretation and enforcement of such laws, rules and regulations, resulting in increased audit activity
and audit assessments. As such, potential tax liabilities may exceed our current tax reserves.
Taxing authorities have made inquiries, filed lawsuits, and/or levied assessments asserting we are required to collect
and/or remit state and local sales or use taxes, value added taxes, or other transactional taxes related to our travel
facilitation services, including the legal proceedings described in Part I. Item 3. Legal Proceedings.
Judgment and estimation are required in determining our worldwide tax liabilities. In the ordinary course of our
business, there are calculations and transactions for which the ultimate tax determination is uncertain or otherwise subject
to interpretation. Taxing authorities may disagree with our tax calculations, including transfer pricing. We believe our tax
estimates are reasonable, however the final determination of tax audits may be materially different from our historical tax
provisions and accruals in which case we may be subject to additional tax liabilities, including interest and penalties, or
may require payment of tax assessments prior to contesting the validity of the assessment, any of which could have a
material adverse effect on our cash flows, financial condition and results of operations.
We could be subject to changes in tax rates, the adoption of new U.S. or international tax legislation, or exposure to
additional tax liabilities.
Our future tax liabilities may be adversely affected by legislative and other changes to taxing regimes, as well as
changes in our business operating structure and the mix of revenue and earnings in countries with differing tax rates. Due
to the pace of legislative changes and the scale of our business activities, any substantial changes in tax policies or
legislative initiatives may materially and adversely affect our business, the taxes we are required to pay, our financial
position, and results of operations.
Taxing jurisdictions around the world have focused legislative efforts on tax reform, transparency, base erosion, and
have enacted or are considering enacting digital services taxes, which could lead to inconsistent and potentially overlapping
international tax regimes. The Organization for Economic Cooperation and Development (OECD) continues to advance
proposals relating to its initiative for modernizing international tax rules, with the goal of having the participant countries
implement a modernized and aligned international tax framework, however there can be no guarantee this will occur.
Many of the current tax laws, rules, and regulations imposing taxes and other obligations were enacted before the
growth of the digital economy. Certain jurisdictions have enacted legislation directed at taxing the digital economy and
multi-national businesses. If existing tax laws, rules, or regulations change, by amendment or new legislation, the result
could increase our tax liabilities and reporting obligations, including requirements to provide information about travel
suppliers, customers, and transactions on our technology platform. The outcome of these changes may have an adverse
effect on our business or financial performance, including a decrease in demand for our products and services if we pass on
such costs to the consumer; an increase in the volume and cost of our tax reporting and compliance obligations; or limit the
scope of our business activities if we decide not to conduct business in particular jurisdictions.
We are involved in various legal proceedings and may experience unfavorable outcomes, which could adversely
affect our business and financial condition.
We are involved in various legal proceedings and disputes involving taxes, personal injury, contract, alleged
infringement of third-party intellectual property rights, antitrust, consumer protection, securities laws, and other claims,
including, but not limited to, the legal proceedings described in Part I, Item 3, Legal Proceedings. These matters may
involve claims for substantial amounts of money or for other relief that might necessitate changes to our business or
operations. The defense of these actions has been, and will likely continue to be, both time consuming and expensive and
the outcomes of these actions cannot be predicted with certainty. Determining reserves for pending litigation is a complex,
fact-intensive process that requires significant legal judgment. It is possible that unfavorable outcomes in one or more such
proceedings could result in substantial payments that could adversely affect our business, consolidated financial position,
results of operations, or cash flows in a particular period.
We cannot be sure that our intellectual property and proprietary information is protected from all forms of copying
or use by others, including potential competitors.
Our websites and mobile applications rely on content, brands, trademarks, domain names and technology, much of
which is proprietary. We establish and protect our intellectual property by relying on a combination of trademark, domain
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name, copyright, trade secret and patent laws in the U.S. and other jurisdictions, license and confidentiality agreements,
and internal policies and procedures. In connection with our license agreements with third parties, we seek to control access
to, and the use and distribution of, our proprietary information and intellectual property. Even with these precautions,
however, third parties may copy or otherwise obtain and use our intellectual property or confusingly similar trademarks or
domain names without our authorization or to develop similar intellectual property independently. Effective trademark,
domain name, copyright, patent and trade secret protection may not be available in every jurisdiction in which our services
are available and policing unauthorized use of our intellectual property is difficult and expensive. We cannot be sure that
the steps we have taken will prevent misappropriation or infringement of intellectual property. 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, to protect our trade secrets 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, content, and brands incorporated into our websites.
We also license content from suppliers for our creative campaigns. As we continue to build our creative production work
and introduce new services that incorporate new technologies, content and brands, we may be required to license additional
technology, content, and brands. We cannot be sure that such technology, content and brand licenses will be available on
commercially reasonable terms, if at all. We also cannot be sure that content obtained from suppliers won’t be subject to
intellectual property infringement claims by a third party.
Technology, Information Protection and Privacy Risks
We rely on information technology to operate our businesses and maintain our competitiveness, and if we fail to
adequately maintain or improve our information technology systems, or to adapt them to technological
developments and industry trends, our business and operations could be adversely affected.
We depend on the use of sophisticated information technologies and systems in many areas of our business including
technology and systems used for website and mobile applications, reservations, customer service, supplier connectivity,
marketing, communications, procurement, payments, tax collection and remittance, fraud detection and administration,
which we must continuously improve and upgrade.
Our future success also depends on our ability to adapt our services and infrastructure to meet rapidly evolving
consumer trends and demands while continuing to improve the performance, features and reliability of our service in
response to competitive service and product offerings. Cloud computing, the continued growth of alternative platforms and
mobile computing devices, the emergence of niche competitors who may be able to optimize products, services or
strategies that use cloud computing or for such platforms, as well as other technological changes, including new devices,
services and home assistants, and developing technologies, have, and will continue to require, new and costly investments.
Transitioning to these new technologies may be disruptive to resources and the services we provide, and may increase our
reliance on third party service providers.
We have been engaged in a multi-year effort to migrate products, data storage and processing, key portions of our
consumer and affiliate sites, as well as back-office application functionality, to new technology platforms and significantly
increase our utilization of public cloud computing services, such as Amazon Web Services (“AWS”), to enable us to
improve conversion, innovate more rapidly, achieve better search engine optimization and improve our site merchandising
and transaction processing capabilities, among other anticipated benefits. Implementations and system enhancements such
as these have been in the past, and may continue to be in the future, more time consuming and expensive than originally
anticipated, and the resources devoted to those efforts have in the past adversely affected, and may in the future adversely
affect, our ability to develop new site features. We may be unable to successfully migrate and improve our technology as
planned or we may not achieve the expected benefits from any such initiatives, and as a result our business, including
customer relationships, reputation and operations, could be materially adversely affected.
System interruption, security breaches and unplanned outages in our information systems may harm our
businesses.
The risk of a cybersecurity-related attack by criminal organizations, hacktivists, foreign governments, and terrorists,
is persistent. Due to the size and scale of our technology infrastructure and overall operations, vulnerabilities present within
our systems may result in unauthorized access to confidential data including our own proprietary data, that of our partners
or the personal data of our customers, including payment data. In addition, given the nature of our operations, consumer
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personal and payment data may also be accessed inappropriately within partner systems should those partners also
experience a breach.
In addition, we continue to encounter attempted external attacks in a variety of forms, including ransomware, account
takeovers, phishing, and denial of service attacks. As these continue, there is a risk that successful attacks may cause a
significant cybersecurity incident which impacts our critical operations. Successful attacks have the potential to damage our
reputation, increase costs, and result in regulatory scrutiny or fines.
As we continue to migrate legacy systems to newer information technology systems, we increase the risk of system
interruptions. 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. 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 customers, damage our reputation and brands, increase our costs
and/or cause losses. We also face risks related to our ability to maintain data and hardware security with respect to remote
working.
No assurance can be given that our backup systems or contingency plans will sustain critical aspects of our
operations or business processes in all circumstances. 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 travelers and/or third parties for a significant period of time.
In addition, as a result of our migration of key portions of our platform functionality to AWS, we now depend on the
availability of AWS’s services and any incident affecting AWS’s infrastructure and availability, which have occurred a
number of times in the recent past, could adversely affect the availability of our platform and our ability to serve our
customers, which could in turn damage our reputation with current and potential customers, expose us to liability, result in
substantial costs for remediation, cause us to lose customers, or otherwise harm our business, financial condition, or results
of operations. We may also incur significant costs for using alternative hosting sources or taking other actions in
preparation for, or in reaction to, events that compromise the AWS services we use.
We process, store and use customer, supplier and employee personal, financial and other data, which subjects us to
risks stemming from possible failure to comply with governmental regulation and other legal obligations, as well as
litigation and reputational risks associated with the failure to protect such data from unauthorized use, theft or
destruction.
There are numerous laws regarding the storing, sharing, use, processing, disclosure and protection of customer and
employee personal, financial, and other data, the scope of which is 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 our businesses.
Any failure or perceived failure by us, or our service providers, to comply with, privacy-related legal obligations or
any compromise of security that results in the unauthorized use, theft, or destruction of such data, may result in a material
loss of revenues from the potential adverse impact to our reputation and brand, our ability to retain customers or attract new
customers, and the potential disruption to our business and plans. The risk of a data incident due to cybersecurity-related
privacy event remains persistent.
In addition, such an event could result in violations of applicable U.S. and international laws, governmental
enforcement actions and consumer or securities litigation.
We are subject to privacy regulations, and compliance with these regulations could impose significant compliance
burdens.
The regulatory framework for privacy issues worldwide 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. Several U.S. states, including
California, have passed comprehensive privacy legislation or are considering privacy legislation. In addition, the General
Data Protection Regulation, or GDPR, that went into effect in the European Union in May 2018, requires companies to
implement and remain compliant with regulations regarding the handling of personal data. Enforcement of GDPR
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regulations, and fines for non-compliance, continue to increase and a significant number of additional jurisdictions are
expected to enact similar privacy regulations in the future. As additional jurisdictions enact privacy regulations and laws,
we will experience increased compliance costs and uncertainty as to how such laws will be interpreted. Although we have
invested, and expect to continue to invest, significant resources to comply with the GDPR and other privacy laws and
regulations, the number and variety of regulations combined with our multi-product, multi-brand, global businesses, could
nevertheless result in compliance failures. Failure to meet any of the requirements of these laws and regulations could
result in significant penalties or legal liability, adverse publicity and/or damage to our reputation, which could negatively
affect our business, results of operations and financial condition.
Environmental, Social and Governance Risks
Mr. Diller may be deemed to beneficially own shares representing approximately 27% of the outstanding voting
power of Expedia Group.
As of December 31, 2022, Mr. Diller may be deemed to have beneficially owned 100% of Expedia Group’s
outstanding Class B common stock, representing approximately 27% of the total voting power of all shares of Expedia
Group common stock and Class B common stock outstanding. In the future, Mr. Diller’s ownership percentage in Expedia
Group could increase if he acquires additional shares of Expedia Group common stock in open market purchases or
otherwise, or if Expedia Group repurchases shares of its common stock.
Mr. Diller is also currently the Chairman of Expedia Group’s Board of Directors and Senior Executive of Expedia
Group. Expedia Group’s amended and restated certificate of incorporation provides that the Chairman of the Board may
only be removed without cause by the affirmative vote of at least 80% of the entire Board of Directors, which provision
may not be amended, altered changed or repealed, or any provision inconsistent therewith adopted, without the approval of
at least (1) 80% of the entire Board of Directors and (2) 80% of the voting power of Expedia Group’s outstanding voting
securities, voting together as a single class.
As a result of Mr. Diller’s ownership interests and voting power, Mr. Diller is in a position to influence, and
potentially control, significant corporate actions, including corporate transactions such as mergers, business combinations
or dispositions of assets. Additionally, in the future, another holder of the Class B Shares might have such a position of
influence by virtue of ownership interests in the Class B Shares. This concentrated ownership position could discourage
others from initiating any potential merger, takeover or other change of control transaction that may otherwise be beneficial
to Expedia Group stockholders.
Actual or potential conflicts of interest may develop between Expedia Group management and directors, on the one
hand, and the management and directors of IAC, on the other.
Mr. Diller serves as our Chairman of the Board of Directors and Senior Executive, while retaining his role as
Chairman of the Board of Directors and Senior Executive of IAC/InterActiveCorp, or IAC. Each of Ms. Clinton and Mr.
von Furstenberg also serves as a member of the Board of Directors of both Expedia Group and IAC. These overlapping
relationships could create, or appear to create, potential conflicts of interest for the directors or officers when facing
decisions that may affect both IAC and Expedia Group. Mr. Diller in particular may also face conflicts of interest with
regard to the allocation of his time between the companies.
Our amended and restated certificate of incorporation provides that no officer or director of Expedia Group who is
also an officer or director of IAC will be liable to Expedia Group or its stockholders for breach of any fiduciary duty by
reason of the fact that any such individual directs a corporate opportunity to IAC instead of Expedia Group, or does not
communicate information regarding a corporate opportunity to Expedia Group because the officer or director has directed
the corporate opportunity to IAC. This corporate opportunity provision may have the effect of exacerbating the risk of
conflicts of interest between the companies because the provision effectively shields an overlapping director/executive
officer from liability for breach of fiduciary duty in the event that such director or officer chooses to direct a corporate
opportunity to IAC instead of Expedia Group.
Increased focus on our environmental, social, and governance ("ESG") 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, employees
and other stakeholders are increasingly focused on ESG practices of companies, including climate change, diversity, equity
and inclusion, human capital management, data privacy and security, supply chains (including human rights issues), among
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other topics. These evolving stakeholder expectations and our efforts and ability to respond to and manage these issues,
provide updates on them, and establish and meet appropriate goals, commitments, and targets present numerous
operational, regulatory, reputational, financial, legal, and other risks and impacts, any of which may be outside of our
control or could have a material adverse impact on our business, including on our reputation and stock price. Our efforts in
this area 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 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 stockholders or stakeholders.
Climate change may have an adverse impact on our business.
Our businesses may also be negatively impacted by direct and indirect impacts of climate change. Direct impacts
may include 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. Indirect impacts may include a significant shift in consumer
preferences, which we may not successfully adapt to, or the general harm to our business as a result of a general perception
of travel as an environmental harm. These and other climate change related impacts could have a significant adverse impact
on our business in both the short, medium and long term. Further, there is uncertainty around the accounting standards and
climate-related disclosures associated with emerging laws and reporting requirements and the related costs to comply with
the emerging regulations could be significant.
Risks Related to Ownership of our Stock
Our stock price is highly volatile.
The market price of our common stock is highly volatile and could continue to be subject to wide fluctuations in
response to, among other risks, the risks described in this Item 1A, as well as:
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Quarterly variations in our operating and financial results as well as that of our peer companies;
Operating and financial results that vary from the expectations of securities analysts and investors, including failure to
deliver returns on investments or key initiatives;
Changes in our capital or governance structure;
Repurchases of our common stock;
Changes in the stock price or market valuations of trivago, our majority-owned, publicly traded subsidiary, whose
stock price is also highly volatile;
Changes in device and platform technologies and search industry dynamics, such as key word pricing and traffic, or
other changes that negatively affect our ability to generate traffic to our websites;
Announcements by us or our competitors of significant contracts, acquisitions, divestitures, strategic partnerships,
joint ventures or capital commitments as well as technological innovations, new services or promotional and
discounting activities;
Dilution resulting from any conversion of our convertible debt into common stock;
Loss of a major travel supplier, such as an airline, hotel or car rental chain;
Lack of success in our efforts to increase our market share; and
Price and volume fluctuations in the stock markets in general.
Volatility in our stock price could also make us less attractive to certain investors, and/or invite speculative trading in
our common stock or debt instruments.
Part I. Item 1B. Unresolved Staff Comments
None.
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Part I. Item 2. Properties
We own our corporate headquarters located in Seattle, Washington, which is approximately 650,000 square feet of
office space.
In addition, we lease approximately 2.3 million square feet of office space worldwide in various cities and locations,
pursuant to leases with expiration dates through May 2038, of which approximately 865,000 square feet is leased for
domestic operations and 1.4 million for international operations.
Part I. Item 3. Legal Proceedings
In the ordinary course of business, Expedia Group and its subsidiaries are parties to legal proceedings and claims
involving property, personal injury, contract, alleged infringement of third-party intellectual property rights and other
statutory and common law claims. The amounts that may be recovered in such matters may be subject to insurance
coverage.
Rules of the SEC require the description of material pending legal proceedings, other than ordinary, routine litigation
incident to the registrant’s business, and advise that proceedings ordinarily need not be described if they primarily involve
damages claims for amounts (exclusive of interest and costs) not individually exceeding 10% of the current assets of the
registrant and its subsidiaries on a consolidated basis. In the judgment of management, none of the pending litigation
matters that the Company and its subsidiaries are defending, including those described below, involves or is likely to
involve amounts of that magnitude. The litigation matters described below involve issues or claims that may be of
particular interest to our stockholders, regardless of whether any of these matters may be material to our financial position
or results of operations based upon the standard set forth in the SEC’s rules.
Litigation Relating to Occupancy and Other Taxes
A number of jurisdictions in the United States have filed lawsuits against online travel companies, including Expedia
Group companies such as Hotels.com, Expedia, Hotwire, Orbitz and HomeAway, claiming that such travel companies have
failed to collect and/or pay taxes (e.g., occupancy taxes, business privilege taxes, excise taxes, sales taxes, etc.), as well as
related claims such as unjust enrichment, restitution, conversion and violation of consumer protection statutes, and seeking
monetary (including tax, interest, and penalties), injunctive and/or declaratory relief. In addition, we may file complaints
contesting tax assessments made by states, counties and municipalities seeking to obligate online travel companies,
including certain Expedia Group companies, to collect and remit certain taxes, either retroactively or prospectively, or both.
Moreover, certain jurisdictions may require us to pay tax assessments prior to contesting any such assessments. This
requirement is commonly referred to as “pay-to-play.” Payment of these amounts is not an admission that we believe we
are subject to such taxes and, even when such payments are made, we continue to defend our position vigorously.
Actions Filed by Individual States, Cities and Counties
Pine Bluff, Arkansas Litigation. In September 2009, Pine Bluff Advertising and Promotion Commission and
Jefferson County filed a putative class action against a number of online travel companies, including Expedia, Hotels.com,
Hotwire and Orbitz, alleging that defendants failed to collect and/or pay taxes under hotel tax occupancy ordinances. In
February 2018, the trial court granted plaintiffs’ motion for summary judgment and denied defendants’ motion for
summary judgment on the issue of tax liability. The matter is currently pending in the trial court on damages issues.
State of Mississippi Litigation. In December 2011, the State of Mississippi brought suit against a number of online
travel companies, including Expedia, Hotels.com, Hotwire and Orbitz, for declaratory judgment, injunctive relief,
violations of the state sales tax statute and local ordinances, violation of Consumer Protection Act (subsequently
dismissed), conversion, unjust enrichment, constructive trust, money had and received and joint venture liability. In
October 2018, the trial court granted the State of Mississippi’s motion for summary judgment on the issue of liability, after
which the case proceeded to a damages phase in the trial court. In a July 12, 2021 final judgment, the trial court found the
defendant online travel companies liable for state and local sales taxes and interest and also held the defendants liable for
penalties. An appeal of the final judgment to the Mississippi Supreme Court remains pending.
Arizona Cities Litigation. Tax assessments were issued in 2013 by 12 Arizona cities against a group of online travel
companies including Expedia, Hotels.com, Hotwire and Orbitz. The online travel companies protested and petitioned for
redetermination of the assessments. On May 28, 2014, the Municipal Tax Hearing Officer granted the online travel
companies' protests and ordered the cities to abate the assessments. The cities appealed to the Arizona Tax Court, which
granted the cities' motion for summary judgment in part and denied it in part in April 2016. The matter is currently pending
in the Arizona Tax Court on damages issues. The parties filed cross motions for summary judgment on damages issues in
2020. On December 17, 2021, the Tax Court granted the parties’ motions in part and denied the parties’ motions in part. On
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January 3, 2022, plaintiffs filed a motion to reconsider a portion of the December 17, 2021 ruling, which the Tax Court
granted on March 1, 2022. The parties reached a settlement of all claims with the exception of those brought by the city of
Tucson and, on July 25, 2022, the court dismissed those claims, thereby ending the matter as to those claims. The parties
filed cross motions for summary judgment on the city of Tucson’s claims and, on November 16, 2022, the Tax Court found
in favor of the city of Tucson. The Tax Court issued a final judgment on January 18, 2023, and the Expedia Defendants
filed a notice of appeal from that judgment on January 30, 2023. That appeal is pending.
State of Louisiana/City of New Orleans Litigation. In August 2016, the State of Louisiana Department of Revenue
and the city of New Orleans filed a lawsuit in Louisiana state court against a number of online travel companies, including
Expedia, Hotels.com, Hotwire, Orbitz and Egencia. The complaint alleges claims for declaratory judgment, violation of
state and city tax laws, unfair trade practices, breach of fiduciary duty, and imposition of a constructive trust. On January
26, 2022, the defendants filed a motion to reconsider the court’s prior denial of their motion for summary judgment and
motion for judgment on the pleadings based on the recent decision by the Louisiana court of appeals in the Jefferson
Parrish litigation. The court granted that motion in part, and denied it in part, on March 3, 2022. Trial in the case began on
April 5 and concluded on April 13, 2022. On May 19, 2022, the trial court announced its decision in favor of the Expedia
defendants, holding that they had no tax liability to the plaintiffs. The plaintiffs have filed notices of appeal and their appeal
remains pending.
Clark County, Nevada Litigation. On May 14, 2021, Clark County, Nevada filed a lawsuit in state court against a
number of online travel companies, including a number of Expedia Group companies such as Expedia, Hotels.com, Orbitz,
Travelscape, and Hotwire. The complaint alleges the defendants failed to comply with state and local transient occupancy
tax statutes, as well as claims for conversion, breach of fiduciary duty, unjust enrichment, fraud and violation of the
Nevada Deceptive Trade Practices Act. Plaintiffs purport to seek compensatory and punitive damages, declaratory relief
and imposition of a constructive trust. The case was removed to federal district court. On September 13, 2021, defendants
filed a motion to dismiss the common law and Nevada Deceptive Trade Practices Act claims. On August 12, 2022, the
district court dismissed the Nevada Deceptive Trade Practice Claim but denied the motion to dismiss the common law
claims. On May 16, 2022, defendants filed a motion for summary judgment as to all claims, which remains pending.
In addition, HomeAway is a party in the following proceedings:
Jasper County Development District #1, Texas Litigation. On August 17, 2020, Jasper County Development District
# 1 filed a lawsuit in Texas state court against Expedia and HomeAway. The complaint alleges claims for declaratory
judgment, damages and an accounting. The parties have reached a tentative settlement agreement.
City of Charleston, South Carolina Litigation. On April 9, 2021, nine local governmental entities in South Carolina
filed a lawsuit in state circuit court against HomeAway.com, Inc. and many other vacation rental listing companies. The
complaint alleges the defendants failed to register with, and remit taxes and business license fees to, the plaintiffs as
allegedly required by certain local accommodations tax and business license ordinances. The complaint further alleges
claims for violation of the South Carolina Unfair Trade Practices Act. Plaintiffs purport to seek declaratory and injunctive
relief, a legal accounting and damages. On May 27, 2021, plaintiffs filed an amended complaint adding five additional
local government entities as plaintiffs. On September 24, 2021, plaintiffs filed a motion for leave to file a second amended
complaint seeking to add, among other things, two additional local government entities as plaintiffs (which would bring the
total number of plaintiffs to 16). The court granted that motion on March 25, 2022. On August 15, 2022, HomeAway.com,
Inc. filed a motion to dismiss the South Carolina Unfair Trade Practices Act, contractual undertaking, declaratory relief and
injunctive relief causes of action and answered the remaining causes of action. The court has scheduled argument on
HomeAway.com, Inc.'s and other defendants' motions to dismiss for February 14, 2023.
Notices of Audit or Tax Assessments
At various times, the Company has also received notices of audit or tax assessments from states, counties,
municipalities and other local taxing jurisdictions concerning its possible obligations with respect to state and local taxes
(e.g. occupancy taxes, business privilege taxes, excise taxes, sales taxes, etc.).
Non-Tax Litigation and Other Legal Proceedings
Putative Class Action Litigation
Israeli Putative Class Action Lawsuit (Silis). In or around September 2016, a putative class action lawsuit was filed in
the District Court in Tel Aviv, Israel against Hotels.com. The plaintiff generally alleges that Hotels.com violated Israeli
consumer protection laws in various ways by failing to calculate and display VAT charges in pricing displays shown to
Israeli consumers. The plaintiff has filed a motion for class certification which Hotels.com has opposed. In January 2023,
the parties agreed to a settlement in principle.
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Israeli Putative Class Action Lawsuit (Ze’ev). In or around January 2018, a putative class action lawsuit was filed in
the District Court in Lod, Israel against a number of online travel companies including Expedia, Inc. and Hotels.com. The
plaintiff generally alleges that the defendants violated Israeli consumer laws by limiting hotel price competition. The
plaintiff has filed a motion for class certification which defendants have opposed.
Other Legal Proceedings
Helms-Burton Litigation. A number of complaints have been filed by parties alleging violations of Title III of the
Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act. On August 18, 2022, the Third Circuit
affirmed the dismissal of plaintiff’s claim in the Glen action, thereby ending that matter. On November 11, 2022, the
Eleventh Circuit reversed the dismissal of the plaintiff’s claim in the Del Valle matter. Currently, five cases are pending in
the U.S. District Court for the Southern District of Florida and two cases are pending in the District of Delaware.
Paris City Hall Litigation. On January 28, 2021, Paris City Hall filed an action against HomeAway UK Ltd.
(“HomeAway UK”) alleging that HomeAway UK had failed to comply with regulations relating to the sharing of supplier
booking data in 2019 and 2020. A hearing on the matter was held on March 30, 2022. On November 30, 2022, the court
ruled in Homeaway UK’s favor dismissing all claims. On January 12, 2023, Paris City Hall appealed the decision. That
appeal remains pending.
Competition and Consumer Matters
Over the last several years, the online travel industry has become the subject of investigations by various national
competition authorities (“NCAs”), particularly in Europe.
Matters Relating to Contractual Provisions with Accommodations Providers
Expedia Group companies are or have been involved in a number of investigations by NCAs predominately related to
whether certain parity clauses in contracts between Expedia Group entities and accommodation providers (sometimes also
referred to as “most favored nation” or “MFN” provisions) are anti-competitive.
In 2015, Expedia Group companies voluntarily waived certain rate, conditions and availability parity clauses in
agreements with European hotel partners, resulting in most NCAs in Europe closing their investigations. However, certain
related matters remain ongoing, including cases brought by the German Federal Cartel Office. Legislative bodies in France,
Austria, Italy, Belgium and Portugal have also adopted domestic anti-parity clause legislation, which we believe in each
case violates both EU and national legal principles. In December 2022, Switzerland also passed legislation taking action on
price parity in Switzerland.
A number of NCAs outside of Europe have also opened investigations or inquired about contractual parity provisions
in contracts between hotels and online travel companies in their respective territories, including Expedia Group companies.
In certain of these jurisdictions, including Australia, Brazil, Hong Kong, South Korea, Japan and New Zealand, the
concerns were resolved with Expedia Group companies’ waiver of certain rate, conditions and availability parity clauses in
agreements with hotel partners in the respective jurisdictions.
Matters Relating to Online Marketplaces
Regulatory authorities in Europe (including the UK Competition and Markets Authority, or “CMA”), Australia, and
elsewhere have also undertaken market studies, inquiries or investigations relating to the presentation of information on
certain of our UK and European Union consumer-facing websites. We have agreed to offer certain voluntary undertakings
in order to address the regulatory authorities' concerns.
We are cooperating with regulators in the investigations described above where applicable, but we are unable to
predict what, if any, effect such actions will have on our business, industry practices or online commerce more generally.
Part I. Item 4. Mine Safety Disclosures
Not applicable.
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Part II. Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information
Our common stock is quoted on the Nasdaq Global Select Market under the ticker symbol “EXPE.” Our Class B
common stock is not listed and there is no established public trading market. As of January 27, 2023, there were
approximately 2,444 holders of record of our common stock and the closing price of our common stock was $116.18 on
Nasdaq. As of January 27, 2023, all of our Class B common stock was held by Mr. Diller, Chairman and Senior Executive
of Expedia Group and the Diller Foundation d/b/a The Diller - von Furstenberg Family Foundation.
Dividend Policy
During 2022 and 2021, we continued the suspension of our quarterly common stock dividends. During 2021, we paid
$67 million (or $74.96 per share of Series A Preferred Stock) of dividends on the Series A Preferred Stock.
At this time, we do not currently expect to declare dividends on our common stock. Declaration and payment of
future dividends, if any, is at the discretion of the Board of Directors and will depend on, among other things, our results of
operations, cash requirements and surplus, financial condition, share dilution management, legal risks, tax policies, capital
requirements relating to research and development, investments and acquisitions, challenges to our business model and
other factors that the Board of Directors may deem relevant. In addition, our credit agreements limit our ability to pay cash
dividends under certain circumstances.
Unregistered Sales of Equity Securities
During the quarter ended December 31, 2022, we did not issue or sell any shares of our common stock or other
equity securities pursuant to unregistered transactions in reliance upon an exemption from the registration requirements of
the Securities Act of 1933, as amended.
Issuer Purchases of Equity Securities
In April 2018, the Board of Directors and the Executive Committee, pursuant to a delegation of authority from the
Board, authorized a repurchase of up to 15 million outstanding shares of our common stock, and in December 2019,
authorized a repurchase of up to 20 million shares of our common stock. A summary of the repurchase activity for the
fourth quarter of 2022 is as follows:
Period
October 1-31, 2022
November 1-30, 2022
December 1-31, 2022
Total
Total Number of
Shares
Purchased
Average Price
Paid Per
Share
Total Number of
Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
Maximum
Number of
Shares that
May Yet Be
Purchased
Under Plans or
Programs
(In thousands, expect per share data)
495 $
1,223
1,959
3,677
95.65
97.54
92.20
495
1,223
1,959
3,677
21,276
20,053
18,094
Performance Comparison Graph
The graph shows a five-year comparison of cumulative total return, calculated on a dividend reinvested basis, for
Expedia Group common stock, the NASDAQ Composite Index, the RDG (Research Data Group) Internet Composite Index
and the S&P 500. The graph assumes an investment of $100 in each of the above on December 31, 2017. The stock price
performance shown in the graph is not necessarily indicative of future price performance.
29
Part II. Item 6. Reserved
30
Part II. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview
Expedia Group's mission is to power global travel for everyone, everywhere. We believe travel is a force for good.
Travel is an essential human experience that strengthens connections, broadens horizons and bridges divides. We help
reduce the barriers to travel, making it easier, more enjoyable, more attainable and more accessible. We bring the world
within reach for customers and partners around the globe. We leverage our supply portfolio, platform and technology
capabilities across an extensive portfolio of consumer brands, and provide solutions to our business partners, to empower
travelers to efficiently research, plan, book and experience travel. We make available, on a stand-alone and package basis,
travel services provided by numerous lodging properties, airlines, car rental companies, activities and experiences
providers, cruise lines, alternative accommodations property owners and managers, and other travel product and service
companies. We also offer travel and non-travel advertisers access to a potential source of incremental traffic and
transactions through our various media and advertising offerings on our websites. For additional information about our
portfolio of brands, see the disclosure set forth in Part I, Item 1, Business, under the caption “Market Opportunity and
Business Strategy.”
This section of this Form 10-K generally discusses the years ended December 31, 2022 and 2021 items and year over
year comparisons between 2022 and 2021. Discussions of the year ended December 31, 2020 items and the year over year
comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 2021. All percentages within this section are calculated on actual, unrounded
numbers.
Trends
The COVID-19 pandemic, and measures to contain the virus, including government travel restrictions and quarantine
orders, had an unprecedented impact on the global travel industry and materially and negatively impacted our business,
financial results and financial condition. With the evolution of milder COVID-19 variants, availability of multiple vaccine
booster doses and increasing familiarity with the virus, many COVID-19 related travel restrictions have been lifted, and
countries around the world reopened their borders for foreign travel.
However, we note that the recovery has been uneven, with different regions experiencing different rates of recovery.
Despite positive developments, the full duration and total impact of COVID-19 remains uncertain, and therefore it is
difficult to predict any future impact on the travel industry and, in particular, our business.
More recently, inflation and other macroeconomic pressures in the U.S. and the global economy, such as rising
interest rates, appreciation of the dollar, energy price volatility and inflationary pressures, have contributed to an
increasingly complex macroeconomic environment. Our future operational results may be subject to volatility, particularly
in the short-term, due to the impact of the aforementioned trends. Broad, sustained negative economic impacts could put
strain on our suppliers, business and service partners, which increases the risk of credit losses and service level or other
disruptions.
Additionally, further health-related events, political instability, geopolitical conflicts, acts of terrorism, significant
fluctuations in currency values, sustained levels of increased inflation, sovereign debt issues, and natural disasters, are
examples of other events that could have a negative impact on the travel industry in the future.
Despite these factors, we have witnessed a healthy recovery of travel demand, which remains strong and is
attributable to factors including pent-up demand from the COVID-19 pandemic, and consumers prioritizing spend on travel
and experiences over other discretionary spending.
We have also executed cost savings initiatives aimed at simplifying the organization and increasing efficiency,
achieving by 2021 forward annualized run-rate fixed cost savings of $700 to $750 million compared to the fourth quarter of
2019 exit rate, as well as greater than $200 million in variable costs savings, at 2019 volume levels. We also believe we
have improved our marketing efficiency and continue to evaluate additional opportunities to increase efficiency and
improve operational effectiveness across the Company. As a result of these initiatives, and a near full recovery in travel
bookings, we have experienced increases in Adjusted EBITDA margins, profitability and operating cash flows in excess of
historic levels.
For additional information about our business strategy for Expedia Group, see the disclosure set forth in Part I. Item
1. Business, under the caption “Market Opportunity and Business Strategy.”
31
Online Travel
Increased usage and familiarity with the internet have continued to drive rapid growth in online penetration of travel
expenditures. Online penetration is higher in the U.S. and Western European markets with online penetration rates in some
emerging markets, such as Latin America and Eastern European regions, lagging behind those regions. Emerging market
online penetration rates increased through the COVID-19 pandemic, and are expected to continue growing, which presents
an attractive growth opportunity for our business, while also attracting many competitors to online travel. This competition
intensified in recent years, and the industry is expected to remain highly competitive for the foreseeable future. In addition
to the growth of online travel agencies, we have seen increased interest in the online travel industry from search engine
companies such as Google, evidenced by continued product enhancements, and prioritizing its own AdWords and
metasearch products such as, Google Hotel Ads and Google Flights, in search results. Competitive entrants such as
“metasearch” companies, including Kayak.com (owned by Booking Holdings), trivago (in which Expedia Group owns a
majority interest) as well as TripAdvisor, introduced differentiated features, pricing and content compared with the legacy
online travel agency companies, as well as various forms of direct or assisted booking tools. Further, airlines and lodging
companies are aggressively pursuing direct online distribution of their products and services. In addition, the increasing
popularity of the “sharing economy,” accelerated by online penetration, has had a direct impact on the travel and lodging
industry. Businesses such as Airbnb, Vrbo and Booking.com have emerged as the leaders, bringing incremental alternative
accommodation and vacation rental inventory to the market. Other competitors have arisen, including vacation rental
property managers such as Vacasa, who operate their own booking sites in addition to listing on Airbnb, Vrbo, and
Booking.com, and are expected to continue to grow as a percentage of the global accommodation market. Additionally,
traditional consumer ecommerce players have expanded their local offerings by adding hotel offers to their websites. Most
recently, ride sharing app Uber has added transportation and experience offerings to its app via partnerships with other
travel providers.
The online travel industry also saw the development of alternative business models and variations in the timing of
payment by travelers and to suppliers, which in some cases place pressure on historical business models. In particular, the
agency hotel model saw rapid adoption in Europe. Expedia Group facilitates both merchant (Expedia Collect) and agency
(Hotel Collect) hotel offerings with our hotel supply partners through both agency-only contracts as well as our hybrid ETP
program, which offers travelers the choice of whether to pay Expedia Group at the time of booking or pay the hotel at the
time of stay.
In 2022, we began evolving our strategy from being largely transactionally focused, where we were primarily
focused on acquiring customers through performance channels, to building a direct relationship with our customers by
allocating more marketing spend towards our loyalty programs, paid app downloads, and brand awareness. While we
maintain a large portfolio of consumer brands, we put the majority of our marketing efforts towards our three core
consumer brands: Expedia, Hotels.com, and Vrbo.
For more detail, see Part I, Item 1A, Risk Factors - "We rely on the value of our brands, and the costs of maintaining
and enhancing our brand awareness are increasing” and “Our international operations involve additional risks and our
exposure to these risks will increase as our business expands globally.”
Lodging
Lodging includes both hotel and alternative accommodations. As a percentage of our total worldwide revenue in
2022, lodging accounted for 76%. As a result of the impact on travel demand from the COVID-19 outbreak, room nights
stayed grew 29% in 2022, as compared to a growth of 35% in 2021 and a decline of 55% in 2020. ADRs for rooms stayed
for Expedia Group increased 3% in 2020, increased 20% in 2021 and increased 7% in 2022. Over the last couple of years,
our lodging business saw a significant increase in ADRs compared to pre-pandemic levels, which were driven by broader
industry trends, a mix shift to Vrbo and high ADR geographies. Vrbo carries a higher ADR than hotels and has accounted
for a higher percentage of room nights due to the faster recovery and shift to alternative accommodations during these
periods.
As of December 31, 2022, our global lodging marketplace had approximately 3 million lodging properties available,
including over 2 million online bookable alternative accommodations listings through Vrbo and approximately 900,000
hotels and alternative accommodations through our other brands.
Hotel. We generate the majority of our revenue through the facilitation of hotel reservations (stand-alone and
package bookings). Our relationships and overall economics with hotel supply partners have been broadly stable in recent
years. As we continue to expand the breadth and depth of our global hotel offering, in some cases we have reduced our
economics in various geographies based on local market conditions. These impacts are due to specific initiatives intended
32
to drive greater global size and scale through faster overall room night growth. Additionally, increased promotional
activities such as growing loyalty programs, discounting, and couponing have contributed to declines in revenue per room
night and profitability in certain cases.
Since our hotel supplier agreements are generally negotiated on a percentage basis, any increase or decrease in ADRs
has an impact on the revenue we earn per room night. Strong pent-up demand and high operating costs during 2022 drove a
14% increase in the U.S. hotel industry ADRs versus 2019, according to Smith Travel Research (STR). In the future, we
could see macroeconomic factors influence hotel ADR trends, including as the rising living costs due to inflation and
higher interest rates. Other factors that could lead to moderating ADRs include growth in hotel supply and the increase in
alternative accommodation inventory. Further, while the global lodging industry remains very fragmented, there has been
consolidation in the hotel space among chains as well as ownership groups. In the meantime, certain hotel chains have been
focusing on driving direct bookings on their own websites and mobile applications by advertising lower rates than those
available on third-party websites as well as incentives such as loyalty programs, increased or exclusive product availability
and complimentary benefits.
Alternative Accommodations. With our acquisition of Vrbo (previously HomeAway) and all of its brands in
December 2015, we expanded into the fast-growing alternative accommodations market. Vrbo is a leader in this market,
specializing in unique whole home inventory, primarily in North American leisure markets, and represents an attractive
growth opportunity for Expedia Group.
Vrbo has transitioned from a listings-based classified advertising model to an online transactional model that
optimizes for both travelers and homeowner and property manager partners, with a goal of increasing monetization and
driving growth through investments in marketing as well as in product and technology. Vrbo offers hosts subscription-
based listing or pay-per-booking service models. It also generates revenue from a traveler service fee for bookings.
Air
Similar to the rest of travel, the airlines experienced a surge in pent-up demand, however they have been operating at
reduced capacity due to staffing shortages, supply chain disruptions, and elevated fuel costs. In 2022, the reduced airline
capacity and high operating costs drove average U.S. domestic airfares up approximately 10% compared to pre-pandemic
levels, according to Airlines Reporting Corporation (ARC) data. While air bookings improved in 2022 relative to 2021, our
air business continues to lag lodging bookings and remains below 2019 levels.
In addition, we could encounter pressure on air remuneration as air carriers combine, certain supply agreements
renew, and as we continue to add airlines to ensure local coverage in new markets.
Air ticket volumes increased 8% in 2022 and increased 43% during 2021, compared to a decline of 63% in 2020. As
a percentage of our total worldwide revenue in 2022, air accounted for 3%.
Advertising & Media
Our advertising and media business is principally driven by revenue generated by trivago, a leading hotel metasearch
website, and Expedia Group Media Solutions, which is responsible for generating advertising revenue on our global online
travel brands. In 2022, we generated $777 million of advertising and media revenue, a 29% increase from 2021,
representing 7% of our total worldwide revenue.
Since the onset of COVID-19, online travel agencies, including ourselves, have reduced marketing spend on trivago.
In response, trivago has reduced its own marketing spend and lowered operating costs to preserve profitability. We expect
trivago to continue to experience revenue pressure going forward.
Seasonality
We generally experience seasonal fluctuations in the demand for our travel services. For example, traditional leisure
travel bookings are generally the highest in the first three quarters as travelers plan and book their spring, summer and
winter holiday travel. The number of bookings typically decreases in the fourth quarter. Since revenue for most of our
travel services, including merchant and agency hotel, is recognized as the travel takes place rather than when it is booked,
revenue typically lags bookings by several weeks for our hotel business and can be several months or more for our
alternative accommodations business. Historically, Vrbo has seen seasonally stronger bookings in the first quarter of the
year, with the relevant stays occurring during the peak summer travel months. The seasonal revenue impact is exacerbated
with respect to income by the nature of our variable cost of revenue and direct sales and marketing costs, which we
typically realize in closer alignment to booking volumes, and the more stable nature of our fixed costs. As a result on a
consolidated basis, revenue and income are typically the lowest in the first quarter and highest in the third quarter.
33
The growth in our B2B segment, international operations, advertising business or a change in our product mix,
among others, may also influence the typical trend of seasonality in the future. Significantly higher cancellations and
reduced booking volumes from COVID-19 disrupted our typical seasonal pattern for bookings, revenue, profit and cash
flows from 2020 through early 2022, but have generally returned to historic seasonality.
Critical Accounting Policies and Estimates
Critical 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 amounts 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 critical 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.
For more information on each of these policies, see NOTE 2 — Significant Accounting Policies, in the notes to
consolidated financial statements. We discuss information about the nature and rationale for our critical accounting
estimates below.
Accounting for Certain Merchant Revenue
We accrue the cost of certain merchant revenue based on the amount we expect to be billed by suppliers. In certain
instances when a supplier invoices us for less than the cost we accrued, we generally reduce our merchant accounts payable
and the supplier costs within net revenue six months in arrears, net of an allowance, when we determine it is not probable
that we will be required to pay the supplier, based on historical experience. Actual revenue could be greater or less than the
amounts estimated due to changes in hotel billing practices or changes in traveler behavior.
Deferred Loyalty Rewards
We currently offer certain internally administered traveler loyalty programs to our travelers, such as our Hotels.com
Rewards program, our Expedia Rewards program and our Orbitz Rewards program. Hotels.com Rewards offers travelers
one free night at any Hotels.com partner property after that traveler stays 10 nights, subject to certain restrictions. Expedia
Rewards enables participating travelers to earn points on all hotel, flight, package and activities made on various Brand
Expedia websites. Orbitz Rewards allows travelers to earn Orbucks, the currency of Orbitz Rewards, on flights, hotels and
vacation packages and instantly redeem those Orbucks on future bookings at various hotels worldwide. In 2021, we
announced plans to unify and expand our existing loyalty programs into one global rewards platform called "One Key"
spanning all our main brands, which we expect to launch in 2023. As travelers accumulate points towards free travel
products, we defer the relative standalone selling price of earned points, net of expected breakage, as deferred loyalty
rewards within deferred merchant bookings on the consolidated balance sheet. In order to estimate the standalone selling
price of the underlying services on which points can be redeemed for all loyalty programs, we use an adjusted market
assessment approach and consider the redemption values expected from the traveler. We then estimate the number of
rewards that will not be redeemed based on historical activity in our members' accounts as well as statistical modeling
techniques. Revenue is recognized when we have satisfied our performance obligation relating to the points, that is when
the travel service purchased with the loyalty award is satisfied. Both the actual standalone selling price of the underlying
services and ultimate redemption rates could differ materially from our estimates due to a number of factors, including
fluctuations in reward value, product utilization and divergence from historical member behavior.
Recoverability of Goodwill and Indefinite and Definite-Lived Intangible Assets
34
Goodwill. We assess goodwill for impairment annually as of October 1, or more frequently, if events and
circumstances indicate impairment may have occurred. During 2020, as a result of the significant turmoil related to
COVID-19, we concluded that sufficient indicators existed to require us to perform multiple interim impairment
assessments. In the evaluation of goodwill for impairment, we typically perform a quantitative assessment and compare the
fair value of the reporting unit to the carrying value and, if applicable, record an impairment charge 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 generally base our measurement of fair value of reporting units, except for trivago, which is a separately listed
company on the Nasdaq Global Select Market, on a blended analysis of the present value of future discounted cash flows
and market valuation approach with the exception of our standalone publicly traded subsidiary, which is based on market
valuation. 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 estimates in the discounted cash
flows model include: our weighted average cost of capital; long-term rate of growth and profitability of our business; and
working capital effects. The market valuation approach indicates the fair value of the business based on a comparison of
the Company to comparable publicly traded firms in similar lines of business. Our significant estimates in the market
approach model include identifying similar companies with comparable business factors such as size, growth, profitability,
risk and return on investment and assessing comparable revenue and operating income multiples in estimating the fair
value of the reporting units. The fair value estimate for the trivago reporting unit was based on trivago's stock price, a Level
1 input, adjusted for an estimated control premium.
We believe the weighted use of discounted cash flows and market approach is the best method for determining the
fair value of our reporting units because these are the most common valuation methodologies used within the travel and
internet industries; and the blended use of both models compensates for the inherent risks associated with either model if
used on a stand-alone basis.
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 the Company’s total fair value of equity plus debt as of the assessment
date. Our equity value assumes our fully diluted 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.
Indefinite-Lived Intangible Assets. We base our measurement of fair value of indefinite-lived intangible assets, which
primarily consist of trade name and trademarks, using the relief-from-royalty method. This method assumes that the trade
name and trademarks have value to the extent that their owner is relieved of the obligation to pay royalties for the benefits
received from them. This method requires us to estimate the future revenue for the related brands, the appropriate royalty
rate and the weighted average cost of capital.
Definite-Lived Intangible Assets. We review the carrying value of long-lived assets or asset groups 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 would 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 will 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.
The use of different estimates or assumptions in determining the fair value of our goodwill, indefinite-lived and
definite-lived intangible assets may result in different values for these assets, which could result in an impairment or, in the
period in which an impairment is recognized, could result in a materially different impairment charge.
35
For additional information on our goodwill and intangible asset impairments recorded in 2022, 2021 and 2020, see
NOTE 3 — Fair Value Measurements in the notes to the consolidated financial statements.
Income Taxes
We record income taxes under the liability method. Deferred tax assets and liabilities reflect our estimation of the
future tax consequences of temporary differences between the carrying amounts of assets and liabilities for book and tax
purposes. We determine deferred income taxes based on the differences in accounting methods and timing between
financial statement and income tax reporting. Accordingly, we determine the deferred tax asset or liability for each
temporary difference based on the enacted tax rates expected to be in effect when we realize the underlying items of
income and expense.
We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including our
recent earnings experience by jurisdiction, expectations of future taxable income, and the carryforward periods available to
us for tax reporting purposes, as well as other relevant factors. We may establish a valuation allowance to reduce deferred
tax assets to the amount we believe is more likely than not to be realized. Due to inherent complexities arising from the
nature of our businesses, future changes in income tax law, tax sharing agreements or variances between our actual and
anticipated operating results, we make certain judgments and estimates. Therefore, actual income taxes could materially
vary from these estimates. All deferred income taxes are classified as long-term on our consolidated balance sheets.
We account for uncertain tax positions based on a two-step process of evaluating recognition and measurement
criteria. The first step assesses whether the tax position is more likely than not to be sustained upon examination by the tax
authority, including resolution of any appeals or litigation, based on the technical merits of the position. If the tax position
meets the more likely than not criteria, the portion of the tax benefit greater than 50% likely to be realized upon settlement
with the tax authority is recognized in the financial statements. The ultimate resolution of these tax positions may be
greater or less than the liabilities recorded.
Other Long-Term Liabilities
Various Legal and Tax Contingencies. We record liabilities to address potential exposures related to business and tax
positions we have taken that have been or could be challenged by taxing authorities. In addition, we record liabilities
associated with legal proceedings and lawsuits. These liabilities are recorded when the likelihood of payment is probable
and the amounts can be reasonably estimated. The determination for required liabilities is based upon analysis of each
individual tax issue, or legal proceeding, taking into consideration the likelihood of adverse judgments and the range of
possible loss. In addition, our analysis may be based on discussions with outside legal counsel. The ultimate resolution of
these potential tax exposures and legal proceedings may be greater or less than the liabilities recorded.
Occupancy and Other Taxes. Some states and localities impose taxes (e.g. transient occupancy, accommodation tax,
sales tax and/or business privilege tax) on the use or occupancy of hotel accommodations or other traveler services.
Generally, hotels collect taxes based on the rate paid to the hotel and remit these taxes to the various tax authorities. When
a customer books a room through one of our travel services, we collect a tax recovery charge from the customer which we
pay to the hotel. We calculate the tax recovery charge by applying the applicable tax rate supplied to us by the hotels to the
amount that the hotel has agreed to receive for the rental of the room by the consumer. In most jurisdictions, we do not
collect or remit taxes, nor do we pay taxes to the hotel operator, on the portion of the customer payment we retain. Some
jurisdictions have questioned our practice in this regard. While the applicable tax provisions vary among the jurisdictions,
we generally believe that we are not required to pay such taxes. A limited number of taxing jurisdictions have made similar
claims against certain of our companies for tax amounts due on the rental amounts charged by owners of alternative
accommodations properties or for taxes on our services. We are an intermediary between a traveler and a party renting an
alternative accommodations property and we believe are similarly not liable for such taxes. We are engaged in discussions
with tax authorities in various jurisdictions to resolve these issues. Some tax authorities have brought lawsuits or have
levied assessments asserting that we are required to collect and remit tax. The ultimate resolution in all jurisdictions cannot
be determined at this time. Certain jurisdictions may require us to pay tax assessments, including occupancy and other
transactional tax assessments, prior to contesting any such assessments.
We have established a reserve for the potential settlement of issues related to hotel occupancy and other tax litigation
for prior and current periods, consistent with applicable accounting principles and in light of all current facts and
circumstances. A variety of factors could affect the amount of the liability (both past and future), which factors include, but
36
are not limited to, the number of, and amount of revenue represented by, jurisdictions that ultimately assert a claim and
prevail in assessing such additional tax or negotiate a settlement and changes in relevant statutes.
We note that there are more than 10,000 taxing jurisdictions in the United States, and it is not feasible to analyze the
statutes, regulations and judicial and administrative rulings in every jurisdiction. Rather, we have obtained the advice of
state and local tax experts with respect to tax laws of certain states and local jurisdictions that represent a large portion of
our hotel revenue. Many of the statutes and regulations that impose these taxes were established before the emergence of
the internet and ecommerce. Certain jurisdictions have enacted, and others may enact, legislation regarding the imposition
of taxes on businesses that facilitate the booking of hotel or alternative accommodations. We continue to work with the
relevant tax authorities and legislators to clarify our obligations under new and emerging laws and regulations. We will
continue to monitor the issue closely and provide additional disclosure, as well as adjust the level of reserves, as
developments warrant. Additionally, certain of our businesses are involved in tax related litigation, which is discussed in
Part I, Item 3, Legal Proceedings.
New Accounting Pronouncements
For a discussion of new accounting pronouncements, see NOTE 2 — Significant Accounting Policies in the notes to
consolidated financial statements.
Occupancy and Other Taxes
We are currently involved in eight lawsuits brought by or against states, cities and counties over issues involving the
payment of hotel occupancy and other taxes. We continue to defend these lawsuits vigorously. With respect to the principal
claims in these matters, we believe that the statutes and/or ordinances at issue do not apply to us or the services we provide,
namely the facilitation of travel planning and reservations, and, therefore, that we do not owe the taxes that are claimed to
be owed. We believe that the statutes and ordinances at issue generally impose occupancy and other taxes on entities that
own, operate or control hotels (or similar businesses) or furnish or provide hotel rooms or similar accommodations.
For additional information and other recent developments on these and other legal proceedings, see Part I, Item 3,
Legal Proceedings.
We have established a reserve for the potential settlement of issues related to hotel occupancy and other tax
litigation, consistent with applicable accounting principles and in light of all current facts and circumstances, in the amount
of $44 million as of December 31, 2022 and $50 million as of December 31, 2021.
Certain jurisdictions, including without limitation the states of New York, New Jersey, North Carolina, Minnesota,
Oregon, Rhode Island, Maryland, Pennsylvania, Hawaii, Iowa, Massachusetts, Arizona, Wisconsin, Idaho, Arkansas,
Indiana, Maine, Nebraska, Vermont, Mississippi, Virginia, the city of New York, and the District of Columbia, have
enacted legislation seeking to tax online travel company services as part of sales or other taxes for hotel and/or other
accommodations and/or car rental. In addition, in certain jurisdictions, we have entered into voluntary collection
agreements pursuant to which we have agreed to voluntarily collect and remit taxes to state and/or local taxing
jurisdictions. We are currently remitting taxes to a number of jurisdictions, including without limitation the states of New
York, New Jersey, South Carolina, North Carolina, Minnesota, Georgia, Wyoming, West Virginia, Oregon, Rhode Island,
Montana, Maryland, Kentucky, Maine, Pennsylvania, Hawaii, Iowa, Massachusetts, Arizona, Wisconsin, Idaho, Arkansas,
Indiana, Nebraska, Vermont, Colorado, Mississippi, Virginia, the city of New York and the District of Columbia, as well as
certain other jurisdictions.
Pay-to-Play
Certain jurisdictions may assert that we are required to pay any assessed taxes prior to being allowed to contest or
litigate the applicability of the ordinances. This prepayment of contested taxes is referred to as “pay-to-play.” Payment of
these amounts is not an admission that we believe we are subject to such taxes and, even when such payments are made, we
continue to defend our position vigorously. If we prevail in the litigation, for which a pay-to-play payment was made, the
jurisdiction collecting the payment will be required to repay such amounts and also may be required to pay interest.
However, any significant pay-to-play payment or litigation loss could negatively impact our liquidity.
Other Jurisdictions. We are also in various stages of inquiry or audit with various tax authorities, some of which,
including the City of Los Angeles regarding hotel occupancy taxes, may impose a pay-to-play requirement to challenge an
adverse inquiry or audit result in court.
37
Segments
We have the following reportable segments: Retail, B2B, and trivago. Our Retail segment provides a full range of
travel and advertising services to our worldwide customers through a variety of consumer brands including: Expedia.com
and Hotels.com in the United States and localized Expedia and Hotels.com websites throughout the world, Vrbo, Orbitz,
Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com, and CarRentals.com. Our B2B segment is comprised of
Expedia Partner Solutions, which offers private label and co-branded products to make travel services available to travelers
through third-party company branded websites, and, through its sale in November 2021, Egencia, a full-service travel
management company that provided travel services to businesses and their corporate customers. Our trivago segment
generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from
its hotel metasearch websites.
Operating Metrics
Our operating results are affected by certain metrics, such as gross bookings and revenue margin, which we believe
are necessary for understanding and evaluating us. Gross bookings generally represent the total retail value of transactions
booked for agency and merchant transactions, recorded at the time of booking reflecting the total price due for travel by
travelers, including taxes, fees and other charges, and are reduced for cancellations and refunds. Revenue margin is defined
as revenue as a percentage of gross bookings.
Gross Bookings and Revenue Margin
Gross Bookings
Gross bookings
Revenue margin (1)
___________________________________
(1)
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
($ in millions)
$
95,049
$
72,425
$
36,796
31 %
97 %
12.3 %
11.9 %
14.1 %
trivago, which is comprised of a hotel metasearch business that differs from our transaction-based websites, does
not have associated gross bookings or revenue margin. However, third-party revenue from trivago is included in
revenue used to calculate total revenue margin.
Gross bookings increased 31% in 2022 compared to 2021 as gross bookings for lodging, air and other travel products
grew as travel demand continued to recover.
Revenue margin in 2022 was higher than 2021 as a result of improved margins at our lodging business.
Results of Operations
Revenue
Revenue by Segment
Retail
B2B
trivago (Third-party revenue)
Corporate (Bodybuilding.com)
Total revenue
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
($ in millions)
$
$
8,741 $
2,546
380
—
11,667 $
6,821 $
1,460
317
—
8,598 $
3,993
942
205
59
5,199
28 %
74 %
20 %
N/A
36 %
71 %
55 %
54 %
N/A
65 %
Similar to the gross bookings increase, revenue increased 36% in 2022 compared to 2021, with all segment's growth
reflecting the continued improvement in travel demand.
38
Revenue by Service Type
Lodging
Air
Advertising and media(1)
Other
Total revenue
___________________________________
Year Ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
($ in millions)
$
8,905 $
6,449 $
4,051
362
777
1,623
254
603
1,292
105
405
638
$
11,667 $
8,598 $
5,199
38 %
43 %
29 %
25 %
36 %
59 %
141 %
49 %
103 %
65 %
(1)
Includes third-party revenue from trivago as well as our transaction-based websites.
Lodging revenue increased 38% in 2022 on a 29% increase in room nights stayed and as well as stayed ADR growth
of 7%.
Air revenue increased 43% in 2022 driven by an increase in air tickets sold of 8% and revenue per ticket of 32% due
primarily to higher average ticket prices of 30% and an increased mix of international tickets.
Advertising and media revenue increased 29% in 2022 due to increases at both Expedia Group Media Solutions and
trivago. All other revenue, which includes car rental, insurance, destination services, fee revenue related to our corporate
travel business (through Egencia's sale in November 2021), increased 25% in 2022 from growth in travel insurance
products as well as car.
In addition to the above segment and product revenue discussion, our revenue by business model is as follows:
Revenue by Business Model
Merchant
Agency
Advertising, media and other
Total revenue
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
($ in millions)
$
$
7,762 $
2,994
911
11,667 $
5,537 $
2,307
754
8,598 $
3,261
1,267
671
5,199
40 %
30 %
21 %
36 %
70 %
82 %
12 %
65 %
The increase in merchant revenue in 2022 was primarily due to an increase in merchant hotel revenue driven by an
increase in room nights stayed as well as increases in merchant alternative accommodations revenue and travel insurance
revenue.
The increase in agency revenue in 2022 was primarily due to an increase in agency hotel, air and alternative
accommodations.
Advertising, media and other increased 21% in 2022 compared to 2021 primarily due to an increase in advertising
revenue.
39
Cost of Revenue
Direct costs
Personnel and overhead
Total cost of revenue
% of revenue
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
$
1,353
304
1,657
14.2 %
($ in millions)
1,118
$
404
1,522
17.7 %
$
$
$
1,148
501
1,649
31.7 %
21 %
(25) %
9 %
(3) %
(19) %
(8) %
Cost of revenue primarily consists of direct costs to support our customer operations, including our customer support
and telesales as well as fees to air ticket fulfillment vendors; credit card processing, including merchant fees, fraud and
chargebacks; and other costs, primarily including data center and cloud costs to support our websites, supplier operations,
destination supply, certain transactional level taxes, costs related to Bodybuilding.com during our period of ownership as
well as related personnel and overhead costs, including stock-based compensation.
Cost of revenue increased $135 million during 2022 compared to 2021, primarily due to higher merchant fees, cloud
costs and customer service costs as a result of increased transaction volumes, which offset lower personnel costs related to
the sale of Egencia in November 2021.
Selling and Marketing
Direct costs
Indirect costs
Total selling and marketing
% of revenue
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
$
5,428
672
6,100
($ in millions)
3,499
$
722
$
4,221
$
$
1,728
799
2,527
52.3 %
49.1 %
48.6 %
55 %
(7) %
45 %
103 %
(10) %
67 %
Selling and marketing expense primarily relates to direct costs, including traffic generation costs from search engines
and internet portals, television, radio and print spending, private label and affiliate program commissions, public relations
and other costs. The remainder of the expense relates to indirect costs, including personnel and related overhead in our
various brands and global supply organization as well as stock-based compensation costs.
Selling and marketing expenses increased $1.9 billion during 2022 compared to 2021 primarily driven by an increase
in B2B partner commissions as well as increased spend in Retail marketing channels. In addition, the decrease in indirect
costs in the current year was primarily driven by lower personnel costs related to the sale of Egencia in November 2021 as
well as lower stock-based compensation.
Technology and Content
Personnel and overhead
Other
Total technology and content
% of revenue
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
$
874
307
1,181
10.1 %
($ in millions)
785
$
289
1,074
12.5 %
$
$
$
744
324
1,068
20.5 %
11 %
6 %
10 %
6 %
(11) %
1 %
Technology and content expense includes product development and content expense, as well as information
technology costs to support our infrastructure, back-office applications and overall monitoring and security of our
networks, and is principally comprised of personnel and overhead, including stock-based compensation, as well as other
costs including cloud expense and licensing and maintenance expense.
40
Technology and content expense increased $107 million for 2022 compared to 2021 primarily due to higher
personnel costs due to increased headcount as well as an increase in average salaries, including the prior year's
compensation change, which shifted discretionary bonuses to salary beginning in the second quarter of 2021.
General and Administrative
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
Personnel and overhead
Professional fees and other
Total general and administrative
% of revenue
$
$
($ in millions)
562
$
143
705
8.2 %
$
$
$
591
157
748
6.4 %
434
155
589
11.3 %
5 %
9 %
6 %
30 %
(8) %
20 %
General and administrative expense consists primarily of personnel-related costs, including our executive leadership,
finance, legal and human resource functions and related stock-based compensation, as well as fees for external professional
services.
General and administrative expense increased $43 million in 2022 compared to 2021 primarily due to higher
personnel costs due to increased headcount as well as an increase in average salaries, including the prior year's
compensation change, which shifted discretionary bonuses to salary beginning in the second quarter of 2021.
Depreciation and Amortization
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
($ in millions)
Depreciation
Amortization of intangible assets
Total depreciation and amortization
$
$
704 $
88
792 $
715 $
99
814 $
739
154
893
(2) %
(11) %
(3) %
(3) %
(36) %
(9) %
Depreciation decreased $11 million in 2022 compared to 2021. Amortization of intangible assets decreased $11
million in 2022 compared to 2021 primarily due to the completion of amortization related to certain intangible assets.
Impairment of Goodwill, Intangible and Other Long-term Assets
During 2022, we recognized intangible impairment charges of $81 million related to an indefinite-lived trade name
within our trivago segment. During 2021, we recognized a goodwill impairment charge of $14 million and intangible and
other long-term asset impairment charges of $6 million related to our B2B segment. See NOTE 3 — Fair Value
Measurements in the notes to the consolidated financial statements for further information.
Legal Reserves, Occupancy Tax and Other
Legal reserves, occupancy tax and other
$
23 $
1 $
(13)
N/A
N/A
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
($ in millions)
Legal reserves, occupancy tax and other primarily consists of increases in our reserves for court decisions and the
potential and final settlement of issues related to hotel occupancy and other taxes, expenses recognized related to monies
paid in advance of occupancy and other tax proceedings (“pay-to-play”) as well as certain other legal reserves.
Legal reserves, occupancy tax and other for year ended December 31, 2022 primarily included charges related to
certain other legal reserves for trivago as described in NOTE 15 — Commitments and Contingencies in the notes to the
consolidated financial statements. Legal reserves, occupancy tax and other for year ended December 31, 2021 included a
charge for certain other legal reserves, mostly offset by net reductions to our reserve related to hotel occupancy and other
taxes.
41
Restructuring and Related Reorganization Charges
In 2020, we committed to restructuring actions intended to simplify our businesses and improve operational
efficiencies, which resulted in headcount reductions and office consolidations. As a result, we recognized $55 million in
restructuring and related reorganization charges during 2021. We did not recognize any such costs in 2022, but we continue
to actively evaluate additional cost reduction efforts and should we make decisions in future periods to take further actions
we may incur additional reorganization charges.
Operating Income (Loss)
Operating income (loss)
% of revenue
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
1,085
9.3 %
($ in millions)
186
$
2.2 %
$
(2,719)
484 %
N/A
(52.3) %
In 2022, the improvement in operating income was primarily due to growth in revenue in excess of operating costs.
Adjusted EBITDA by Segment
Retail
B2B(1)
trivago
Unallocated overhead costs (Corporate)(2)
Total Adjusted EBITDA(3)
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
($ in millions)
$
2,124 $
1,782 $
599
113
110
39
(487)
(454)
$
2,349 $
1,477 $
298
(190)
(14)
(462)
(368)
19 %
445 %
191 %
7 %
59 %
498 %
N/A
N/A
(2) %
N/A
______________________________________
(1) Includes operating results of Egencia through its sale in November 2021.
(2) Includes immaterial operating results of Bodybuilding.com through its sale in May 2020.
(3) Adjusted EBITDA is a non-GAAP measure. See "Definition and Reconciliation of Adjusted EBITDA" below for
more
information.
Adjusted EBITDA is our primary segment operating metric. See NOTE 18 — Segment Information in the notes to
the consolidated financial statements for additional information on intersegment transactions, unallocated overhead costs
and for a reconciliation of Adjusted EBITDA by segment to net income (loss) attributable to Expedia Group, Inc. for the
periods presented above.
Our Retail, B2B and trivago segments all experienced improvements in Adjusted EBITDA in 2022 as a result of the
recovering travel demand. In addition, the B2B segment improved in part due to the absence of the prior year Adjusted
EBITDA loss related to Egencia. Unallocated overhead costs increased $33 million during 2022 primarily due to an
increase in general and administrative expenses.
Interest Income and Expense
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
($ in millions)
Interest income
Interest expense
Gain (loss) on debt extinguishment, net
60 $
(277)
49
9 $
(351)
(280)
18
(360)
—
543 %
(21) %
N/A
(48) %
(2) %
N/A
Interest income increased in 2022 compared to 2021 as a result of higher rates of return. Interest expense decreased
in 2022 compared to 2021, as a result of lower average senior notes outstanding in the current year.
42
During 2022, we settled a tender offer to purchase $500 million in aggregate principal of our 2.95% senior unsecured
notes, which resulted in the recognition of a net gain on debt extinguishment of $73 million. In addition, as a result of the
early redemption of the 3.6% and 4.5% senior unsecured notes in 2022, we recognized a loss on debt extinguishment of
$24 million. See NOTE 7 — Debt in the notes to the consolidated financial statements for further information.
As a result of debt refinancing transactions during 2021, we recognized a loss on debt extinguishment of $280
million, which included the payment of early payment premiums and fees as well as the write-off of unamortized debt
issuance costs.
Gain (Loss) on Sale of Business, Net
In 2022, we recognized an immaterial gain of $6 million primarily related to the sale of Egencia in the prior year. In
2021, we had a net gain on sale of businesses of $456 million. In November 2021, we completed the sale of Egencia to
GBT and, as a result, we recognized a $401 million gain on the sale. Additionally, in 2021, we completed the sale of
certain of our smaller businesses within our Retail segment, which resulted in net gains of $57 million. For additional
information on these and other transactions, see NOTE 16 – Divestitures in the notes to the consolidated financial
statements.
Other, Net
Other, net is comprised of the following:
Foreign exchange rate gains (losses), net
Gains (losses) on minority equity investments, net
Other
Total other, net
Year ended December 31,
2022
2021
(In millions)
2020
$
$
(40) $
(345)
—
(385) $
(48) $
(29)
19
(58) $
71
(142)
(6)
(77)
During 2022, losses on minority equity investments, net included $300 million of losses related to mark-to-market
adjustments in the fair value for our GBT investment as well as $45 million related to changes in our publicly traded
marketable equity investment, Despegar. During 2021, losses on minority equity investments, net related to changes in our
Despegar investment. See NOTE 3 — Fair Value Measurements in the notes to the consolidated financial statements for
further information.
Provision for Income Taxes
Provision for income taxes
Effective tax rate
Year ended December 31,
% Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
$
195
36.2 %
($ in millions)
(53)
$
139.9 %
$
(423)
13.4 %
N/A
(88) %
Our effective tax rate for 2022 was higher than the 21% federal statutory income tax rate due to a valuation
allowance on minority investments and nondeductible compensation, partially offset by research and experimentation
credits. Our effective tax rate for 2021 was higher than the 21% federal statutory income tax rate due to excess tax benefits
related to stock-based compensation, release of valuation allowance and research and experimentation credits, partially
offset by nondeductible compensation, measured against a pre-tax loss. For additional information, see NOTE 10 —
Income Taxes in the notes to the consolidated financial statements.
We are subject to taxation in the United States and foreign jurisdictions. Our income tax filings are regularly
examined by federal, state and foreign tax authorities. During the fourth quarter of 2019, the Internal Revenue Service
(“IRS”) issued final adjustments related to transfer pricing with our foreign subsidiaries for our 2011 to 2013 tax years. The
adjustments would increase our U.S. taxable income by $696 million, which would result in federal tax of approximately
$244 million, subject to interest. We do not agree with the position of the IRS. We have formally filed a protest for our
2011 to 2013 tax years and the case has been transferred to Appeals. During the fourth quarter of 2022, the IRS issued
similar proposed adjustments related to transfer pricing with our foreign subsidiaries for our 2014 to 2016 tax years. The
adjustments would increase our U.S. taxable income by $1.413 billion, which would result in federal tax of approximately
$494 million, subject to interest. The proposed adjustments provided by the IRS exclude any offsetting adjustments that
43
may reduce the amount of federal tax. We do not agree with the position of the IRS and intend to formally protest. We are
also under examination by the IRS for our 2017-2020 years. We believe it is reasonably possible that the audit of the 2011
and 2013 tax years will conclude within the next 12 months. For more detail on our tax risk factors, see Part I, Item 1A,
Risk Factors - "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, financial performance, results of operations or business
growth” and “Application of existing tax laws, rules or regulations are subject to interpretation by taxing authorities.”
Definition and Reconciliation of Adjusted EBITDA
We report Adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles ("GAAP").
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 GAAP, but should not be considered a substitute for or superior to GAAP. Adjusted EBITDA has certain
limitations in that it does not take into account 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 the most directly
comparable GAAP measure and a description of the reconciling items and adjustments to derive the non-GAAP measure.
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 above, in the Legal Proceedings
section, as well as the notes to the financial statements. The non-GAAP financial measure used by the Company may be
calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies.
Adjusted EBITDA is defined as net income (loss) attributable to Expedia Group, Inc. adjusted for (1) net income
(loss) attributable to non-controlling interests; (2) provision for income taxes; (3) total other expenses, net; (4) stock-based
compensation expense, including compensation expense related to certain subsidiary equity plans; (5) acquisition-related
impacts, including (i) amortization of intangible assets and goodwill and intangible asset impairment, (ii) gains (losses)
recognized on changes in the value of contingent consideration arrangements, if any, and (iii) upfront consideration paid to
settle employee compensation plans of the acquiree, if any; (6) certain other items, including restructuring; (7) items
included in legal reserves, occupancy tax and other; (8) that portion of gains (losses) on revenue hedging activities that are
included in other, net that relate to revenue recognized in the period; and (9) depreciation.
The above items are excluded from our Adjusted EBITDA measure because these items are noncash in nature, or
because the amount and timing of these items is unpredictable, not driven by core operating results and renders
comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA is a useful measure for
analysts and investors to evaluate our future on-going 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, 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, from which capital investments are made and debt is serviced.
44
The reconciliation of net income (loss) attributable to Expedia Group, Inc. to Adjusted EBITDA is as follows:
Net income (loss) attributable to Expedia Group, Inc.
$
Net income (loss) attributable to non-controlling interests
Provision for income taxes
Total other expense, net
Operating income (loss)
Gain (loss) on revenue hedges related to revenue recognized
Restructuring and related reorganization charges
Legal reserves, occupancy tax and other
Stock-based compensation
Depreciation and amortization
Impairment of goodwill
Intangible and other long-term asset impairment
Year ended December 31,
2022
2021
(In millions)
2020
352 $
(9)
195
547
1,085
(6)
—
23
374
792
—
81
12 $
(2,612)
3
(53)
224
186
(17)
55
1
418
814
14
6
(116)
(423)
432
(2,719)
61
231
(13)
205
893
799
175
Adjusted EBITDA
$
2,349 $
1,477 $
(368)
Financial Position, Liquidity and Capital Resources
Our principal sources of liquidity are typically cash flows generated from operations, cash available under our credit
facility as well as our cash and cash equivalents and short-term investment balances, which were $4.1 billion and $4.3
billion at December 31, 2022 and 2021. Our revolving credit facility with aggregate commitments of $2.5 billion was
essentially untapped at December 31, 2022.
As of December 31, 2022, the total cash and cash equivalents and short-term investments held outside the United
States was $770 million ($456 million in wholly-owned foreign subsidiaries and $314 million in majority-owned
subsidiaries). The amount of undistributed earnings in foreign subsidiaries where the foreign subsidiary has or will invest
undistributed earnings indefinitely outside of the Unites States, and for which future distributions could be taxable, was $65
million as of December 31, 2022. The unrecognized deferred tax liability related to the U.S. federal income tax
consequences of these earnings was $17 million as of December 31, 2022.
In 2022, we took the following action to reduce our debt outstanding:
• Redemption of 2.5% Senior Notes. In March 2022, we early redeemed all of the €650 million of outstanding
aggregate principal amount of our 2.5% senior notes due in June 2022. The redemption price for the 2.5% senior
notes equaled 100% of the aggregate principal amount thereof plus accrued and unpaid interest thereon through
the redemption date.
• Redemption of 3.6% and 4.5% Senior Notes. In May 2022, we early redeemed all of our $500 million 3.6% senior
notes due 2023, and in June 2022, we early redeemed all of our $500 million 4.5% senior notes due 2024, which
resulted in the recognition of a loss on debt extinguishment of $24 million primarily comprised of “make-whole”
premiums as well as the write-off of unamortized discount and debt issuance costs.
• Redemption of 2.95% Senior Notes. In September 2022, we settled the tender offer to purchase $500 million in
aggregate principal of our 2.95% senior notes due 2031 for an aggregate cash repurchase price of approximately
$418 million, which resulted in the recognition of a net gain on debt extinguishment of $73 million. The net gain
included the write-off of unamortized discount and debt issuance costs as well as related fees.
Our credit ratings are periodically reviewed by rating agencies. As of December 31, 2022, Moody’s rating was Baa3
with an outlook of “stable,” S&P’s rating was BBB- with an outlook of “stable” and Fitch’s rating was BBB- with an
outlook of “stable.” Changes in our operating results, cash flows, financial position, capital structure, financial policy or
capital allocations to share repurchase, dividends, investments and acquisitions could impact the ratings assigned by the
various rating agencies. Should our credit ratings be adjusted downward, we may incur higher costs to borrow and/or
45
limited access to capital markets and interest rates on our 6.25% senior notes, 4.625% senior notes as well as our 2.95%
senior notes will increase, which could have a material impact on our financial condition and results of operations.
As of December 31, 2022, we were in compliance with the covenants and conditions in our revolving credit facilities
and outstanding debt as detailed in NOTE 7 — Debt in the notes to the consolidated financial statements.
Under the merchant model, we receive cash from travelers at the time of booking and we record these amounts on
our consolidated balance sheets as deferred merchant bookings. We pay our airline suppliers related to these merchant
model bookings generally within a few weeks after completing the transaction. For most other merchant bookings, which is
primarily our merchant lodging business, we generally pay after the travelers’ use and, in some cases, subsequent billing
from the hotel suppliers. Therefore, generally we receive cash from the traveler prior to paying our supplier, and this
operating cycle represents a working capital source of cash to us. Typically, the seasonal fluctuations in our merchant hotel
bookings have affected the timing of our annual cash flows. Generally, during the first half of the year, hotel bookings have
traditionally exceeded stays, resulting in much higher cash flow related to working capital. During the second half of the
year, this pattern typically reverses and cash flows are typically negative. During 2020, impacts of COVID-19 disrupted
our typical working capital trends. Significantly higher cancellations and reduced booking volumes, particularly in the first
half of 2020, resulted in material operating losses and negative cash flow. During 2022, booking and travel trends have
nearly normalized resulting in working capital benefits and positive cash flow in the current period akin to typical historical
trends. However, it remains difficult to forecast the working capital trends for the upcoming quarters, given the uncertainty
related to the full duration and total impact of COVID-19.
Prior to COVID-19, we embarked on an ambitious cost reduction initiative to simplify the organization and increase
efficiency. In response to COVID-19, we took several additional actions to further reduce costs to help mitigate the
financial impact from COVID-19 and continue to improve our long-term cost structure. For 2023, we expect total capital
expenditures for the full year to increase relative to our 2022 spending levels as we look to continue to improve our
technology platforms, infrastructure, operational capabilities, and in the development of service offerings and expansion of
our operations.
Our cash flows are as follows:
Cash provided by (used in) operations:
Operating activities
Investing activities
Financing activities
Effect of foreign exchange rate changes on
cash and cash equivalents
Year ended December 31,
$ Change
2022
2021
2020
2022 vs 2021
2021 vs 2020
(In millions)
$
3,440 $
3,748 $
(3,834) $
(308) $
(580)
(2,624)
(190)
(931)
(973)
(177)
(263)
4,077
351
(1,651)
7,582
(668)
(5,050)
61
(13)
(238)
In 2022, net cash provided by operating activities decreased by $308 million primarily due to a decrease in benefits
from working capital changes driven mostly from a change in deferred merchant booking, which was largely offset by
higher operating income after adjusting for impacts of depreciation and amortization.
In 2022, $351 million less cash was used in investing activities primarily due to net sales and maturities of
investments of $145 million in 2022 compared to net purchases of investments of $178 million in 2021.
Cash used in financing activities in 2022 primarily included payments of $2.2 billion related to the extinguishment of
our 2.5% senior notes, 3.6% senior notes, 4.5% senior notes and the tender offer for a portion of our 2.95% senior notes
discussed above as well as $607 million of cash paid to acquire shares, including the repurchased shares under the
authorizations discussed below and for treasury stock activity related to the vesting of equity instruments. These uses of
cash were partially offset by $131 million of proceeds from the exercise of options and employee stock purchase plans.
Cash used in financing activities in 2021 primarily included payments of approximately $2 billion related to the
extinguishment of debt and $1.2 billion for the redemption of preferred stock as well as $165 million of cash paid for
treasury stock activity related to the vesting of equity instruments and $67 million in preferred stock dividends. These uses
of cash were largely offset by approximately $2 billion of net proceeds from the issuance of convertible notes and 2.95%
senior notes issued in February and March 2021, respectively, as well as $503 million of proceeds from the exercise of
options and employee stock purchase plans.
46
Our Board of Directors and the Executive Committee, pursuant to a delegation of authority from the Board, have
authorized share repurchases under authorized programs. These programs were temporarily halted in early 2020 with the
onset of the COVID-19 pandemic but resumed in the second half of 2022. Shares repurchased under the authorized
programs were as follows:
Number of shares repurchased
Average price per share
Total cost of repurchases (in millions)(1)
______________________________________
(1)
Amount excludes transaction costs.
Year ended December 31,
2022
5.2 million
96.09 $
500 $
$
$
2021
—
— $
— $
2020
3.4 million
109.88
370
As of December 31, 2022, 18.1 million shares remain authorized for repurchase with no fixed termination date for
the repurchases.
During 2022, we didn't pay any common stock dividends. During 2021, while we also didn't pay common stock
dividends, we did pay $67 million (or $74.96 per share of Series A Preferred Stock) of dividends on the Series A Preferred
Stock. At this time, we do not expect to make quarterly dividend payments on our common stock. Future declarations of
dividends are subject to final determination by our Board of Directors.
Foreign exchange rate changes resulted in a decrease of our cash and restricted cash balances denominated in foreign
currency in both 2022 and 2021 of $190 million and $177 million, respectively, reflecting a net depreciation in foreign
currencies relative to the U.S. dollar during each year.
Contractual Obligations and Commercial Commitments. Our material cash requirements as of December 31, 2022
include the following contractual obligations and commercial commitments arising in the normal course of business:
• Principal payments related to our debt that is included in our consolidated balance sheet and the related periodic
interest payments. The Company had Senior Notes and Convertible Notes, as described in NOTE 7 — Debt in the
notes to our consolidated financial statements, with varying maturities and an aggregate principal amount of $6.3
billion, none of which is payable within 12 months. Based on current stated fixed rates, future interest payments
associated with the Senior Notes total approximately $1.1 billion, with approximately $231 million payable within
12 months;
• Our operating leases had fixed lease payment obligations, including imputed interest, of $443 million, with $88
million payable within 12 months; and
• Purchase obligations representing the minimum obligations we have under agreements with certain of our vendors
and marketing partners. These minimum obligations are less than our projected use for those periods, and
payments may be more than the minimum obligations based on actual use. The Company had purchase
obligations of $466 million, with $292 million payable within 12 months.
In addition, we had $284 million of net unrecognized tax benefits recorded on our balance sheet as of December 31,
2022, for which we cannot make a reasonably reliable estimate of the amount and period of payment.
See NOTE 15 — Commitments and Contingencies in the notes to the consolidated financial statements for further
information related to our purchase obligations as well as amounts outstanding as of December 31, 2022 related to letters
of credit and guarantees. Other than the items described above, we do not have any off-balance sheet arrangements as of
December 31, 2022.
In our opinion, our liquidity position provides sufficient capital resources to meet our foreseeable cash needs. There
can be no assurance, however, that the cost or availability of future borrowings, including refinancings, if any, will be
available on terms acceptable to us.
Certain Relationships and Related Party Transactions
For a discussion of certain relationships and related party transactions, see NOTE 17 — Related Party Transactions
in the notes to the consolidated financial statements.
47
Summarized Financial Information for Guarantors and the Issuer of Guaranteed Securities
Summarized financial information of Expedia Group, Inc. (the “Parent”) and our subsidiaries that are guarantors of
our debt facility and instruments (the “Guarantor Subsidiaries”) is shown below on a combined basis as the “Obligor
Group.” The debt facility and instruments are guaranteed by certain of our wholly-owned domestic subsidiaries and rank
equally in right of payment with all of our existing and future unsecured and unsubordinated obligations. The guarantees
are full, unconditional, joint and several with the exception of certain customary automatic subsidiary release provisions. In
this summarized financial information of the Obligor Group, all intercompany balances and transactions between the Parent
and Guarantor Subsidiaries have been eliminated and all information excludes subsidiaries that are not issuers or guarantors
of our debt facility and instruments, including earnings from and investments in these entities.
Combined Balance Sheets Information:
Current Assets
Non-Current Assets
Current Liabilities(1)
Non-Current Liabilities
Combined Statements of Operations Information:
Revenue
Operating income (2)
Net income
Net income attributable to Obligors
December 31, 2022
(In millions)
$
6,720
10,458
10,407
6,777
Year Ended
December 31, 2022
$
9,431
747
150
146
(1)
(2)
Current liabilities include intercompany payables with non-guarantors of $466 million as of December 31, 2022.
Operating income includes intercompany income with non-guarantors of $35 million for the year ended
December 31, 2022.
Part II. Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk Management
Market risk is the potential loss from adverse changes in interest rates, foreign exchange rates and market prices. Our
exposure to market risk includes our long-term debt, our revolving credit facilities, derivative instruments and cash and
cash equivalents, accounts receivable, intercompany receivables, investments, merchant accounts payable and deferred
merchant bookings denominated in foreign currencies. We manage our exposure to these risks through established policies
and procedures. Our objective is to mitigate potential income statement, cash flow and market exposures from changes in
interest and foreign exchange rates.
Interest Rate Risk
As of December 31, 2022 and 2021, the outstanding aggregate principal amount of our debt was $6.3 billion and
$8.5 billion, respectively. As of December 31, 2022, the aggregate principal of our debt included:
•
•
•
•
•
•
•
$1.044 billion of senior unsecured notes due May 2025 that bear interest at 6.25%;
$750 million of senior unsecured notes due February 2026 that bear interest at 5.0%;
$1 billion of convertible senior unsecured notes due February 2026 with a fixed rate of 0% (the “Convertible
Notes”);
$750 million of senior unsecured notes due August 2027 that bear interest at 4.625%;
$1 billion of senior unsecured notes due February 2028 that bear interest at 3.8%;
$1.25 billion of senior unsecured notes due February 2030 that bear interest at 3.25%; and
$500 million of senior unsecured notes due March 2031 that bear interest at 2.95%.
48
The 6.25%, 5.0%, 4.625%, 3.8%, 3.25%, and 2.95% senior unsecured notes are collectively the “Senior Notes.” If
market interest rates decline, our required payments will exceed those based on market rates. Additionally, the 6.25%,
4.625% and 2.95% senior unsecured notes are subject to interest rate adjustments should our credit ratings be adjusted
downwards, which would result in increased interest expense in the future. The total estimated fair value of our Senior
Notes and Convertible Notes was approximately $5.8 billion and $9.2 billion as of December 31, 2022 and December 31,
2021, respectively. The fair value was determined based on quoted market prices in less active markets and is categorized
accordingly as Level 2 in the fair value hierarchy. A 50 basis point increase or decrease in interest rates would decrease or
increase the fair value of our debt by approximately $115 million.
We maintain a revolving credit facility of $2.5 billion, which bears interest based on market rates plus a spread
determined by our credit ratings. Because our interest rate is tied to a market rate, we will be susceptible to fluctuations in
interest rates if, consistent with our practice to date, we do not hedge the interest rate exposure arising from any borrowings
under our revolving credit facilities. We had no revolving credit facilities borrowings outstanding as of both December 31,
2022 and 2021.
Foreign Exchange Risk
We conduct business in certain international markets, primarily in Australia, Canada, China, the United Kingdom,
and the European Union. Because we operate in international markets, we have exposure to different economic climates,
political arenas, tax systems and regulations that could affect foreign exchange rates. Our primary exposure to foreign
currency risk relates to transacting in foreign currency and recording the activity in U.S. dollars. Changes in exchange rates
between the U.S. dollar and these other currencies will result in transaction gains or losses, which we recognize in our
consolidated statements of operations.
To the extent practicable, we minimize our foreign currency exposures by maintaining natural hedges between our
current assets and current liabilities in similarly denominated foreign currencies. Additionally, we use foreign currency
forward contracts to economically hedge certain merchant revenue exposures, foreign denominated liabilities related to
certain of our loyalty programs and our other foreign currency-denominated operating liabilities. These instruments are
typically short-term and are recorded at fair value with gains and losses recorded in other, net. As of December 31, 2022
and 2021, we had net forward assets of $15 million and $3 million, respectively, included in prepaid expenses and other
current assets. We may enter into additional foreign exchange derivative contracts or other economic hedges in the future.
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. We make a number of estimates in
conducting hedging activities including in some cases the level of future bookings, cancellations, refunds, customer stay
patterns and payments in foreign currencies. In the event those estimates differ significantly from actual results, we could
experience greater volatility as a result of our hedges.
In March 2022, we entered into two fixed-to-fixed cross-currency interest rate swaps (“the swaps”) with an aggregate
notional amount of €300 million. The swaps were designated as net investment hedges of Euro assets with the objective to
protect the U.S. dollar value of our net investments in the Euro foreign operations due to movements in foreign currency.
During the term of each contract, we receive interest payments in U.S. dollars at a fixed rate of 5% and make interest
payments in Euros at an average fixed rate of 3.38%. The maturity date of both swaps is February 2026, whereby, we will
receive U.S. dollars from and pay Euros to the contract counterparties. The fair value of the cross-currency interest rate
swaps was a $21 million asset as of December 31, 2022 recorded in long-term investments and other assets.
Future net transaction gains and losses are inherently difficult to predict as they are reliant on how the multiple
currencies in which we transact fluctuate in relation to the U.S. dollar, the relative composition and denomination of
current assets and liabilities each period, and our effectiveness at forecasting and managing, through balance sheet netting
or the use of derivative contracts, such exposures. As an example, if the foreign currencies in which we hold net asset
balances were to all weaken 10% against the U.S. dollar and foreign currencies in which we hold net liability balances were
to all strengthen 10% against the U.S. dollar, we would recognize foreign exchange losses of approximately $31 million
based on our foreign currency forward positions (including the impact of forward positions economically hedging our
merchant revenue exposures) and the net asset or liability balances of our foreign denominated cash and cash equivalents,
accounts receivable, deferred merchant bookings and merchant accounts payable balances as of December 31, 2022. As the
net composition of these balances fluctuate frequently, even daily, as do foreign exchange rates, the example loss could be
compounded or reduced significantly within a given period.
During 2022, 2021 and 2020, we recorded net foreign exchange rate losses of approximately $40 million ($37
million loss excluding the contracts economically hedging our forecasted merchant revenue), net foreign exchange rate
49
losses of approximately $48 million ($37 million loss excluding the contracts economically hedging our forecasted
merchant revenue) and net foreign exchange rate gains of approximately $71 million ($2 million gain excluding the
contracts economically hedging our forecasted merchant revenue). As we increase our operations in international markets,
our exposure to fluctuations in foreign currency exchange rates increases. The economic impact to us of foreign currency
exchange rate movements is linked to variability in real growth, inflation, interest rates, governmental actions and other
factors. These changes, if material, could cause us to adjust our financing and operating strategies.
Equity Investment Risk
We are exposed to equity price risk as it relates to changes in fair values of our investments in equity securities of
publicly-traded companies, investments in which we’ve elected the fair value option, and minority investments without
readily determinable fair values. We recorded net losses of $345 million, $29 million, and $142 million related to these
investments for the years ended December 31, 2022, 2021, and 2020, respectively (See NOTE 3 — Fair Value
Measurements in the notes to the consolidated financial statements for further information). The fair values of our
investments in equity securities of publicly-traded companies (combined with our investments in which we’ve elected the
fair value option) and minority investments without readily determinable fair values, were $564 million and $330 million,
respectively, at December 31, 2022, and $909 million and $330 million, respectively, at December 31, 2021. A
hypothetical 10% decrease in the fair values at December 31, 2022 of our investments in equity securities of publicly-
traded companies and minority investments without readily determinable fair values would have resulted in a loss, before
tax, of approximately $89 million, being recognized within other, net in our consolidated statements of operations.
Part II. Item 8. Consolidated Financial Statements and Supplementary Data
The Consolidated Financial Statements and Schedule listed in the Index to Financial Statements, Schedules and
Exhibits on page F-1 are filed as part of this report.
Part II. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Part II. Item 9A. Controls and Procedures
Changes in Internal Control over Financial Reporting.
There were no changes to our internal control over financial reporting that occurred during the quarter ended
December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.
Evaluation of Disclosure Controls and Procedures.
As required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), our
management, including our Chairman and Senior Executive, Chief Executive Officer and Chief Financial Officer,
evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act). Based upon that evaluation, our Chairman and Senior Executive, Chief Executive
Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure
controls and procedures were effective.
Management’s Report on Internal Control over Financial Reporting.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as
defined in Rule 13a-15(f) of the Exchange Act. Internal control over financial reporting is a process to provide reasonable
assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles
generally accepted in the United States of America. Management conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the criteria for effective control over financial reporting described in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on this evaluation, management has concluded that, as of December 31, 2022, the Company’s internal
control over financial reporting was effective. Management has reviewed its assessment with the Audit Committee. Ernst &
Young, LLP, an independent registered public accounting firm, has audited the effectiveness of our internal control over
financial reporting as of December 31, 2022, as stated in their report which is included below.
50
Limitations on Controls.
Management does not expect that our disclosure controls and procedures or our internal control over financial
reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based
upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further,
no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all
control issues and instances of fraud, if any, within the Company have been detected.
51
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Expedia Group, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Expedia Group, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Expedia Group, Inc. (the Company)
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on
the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related
consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows for each of
the three years in the period ended December 31, 2022, and the related notes and our report dated February 9, 2023
expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal
control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in
all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.
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 (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) 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 (3) 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.
/s/Ernst & Young LLP
Seattle, Washington
February 9, 2023
52
Part II. Item 9B. Other Information
None.
Part II. Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections
Not Applicable.
Part III.
We are incorporating by reference the information required by Part III of this report on Form 10-K from our proxy
statement relating to our 2023 annual meeting of stockholders (the “2023 Proxy Statement”), which will be filed with the
Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2022.
Part III. Item 10. Directors, Executive Officers and Corporate Governance
The information required by this item is included under the captions “Election of Directors — Nominees,” “Election
of Directors — Board Meetings and Committees,” “Information Concerning Executive Officers” and “Delinquent
Section 16(a) Reports” in the 2023 Proxy Statement and incorporated herein by reference.
Part III. Item 11. Executive Compensation
The information required by this item is included under the captions “Election of Directors —Compensation of Non-
Employee Directors,” “Election of Directors — Compensation Committee Interlocks and Insider Participation,”
“Compensation Discussion and Analysis,” “Compensation Committee Report” and “Executive Compensation” in the 2023
Proxy Statement and incorporated herein by reference.
Part III. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this item is included under the captions “Security Ownership of Certain Beneficial
Owners and Management” and “Equity Compensation Plan Information” in the 2023 Proxy Statement and incorporated
herein by reference.
Part III. Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item is included under the captions “Certain Relationships and Related Person
Transactions” and “Board of Directors — Director Independence” in the 2023 Proxy Statement and incorporated herein by
reference.
Part III. Item 14. Principal Accounting Fees and Services
The information required by this item is included under the caption "Fees Paid to Our Independent Registered Public
Accounting Firm" and “Audit Committee Review and Pre-Approval of Independent Registered Public Accounting Firm
Fees” in the 2023 Proxy Statement and incorporated herein by reference.
Part IV. Item 15. Exhibits, Consolidated Financial Statements and Financial Statement Schedules
(a)(1) Consolidated Financial Statements
We have filed the consolidated financial statements listed in the Index to Consolidated Financial Statements,
Schedules and Exhibits on page F-1 as a part of this report.
(a)(2) Financial Statement Schedules
All financial statement schedules have been omitted because they are not applicable, not material or the required
information is shown in the consolidated financial statements or the notes thereto.
(a)(3) Exhibits
The exhibits listed below are filed as part of this Annual Report on Form 10-K.
Exhibit
No.
Exhibit Description
Filed
Herewith
Incorporated by Reference
Form
SEC File No.
Exhibit
Filing Date
53
2.1
2.2
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
Share Purchase Agreement, dated as of
December 21, 2012, by and among Expedia, Inc.,
trivago GmbH, a wholly owned subsidiary of
Expedia and the shareholders of trivago GmbH
party thereto.
Shareholders Agreement, dated as of
December 21, 2012 by and among trivago GmbH,
Expedia, Inc., a wholly owned subsidiary of
Expedia and certain shareholders of trivago
GmbH.
Amended and Restated Certificate of
Incorporation of Expedia Group, Inc., dated as of
December 3, 2019
Amended and Restated By-Laws of Expedia
Group, Inc. dated as of April 15, 2019
Description of Securities
X
Indenture, dated as of December 8, 2015, among
Expedia, Inc., as Issuer, the Subsidiary Guarantors
from time to time parties thereto and The Bank of
New York Mellon Trust Company, N.A., as
Trustee, governing the 5.000% Senior Notes due
2026
Indenture, dated as of September 21, 2017, among
Expedia, Inc., the Subsidiary Guarantors from
time to time parties thereto and U.S. Bank
National Association, as Trustee, governing the
3.800% Senior Notes due 2028
Indenture, dated as of September 19, 2019, among
Expedia Group, Inc., the Subsidiary Guarantors
from time to time parties thereto and U.S. Bank
National Association, as Trustee, governing the
3.25% Senior Notes due 2030.
Indenture, dated as of May 5, 2020, among
Expedia Group, Inc., the Subsidiary Guarantors
from time to time parties thereto and U.S. Bank
National Association governing the 6.250% Notes
due 2025
Indenture, dated as of July 14, 2020, among
Expedia Group, Inc., the Subsidiary Guarantors
from time to time parties thereto and U.S. Bank
National Association governing the 4.625% Senior
Notes due 2027
Indenture, dated as of February 19, 2021 among
Expedia Group, Inc., the Subsidiary Guarantors
from time to time parties thereto and U.S. Bank
National Association governing the 0%
Convertible Notes due 2026
Indenture, dated as of March 3, 2021, among
Expedia Group, Inc., the Subsidiary Guarantors
from time to time parties thereto and U.S. Bank
National Association governing the 2.95% Senior
Notes due 2031
8-K
000-51447
2.1
12/21/2012
8-K
000-51447
2.2
12/21/2012
8-K
001-37429
3.1
12/4/2019
8-K
001-37429
3.1
4/16/2019
8-K
001-37429
4.1
12/8/2015
8-K
001-37429
4.1
9/21/2017
8-K
001-37429
4.1
9/20/2019
8-K
001-37429
4.1
5/5/2020
8-K
001-37429
4.2
7/15/2020
8-K
001-37429
4.1
2/19/2021
8-K
001-37429
4.1
3/3/2021
10.1
Tax Sharing Agreement by and between Expedia,
Inc. and TripAdvisor, Inc., dated as of
December 20, 2011
8-K
000-51447
10.2
12/27/2011
54
10.2
10.3
10.4
10.5
10.6
10.7
10.8
Second Amended and Restated Governance
Agreement by and between Expedia Group, Inc.
and Barry Diller, dated as of April 15, 2019
Amendment No. 1 to Second Amended and
Restated Governance Agreement by and between
Expedia Group, Inc. and Barry Diller, dated as of
April 10, 2020
Assumption and Joinder Agreement to Tax
Sharing Agreement by and among Expedia Group,
Inc., Liberty Expedia Holdings, Inc. and Qurate
Retail, Inc., dated as of April 15, 2019
Tax Sharing Agreement, by and between Liberty
Interactive Corporation and Liberty Expedia
Holdings, Inc., dated as of November 4, 2016
Assumption and Joinder Agreement to
Reorganization Agreement by and among Expedia
Group, Inc., Liberty Expedia Holdings, Inc. and
Qurate Retail, Inc., dated as of April 15, 2019
Reorganization Agreement by and between
Liberty Interactive Corporation and Liberty
Expedia Holdings, Inc., dated as of October 26,
2016
Credit Agreement, dated as of April 14, 2022, by
and among Expedia Group, Inc. and certain of its
Subsidiaries, as Borrowers, the Lenders thereto,
and JPMorgan Chase Bank, N.A., as
Administrative Agent
8-K
001-37429
10.3
4/16/2019
8-K
001-3749
10.1
4/10/2020
8-K
001-37429
10.7
4/16/2019
8-K*^
001-33982
10.1
11/7/2016
8-K
001-37429
10.10
4/16/2019
POS-
AM*†
333-210377
2.1
11/4/2016
8-K
001-37429
10.1
4/18/2022
10.9*
Fifth Amended and Restated Expedia Group, Inc.
2005 Stock and Annual Incentive Plan
DEF 14A
001-37429
App.A
5/7/2020
10.10* HomeAway, Inc. 2011 Equity Incentive Plan
S-8
333-208548
99.1
12/15/2015
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
Expedia Group, Inc. 2013 Employee Stock
Purchase Plan, as Amended and Restated
Expedia Group, Inc. 2013 International Employee
Stock Purchase Plan, As Amended and Restated
Form of Expedia, Inc. Restricted Stock Unit
Agreement (Directors)
Form of Expedia Group, Inc. 2020 Restricted
Stock Unit Agreement (Directors)
Form of Expedia, Inc. Restricted Stock Unit
Agreement
Form of Expedia Group, Inc. Restricted Stock
Unit Agreement
Form of Expedia, Inc. Stock Option Agreement
Form of Expedia Group, Inc. Stock Option
Agreement
Form of Expedia, Inc. 2018 Performance-Based
Stock Option Agreement
Form of Expedia Group, Inc. Stock Option
Agreement
Form of Expedia Group, Inc. Stock Option
Agreement
Form of Expedia Group, Inc. Restricted Stock
Unit Agreement
55
10-Q
001-37429
10.3
11/5/2020
10-Q
001-37429
10.4
11/5/2020
10-Q
000-51447
10.1
8/1/2014
10-K
001-37429
10.34
2/12/2021
10-K
001-37429
10.22
2/10/2017
10-Q
10-K
10-Q
001-37429
10.1
4/27/2018
001-37429
10.23
2/10/2017
001-37429
10.2
4/27/2018
10-Q
001-37429
10.3
4/27/2018
10-K
001-37429
10.46
2/8/2019
10-Q
001-37429
10.2
5/3/2019
10-Q
001-37429
10.3
5/3/2019
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
10.32*
10.33*
10.34*
10.35*
10.36*
10.37*
10.38*
10.39*
10.40*
10.41*
21
22
23.1
Form of Expedia Group, Inc. 2020 Restricted
Stock Unit Agreement
Form of Expedia Group, Inc. 2020 Performance
Stock Unit Agreement
Amended and Restated Expedia, Inc. Non-
Employee Director Deferred Compensation Plan,
effective as of January 1, 2009
Amended and Restated Expedia, Inc. Executive
Deferred Compensation Plan, effective as of
January 1, 2009
First Amendment of the Executive Deferred
Compensation Plan, effective as of December 31,
2014
Amended and Restated Employment Agreement
between Robert J. Dzielak and Expedia, Inc.,
effective March 3, 2018
Stock Option Agreement between Robert Dzielak
and Expedia, Inc., effective March 2, 2018
(Performance-Based Options)
Stock Option Agreement between Robert Dzielak
and Expedia, Inc., effective March 2, 2018 (Cliff
Vest Options)
Equity Treatment Agreement between Dara
Khosrowshahi and Expedia, Inc., effective
September 20, 2017
Expedia, Inc. Stock Option Agreement for Dara
Khosrowshahi, dated as of March 31, 2015
(Performance Options)
Restricted Stock Unit Agreement between Peter
Kern and Expedia Group, Inc., dated as of August
17, 2018
Restricted Stock Unit Agreement between Peter
Kern and Expedia Group, Inc., dated as of March
7, 2019
Performance Stock Unit Agreement between Peter
Kern and Expedia Group, Inc., dated as of
February 28, 2020
Employment Agreement between Peter Kern and
Expedia, Inc., effective February 25, 2021
Stock Option Agreement between Peter Kern and
Expedia Group, Inc., dated as of February 25,
2021
Restricted Stock Unit Agreement between Peter
Kern and Expedia Group, Inc., dated as of
February 25, 2021
Employment Agreement between Eric Hart and
Expedia, Inc., effective November 1, 2019
Transition and Services Agreement between Eric
Hart and Expedia, Inc., dated September 14, 2022
Employment Agreement between Julie Whalen
and Expedia, Inc., dated September 13, 2022
Subsidiaries of the Registrant
List of Guarantor Subsidiaries of Expedia Group,
Inc.
Consent of Independent Registered Public
Accounting Firm
56
X
X
X
10-K/A
001-37429
10.64
4/29/2020
10-K/A
001-37429
10.65
4/29/2020
10-K
000-51447
10.13
2/19/2009
10-K
000-51447
10.17
2/19/2009
10-K
000-51447
10.20
2/6/2015
8-K
001-37429
10.1
3/7/2018
10-Q
001-37429
10.6
4/27/2018
10-Q
001-37429
10.7
4/27/2018
8-K/A
001-37429
10.4
9/21/2017
8-K
000-51447
10.3
4/1/2015
10-K
001-37429
10.45
2/8/2019
10-Q
001-37429
10.4
5/3/2019
10-Q
001-37429
10.4
5/21/2020
8-K
001-37429
10.1
2/26/2021
8-K
001-37429
10.2
2/26/2021
8-K
001-37429
10.3
2/26/2021
10-K
001-37429
10.62
2/14/2020
8-K
8-K
001-37429
10.1
9/14/2022
001-37429
10.2
9/14/2022
31.1
31.2
31.3
32.1***
32.2***
32.3***
99.1
99.2
101.INS
101.SC
H
101.CA
L
101.DE
F
101.LA
B
101.PR
E
104
*
*†
*^
Certifications of the Chairman and Senior
Executive Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Certification of the Vice Chairman (Principal
Executive Officer) Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Certification of the Chief Financial Officer
(Principal Financial Officer) pursuant Section 302
of the Sarbanes-Oxley Act of 2002
Certification of the Chairman and Senior
Executive pursuant Section 906 of the Sarbanes-
Oxley Act of 2002
Certification of the Vice Chairman (Principal
Executive Officer) pursuant Section 906 of the
Sarbanes-Oxley Act of 2002
Certification of the Chief Financial Officer
(Principal Financial Officer) pursuant Section 906
of the Sarbanes-Oxley Act of 2002
Order and Final Judgment, entered January 19,
2022
Stipulation of Compromise and Settlement, dated
November 2, 2021
Inline XBRL Instance Document-the instance
document does not appear in the Interactive Data
File as its XBRL tags are embedded within the
Inline XBRL document
Inline XBRL Taxonomy Extension Schema
Inline XBRL Taxonomy Extension Calculation
Linkbase
Inline XBRL Taxonomy Extension Definition
Linkbase
Inline XBRL Taxonomy Extension Label
Linkbase
Inline XBRL Taxonomy Extension Presentation
Linkbase
Cover page formatted as Inline XBRL and
contained in Exhibit 101
X
X
X
X
X
X
X
X
X
10-K
001-37429
99.1
2/10/2022
10-K
001-37429
99.2
2/10/2022
Indicates a management contract or compensatory plan or arrangement.
Indicates reference to filing of Liberty Expedia Holdings, Inc.
Indicates reference to filing of Qurate Retail, Inc.
***
Furnished herewith
Part IV. Item 16. Form 10-K Summary
Not applicable.
57
Pursuant to the requirements of the Section 13 or 15(d) Securities Exchange Act of 1934, the Registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Signatures
Expedia Group, Inc.
By:
/s/ PETER KERN
Peter Kern
Chief Executive Officer and Vice Chairman
February 9, 2023
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities indicated on February 9, 2023.
Signature
Title
/s/ PETER KERN
Peter Kern
/s/ JULIE WHALEN
Julie Whalen
/s/ LANCE SOLIDAY
Lance Soliday
/s/ BARRY DILLER
Barry Diller
/s/ SAMUEL ALTMAN
Samuel Altman
/s/ BEVERLY ANDERSON
Beverly Anderson
/s/ CHELSEA CLINTON
Chelsea Clinton
/s/ HENRIQUE DUBUGRAS
Henrique Dubugras
/s/ CRAIG JACOBSON
Craig Jacobson
/s/ DARA KHOSROWSHAHI
Dara Khosrowshahi
/s/ PATRICIA MENENDEZ CAMBO
Patricia Menendez Cambo
/s/ ALEX VON FURSTENBERG
Alex von Furstenberg
Chief Executive Officer, Vice Chairman and Director
(Principal Executive Officer)
Chief Financial Officer and Director
(Principal Financial Officer)
Senior Vice President, Chief Accounting
Officer and Controller
(Principal Accounting Officer)
Chairman of the Board, Senior Executive and Director
Director
Director
Director
Director
Director
Director
Director
Director
58
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS, SCHEDULES AND EXHIBITS
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Changes in Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
F- 2
F- 4
F- 6
F- 7
F- 8
F- 10
F- 13
F- 1
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Expedia Group, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Expedia Group, Inc. (the Company) as of December 31,
2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity
and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its
operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S.
generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (2013 framework), and our report dated February 9, 2023 expressed an unqualified opinion
thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the 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 audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
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 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 financial statements. We believe that our audits provide a reasonable basis for our
opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the financial statements and (2) 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
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Description of the Matter
Loyalty Programs
As discussed in Note 2 of the financial statements, travelers enrolled in the Expedia Rewards
and Hotels.com Rewards loyalty programs (collectively “loyalty programs”) earn reward
points with each eligible booking made which can be redeemed for free or discounted future
bookings. Member consideration is allocated between travel services and reward points
earned in the loyalty programs. The Company defers the relative standalone selling price of
earned reward points, net of rewards not expected to be redeemed (known as “breakage”), as
deferred loyalty rewards within deferred merchant bookings on the consolidated balance
sheet. To estimate the relative standalone selling price for reward points, the Company
considers the stated redemption value per point dictated by the terms of the loyalty programs
and then estimates the future breakage of reward points based on statistical modeling
techniques using historical member activity. The deferred loyalty rewards balance, net of
amounts paid to the travel suppler, is recognized as revenue when the travel service purchased
with the loyalty reward is satisfied.
F- 2
How We Addressed the
Matter in Our Audit
Description of the Matter
How We Addressed the
Matter in Our Audit
Auditing the Company’s deferred loyalty rewards balance is especially complex and
judgmental due to significant measurement uncertainty in determining the expected future
breakage of reward points. Management uses statistical modeling techniques to estimate
future breakage based on historical member activity. The amount of member consideration
allocated to the reward points earned is sensitive to the expected future breakage assumption.
Changes in loyalty program terms or the method or manner in which reward points can be
redeemed by members can change member behavior which increases the measurement
uncertainty as historical member activity may not be indicative of future behavior.
We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over Management’s review of the statistical modeling techniques and resulting
breakage estimates. We also tested controls over the completeness and accuracy of member
activity data used in the breakage estimate analyses. This included controls over the
Company’s systems and the application controls involved in the process to track loyalty
reward member activity.
To test the deferred loyalty rewards balance, we performed audit procedures that included,
among others, involving our actuarial specialists to assist us in assessing the methods used by
Management and to develop an independent actuarial estimate of a reasonable range of
breakage rates. We then compared this reasonable range of breakage rates to the Company’s
estimates. Additionally, we tested the completeness and accuracy of the member activity data
used by our actuarial specialists in their breakage analyses.
Deferred Tax Assets Valuation Allowance
As discussed in Note 2 to the consolidated financial statements, the Company records a
valuation allowance based on the assessment of the realizability of the Company’s deferred
tax assets. The Company establishes a valuation allowance to reduce deferred tax assets to the
amount management believes is more likely than not to be realized. For the year ended
December 31, 2022, the Company recorded deferred tax assets of $1,343 million and a
related valuation allowance of $242 million.
Auditing management’s assessment of the realizability of its deferred tax assets is complex
because management’s projection of future taxable income includes forward-looking
assumptions that are inherently judgmental because they may be affected by future market or
other economic conditions.
We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over Management’s review of the realizability of deferred tax assets. This included
controls over management’s evaluation of the sources of future taxable income.
We tested the assumptions used by the Company to develop the anticipated future earnings
used in the Company’s analysis in determining the valuation allowance. We tested the
completeness and accuracy of the underlying data used in the Company’s projections. For
example, we evaluated the appropriateness of the assumptions underlying the future projected
financial information, as well as management’s consideration of current operating, industry
and economic trends. We also compared the projections of future taxable income with other
forecasted financial information prepared by the Company. In addition, we evaluated the
application of tax law in the projections of future taxable income.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2004.
Seattle, Washington
February 9, 2023
F- 3
Consolidated Financial Statements
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
2022
2021
2020
(In millions, except for per share data)
$
11,667 $
8,598 $
5,199
Revenue
Costs and expenses:
Cost of revenue (exclusive of depreciation and amortization
shown separately below) (1)
Selling and marketing (1)
Technology and content (1)
General and administrative (1)
Depreciation and amortization
Impairment of goodwill
Intangible and other long-term asset impairment
Legal reserves, occupancy tax and other
Restructuring and related reorganization charges
Operating income (loss)
Other income (expense):
Interest income
Interest expense
Gain (loss) on debt extinguishment, net
Gain (loss) on sale of business, net
Other, net
Total other expense, net
Income (loss) before income taxes
Provision for income taxes
Net income (loss)
Net (income) loss attributable to non-controlling interests
Net income (loss) attributable to Expedia Group, Inc.
Preferred stock dividend
Loss on redemption of preferred stock
Net income (loss) attributable to Expedia Group, Inc. common
stockholders
Earnings (loss) per share attributable to Expedia Group, Inc.
available to common stockholders:
Basic
Diluted
Shares used in computing earnings (loss) per share (000's):
$
$
Basic
Diluted
_______
F- 4
1,657
6,100
1,181
748
792
—
81
23
—
1,085
60
(277)
49
6
(385)
(547)
538
(195)
343
9
352
—
—
1,522
4,221
1,074
705
814
14
6
1
55
186
9
(351)
(280)
456
(58)
(224)
(38)
53
15
(3)
12
(67)
(214)
352 $
(269) $
1,649
2,527
1,068
589
893
799
175
(13)
231
(2,719)
18
(360)
—
(13)
(77)
(432)
(3,151)
423
(2,728)
116
(2,612)
(75)
—
(2,687)
2.24 $
2.17
(1.80) $
(1.80)
156,672
161,751
149,734
149,734
(19.00)
(19.00)
141,414
141,414
(1) Includes stock-based compensation as follows:
Cost of revenue
Selling and marketing
Technology and content
General and administrative
$
14 $
22 $
67
111
182
96
117
183
12
48
69
76
See notes to consolidated financial statements.
F- 5
EXPEDIA GROUP, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Net income (loss)
Other comprehensive income (loss), net of tax
Currency translation adjustments, net of taxes
Net reclassification of foreign currency translation adjustments
into total other expenses, net
Other comprehensive income (loss), net of tax
Comprehensive income (loss)
Less: Comprehensive income (loss) attributable to non-
controlling interests
Less: Preferred stock dividend
Less: Loss on redemption of preferred stock
Year ended December 31,
2022
2021
(In millions)
2020
$
343 $
15 $
(2,728)
(106)
—
(106)
237
(30)
—
—
(72)
74
2
17
(24)
67
214
67
—
67
(2,661)
(88)
75
—
Comprehensive income (loss) attributable to Expedia Group, Inc.
common stockholders
$
267 $
(240) $
(2,648)
See notes to consolidated financial statements.
F- 6
EXPEDIA GROUP, INC.
CONSOLIDATED BALANCE SHEETS
December 31,
2022
2021
(In millions, except per share data)
ASSETS
Current assets:
Cash and cash equivalents
Restricted cash and cash equivalents
Short-term investments
Accounts receivable, net of allowance of $40 and $65
Income taxes receivable
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Long-term investments and other assets
Deferred income taxes
Intangible assets, net
Goodwill
TOTAL ASSETS
$
$
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable, merchant
Accounts payable, other
Deferred merchant bookings
Deferred revenue
Income taxes payable
Accrued expenses and other current liabilities
Current maturities of long-term debt
Total current liabilities
Long-term debt, excluding current maturities
Deferred income taxes
Operating lease liabilities
Other long-term liabilities
Commitments and contingencies
Stockholders’ equity:
Common stock $.0001 par value, Authorized shares: 1,600,000
Shares issued: 278,264 and 274,661; Shares outstanding: 147,757 and
150,125
Class B common stock $.0001 par value, Authorized shares: 400,000
Shares issued: 12,800 and 12,800; Shares outstanding: 5,523 and 5,523
Additional paid-in capital
Treasury stock — Common stock and Class B, at cost, Shares 137,783 and
131,813
Retained earnings (deficit)
Accumulated other comprehensive income (loss)
Total Expedia Group, Inc. stockholders’ equity
Non-redeemable non-controlling interests
Total stockholders’ equity
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$
$
4,096 $
1,755
48
2,078
40
774
8,791
2,210
363
1,184
661
1,209
7,143
21,561 $
1,709 $
947
7,151
163
21
787
—
10,778
6,240
52
312
451
—
—
14,795
(10,869)
(1,409)
(234)
2,283
1,445
3,728
21,561 $
4,111
1,694
200
1,264
85
827
8,181
2,180
407
1,450
766
1,393
7,171
21,548
1,333
688
5,688
166
16
824
735
9,450
7,715
58
360
413
—
—
14,229
(10,262)
(1,761)
(149)
2,057
1,495
3,552
21,548
See notes to consolidated financial statements.
F- 7
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F- 9
EXPEDIA GROUP, INC.
F- 10
CONSOLIDATED STATEMENTS OF CASH FLOWS
Operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation of property and equipment, including internal-use software and website
development
Amortization of stock-based compensation
Amortization of intangible assets
Impairment of goodwill, intangible and other long-term assets
Deferred income taxes
Foreign exchange loss on cash, restricted cash and short-term investments, net
Realized (gain) loss on foreign currency forwards, net
Loss on minority equity investments, net
(Gain) loss on debt extinguishment, net
(Gain) loss on sale of business, net
Provision for credit losses and other, net
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
Accounts receivable
Prepaid expenses and other assets
Accounts payable, merchant
Accounts payable, other, accrued expenses and other liabilities
Tax payable/receivable, net
Deferred merchant bookings
Deferred revenue
Net cash provided by (used in) operating activities
Investing activities:
3,440
Capital expenditures, including internal-use software and website development
Purchases of investments
Sales and maturities of investments
Cash and restricted cash divested from sale of business, net of proceeds
Proceeds from initial exchange of cross-currency interest rate swaps
Payments for initial exchange of cross-currency interest rate swaps
Other, net
Net cash used in investing activities
Financing activities:
Revolving credit facility borrowings
Revolving credit facility repayments
Proceeds from issuance of long-term debt, net of issuance costs
Payment of long-term debt
Debt extinguishment costs
Net proceeds from issuance of preferred stock and warrants
Redemption of preferred stock
Purchases of treasury stock
Payment of dividends to common and preferred stockholders
Proceeds from exercise of equity awards and employee stock purchase plan
Other, net
Year ended December 31,
2022
2021
2020
(In millions)
$ 343 $
15 $ (2,728)
704
715
374
88
81
70
128
78
345
(49)
(6)
23
418
99
20
(145)
105
16
29
280
(456)
32
739
205
154
974
(488)
2
(80)
142
—
13
135
(838)
55
375
196
11
1,464
(2)
(721) 1,781
(188)
(224)
(1,320)
777
(400)
138
(57)
10
(2,576)
2,642
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(3,834)
3,748
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(673)
(201)
23
(60)
(662)
(60)
205
4
337
—
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(67)
(580)
(20)
(931)
(797)
(685)
1,161
(21)
—
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79
(263)
—
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1,964
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—
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(258)
(22)
2,672
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3,945
(750)
—
1,132
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(425)
(123)
319
(21)
(973) 4,077
—
(1,236)
(165)
(67)
503
(8)
—
—
(607)
—
131
15
Net cash provided by (used in) financing activities
(2,624)
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash
equivalents
Net increase in cash, cash equivalents and restricted cash and cash equivalents
Cash, cash equivalents and restricted cash and cash equivalents at beginning of year
Cash, cash equivalents and restricted cash and cash equivalents at end of year
Supplemental cash flow information
Cash paid for interest
Income tax payments, net
(190)
(177)
61
46
1,667
41
4,097
4,138
5,805
$ 5,851 $ 5,805 $ 4,138
$ 291 $ 342 $
102
74
313
108
F- 11
See notes to consolidated financial statements.
F- 12
Expedia Group, Inc.
Notes to Consolidated Financial Statements
NOTE 1 — Organization and Basis of Presentation
Description of Business
Expedia Group, Inc. and its subsidiaries provide travel products and services to leisure and corporate travelers in the
United States and abroad as well as various media and advertising offerings to travel and non-travel advertisers. These
travel products and services are offered through a diversified portfolio of brands including: Brand Expedia®, Hotels.com®,
Expedia® Partner Solutions, Vrbo®, trivago®, Orbitz®, Travelocity®, Hotwire®, Wotif®, ebookers®, CheapTickets®,
Expedia Group™ Media Solutions, CarRentals.com™ and Expedia Cruises™. In addition, many of these brands have
related international points of sale. We refer to Expedia Group, Inc. and its subsidiaries collectively as “Expedia Group,”
the “Company,” “us,” “we” and “our” in these consolidated financial statements.
COVID-19
The COVID-19 pandemic, and measures to contain the virus, had an unprecedented impact on the global travel
industry and materially and negatively impacted our business, financial results and financial condition. With the evolution
of milder COVID-19 variants, availability of multiple vaccine booster doses and increasing familiarity with the virus, many
COVID-19 related travel restrictions have been lifted, and countries around the world reopened their borders for foreign
travel. Overall, the full duration and total impact of COVID-19 remains uncertain and it is difficult to predict how the
recovery will unfold for the travel industry and, in particular, our business, going forward.
Basis of Presentation
The accompanying consolidated financial statements include Expedia Group, Inc., our wholly-owned subsidiaries,
and entities we control, or in which we have a variable interest and are the primary beneficiary of expected cash profits or
losses. 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 or at fair value. We have eliminated significant intercompany transactions
and accounts.
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.
Seasonality
We generally experience seasonal fluctuations in the demand for our travel services. For example, traditional leisure
travel bookings are generally the highest in the first three quarters as travelers plan and book their spring, summer and
winter holiday travel. The number of bookings typically decreases in the fourth quarter. Since revenue for most of our
travel services, including merchant and agency hotel, is recognized as the travel takes place rather than when it is booked,
revenue typically lags bookings by several weeks for our hotel business and can be several months or more for our
alternative accommodations business. Historically, Vrbo has seen seasonally stronger bookings in the first quarter of the
year, with the relevant stays occurring during the peak summer travel months. The seasonal revenue impact is exacerbated
with respect to income by the nature of our variable cost of revenue and direct sales and marketing costs, which we
typically realize in closer alignment to booking volumes, and the more stable nature of our fixed costs. As a result on a
consolidated basis, revenue and income are typically the lowest in the first quarter and highest in the third quarter.
Significantly higher cancellations and reduced booking volumes from COVID-19 disrupted our typical seasonal
pattern for bookings, revenue, profit and cash flows from 2020 through early 2022, but have generally returned to historic
seasonality.
NOTE 2 — Significant Accounting Policies
Consolidation
Our consolidated financial statements include the accounts of Expedia Group, Inc., our wholly-owned subsidiaries,
and entities for which we control a majority of the entity’s outstanding common stock. We record non-controlling interest
in our consolidated financial statements to recognize the minority ownership interest in our consolidated subsidiaries. Non-
controlling interest in the earnings and losses of consolidated subsidiaries represent the share of net income or loss
F- 13
allocated to members or partners in our consolidated entities. trivago is a separately listed company on the Nasdaq Global
Select Market and, therefore, is subject to its own reporting and filing requirements, which could result in possible
differences that are not expected to be material to Expedia Group, Inc.
We have eliminated significant intercompany transactions and accounts in our consolidated financial statements.
Accounting Estimates
We use estimates and assumptions in the preparation of our consolidated financial statements in accordance with
accounting principles generally accepted in the United States (“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. The significant estimates underlying our
consolidated financial statements include revenue recognition; recoverability of current and long-lived assets, intangible
assets and goodwill; income and transactional taxes, such as potential settlements related to occupancy and excise taxes;
loss contingencies; deferred loyalty rewards; stock-based compensation; accounting for derivative instruments and
provisions for credit losses, customer refunds and chargebacks.
Reclassifications
We have reclassified prior period financial statements to conform to the current period presentation.
Revenue Recognition
We recognize revenue upon transfer of control of our promised services in an amount that reflects the consideration
we expect to be entitled to in exchange for those services.
For our primary transaction-based revenue sources, discussed below, we have determined net presentation (that is, the
amount billed to a traveler less the amount paid to a supplier) is appropriate for the majority of our revenue transactions as
the supplier is primarily responsible for providing the underlying travel services and we do not control the service provided
by the supplier to the traveler. We exclude all taxes assessed by a government authority, if any, from the measurement of
transaction prices that are imposed on our travel related services or collected by the Company from customers (which are
therefore excluded from revenue).
We offer traditional travel services on a stand-alone and package basis generally either through the merchant or the
agency business model.
Under the merchant model, we facilitate the booking of hotel rooms, alternative accommodations, airline seats, car
rentals and destination services from our travel suppliers and we are the merchant of record for such bookings.
Under the agency model, we pass reservations booked by the traveler to the relevant travel supplier and the travel
supplier serves as the merchant of record for such bookings. We receive commissions or ticketing fees from the travel
supplier and/or traveler. For certain agency airline, hotel and car transactions, we also receive fees through global
distribution systems (“GDS”) that provide the computer systems through which the travel supplier inventory is made
available and through which reservations are booked.
Under the advertising model, we offer travel and non-travel advertisers access to a potential source of incremental
traffic and transactions through our various media and advertising offerings on trivago and our transaction-based websites.
In addition, Vrbo also provides subscription-based listing and other ancillary services to property owners and
managers.
The nature of our travel booking service performance obligations vary based on the travel service with differences
primarily related to the degree to which we provide post booking services to the traveler and the timing when rights and
obligations are triggered in our underlying supplier agreements. We consider both the traveler and travel supplier as our
customers.
Refer to NOTE 18 — Segment Information for revenue by business model and service type.
Lodging. Our lodging revenue is comprised of revenue recognized under the merchant, agency and Vrbo
subscription-based listing services model.
Merchant Hotel. We provide travelers access to book hotel room reservations through our contracts with lodging
suppliers, which provide us with rates and availability information for rooms but for which we have no control over the
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rooms and do not bear inventory risk. Our travelers pay us for merchant hotel transactions prior to departing on their trip,
generally when they book the reservation. We record the payment in deferred merchant bookings until the stayed night
occurs, at which point we recognize the revenue, net of amounts paid to suppliers, as this is when our performance
obligation is satisfied. Payments to suppliers are generally due within 30 days of check-in or stay. In certain instances when
a supplier invoices us for less than the cost we accrued, we generally reduce our merchant accounts payable and the
supplier costs within net revenue six months in arrears, net of an allowance, when we determine it is not probable that we
will be required to pay the supplier, based on historical experience. Cancellation fees are collected and remitted to the
supplier, if applicable.
Agency Hotel. We generally record agency revenue from the hotel when the stayed night occurs as we provide post
booking services to the traveler and, thus consider the stay as when our performance obligation is satisfied. We record an
allowance for cancellations on this revenue based on historical experience.
Merchant and Agency Vrbo Alternative Accommodations. Vrbo's lodging revenue is generally earned on a pay-per-
booking basis, which can be either merchant or agency bookings depending on the nature of the payment processor. Pay-
per-booking arrangements are commission-based where rental property owners and managers bear the inventory risk, have
latitude in setting the price and compensate Vrbo for facilitating bookings with travelers. Under pay-per-booking
arrangements, each booking is a separate contract as listings are typically cancelable at any time and the related revenue,
net of amounts paid to property owners, is recognized at check in, which is the point in time when our service to the
traveler is complete. Vrbo also charges a traveler service fee at the time of booking. The service fee charged to travelers
provides compensation for Vrbo's services, including but not limited to the use of Vrbo's website and a “Book with
Confidence Guarantee” providing travelers with comprehensive payment protection and 24/7 traveler support. The
performance obligation is to facilitate the booking of a property and assist travelers up to their check in process and, as
such, the traveler service fee revenue is recognized at check-in.
Subscription-based Listing Services. To a lesser extent, Vrbo's lodging revenue is also earned on a pay-per-
subscription basis. In pay-per-subscription contracts, property owners or managers purchase in advance online advertising
services related to the listing of their properties for rent over a fixed term (typically one year). As the performance
obligation is the listing service and is provided to the property owner or manager over the life of the listing period, the pay-
per-subscription revenue is recognized on a straight-line basis over the listing period.
Merchant and Agency Air. We record revenue on air transactions when the traveler books the transaction, as we do
not typically provide significant post booking services to the traveler and payments due to and from air carriers are
typically due at the time of ticketing. We record a reserve for chargebacks and cancellations at the time of the transaction
based on historical experience. In certain transactions, the GDS collects commissions from our suppliers and passes these
commissions to us, net of their fees. Therefore, we view payments through the GDS as commissions from suppliers and
record these commissions in net revenue. Fees paid to the GDS as compensation for their role in processing transactions
are recorded as cost of revenue.
Advertising and Media. We record revenue from click-through fees charged to our travel partners for leads sent to
the travel partners’ websites. We record revenue from click-through fees after the traveler makes the click-through to the
related travel partners’ websites. We record revenue for advertising placements ratably over the advertising period or upon
delivery of advertising impressions, depending on the terms of the contract. Payments from advertisers are generally due
within 30 days of invoicing.
Other. Other primarily includes transaction revenue for booking services related to products such as car, cruise and
destination services under the agency business model. We generally record the related revenue when the travel occurs, as in
most cases we provide post booking services and this is when our performance obligation is complete. Additionally, no
rights or obligations are triggered in our supplier agreements until the travel occurs. We record an allowance for
cancellations on this revenue based on historical experience. Revenue from other ancillary alternative accommodation
services or products are recorded either upon delivery or when we provide the service. In addition, other also includes
travel insurance products primarily under the merchant model, for which revenue is recorded at the time the transaction is
booked.
Packages. Packages assembled by travelers through the packaging functionality on our websites generally include a
merchant hotel component and some combination of an air, car or destination services component. The individual package
components are accounted for as separate performance obligations and recognized in accordance with our revenue
recognition policies stated above.
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Prepaid Merchant Bookings. We classify payments made to suppliers in advance of Vrbo performance obligations as
prepaid merchant bookings included within prepaid and other current assets. Prepaid merchant bookings was $480 million
as of December 31, 2022 and $591 million as of December 31, 2021.
Deferred Merchant Bookings. We classify cash payments received in advance of our performance obligations as
deferred merchant bookings. At December 31, 2021, $4.9 billion of advance cash payments was reported within deferred
merchant bookings, $4.0 billion of which was recognized resulting in $693 million of revenue during the year ended
December 31, 2022 with the remainder primarily consisting of cancellations during the year. At December 31, 2022, the
related balance was $6.2 billion.
Travelers enrolled in our internally administered traveler loyalty rewards programs earn points for each eligible
booking made which can be redeemed for free or discounted future bookings. Hotels.com Rewards offers travelers one free
night at any Hotels.com partner property after that traveler stays 10 nights, subject to certain restrictions. Expedia Rewards
enables participating travelers to earn points on all hotel, flight, package and activities made on various Brand Expedia
websites. Orbitz Rewards allows travelers to earn Orbucks, the currency of Orbitz Rewards, on flights, hotels and vacation
packages and instantly redeem those Orbucks on future bookings at various hotels worldwide. As travelers accumulate
points towards free travel products, we defer the relative standalone selling price of earned points, net of expected
breakage, as deferred loyalty rewards within deferred merchant bookings on the consolidated balance sheet. In order to
estimate the standalone selling price of the underlying services on which points can be redeemed for all loyalty programs,
we use an adjusted market assessment approach and consider the redemption values expected from the traveler. We then
estimate the number of rewards that will not be redeemed based on historical activity in our members' accounts as well as
statistical modeling techniques. Revenue is recognized when we have satisfied our performance obligation relating to the
points, that is when the travel service purchased with the loyalty award is satisfied. The majority of rewards expected to be
redeemed are recognized within one to two years of being earned. At December 31, 2021, $798 million of deferred loyalty
rewards was reported within deferred merchant bookings, all of which was recognized as revenue during the year ended
December 31, 2022. At December 31, 2022, the related balance was $961 million.
Deferred Revenue. Deferred revenue primarily consists of unearned subscription revenue as well as deferred
advertising revenue. At December 31, 2021, $166 million was recorded as deferred revenue, $117 million of which was
recognized as revenue during the year ended December 31, 2022. At December 31, 2022, the related balance was $163
million.
Practical Expedients and Exemptions. We have used the portfolio approach to account for our loyalty points as the
rewards programs share similar characteristics within each program in relation to the value provided to the traveler and
their breakage patterns. Using this portfolio approach is not expected to differ materially from applying the guidance to
individual contracts. However, we will continue to assess and refine, if necessary, how a portfolio within each rewards
program is defined.
We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length
of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice
for services performed.
Cash, Restricted Cash, and Cash Equivalents
Our cash and cash equivalents include cash and liquid financial instruments, including money market funds and term
deposit investments, with maturities of three months or less when purchased. Restricted cash includes cash and cash
equivalents that is restricted through legal contracts, regulations or our intention to use the cash for a specific purpose. Our
restricted cash primarily relates to certain traveler deposits and to a lesser extent collateral for office leases. The following
table reconciles cash, cash equivalents and restricted cash reported in our consolidated balance sheets to the total amount
presented in our consolidated statements of cash flows:
Cash and cash equivalents
Restricted cash and cash equivalents
Total cash, cash equivalents and restricted cash and cash equivalents in the consolidated
statements of cash flows
Short-term and Long-term Investments
F- 16
December 31,
2022
2021
(in millions)
4,096 $
1,755
5,851 $
4,111
1,694
5,805
$
$
We determine the appropriate classification of our investments in marketable securities at the time of purchase and
reevaluate such designation at each balance sheet date. Investments, other than minority equity investments, classified as
available-for-sale are recorded at fair value with unrealized holding gains and losses recorded, net of tax, as a component of
accumulated other comprehensive income ("OCI"). Realized gains and losses from the sale of available-for-sale
investments, if any, are determined on a specific identification basis. Investments with remaining maturities of less than
one year are classified within short-term investments. All other investments are classified within long-term investments and
other assets.
Minority equity investments with either readily determinable fair values, or for which we have elected to apply the
fair value option, are measured at fair value on a recurring basis with changes in fair value recorded through net income or
loss. Minority investments without readily determinable fair values, for which we have not elected to measure at fair value,
are measured using the equity method, or measured at cost with observable price changes reflected through net income or
loss. We perform a qualitative assessment on a quarterly basis and recognize an impairment if there are sufficient indicators
that the fair value of the investment is less than carrying value. Changes in value of minority equity investments are
recorded in other income (expense), net.
Accounts Receivable
Accounts receivable are generally due within thirty days and are recorded net of an allowance for expected
uncollectible amounts. We consider accounts outstanding longer than the contractual payment terms as past due. The risk
characteristics we generally review when analyzing our accounts receivable pools primarily include the type of receivable
(for example, credit card vs hotel collect), collection terms and historical or expected credit loss patterns. For each pool, we
make estimates of expected credit losses for our allowance by considering a number of 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. The provision for estimated credit losses is recorded as
cost of revenue in our consolidated statements of operations.
Property and Equipment
We record property and equipment at cost, net of accumulated depreciation and amortization. We also capitalize
certain costs incurred related to the development of internal use software. We capitalize costs incurred during the
application development stage related to the development of internal use software. We expense costs incurred related to the
planning and post-implementation phases of development as incurred.
We compute depreciation using the straight-line method over the estimated useful lives of the assets, which is three
to five years for computer equipment, capitalized software development and furniture and other equipment, 15 years for
land improvements, and 40 years for buildings, which includes our corporate headquarters. Land is not depreciated. We
amortize 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.
We establish assets and liabilities for the present value of estimated future costs to return certain of our leased
facilities to their original condition under the authoritative accounting guidance for asset retirement obligations. Such assets
are depreciated over the lease period into operating expense, and the recorded liabilities are accreted to the future value of
the estimated restoration costs.
Leases
We determine if an arrangement is a lease at inception. Operating leases are primarily for office space and data
centers and are included in operating lease right-of-use ("ROU") assets, accrued expenses and other current liabilities, and
operating lease liabilities on our consolidated balance sheets. 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 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 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.
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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 sheet. 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 cash flows.
We have office space and data center lease agreements with insignificant non-lease components and have elected the
practical expedient to combine and account for lease and non-lease components as a single lease component.
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, 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 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. Any changes to provisional amounts
identified during the measurement period are recognized in the reporting period in which the adjustment amounts are
determined.
Recoverability of Goodwill and Indefinite-Lived Intangible Assets
Goodwill is assigned 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 October 1, 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 the 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 generally base our measurement of fair value of reporting units, except for trivago, which is a separately listed
company on the Nasdaq Global Select Market, on a blended analysis of the present value of future discounted cash flows
and market valuation approach with the exception of our standalone publicly traded subsidiary, which is based on market
valuation. 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 estimates in the discounted cash
flows model include: our weighted average cost of capital; long-term rate of growth and profitability of our business; and
working capital effects. The market valuation approach indicates the fair value of the business based on a comparison of
the Company to comparable publicly traded firms in similar lines of business. Our significant estimates in the market
approach model include identifying similar companies with comparable business factors such as size, growth, profitability,
risk and return on investment and assessing comparable revenue and operating income multiples in estimating the fair
value of the reporting units. The fair value of the trivago reporting unit was based on trivago's stock price, a Level 1 input,
adjusted for an estimated control premium.
We believe the weighted use of discounted cash flows and market approach is the best method for determining the
fair value of our reporting units because these are the most common valuation methodologies used within the travel and
internet industries; and the blended use of both models compensates for the inherent risks associated with either model if
used on a stand-alone basis.
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 the Company’s total fair value of equity plus debt as of the assessment
date. Our equity value assumes our fully diluted 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 trade
name and trademarks, using the relief-from-royalty method. This method assumes that the trade name and trademarks have
F- 18
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.
Recoverability of Intangible Assets with Definite 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 one to ten years. 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 would 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 will 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.
Income Taxes
We record income taxes under the liability method. Deferred tax assets and liabilities reflect our estimation of the
future tax consequences of temporary differences between the carrying amounts of assets and liabilities for book and tax
purposes. We determine deferred income taxes based on the differences in accounting methods and timing between
financial statement and income tax reporting. Accordingly, we determine the deferred tax asset or liability for each
temporary difference based on the enacted tax rates expected to be in effect when we realize the underlying items of
income and expense.
We consider many factors when assessing the likelihood of future realization of our deferred tax assets, including our
recent earnings experience by jurisdiction, expectations of future taxable income, and the carryforward periods available to
us for tax reporting purposes, as well as other relevant factors. We may establish a valuation allowance to reduce deferred
tax assets to the amount we believe is more likely than not to be realized. Due to inherent complexities arising from the
nature of our businesses, future changes in income tax law, tax sharing agreements or variances between our actual and
anticipated operating results, we make certain judgments and estimates. Therefore, actual income taxes could materially
vary from these estimates. All deferred income taxes are classified as long-term on our consolidated balance sheets.
We account for uncertain tax positions based on a two-step process of evaluating recognition and measurement
criteria. The first step assesses whether the tax position is more likely than not to be sustained upon examination by the tax
authority, including resolution of any appeals or litigation, based on the technical merits of the position. If the tax position
meets the more likely than not criteria, the portion of the tax benefit greater than 50% likely to be realized upon settlement
with the tax authority is recognized in the financial statements.
We recognize interest and penalties related to unrecognized tax benefits in the income tax expense line in our
consolidated statement of operations. Accrued interest and penalties are included in other long-term liabilities on the
consolidated balance sheet.
In relation to tax effects for accumulated OCI, our policy is to release the tax effects of amounts reclassified from
accumulated OCI to pre-tax income (loss) from continuing operations. Any remaining tax effect in accumulated OCI is
released following a portfolio approach.
We account for the global intangible low-tax income earned by our foreign subsidiaries included in gross U.S.
taxable income in the period incurred.
Derivative Instruments
Derivative instruments are carried 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.
F- 19
At December 31, 2022 and 2021, our derivative instruments primarily consisted of foreign currency forward
contracts. We use foreign currency forward contracts to economically hedge certain merchant revenue exposures, foreign
denominated liabilities related to certain of our loyalty programs and our other foreign currency-denominated operating
liabilities. 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 other, net. We do not hold or issue financial instruments for speculative or trading purposes.
Until their redemption in March 2022, the aggregate principal value of our €650 million of registered senior
unsecured notes that bore interest at 2.5% (the “2.5% Notes”) was designated as a hedge of our net investment in certain
Euro-functional currency subsidiaries. The notes were measured at Euro to U.S. Dollar exchange rates at each balance
sheet date and transaction gains or losses due to changes in rates were recorded in accumulated OCI within the foreign
currency translation adjustment. The Euro denominated net assets of these subsidiaries were translated into U.S. Dollars at
each balance sheet date, with effects of foreign currency changes also reported in accumulated OCI. In March 2022, we
redeemed the 2.5% Notes and terminated the related hedging relationship. The currency translation adjustment amounts
associated with the net investment hedge of the 2.5% Notes will remain in accumulated OCI until realized upon a full or
partial sale or liquidation of applicable Euro-functional currency subsidiaries.
In March 2022, we entered into two fixed-to-fixed cross-currency interest rate swaps (the “swaps”) with an aggregate
notional amount of €300 million. During the term of each contract, we receive interest payments in U.S. dollars at a fixed
rate of 5% and make interest payments in Euros at an average fixed rate of 3.38% based on a notional amount and fixed
interest rates determined at contract inception. The swaps were designated as a hedge of our net investment in certain Euro
functional currency subsidiaries. Hedge effectiveness is assessed each quarter based on the net investment in the foreign
subsidiaries designated as the hedged item and the changes in the fair value of the designated interest rate swaps based on
spot rates. For hedges that meet the effectiveness requirements, changes in fair value are recorded as accumulated OCI
within the foreign currency translation adjustment. Amounts excluded from hedge effectiveness at inception are recognized
as interest accrues within interest expense. The maturity date of both swaps is February 2026, whereby, we will receive
U.S. dollars from and pay Euros to the contract counterparties.
Foreign Currency Translation and Transaction Gains and Losses
Certain of our operations outside of the United States use the related local currency as their functional currency. We
translate revenue and expense at average rates of exchange during the period. We translate assets and liabilities at the rates
of exchange as of the consolidated balance sheet dates and include foreign currency translation gains and losses as a
component of accumulated OCI. Due to the nature of our operations and our corporate structure, we also have subsidiaries
that have significant transactions in foreign currencies other than their functional currency. We record transaction gains and
losses in our consolidated statements of operations related to the recurring remeasurement and settlement of such
transactions.
To the extent practicable, we attempt to minimize this exposure by maintaining natural hedges between our current
assets and current liabilities of similarly denominated foreign currencies. Additionally, as discussed above, we use foreign
currency forward contracts to economically hedge certain merchant revenue exposures and in lieu of holding certain
foreign currency cash for the purpose of economically hedging our foreign currency-denominated operating liabilities.
Debt Issuance Costs
We defer costs we incur to issue debt, which are presented in the balance sheet as a direct deduction from the
carrying amount of the related debt liability, and amortize these costs to interest expense over the term of the debt or in
circumstances where the debt can be redeemed at the option of the holders, over the term of the redemption option.
Marketing Promotions
We periodically provide incentive offers to our customers to encourage booking of travel products and services.
Generally, our incentive offers are as follows:
Current Discount Offers. These promotions include dollar or percent off discounts to be applied against current
purchases. We record the discounts as reduction in revenue at the date we record the corresponding revenue transaction.
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Inducement Offers. These promotions include discounts granted at the time of a current purchase to be applied
against a future qualifying purchase. We treat inducement offers as a reduction to revenue based on estimated future
redemption rates. We allocate the discount amount at the time of the offer between the current performance obligation and
the potential future performance obligations based on our expected relative value of the transactions. We estimate our
redemption rates using our historical experience for similar inducement offers.
Concession Offers. These promotions include discounts to be applied against a future purchase to maintain customer
satisfaction. Upon issuance, we record these concession offers as a reduction to revenue based on estimated future
redemption rates. We estimate our redemption rates using our historical experience for concession offers.
Advertising Expense
We incur advertising expense consisting of offline costs, including television and radio advertising, and online
advertising expense to promote our brands. We expense the production costs associated with advertisements in the period
in which the advertisement first takes place. We expense the costs of communicating the advertisement (e.g., television
airtime) as incurred each time the advertisement is shown. For the years ended December 31, 2022, 2021 and 2020, our
advertising expense was $3.9 billion, $2.7 billion and $1.2 billion.
Stock-Based Compensation
We measure and amortize the fair value of restricted stock units (“RSUs”) and stock options as follows:
Restricted Stock Units. RSUs are stock awards that are granted to employees entitling the holder to shares of
common stock as the award vests, typically over a four-year period, but may accelerate in certain circumstances. 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, net of actual forfeitures, as stock-based compensation expense over the
vesting term on a straight-line basis. In addition, we have a limited number of performance stock units ("PSUs"), for which
we calculate the fair value using a Monte Carlo valuation model and amortized the fair value, net of actual forfeitures, as
stock-based compensation over the vesting term, generally a two or three year period, on an accelerated basis. The number
of shares that ultimately vest depends on achieving certain performance metrics or performance goals, as applicable, by the
end of the performance period, assuming there is no accelerated vesting for, among other things, a termination of
employment under certain circumstances. We record RSUs that may be settled by the holder in cash, rather than shares, as
a liability and we remeasure these instruments at fair value at the end of each reporting period. Upon settlement of these
awards, our total compensation expense recorded over the vesting period of the awards will equal the settlement amount,
which is based on our stock price on the settlement date.
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, on the grant date (or modification or acquisition
dates, if applicable) at fair value, using appropriate valuation techniques, including the Black-Scholes. We amortize the fair
value, net of actual forfeitures, over the remaining explicit vesting term in the case of service-based awards and the longer
of the derived service period or the explicit service period for awards with market conditions on a straight-line basis. In
addition, we classify certain employee option awards as liabilities when we deem it not probable that the employees
holding the awards will bear the risk and rewards of stock ownership for a reasonable period of time. Such options are
revalued at the end of each reporting period and upon settlement our total compensation expense recorded from grant date
to settlement date will equal the settlement amount. The majority of our stock options vest over three to four years.
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.
Earnings Per Share
We compute basic earnings per share by taking net income or loss attributable to Expedia Group, Inc. available to
common stockholders divided by the weighted average number of common and Class B common shares outstanding during
the period excluding restricted stock and stock held in escrow. Diluted earnings per share include the potential dilution that
could occur from stock-based awards and other stock-based commitments (which includes our Convertible Notes) using
F- 21
the treasury stock or the if converted method, as applicable. For additional information on how we compute earnings per
share, see NOTE 12 — Earnings Per Share.
Fair Value Recognition, Measurement and Disclosure
The carrying amounts of cash and cash equivalents and restricted cash and cash equivalents reported on our
consolidated balance sheets approximate fair value as we maintain them with various high-quality financial institutions.
The accounts receivable are short-term in nature and are generally settled shortly after the sale.
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.
Certain Risks and Concentrations
Our business is subject to certain risks and concentrations including dependence on relationships with travel
suppliers, primarily airlines and hotels, dependence on third-party technology providers, exposure to risks associated with
online commerce security and payment related fraud. We also rely on global distribution system partners and third-party
service providers for certain fulfillment services.
Financial instruments, which potentially subject us to concentration of credit risk, consist primarily of cash and cash
equivalents. We maintain some cash and cash equivalents balances with financial institutions that are in excess of Federal
Deposit Insurance Corporation insurance limits. Our cash and cash equivalents are primarily composed of term deposits as
well as bank (both interest and non-interest bearing) account balances denominated in U.S. dollars, Euros, British pound,
Canadian dollar, Australian dollar, Brazilian real, Swiss Franc and Indian Rupee.
Contingent Liabilities
We have a number of regulatory and legal matters outstanding, as discussed further in NOTE 15 — Commitments
and 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 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.
Occupancy and Other Taxes
Some states and localities impose taxes (e.g. transient occupancy, accommodation tax, sales tax, and/or business
privilege tax) on the use or occupancy of hotel accommodations or other traveler services. Generally, hotels collect taxes
based on the room rate paid to the hotel and remit these taxes to the various tax authorities. When a customer books a room
through one of our travel services, we collect a tax recovery charge from the customer which we pay to the hotel. We
calculate the tax recovery charge by applying the applicable tax rate supplied to us by the hotels to the amount that the
hotel has agreed to receive for the rental of the room by the consumer. In most jurisdictions, we do not collect or remit
taxes, nor do we pay taxes to the hotel operator on the portion of the customer payment we retain. Some jurisdictions have
questioned our practice in this regard. While the applicable tax provisions vary among the jurisdictions, we generally
believe that we are not required to collect and remit such taxes. A limited number of taxing jurisdictions have made similar
claims against certain of our companies for tax amounts due on the rental amounts charged by owners of alternative
accommodations properties or for taxes on our services. We are an intermediary between a traveler and a party renting a
F- 22
vacation property and we believe is similarly not liable for such taxes. We are engaged in discussions with tax authorities
in various jurisdictions to resolve these issues. Some tax authorities have brought lawsuits or have levied assessments
asserting that we are required to collect and remit tax. The ultimate resolution in all jurisdictions cannot be determined at
this time. We have established a reserve for the potential settlement of issues related to hotel occupancy and other taxes
when determined to be probable and estimable. See NOTE 15 — Commitments and Contingencies for further discussion.
Recently Adopted Accounting Policies
In June 2022, the Financial Accounting Standards Board (“FASB”) issued new guidance related to fair value
measurement of equity securities, which clarifies the fair value measurement of an equity security that is subject to a
contractual sale restriction and requires specific disclosures related to such an equity security. The new guidance is
effective for fiscal years beginning after December 15, 2023, with early adoption permitted. We elected to early adopt the
new guidance in the second quarter of 2022 on a prospective basis. One of our minority equity investments is accounted for
in accordance with this new guidance See NOTE 3 — Fair Value Measurements for additional information.
Recent Accounting Policies Not Yet Adopted
In October 2021, the FASB issued new guidance relate to recognizing and measuring contract assets and contract
liabilities from contracts with customers acquired in a business combination. The new guidance will require acquiring
entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination as
compared to current GAAP where an acquirer generally recognizes such items at fair value on the acquisition date. The
new guidance is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption
permitted. We do not expect it will have a material impact, if any, on our consolidated financial statements.
NOTE 3 — Fair Value Measurements
Financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 are classified
using the fair value hierarchy in the table below:
Assets
Cash equivalents:
Money market funds
Term deposits
Derivatives:
Foreign currency forward contracts
Cross-currency interest rate swaps
Investments:
Term deposits
Equity investments
Total assets
Total
Level 1
(In millions)
Level 2
$
$
3 $
188
3 $
—
15
21
48
564
839 $
—
—
—
49
52 $
—
188
15
21
48
515
787
F- 23
Financial assets measured at fair value on a recurring basis as of December 31, 2021 are classified using the fair
value hierarchy in the table below:
Assets
Cash equivalents:
Money market funds
Mutual funds
Term deposits
Derivatives:
Foreign currency forward contracts
Investments:
Term deposits
Equity investments
Total assets
Total
Level 1
Level 2
Level 3
(In millions)
$
$
47 $
23
153
47 $
23
—
— $
—
153
3
—
3
200
909
1,335 $
—
94
164 $
200
—
356 $
—
—
—
—
—
815
815
We classify our cash equivalents and investments within Level 1 and Level 2 as we value our cash equivalents and
investments using quoted market prices or alternative pricing sources and models utilizing market observable inputs.
Valuation of the foreign currency forward contracts is based on foreign currency exchange rates in active markets, a
Level 2 input. Valuation of the cross-currency interest rate swaps is based on foreign currency exchange rates and the
current interest rate curve, Level 2 inputs.
We hold term deposit investments with financial institutions. Term deposits with original maturities of less than three
months are classified as cash equivalents, those with remaining maturities of less than one year are classified within short-
term investments and those with remaining maturities of greater than one year are classified within long-term investments
and other assets.
As of December 31, 2022 and 2021, our cash and cash equivalents consisted primarily of term deposits, money
market funds and mutual funds with maturities of three months or less and bank account balances.
We use foreign currency forward contracts to economically hedge certain merchant revenue exposures, foreign
denominated liabilities related to certain of our loyalty programs and our other foreign currency-denominated operating
liabilities. As of December 31, 2022, we were party to outstanding forward contracts hedging our liability exposures with a
total net notional value of $2.8 billion. As of December 31, 2022 and 2021, we had net forward assets of $15 million
($29 million gross forward asset) and $3 million ($12 million gross forward asset) recorded in prepaid expenses and other
current assets. We recorded $(66) million, $1 million and $74 million in net gains (losses) from foreign currency forward
contracts in 2022, 2021 and 2020.
On March 2, 2022, we entered into two fixed-to-fixed cross-currency interest rate swaps with an aggregate notional
amount of €300 million, and maturity dates of February 2026. The swaps were designated as net investment hedges of Euro
assets with the objective to protect the U.S. dollar value of our net investments in the Euro foreign operations due to
movements in foreign currency. The fair value of the cross-currency interest rate swaps was a $21 million asset as of
December 31, 2022 recorded in long-term investments and other assets, and the gain recognized in interest expense during
the year ended December 31, 2022 was $5 million.
Our equity investments include our marketable equity investment in Despegar, a publicly traded company, which is
included in long-term investments and other assets in our consolidated balance sheets. During the years ended
December 31, 2022, 2021, and 2020, we recognized losses of approximately $45 million, $29 million and $6 million,
respectively, within other, net in our consolidated statements of operations related to the fair value changes of this equity
investment.
In connection with our disposition of Egencia (our former corporate travel arm) in November 2021 as discussed in
NOTE 16 – Divestitures, we became an indirect holder of approximately 19% interest in GBT JerseyCo Ltd. (“GBT”),
doing business as American Express Global Business Travel, with an initial fair value of $815 million. As we elected the
fair value option for our investment, during the first quarter of 2022, we recorded a downward adjustment of approximately
$2 million based on an updated valuation. In May 2022, GBT completed a deSPAC business combination with Apollo
Strategic Growth Capital. This combination resulted in a newly publicly traded company, Global Business Travel Group,
F- 24
Inc (“GBTG”), which together with GBT’s pre-combination shareholders owned all of GBT. Post combination and as of
December 31, 2022, we had an approximately 16% ownership interest in GBT and a commensurate voting interest in
GBTG. Our shares in GBT are exchangeable on a 1:1 basis for GBTG shares, and as such, we valued our investment based
on the GBTG’s share price as of the last trading day in 2022, which resulted in a loss of $300 million within other, net in
our consolidated statements of operations for the year ended December 31, 2022.
The following table reconciles, in millions, the beginning and ending balances of our Level 3 assets. With the May
2022 business combination of GBTG, we reclassified our equity investment from a Level 3 asset to a Level 2 asset.
Balance at December 31, 2021
Upward (downward) adjustment to valuation
Reclassification to Level 2
Balance at December 31, 2022
Assets Measured at Fair Value on a Non-recurring Basis
$
$
815
(335)
(480)
—
Our non-financial assets, such as goodwill, intangible assets and property and equipment, as well as equity method
investments for which we have not elected the fair value option, are adjusted to fair value when an impairment charge is
recognized or the underlying investment is sold. Such fair value measurements are based predominately on Level 3 inputs.
We measure our minority investments that do not have readily determinable fair values at cost less impairment, adjusted by
observable price changes with changes recorded within other, net on our consolidated statements of operations.
Goodwill. During 2021, we recognized a goodwill impairment charge of $14 million in our B2B segment resulting
from valuing a component of our Egencia reporting unit that remained after the sale on November 1, 2021.
During 2020, due to the severe and persistent negative effect COVID-19 had on global economies, the travel industry
and our business, as well as the uncertainty and high variability in anticipated versus actual rates of recovery, in addition to
our annual assessment on October 1, 2020, we deemed it necessary to perform various interim assessments of goodwill. As
a result of assessments during 2020, we recognized goodwill impairment charges of $799 million, of which $559 million
related to our Retail segment, primarily our Vrbo reporting unit, and $240 million related to our trivago segment.
Our assessments compared the fair value of the reporting units to their carrying value. The fair value estimates for all
reporting units, except trivago, were based on a blended analysis of the present value of future discounted cash flows and
market value approach, Level 3 inputs. The significant estimates used in the discounted cash flows model included our
weighted average cost of capital, projected cash flows and the long-term rate of growth. Our assumptions were based on
the actual historical performance of the reporting unit and took into account operating result trends, the anticipated duration
of COVID-19 impacts and rates of recovery, and implied risk premiums based on market prices of our equity and debt as
of the assessment dates. Our significant estimates in the market approach model included identifying similar companies
with comparable business factors such as size, growth, profitability, risk and return on investment and assessing
comparable revenue and earnings multiples in estimating the fair value of the reporting unit. The fair value estimate for the
trivago reporting unit was based on trivago’s stock price, a Level 1 input, adjusted for an estimated control premium. The
excess of the reporting unit's carrying value over our estimate of the fair value was recorded as goodwill impairment
charges during 2020. As of December 31, 2020, the applicable reporting units within our Retail segment had $2.3 billion
goodwill remaining after the impairments incurred in 2020 and our trivago segment had $337 million goodwill remaining.
As noted above, trivago is subject to its own reporting and filing requirements and, therefore, assesses goodwill at a
lower level, which could result in possible differences in the ultimate amount or timing of impairments recognized.
Additionally, as the stock of our trivago segment is publicly traded, it is difficult to predict market dynamics and the extent
or duration of any stock price declines.
Intangible and Long-term Assets. During 2022, we recognized intangible impairment charges of $81 million related
to an indefinite-lived trade name within our trivago segment that primarily resulted from changes in the weighted average
cost of capital. The indefinite-lived trade name asset, classified as Level 3 measurements, was valued using the relief-from-
royalty method, which includes unobservable inputs, including projected revenues, royalty rates and weighted average cost
of capital.
During 2021, we recognized long-term asset impairment charges of $6 million in our B2B segment resulting from the
write-off of capitalized software of a component of our Egencia reporting unit that remained after the sale on November 1,
2021.
F- 25
During 2020, we recognized intangible asset impairment charges of $175 million within our Retail segment, of which
$119 million related to indefinite-lived trade names that resulted from changes in estimated future revenues of the related
brands as well as $35 million related to definite-lived intangible assets and $21 million related to other long-lived assets.
The indefinite-lived intangible assets, classified as Level 3 measurements, were valued using the relief-from-royalty
method, which includes unobservable inputs, including projected revenues and royalty rates, which ranged from 2% to 8%
with a weighted average royalty rate of 7%. For definite-lived intangible assets, classified as Level 3 measurements, we
compared the estimated future, net undiscounted cash flows, which included key inputs such as rates of growth and
profitability of our business as well as incremental net working capital, to the long-lived asset’s carrying amount. During
2020, we met the criteria to recognize certain smaller businesses within our Retail segment as held-for-sale. As such, we
remeasured the disposal groups at fair value, less costs to sell, which is considered a Level 3 measurement and was based
on each transaction’s estimated consideration as of the date of close.
Minority Investments without Readily Determinable Fair Values. As of both December 31, 2022 and 2021, the
carrying values of our minority investments without readily determinable fair values totaled $330 million. During 2022 and
2021, we had no material gains or losses recognized related to these minority investments. During 2020, we recorded
$134 million of losses related to a minority investment, which had recent observable and orderly transactions for similar
investments, using an option pricing model that utilizes judgmental inputs such as discounts for lack of marketability and
estimated exit event timing. As of December 31, 2022, total cumulative adjustments made to the initial cost basis of these
investments included $2 million in unrealized upward adjustments and $105 million in unrealized downward adjustments
(including impairments).
NOTE 4 — Property and Equipment, Net
Our property and equipment consists of the following:
Capitalized software development
Computer equipment
Furniture and other equipment
Buildings and leasehold improvements
Land
Less: accumulated depreciation
Projects in progress
Property and equipment, net
December 31,
2022
2021
(In millions)
$
$
3,107 $
353
102
1,183
146
4,891
(2,744)
63
2,210 $
2,892
351
106
1,220
146
4,715
(2,568)
33
2,180
As of December 31, 2022 and 2021, our recorded capitalized software development costs, net of accumulated
amortization, which have been placed in service were $960 million and $895 million. For the years ended December 31,
2022, 2021 and 2020, we recorded amortization of capitalized software development costs of $597 million, $588 million
and $593 million included in depreciation and amortization expense.
As of December 31, 2022, 2021 and 2020, we had $26 million, $4 million and $9 million, respectively, included in
accounts payable for the acquisition of property and equipment, which is considered a non-cash investing activity in the
consolidated statements of cash flows.
NOTE 5 – Leases
We have operating leases for office space and data centers. Our leases have remaining lease terms of one year to 15
years, some of which include options to extend the leases for up to ten years, and some of which include options to
terminate the leases within one year.
Operating lease costs were $99 million, $119 million and $159 million for the years ended December 31, 2022, 2021
and 2020, respectively.
F- 26
Supplemental cash flow information related to leases were as follows:
2022
Year ended
December 31,
2021
(In millions)
2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating lease payments
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
$
96 $
151 $
75
30
139
117
Supplemental consolidated balance sheet information related to leases were as follows:
December 31, 2022
December 31, 2021
Operating lease right-of-use assets
$
Current lease liabilities, included within Accrued expenses and other current liabilities $
Long-term lease liabilities, included within Operating lease liabilities
Total operating lease liabilities
Weighted average remaining lease term
Weighted average discount rate
Maturities of lease liabilities are as follows:
$
Year ending December 31,
2023
2024
2025
2026
2027
2028 and thereafter
Total lease payments
Less: imputed interest
Total
(in millions)
363
77
312
389
$
$
$
407
77
360
437
7.1 years
3.5 %
8.1 years
3.5 %
Operating Leases
(in millions)
$
$
88
67
56
51
47
134
443
(54)
389
NOTE 6 — Goodwill and Intangible Assets, Net
The following table presents our goodwill and intangible assets as of December 31, 2022 and 2021:
Goodwill
Intangible assets with indefinite lives
Intangible assets with definite lives, net
December 31,
2022
2021
(In millions)
7,143 $
1,058
151
8,352 $
7,171
1,166
227
8,564
$
$
Impairment Assessments. We perform our annual assessment of possible impairment of goodwill and indefinite-lived
intangible assets as of October 1, or more frequently if events and circumstances indicate that an impairment may have
occurred.
During 2022, we recognized an intangible impairment charge of $81 million related to an indefinite-lived trade name
within our trivago segment. During 2021, we recognized a goodwill impairment charge of $14 million. During 2020, due to
F- 27
the severe and persistent negative effect COVID-19 had on global economies, the travel industry and our business, as well
as the uncertainty and high variability in anticipated versus actual rates of recovery, in addition to our annual assessment,
we deemed it necessary to perform various interim assessments of goodwill and intangible assets. As a result of these
assessments, we recognized goodwill impairment charges of $799 million, of which $559 million related to our Retail
segment, primarily our Vrbo reporting unit, and $240 million related to our trivago segment. We also incurred impairment
charges of $175 million related to intangible assets with both indefinite-lives and definite lives, primarily within our Retail
segment.
Goodwill. The following table presents the changes in goodwill by reportable segment:
Retail
B2B
trivago
Total
Balance as of January 1, 2021
Impairment charges
Additions
Deductions
Foreign exchange translation and other
Balance as of December 31, 2021
Foreign exchange translation and other
$
6,505 $
—
—
(34)
(9)
6,462
(29)
(In millions)
538 $
(14)
—
(167)
37
394
18
Balance as of December 31, 2022
$
6,433 $
412 $
337 $
7,380
—
5
—
(27)
315
(17)
298 $
(14)
5
(201)
1
7,171
(28)
7,143
As of December 31, 2022 and 2021, accumulated goodwill impairment losses in total were $3.3 billion, of which
$3.0 billion was associated with our Retail segment, $240 million was associated with our trivago segment and $14 million
was associated with our B2B segment.
Indefinite-lived Intangible Assets. Our indefinite-lived intangible assets relate principally to trade names and
trademarks acquired in various acquisitions.
Intangible Assets with Definite Lives. The following table presents the components of our intangible assets with
definite lives as of December 31, 2022 and 2021:
Cost
December 31, 2022
Accumulated
Amortization
Net
Cost
December 31, 2021
Accumulated
Amortization
Net
Customer relationships
Supplier relationships
Domain names
Other
Total
$
$
382 $
478
149
686
1,695 $
(336) $
(460)
(118)
(630)
(1,544) $
(In millions)
46 $
18
31
56
151 $
565 $
626
164
1,016
2,371 $
(502) $
(564)
(133)
(945)
(2,144) $
Amortization expense was $88 million, $99 million and $154 million for the years ended December 31, 2022, 2021
and 2020. The estimated future amortization expense related to intangible assets with definite lives as of December 31,
2022, assuming no subsequent impairment of the underlying assets, is as follows, in millions:
2023
2024
2025
2026
Total
$
$
63
62
31
71
227
59
52
33
7
151
F- 28
NOTE 7 — Debt
The following table sets forth our outstanding debt:
2.5% (€650 million) senior notes due 2022
3.6% senior notes due 2023
4.5% senior notes due 2024
6.25% senior notes due 2025
5.0% senior notes due 2026
0% convertible senior notes due 2026
4.625% senior notes due 2027
3.8% senior notes due 2028
3.25% senior notes due 2030
2.95% senior notes due 2031
Long-term debt(1)
Current maturities of long-term debt
Long-term debt, excluding current maturities
___________________________________
(1)
Net of applicable discounts and debt issuance costs.
Redemption of Senior Notes
December 31,
2022
2021
(In millions)
— $
—
—
1,036
746
989
745
995
1,237
492
6,240
—
6,240 $
735
497
498
1,033
745
986
744
994
1,235
983
8,450
(735)
7,715
$
$
During 2022, we early redeemed all of our €650 million registered senior unsecured notes that were due June 2022
and bore interest at 2.5% (the “2.5% Notes”), all of our $500 million registered senior unsecured notes that were due
December 2023 and bore interest at 3.6% (the “3.6% Notes”), and all of our $500 million registered senior unsecured notes
that were due August 2024 and bore interest at 4.5% (the “4.5% Notes”), which resulted in the recognition of a loss on debt
extinguishment of $24 million during the year ended December 31, 2022. This loss primarily reflected the payment of
"make-whole" premiums of $20 million for the 3.6% and 4.5% Notes as well as the write-off of unamortized debt issuance
costs and discounts of $4 million.
In addition, during 2022, we settled a tender offer to purchase $500 million in aggregate principal of our 2.95%
Senior Notes due 2031 (the “2.95% Notes”) for an aggregate cash repurchase price of approximately $418 million, which
resulted in the recognition of a net gain on debt extinguishment of $73 million. The net gain included the write-off of debt
issuance costs and discounts of $8 million as well as fees of $1 million.
We paid accrued and unpaid interest on the 2.5%, 3.6%, 4.5% and 2.95% Notes up to their dates of redemption.
During 2021, we redeemed all of our then outstanding 7.0% senior notes due 2025 as well as settled the tender offer
to purchase $956 million in aggregate principal of our 6.25% senior notes due 2025, which resulted in the recognition of a
loss on debt extinguishment of $280 million during the year ended December 31, 2021. This loss primarily reflected the
payment of early payment premiums and fees associated with the tender offer as well as the write-off of unamortized debt
issuance costs.
Outstanding Debt
Senior Notes Outstanding. In prior years, we issued the following senior notes, which are still outstanding as of
December 31, 2022:
•
Approximately $1 billion of senior unsecured notes that are due in May 2025 that bear interest at 6.25% (the
“6.25% Notes”), which reflects the 2021 tender offer to purchase $956 million in aggregate principal discussed
above. The 6.25% Notes were issued at a price of 100% of the aggregate principal amount. Interest is payable
semi-annually in arrears in May and November of each year. We may redeem some or all of the 6.25% Notes at
any time prior to February 1, 2025 by paying a “make-whole” premium plus accrued and unpaid interest, if any.
We may redeem some or all of the 6.25% Notes on or after February 1, 2025 at par plus accrued and unpaid
interest, if any.
F- 29
•
•
•
•
•
$750 million of registered senior unsecured notes that are due in February 2026 that bear interest at 5.0% (the
“5.0% Notes”). The 5.0% Notes were issued at 99.535% of par resulting in a discount, which is being amortized
over their life. Interest is payable semi-annually in arrears in February and August of each year. We may redeem
the 5.0% Notes at our option at any time in whole or from time to time in part. If we elect to redeem the 5.0%
Notes prior to November 12, 2025, we may redeem them at a redemption price of 100% of the principal plus
accrued interest, plus a “make-whole” premium. If we elect to redeem the 5.0% Notes on or after November 12,
2025, we may redeem them at a redemption price of 100% of the principal plus accrued interest.
$750 million of registered senior unsecured notes that are due in August 2027 that bear interest at 4.625% (the
“4.625% Notes”). The 4.625% Notes were issued at a price of 99.997% of the aggregate principal amount. Interest
is payable semi-annually in arrears in February and August of each year. We may redeem some or all of the
4.625% Notes at any time prior to May 1, 2027 by paying a “make-whole” premium plus accrued and unpaid
interest, if any. We may redeem some or all of the 4.625% Notes on or after May 1, 2027 at par plus accrued and
unpaid interest, if any.
$1 billion of registered senior unsecured notes that are due in February 2028 that bear interest at 3.8% (the “3.8%
Notes”). The 3.8% Notes were issued at 99.747% of par resulting in a discount, which is being amortized over
their life. Interest is payable semi-annually in arrears in February and August of each year. We may redeem the
3.8% Notes at our option at any time in whole or from time to time in part. If we elect to redeem the 3.8% Notes
prior to November 15, 2027, we may redeem them at a redemption price of 100% of the principal plus accrued
interest, plus a “make-whole” premium. If we elect to redeem the 3.8% Notes on or after November 15, 2027, we
may redeem them at a redemption price of 100% of the principal plus accrued interest.
$1.25 billion of registered senior unsecured notes that are due in February 2030 and bear interest at 3.25% (the
“3.25% Notes”). The 3.25% Notes were issued at 99.225% of par resulting in a discount, which is being amortized
over their life. Interest is payable semi-annually in arrears in February and August of each year. We may redeem
the 3.25% Notes at our option at any time in whole or from time to time in part. If we elect to redeem the 3.25%
Notes prior to November 15, 2029, we may redeem them at a redemption price of 100% of the principal plus
accrued interest, plus a “make-whole” premium. If we elect to redeem the 3.25% Notes on or after November 15,
2029, we may redeem them at a redemption price of 100% of the principal plus accrued interest.
$500 million of senior unsecured notes that are due in March 2031 and bear interest at 2.95%, which reflects the
2022 tender offer to purchase $500 million in aggregate principal discussed above. The 2.95% Notes were issued
at a price of 99.081% of the aggregate principal amount. Interest is payable semi-annually in arrears in March and
September of each year and the interest rate is subject to adjustment based on certain ratings events. We may
redeem some or all of the 2.95% Notes at any time prior to December 15, 2030 by paying a “make-whole”
premium plus accrued and unpaid interest, if any. We may redeem some or all of the 2.95% Notes on or after
December 15, 2030 at par plus accrued and unpaid interest, if any.
All of our outstanding senior notes (collectively the "Senior Notes") are senior unsecured obligations issued by
Expedia Group and guaranteed by certain domestic Expedia Group subsidiaries. The Senior Notes rank equally in right of
payment with all of our existing and future unsecured and unsubordinated obligations of Expedia Group and the guarantor
subsidiaries. In addition, the Senior Notes include covenants that limit our ability to (i) create certain liens, (ii) enter into
sale/leaseback transactions and (iii) merge or consolidate with or into another entity or transfer substantially all of our
assets. The Senior Notes are redeemable in whole or in part, at the option of the holders thereof, upon the occurrence of
certain change of control triggering events at a purchase price in cash equal to 101% of the principal plus accrued and
unpaid interest. Accrued interest related to the Senior Notes was $73 million and $98 million as of December 31, 2022 and
2021.
Convertible Notes Outstanding. The net carrying amount of the Convertible Notes as of December 31, 2022 and 2021
was $989 million and $986 million, respectively, which reflects the $1 billion in principal less unamortized debt issuance
costs of $11 million and $14 million, respectively. Interest expense related to the amortization of the debt issuance costs for
the Convertible Notes was $3 million during both of the years ended December 31, 2022 and 2021.
The Convertible Notes are unsecured, unsubordinated obligations and rank equally in right of payment with each
other and with all of our existing and future unsecured and unsubordinated obligations, including our existing senior notes.
The Convertible Notes are fully and unconditionally guaranteed by the subsidiary guarantors, which include each domestic
subsidiary that is a borrower under or guarantees the obligations under our existing senior secured credit agreement. So
long as the guarantees are in effect, each subsidiary guarantor’s guarantee will be the unsecured, unsubordinated obligation
of such subsidiary guarantor and will rank equally in right of payment with each other and with all of such subsidiary
F- 30
guarantor’s existing and future unsecured and unsubordinated obligations, including such subsidiary guarantor’s guarantees
of our existing senior notes.
The Convertible Notes will mature on February 15, 2026, unless earlier converted, redeemed or repurchased. The
Convertible Notes will not bear regular interest, and the principal amount of the Convertible Notes will not accrete.
The Convertible Notes have an initial conversion rate of 3.9212 shares of common stock of Expedia Group with a par
value $0.0001 per share (referred to as “our common stock” herein), per $1,000 principal amount of Convertible Notes,
which is equal to an initial conversion price of approximately $255.02 per share of our common stock. The conversion rate
is subject to adjustment from time to time upon the occurrence of certain events, including, but not limited to, the issuance
of stock dividends and payment of cash dividends. At any time prior to the close of business on the business day
immediately preceding November 15, 2025, holders may convert their Convertible Notes at their option only under the
following circumstances:
• during any calendar quarter commencing after the calendar quarter ending on March 31, 2021 (and only during
such calendar quarter), if the last reported sale price of our common stock for at least 20 trading days (whether or
not consecutive) during the period of 30 consecutive trading days ending on, and including, the last trading day of
the immediately preceding calendar quarter is equal to or greater than 130% of the conversion price then in effect
on each applicable trading day;
• during the five business day period immediately after any five consecutive trading day period (the “measurement
period”) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the
measurement period was less than 98% of the product of the last reported sale price of our common stock and the
conversion rate on each such trading day;
• if the Company calls any or all of the Convertible Notes for redemption, at any time prior to the close of business
on the business day immediately prior to the redemption date, but only with respect to the Convertible Notes
called for redemption (or deemed called for redemption); or
• upon the occurrence of specified corporate events.
Irrespective of the foregoing conditions, holders may convert their Convertible Notes on or after November 15, 2025
and prior to the close of business on the second scheduled trading day immediately preceding the maturity date.
Additionally, upon the occurrence of a corporate event that constitutes a “make-whole fundamental change” per the
indenture, or if we call the Convertible Notes for redemption, and a holder elects to convert its Convertible Notes in
connection with such make-whole fundamental change or during the related redemption period, as the case may be, such
holder may be entitled to an increase in the conversion rate in certain circumstances as described in the indenture. Upon
conversion, holders will receive cash, shares of our common stock or a combination of cash and shares of our common
stock, at our election.
We may not redeem the Convertible Notes prior to February 20, 2024. On or after February 20, 2024 and prior to the
41st scheduled trading day immediately preceding the maturity date, if the last reported sale price per share of our common
stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive)
during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the
trading day immediately preceding the date on which we provide notice of redemption, we may redeem for cash all or part
of the Convertible Notes at a redemption price equal to 100% of the principal amount of the Convertible Notes to be
redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, except as otherwise
described in the indenture.
Estimated Fair Value. The total estimated fair value of our Senior Notes was approximately $4.9 billion and $8.0
billion as of December 31, 2022 and 2021. Additionally, the estimated fair value of the Convertible Notes was $871
million and $1.2 billion as of December 31, 2022 and 2021. The fair value was determined based on quoted market prices
in less active markets and is categorized according as Level 2 in the fair value hierarchy.
F- 31
Credit Facility
As of December 31, 2022, Expedia Group maintained a $2.5 billion revolving credit facility that matures in April
2027. As of December 31, 2022, we had no revolving credit facility borrowings outstanding. Loans under the revolving
credit facility bear interest at a rate equal to an index rate plus a margin (a) in the case of term benchmark loans, ranging
from 1.00% to 1.75% per annum, depending on Expedia Group's credit ratings, and (b) in the case of base rate loans,
ranging from 0.00% to 0.75% per annum, depending on Expedia Group's credit ratings. A fee is payable quarterly in
respect of undrawn commitments under the revolving credit facility at a rate ranging from 0.10% to 0.25% per annum,
depending on Expedia Group's credit ratings. The terms of the revolving credit facility require Expedia Group to not
exceed a specified maximum consolidated leverage ratio as of the end of each fiscal quarter.
The revolving credit facility has a $120 million letter of credit (“LOC”) sublimit, and the amount of LOCs issued
under the facility reduced the credit amount available. As of December 31, 2022, there was $38 million of outstanding
stand-by LOCs issued under the facility.
The current facility was setup in April 2022 and Expedia Group terminated all outstanding commitments and repaid
all outstanding obligations under our prior $1.145 billion revolving credit facility and $855 million foreign credit facility.
As of December 31, 2021, we had no borrowings outstanding under either prior facility and $14 million of outstanding
stand-by LOCs issued under the $1.145 billion revolving facility.
NOTE 8 — Employee Benefit Plans
Our U.S. employees are generally eligible to participate in a retirement and savings plan that qualifies under
Section 401(k) of the Internal Revenue Code. Participating employees may contribute up to 50% of their eligible
compensation, but not more than statutory limits. Expedia Group makes matching contributions in an amount equal to 50%
of participant 401(k) contributions up to the first 6% of their compensation each payroll period. Our contribution vests with
the employee after the employee completes two years of service. Participating employees have the option to invest in our
common stock, but there is no requirement for participating employees to invest their contribution or our matching
contribution in our common stock. We also have various defined contribution plans for our international employees. Our
contributions to these benefit plans were $63 million, $68 million and $63 million for the years ended December 31, 2022,
2021 and 2020.
NOTE 9 — Stock-Based Awards and Other Equity Instruments
Pursuant to the Amended and Restated Expedia Group, Inc. 2005 Stock and Annual Incentive Plan, we may grant
restricted stock, restricted stock awards, RSUs, stock options and other stock-based awards, such as PSUs, to directors,
officers, employees and consultants. As of December 31, 2022, we had approximately 7 million shares of common stock
reserved for new stock-based awards under the 2005 Stock and Annual Incentive Plan. We issue new shares to satisfy the
exercise or release of stock-based awards.
The following table presents a summary of RSU activity:
Balance as of December 31, 2021
Granted
Vested
Cancelled
Balance as of December 31, 2022
RSUs
(In thousands)
Weighted Average
Grant-Date Fair
Value
5,822 $
3,967
(2,175)
(984)
6,630
140.33
150.35
139.18
142.14
146.43
F- 32
The following table presents a summary of PSU activity :
Shares probable to be issued as of December 31, 2021
Granted
Performance Shares Adjustment(1)
Vested
Cancelled
Shares probable to be issued as of December 31, 2022
PSUs
(In thousands)
Weighted Average
Grant-Date Fair
Value
380 $
125
(223)
(179)
(70)
33
133.42
222.80
177.35
88.04
189.02
87.58
___________________________________
(1)
Outcome for vested performance-based awards is updated based upon achievement of certain stock price growth
rate targets of the Company’s common stock. Probable outcome for unvested performance-based awards is based
upon achievement of certain stock price growth rate targets of the Company’s common stock as of December 31,
2022.
The total market value of RSU and PSU shares vested during the years ended December 31, 2022, 2021 and 2020 was
$336 million, $504 million and $172 million.
The following table summarizes the estimated vesting, as of December 31, 2022, of PSUs granted in 2022, 2021 and
2020, net of forfeiture and vesting since the respective grant dates:
Performance Stock Units
2022
2021
2020
Total
Weighted Average
Grant-Date Fair
Value
By Grant Year
Shares probable to be issued
Shares not subject to the achievement of
minimum performance thresholds
Shares that could be issued if maximum
performance thresholds are met
—
—
205
(In thousands)
—
—
259
33
33
118
33 $
33
582
87.58
87.58
174.54
The following table presents a summary of our stock option activity:
Options
Weighted Average
Exercise Price
Remaining
Contractual Life
(In thousands)
(In years)
Aggregate
Intrinsic Value
(In millions)
Balance as of December 31, 2021
Exercised
Cancelled
Balance as of December 31, 2022
Exercisable as of December 31, 2022
Vested and expected to vest after December
31, 2022
5,191 $
(945)
(171)
4,075
1,756
4,075
129.17
103.20
111.66
135.93
109.19
135.93
3.5 $
1.3
3.5
—
—
—
The aggregate intrinsic value of outstanding options shown in the stock option activity table above represents the
total pretax intrinsic value at December 31, 2022, based on our closing stock price of $87.60 as of the last trading date in
2022. The total intrinsic value of stock options exercised was $89 million, $302 million and $74 million for the years ended
December 31, 2022, 2021 and 2020.
There were no options granted during 2022 or 2020. The fair value of stock options granted during 2021 were
estimated at the date of grant using the Black-Scholes option-pricing model, assuming the following weighted average
assumptions:
F- 33
Risk-free interest rate
Expected volatility
Expected life (in years)
Dividend yield
0.82 %
42.64 %
5.13
— %
Weighted-average estimated fair value of options granted during the year
$
60.39
In 2022, 2021 and 2020, we recognized total stock-based compensation expense of $374 million, $418 million and
$205 million. The total income tax benefit related to stock-based compensation expense was $106 million, $157 million
and $44 million for 2022, 2021 and 2020. We capitalized $54 million, $68 million and $36 million of stock-based
compensation expense associated with the cost of developing internal-use software in 2022, 2021 and 2020.
Cash received from stock-based award exercises for the years ended December 31, 2022, 2021 and 2020 was $98
million, $476 million and $301 million, respectively. Total current income tax benefits during the years ended
December 31, 2022, 2021 and 2020 associated with the exercise of stock-based awards held by our employees were $17
million, $28 million and $1 million, respectively.
As of December 31, 2022, there was approximately $938 million of unrecognized stock-based compensation expense
related to unvested stock-based awards, which is expected to be recognized in expense over a weighted-average period of
2.73 years.
Employee Stock Purchase Plan
We have an Employee Stock Purchase Plan (“ESPP”), which allows shares of our common stock to be purchased by
eligible employees at three-month intervals at 85% of the fair market value of the stock on the last day of each three-month
period. Eligible employees were allowed to contribute up to 15% of their base compensation. During 2022, 2021 and 2020,
approximately 305,000, 194,000, and 212,000 shares were purchased under this plan for an average price of $109.36,
$135.38 and $84.89 per share. As of December 31, 2022, we have reserved approximately 901,000 shares of our common
stock for issuance under the ESPP.
NOTE 10 — Income Taxes
The following table summarizes our U.S. and foreign income (loss) before income taxes:
U.S.
Foreign
Total
Provision for Income Taxes
Year Ended December 31,
2022
2021
(In millions)
2020
$
$
67 $
471
538 $
(274) $
236
(38) $
(2,354)
(797)
(3,151)
F- 34
The following table summarizes our provision for income taxes:
Current income tax (benefit) expense:
U.S. federal
State
Foreign
Current income tax expense
Deferred income tax (benefit) expense:
U.S. federal
State
Foreign
Deferred income tax (benefit) expense
Income tax (benefit) expense
$
Year Ended December 31,
2022
2021
(In millions)
2020
$
17 $
17 $
6
102
125
(4)
(2)
76
70
195 $
7
68
92
(137)
(19)
11
(145)
(53) $
(31)
—
96
65
(315)
(65)
(108)
(488)
(423)
We reduced our current income tax payable by $17 million, $28 million and $1 million for the years ended
December 31, 2022, 2021 and 2020 for tax deductions attributable to stock-based compensation.
Deferred Income Taxes
As of December 31, 2022 and 2021, the significant components of our deferred tax assets and deferred tax liabilities
were as follows:
Deferred tax assets:
Provision for accrued expenses
Deferred loyalty rewards
Net operating loss and tax credit carryforwards
Stock-based compensation
Property and equipment
Capitalized research and development
Operating lease liabilities
Long-term investments
Other
Total deferred tax assets
Less valuation allowance
Net deferred tax assets
Deferred tax liabilities:
Goodwill and intangible assets
Anticipatory foreign tax credits
Operating lease ROU assets
Other
Total deferred tax liabilities
Net deferred tax assets
December 31,
2022
2021
(In millions)
51 $
225
548
22
24
154
86
194
39
1,343
(242)
1,101 $
(387)
—
(83)
(22)
(492) $
609 $
85
186
939
25
17
2
96
106
62
1,518
(171)
1,347
(418)
(113)
(93)
(15)
(639)
708
$
$
$
$
As of December 31, 2022, we had U.S. federal, state, and foreign net operating loss carryforwards (“NOLs”) of
approximately $1.1 billion, $465 million and $268 million. U.S. federal NOLs of $1.1 billion may be carried forward
indefinitely. State NOLs of $103 million may be carried forward indefinitely, and state NOLs of $362 million expire at
F- 35
various times starting from 2025. Foreign NOLs of $188 million may be carried forward indefinitely, and foreign NOLs of
$80 million expire at various times starting from 2023.
As of December 31, 2022, we had a valuation allowance of approximately $242 million related to certain tax
attribute carryforwards for which it is more likely than not the tax benefits will not be realized. The valuation allowance
increased by $71 million from the amount recorded as of December 31, 2021 primarily due to the unrealized capital losses
on minority investments, offset by use of net operating losses. The amount of the deferred tax asset considered realizable
may be adjusted if capital gains are realized or if, in certain jurisdictions, objective negative evidence in the form of
cumulative GAAP losses is no longer present and additional weight may be given to subjective evidence such as our
projections for growth.
The majority of our foreign undistributed earnings have already been subject to U.S. federal income tax. As of
December 31, 2022, we have undistributed earnings of certain foreign subsidiaries of approximately $65 million that are
considered indefinitely reinvested and we estimate that the unrecognized deferred tax liability related to the U.S. federal,
state and foreign income tax consequences of these earnings was $17 million.
Reconciliation of U.S. Federal Statutory Income Tax Rate to Effective Income Tax Rate
A reconciliation of amounts computed by applying the U.S. federal statutory income tax rate to income before
income taxes to total income tax expense is as follows:
Year Ended December 31,
2022
2021
(In millions)
2020
Income tax (benefit) expense at the U.S. federal statutory rate of
21%
Foreign tax rate differential
U.S. federal research and development credit
Excess tax benefits related to stock-based compensation
Nondeductible compensation
Unrecognized tax benefits and related interest
Change in valuation allowance
Return to provision true-ups
State taxes
Non-creditable foreign withholding tax
Non-deductible goodwill impairment
Divestitures and entity restructuring
Foreign-derived intangible income
Other, net
Income tax (benefit) expense
$
$
113 $
(75)
(40)
(17)
37
27
77
(11)
3
21
—
65
(15)
10
195 $
(8) $
3
(27)
(56)
45
6
(24)
4
(9)
1
—
(6)
—
18
(53) $
(662)
16
(24)
4
17
36
139
(20)
(48)
—
170
(53)
—
2
(423)
Our effective tax rate for 2022 was higher than the 21% U.S. federal statutory income tax rate due to a valuation
allowance on minority investments and nondeductible compensation, partially offset by research and experimentation
credits. Our effective tax rate for 2021 was higher than the 21% U.S. federal statutory income tax rate due to excess tax
benefits related to stock-based compensation, release of valuation allowance and research and experimentation credits,
partially offset by nondeductible compensation, measured against a pre-tax loss. Our effective tax rate for 2020 was lower
than the 21% U.S. federal statutory income tax rate due to valuation allowances and nondeductible impairments measured
against a pre-tax loss.
F- 36
Unrecognized Tax Benefits and Interest
A reconciliation of the beginning and ending amount of gross unrecognized tax benefits and interest is as follows:
Balance, beginning of year
Increases to tax positions related to the current year
Increases to tax positions related to prior years
Decreases to tax positions related to prior years
Reductions due to lapsed statute of limitations
Settlements during current year
Interest and penalties
Balance, end of year
2022
2021
(In millions)
2020
349 $
23
5
—
—
(8)
10
379 $
345 $
11
3
(11)
—
(6)
7
349 $
305
16
18
(2)
(4)
—
12
345
$
$
As of December 31, 2022, we had $379 million of gross unrecognized tax benefits, $213 million of which, if
recognized, would affect the effective tax rate. As of December 31, 2021, we had $349 million of gross unrecognized tax
benefits, $207 million of which, if recognized, would affect the effective tax rate. As of December 31, 2020, we had $345
million of gross unrecognized tax benefits, $219 million of which, if recognized, would affect the effective tax rate.
As of December 31, 2022 and 2021, total gross interest and penalties accrued was $66 million and $56 million,
respectively. We recognized interest expense of $10 million in 2022, $7 million in 2021 and $12 million in 2020 in
connection with our unrecognized tax benefits.
The Company is routinely audited by U.S. federal, state, local and foreign income tax authorities. These audits
include questioning the timing and amount of income and deductions, and the allocation of income and deductions among
various tax jurisdictions. The Internal Revenue Service (“IRS”) is currently examining Expedia Group’s U.S. consolidated
federal income tax returns for the periods ended December 31, 2011 through December 31, 2020. The Company has
consented to an extension of the statute of limitations, until June 30, 2024 related to the 2011 through 2013 tax years, and
until March 31, 2024 related to the 2014 through 2019 tax years. As of December 31, 2022, for the Expedia Group, Inc.
and Subsidiaries group, statute of limitations for tax years 2011 through 2021 remain open to examination in the U.S.
federal jurisdiction and most state jurisdictions. For the HomeAway and Orbitz groups, the tax years 2001 through 2015
remain subject to examination in the U.S. federal and most state jurisdictions due to NOL carryforwards.
During the fourth quarter of 2019, the IRS issued final adjustments related to transfer pricing with our foreign
subsidiaries for our 2011 to 2013 tax years. The adjustments would increase our U.S. taxable income by $696 million,
which would result in U.S. federal tax of approximately $244 million, subject to interest. We do not agree with the position
of the IRS. We have formally filed a protest for our 2011 to 2013 tax years and the case has been transferred to Appeals.
During the fourth quarter of 2022, the IRS issued similar proposed adjustments related to transfer pricing with our foreign
subsidiaries for our 2014 to 2016 tax years. The adjustments would increase our U.S. taxable income by $1.413 billion,
which would result in federal tax of approximately $494 million, subject to interest. The proposed adjustments provided by
the IRS exclude any offsetting adjustments that may reduce the amount of federal tax. We do not agree with the position of
the IRS and intend to formally protest. We believe it is reasonably possible that audit of the 2011 and 2013 tax years will
conclude within the next 12 months.
NOTE 11 — Capital Stock
Common Stock and Class B Common Stock
Our authorized common stock consists of 1.6 billion shares of common stock with par value of $0.0001 per share,
and 400 million shares of Class B common stock with par value of $0.0001 per share. Both classes of common stock
qualify for and share equally in dividends, if declared by our Board of Directors, and generally vote together on all matters.
Common stock is entitled to 1 vote per share and Class B common stock is entitled to 10 votes per share. Holders of
common stock, voting as a single, separate class are entitled to elect 25% of the total number of directors. Class B common
stockholders may, at any time, convert their shares into common stock, on a one for one share basis. Upon conversion, the
Class B common stock is retired and is not available for reissue. In the event of liquidation, dissolution, distribution of
assets or winding-up of Expedia Group, Inc., the holders of both classes of common stock have equal rights to receive all
the assets of Expedia Group, Inc. after the rights of the holders of the preferred stock, if any, have been satisfied.
F- 37
Preferred Stock and Warrants
In 2020, we issued and sold to (1) AP Fort Holdings, L.P., an affiliate of Apollo Global Management, Inc. (the
“Apollo Purchaser”), 600,000 shares of the Company’s newly created Series A Preferred Stock, par value $0.001 per share
(the “Series A Preferred Stock”) and Warrants (the “Warrants”) to purchase 4.2 million shares of our common stock for an
aggregate purchase price of $588 million and (2) SLP V Fort Holdings II, L.P., affiliates of Silver Lake Group, L.L.C. (the
“Silver Lake Purchasers”), 600,000 shares of Series A Preferred Stock and Warrants to purchase 4.2 million shares of
common stock, for an aggregate purchase price of $588 million.
In 2021, we redeemed all of the outstanding Series A Preferred Stock at a price equal to 103% of the Preference
Amount, plus accrued and unpaid distributions as to the redemption date using cash on-hand of $1,275 million, including a
$36 million redemption premium and $39 million of accrued dividends. The loss on redemption of Preferred Stock was
$214 million during the year ended December 31, 2021, which included a charge to additional paid-in capital for the
redemption premium as well as $178 million related to the original issuance discount, issuance costs and the Warrants
value. As of December 31, 2021, there was no remaining Series A Preferred Stock outstanding. The Series A Preferred
Stock accumulated and we paid $67 million (or $74.96 per share of Series A Preferred Stock) in total dividends during the
year ended December 31, 2021, including those mentioned above.
Warrants to Purchase Company Common Stock. Pursuant to the investment agreements in 2020, we issued to each of
(1) the Silver Lake Purchasers (in the aggregate) and (2) the Apollo Purchaser, Warrants to purchase 4.2 million shares of
our common stock at an exercise price of $72.00 per share. In 2021, the Apollo Purchaser exercised all of the Warrants it
held and received approximately 2.5 million shares of our common stock in respect thereof, and the Silver Lake Purchasers
exercised all of the Warrants they held and received approximately 2.6 million shares of our common stock in respect
thereof. As of December 31, 2021, no warrants remained outstanding.
Treasury Stock
As of December 31, 2022, the Company's treasury stock was comprised of approximately 130.5 million common
stock and 7.3 million Class B shares. As of December 31, 2021, the Company's treasury stock was comprised of
approximately 124.5 million common stock and 7.3 million Class B shares.
Share Repurchases. In 2018 and 2019, the Board of Directors and the Executive Committee, pursuant to a delegation
of authority from the Board, authorized the repurchase of up to 15 million shares and 20 million shares of our common
stock, respectively. Shares repurchased under the authorized programs were as follows:
Number of shares repurchased
Average price per share
Total cost of repurchases (in millions)(1)
___________________________________
Amount excludes transaction costs.
(1)
2022
5.2 million
$
$
96.09 $
500 $
Year Ended December 31,
2021
2020
—
— $
— $
3.4 million
109.88
370
As of December 31, 2022, 18.1 million shares remain authorized for repurchase with no fixed termination date for
the repurchases.
Dividends on our Common Stock
In 2020, the Executive Committee, acting on behalf of the Board of Directors, declared and paid the following
common stock dividends:
Year ended December 31, 2020:
Declaration Date
Dividend
Per Share
Record Date
Total Amount
(in millions)
Payment Date
February 13, 2020 $ 0.34
March 10, 2020 $
48
March 26, 2020
During the second quarter of 2020, we suspended quarterly dividends on our common stock. At this time, we do not
currently expect to declare dividends on our common stock. Future declarations of dividends are subject to final
determination by our Board of Directors.
F- 38
Accumulated Other Comprehensive Income (Loss)
The balance of accumulated OCI as of December 31, 2022 and 2021 was comprised of foreign currency translation
adjustments. These translation adjustments include foreign currency transaction losses at December 31, 2022 and 2021 of
$7 million ($10 million before tax) and $15 million ($22 million before tax) associated with our Euro-denominated 2.5%
Notes, as well as foreign currency transaction gains at December 31, 2022 of $16 million ($21 million before tax)
associated with our cross-currency interest rate swaps. See NOTE 2 — Significant Accounting Policies for more
information.
Non-redeemable Non-controlling Interests
As of December 31, 2022 and 2021, our ownership interest in trivago was approximately 61.1% and 58.3%.
NOTE 12 — Earnings Per Share
Basic Earnings Per Share
Basic earnings per share was calculated for the years ended December 31, 2022, 2021 and 2020 using the weighted
average number of common and Class B common shares outstanding during the period excluding restricted stock and stock
held in escrow.
Diluted Earnings Per Share
For the year ended December 31, 2022, we computed diluted earnings per share using (i) the number of shares of
common stock and Class B common stock used in the basic earnings per share calculation as indicated above, (ii) if
dilutive, the incremental common stock that we would issue upon the assumed exercise or vesting of stock-based awards
and common stock warrants using the treasury stock method, (iii) if dilutive, our Convertible Notes using the if-converted
method, and (iv) other stock-based commitments. In periods when we recognize a net loss, such as the years ended
December 31, 2021 and 2020, we exclude the impact of outstanding stock-based awards, common stock warrants and the
potential share settlement impact related to our Convertible Notes from the diluted loss per share calculation as their
inclusion would have an antidilutive effect.
The following table presents our basic and diluted earnings (loss) per share:
Net income (loss) attributable to Expedia Group, Inc.
Preferred stock dividend
Loss on redemption of preferred stock
Net income (loss) attributable to Expedia Group, Inc.
common stockholders
Earnings (loss) per share attributable to Expedia Group,
Inc. available to common stockholders:
Basic
Diluted
Weighted average number of shares outstanding (000's):
Basic
Dilutive effect of:
$
$
$
Convertible Notes
Stock-based awards
Other dilutive securities
Diluted
Year Ended December 31,
2022
2021
2020
(In millions, except share and per share data)
352 $
—
—
352 $
12 $
(67)
(214)
(269) $
(2,612)
(75)
—
(2,687)
2.24 $
2.17
(1.80) $
(1.80)
(19.00)
(19.00)
156,672
149,734
141,414
3,921
1,153
5
161,751
—
—
—
149,734
—
—
—
141,414
For the year ended December 31, 2022, approximately 9 million of outstanding stock-based awards have been
excluded from the calculations of diluted earnings per share attributable to common stockholders because their effect
would have been antidilutive. For the year ended December 31, 2021, approximately 11 million of outstanding stock-based
awards and approximately four million shares related to the potential share settlement impact related to our Convertible
F- 39
Notes were excluded. For the year ended December 31, 2020, approximately 22 million of outstanding stock-based awards
and common stock warrants were excluded.
The earnings per share amounts are the same for common stock and Class B common stock because the holders of
each class are legally entitled to equal per share distributions whether through dividends or in liquidation.
NOTE 13 — Restructuring and Related Reorganization Charges
In 2020, we committed to restructuring actions intended to simplify our businesses and improve operational
efficiencies, which have resulted in headcount reductions and office consolidations. As a result, we recognized $55 million
and $231 million in restructuring and related reorganization charges during 2021 and 2020, respectively. We did not
recognize any restructuring and related organization charges during 2022. We continue to evaluate additional cost
reduction efforts and should we make decisions in future periods to take further actions we may incur additional
reorganization charges.
NOTE 14 — Other Income (Expense)
Other, net
The following table presents the components of other, net:
Foreign exchange rate gains (losses), net
Loss on minority equity investments, net
Other
Total
For the Year Ended December 31,
2022
2021
(In millions)
2020
$
$
(40) $
(345)
—
(385) $
(48) $
(29)
19
(58) $
71
(142)
(6)
(77)
NOTE 15 — Commitments and Contingencies
Letters of Credit, Purchase Obligations and Guarantees
We have commitments and obligations that include purchase obligations, guarantees and LOCs, which could
potentially require our payment in the event of demands by third parties or contingent events. The following table presents
these commitments and obligations as of December 31, 2022:
Purchase obligations
Guarantees
Letters of credit
Total
Less than
1 year
By Period
1 to 3
years
(In millions)
3 to 5
years
More than
5 years
$
$
466 $
27
44
537 $
292 $
27
42
361 $
144 $
—
2
146 $
30 $
—
—
30 $
—
—
—
—
Our purchase obligations represent the minimum obligations we have under agreements with certain of our vendors.
These minimum obligations are less than our projected use for those periods. Payments may be more than the minimum
obligations based on actual use.
We have guarantees which consist primarily of bonds relating to tax assessments that we are contesting as well as
bonds required by certain foreign countries’ aviation authorities for the potential non-delivery, by us, of packaged travel
sold in those countries. The authorities also require that a portion of the total amount of packaged travel sold be bonded.
Our guarantees also include certain surety bonds related to various company performance obligations.
Our LOCs consist of stand-by LOCs, underwritten by a group of lenders, which we primarily issue for certain
regulatory purposes as well as to certain hotel properties to secure our payment for hotel room transactions. The contractual
expiration dates of these LOCs are shown in the table above. There were no material claims made against any stand-by
LOCs during the years ended December 31, 2022, 2021 and 2020.
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Legal Proceedings
In the ordinary course of business, we are a party to various lawsuits. Management does not expect these lawsuits to
have a material impact on the liquidity, results of operations, or financial condition of Expedia Group. We also evaluate
other potential contingent matters, including value-added tax, excise tax, sales tax, transient occupancy or accommodation
tax and similar matters. We do not believe that the aggregate amount of liability that could be reasonably possible with
respect to these matters would have a material adverse effect on our financial results; however, litigation is inherently
uncertain and the actual losses incurred in the event that our legal proceedings were to result in unfavorable outcomes
could have a material adverse effect on our business and financial performance.
Litigation Relating to Occupancy Taxes. One hundred three lawsuits have been filed by or against cities, counties
and states involving hotel occupancy and other taxes. Eight lawsuits are currently active. These lawsuits are in various
stages and we continue to defend against the claims made in them vigorously. With respect to the principal claims in these
matters, we believe that the statutes or ordinances at issue do not apply to us or the services we provide and, therefore, that
we do not owe the taxes that are claimed to be owed. We believe that the statutes or ordinances at issue generally impose
occupancy and other taxes on entities that own, operate or control hotels (or similar businesses) or furnish or provide hotel
rooms or similar accommodations. To date, forty-nine of these lawsuits have been dismissed. Some of these dismissals
have been without prejudice and, generally, allow the governmental entity or entities to seek administrative remedies prior
to pursuing further litigation. Thirty-four dismissals were based on a finding that we and the other defendants were not
subject to the local tax ordinance or that the local government lacked standing to pursue its claims. As a result of this
litigation and other attempts by certain jurisdictions to levy such taxes, we have established a reserve for the potential
settlement of issues related to hotel occupancy and other taxes, consistent with applicable accounting principles and in light
of all current facts and circumstances, in the amount of $44 million and $50 million as of December 31, 2022 and 2021,
respectively. Our settlement reserve is based on our best estimate of probable losses and the ultimate resolution of these
contingencies may be greater or less than the liabilities recorded. An estimate for a reasonably possible loss or range of loss
in excess of the amount reserved cannot be made. Changes to the settlement reserve are included within legal reserves,
occupancy tax and other in the consolidated statements of operations.
Pay-to-Play. Certain jurisdictions may assert that we are required to pay any assessed taxes prior to being allowed to
contest or litigate the applicability of the ordinances. This prepayment of contested taxes is referred to as “pay-to-play.”
Payment of these amounts is not an admission that we believe we are subject to such taxes and, even when such payments
are made, we continue to defend our position vigorously. If we prevail in the litigation, for which a pay-to-play payment
was made, the jurisdiction collecting the payment will be required to repay such amounts and also may be required to pay
interest.
We are in various stages of inquiry or audit with various tax authorities, some of which, including in the City of Los
Angeles regarding hotel occupancy taxes, may impose a pay-to-play requirement to challenge an adverse inquiry or audit
result in court.
Matters Relating to International VAT. We are in various stages of inquiry or audit in multiple European Union
jurisdictions regarding the application of VAT to our European Union related transactions. While we believe we comply
with applicable VAT laws, rules and regulations in the relevant jurisdictions, the tax authorities may determine that we owe
additional taxes. In certain jurisdictions, including the United Kingdom, we may be required to “pay-to-play” any VAT
assessment prior to contesting its validity. While we believe that we will be successful based on the merits of our positions
with regard to audits in pay-to-play jurisdictions, it is nevertheless reasonably possible that we could be required to pay any
assessed amounts in order to contest or litigate the applicability of any assessments and an estimate for a reasonably
possible amount of any such payments cannot be made.
Competition and Consumer Matters. On August 23, 2018, the Australian Competition and Consumer Commission,
or "ACCC", instituted proceedings in the Australian Federal Court against trivago. The ACCC alleged breaches of
Australian Consumer Law, or "ACL," relating to trivago’s advertisements in Australia concerning the hotel prices available
on trivago’s Australian site, trivago’s strike-through pricing practice and other aspects of the way offers for
accommodation were displayed on trivago's Australian website. On January 20, 2020, the Australian Federal Court issued a
judgment finding trivago had engaged in conduct in breach of the ACL. On October 18 and 19, 2021, the court heard
submissions from the parties regarding penalties and other orders. On April 22, 2022, the Australian Federal Court issued a
judgment ordering trivago to pay a penalty of AU$44.7 million, which was paid in the second quarter of 2022, and to cover
the ACCC’s costs arising from the proceedings. The court also enjoined trivago from engaging in misleading conduct of
the type found by the Australian Federal Court to be in contravention of the ACL. We recorded an estimated loss of
approximately $11 million with respect to these proceedings in a previous period and an additional loss of approximately
F- 41
$23 million during the first quarter of 2022, for a total of approximately $34 million previously included in accrued
expenses and other current liabilities as of March 31, 2022.
NOTE 16 – Divestitures
We had no disposition activity during 2022.
On November 1, 2021, we completed the sale of Egencia, Expedia Group’s corporate travel arm included within our
B2B segment, to GBT. As a result of the sale, we deconsolidated Egencia, recognized a gain of $401 million within gain
(loss) on sale of business, net in the consolidated statement of operations during the year ended December 31, 2021 and
divested cash and restricted cash of $88 million. We received no cash for this transaction but on the date of sale Expedia
Group became an indirect holder of an approximately 19% interest of GBT with an initial fair value of $815 million, and a
subsidiary entered into a 10-year lodging supply agreement with GBT. During the year ended December 31, 2022, we
recognized an immaterial gain of approximately $6 million related to this transaction. See NOTE 3 — Fair Value
Measurements for additional information on our ongoing investment.
In addition, during 2020 and 2021, in connection with our efforts to focus on our core businesses and streamline our
activities, we committed to plans to divest certain smaller businesses primarily within our Retail segment. As a result, in
2020, we completed the sale of certain smaller businesses, including Bodybuilding.com and SilverRail, which combined
resulted in a net losses of $13 million and net cash divested of $21 million. In 2021, we completed additional sales
including Classic Vacations and Alice, which combined resulted in net gains of $57 million and net cash received of
$27 million. The resulting gains and losses in these transactions were recorded within gain (loss) on sale of business, net in
the consolidated statement of operations.
None of these dispositions were considered a strategic shift that will have a major effect on our operations or financial
results and they did not represent individually significant components of our business; therefore, they have not been
reported as discontinued operations.
NOTE 17 — Related Party Transactions
IAC/InterActiveCorp
The Company and IAC are related parties because Mr. Diller serves as Chairman and Senior Executive of both
Expedia Group and IAC. At December 31, 2022, each of Expedia Group and IAC has a 50% ownership interest in two
aircraft that may be used by both companies. Members of the aircraft flight crews are employed by an entity in which the
Company and IAC each have a 50% ownership interest. The Company and IAC have agreed to share costs relating to flight
crew compensation and benefits pro-rata according to each company’s respective usage of the aircraft, for which they are
separately billed by the entity described above. We share equally in fixed and nonrecurring costs for the aircraft; direct
operating costs are pro-rated based on actual usage. Another aircraft that had previously been jointly-owned by the
companies was sold in November 2022, with each company receiving 50% of the $19 million in net sale proceeds.
In addition, in December 2021, we entered into agreements pursuant to which we may use additional aircraft owned
by a subsidiary of IAC on a cost basis. Total payments made to this entity by the Company were not material.
As of December 31, 2022 and 2021, the net basis in our ownership interest in the aircrafts then jointly-owned was
$46 million and $60 million, respectively, recorded in long-term investments and other assets. In 2022, 2021 and 2020,
operating and maintenance costs paid directly to the jointly-owned subsidiary for the aircraft were not material.
F- 42
NOTE 18 — Segment Information
We have the following reportable segments: Retail, B2B, and trivago. Our Retail segment, which consists of the
aggregation of operating segments, provides a full range of travel and advertising services to our worldwide customers
through a variety of consumer brands including: Expedia.com and Hotels.com in the United States and localized Expedia
and Hotels.com websites throughout the world, Vrbo, Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets,
Hotwire.com and CarRentals.com. Our B2B segment is comprised of Expedia Partner Solutions, which offers private label
and co-branded products to make travel services available to travelers through third-party company branded websites, and
Egencia (until its sale in November 2021), a full-service travel management company that provides travel services to
businesses and their corporate customers. Our trivago segment generates advertising revenue primarily from sending
referrals to online travel companies and travel service providers from its hotel metasearch websites.
We determined our operating segments based on how our chief operating decision makers manage our business,
make operating decisions and evaluate operating performance. Our primary operating metric is Adjusted EBITDA.
Adjusted EBITDA for our Retail and B2B segments includes allocations of certain expenses, primarily related to our global
travel supply organization and the majority of costs from our product and technology platform, as well as facility costs and
the realized foreign currency gains or losses related to the forward contracts hedging a component of our net merchant
lodging revenue. We base the allocations primarily on transaction volumes and other usage metrics. We do not allocate
certain shared expenses such as accounting, human resources, certain information technology and legal to our reportable
segments. We include these expenses in Corporate and Eliminations. Our allocation methodology is periodically evaluated
and may change.
Our segment disclosure includes intersegment revenues, which primarily consist of advertising and media services
provided by our trivago segment to our Retail segment. 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 Corporate and Eliminations in the table below.
Corporate and Eliminations also includes unallocated corporate functions and expenses as well as Bodybuilding.com
through its sale in May 2020. In addition, we record amortization of intangible assets and any related impairment, as well
as stock-based compensation expense, restructuring and related reorganization charges, legal reserves, occupancy tax and
other, and other items excluded from segment operating performance in Corporate and Eliminations. Such amounts are
detailed in our segment reconciliation below.
F- 43
The following tables present our segment information for 2022, 2021 and 2020. As a significant portion of our
property and equipment is not allocated to our operating segments and depreciation is not included in our segment measure,
we do not report the assets by segment as it would not be meaningful. We do not regularly provide such information to our
chief operating decision makers.
Third-party revenue
Intersegment revenue
Revenue
Adjusted EBITDA
Depreciation
Amortization of intangible assets
Impairment of intangible assets
Stock-based compensation
Legal reserves, occupancy tax and other
Realized (gain) loss on revenue hedges
Operating income (loss)
Other expense, net
Income before income taxes
Provision for income taxes
Net income
Net loss attributable to non-controlling interests
Net income attributable to Expedia Group, Inc.
$
$
$
Year ended December 31, 2022
Retail
B2B
trivago
Corporate &
Eliminations
Total
(In millions)
8,741 $
2,546 $
380 $
— $
11,667
—
—
8,741 $
2,546 $
2,124 $
(509)
599 $
(85)
181
561 $
113 $
(8)
—
—
—
—
2
—
—
—
—
4
—
—
—
—
—
(181)
—
(181) $
11,667
(487) $
2,349
(102)
(88)
—
(374)
—
—
(704)
(88)
—
(374)
—
6
$
1,617 $
518 $
105 $
(1,051)
1,189
(547)
642
(195)
447
9
456
$
F- 44
Third-party revenue
Intersegment revenue
Revenue
Adjusted EBITDA
Depreciation
Amortization of intangible assets
Impairment of goodwill
Intangible and other long-term asset impairment
Stock-based compensation
Legal reserves, occupancy tax and other
Restructuring and related reorganization charges
Realized (gain) loss on revenue hedges
Operating income (loss)
Other expense, net
Loss before income taxes
Provision for income taxes
Net income
$
$
$
Year ended December 31, 2021
Retail
B2B
trivago
Corporate &
Eliminations
Total
6,821 $
1,460 $
317 $
— $
8,598
(In millions)
—
—
6,821 $
1,460 $
1,782 $
110 $
(522)
(102)
106
423 $
39 $
(10)
—
—
—
—
—
—
17
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(106)
(106) $
(454) $
(81)
(99)
(14)
(6)
—
8,598
1,477
(715)
(99)
(14)
(6)
(418)
(418)
(1)
(55)
—
$
1,277 $
8 $
29 $
(1,128)
(1)
(55)
17
186
(224)
(38)
53
15
(3)
12
(67)
(214)
(269)
Net income attributable to non-controlling interests
Net income attributable to Expedia Group, Inc.
Preferred stock dividend
Loss on redemption of preferred stock
Net loss attributable to Expedia Group, Inc. common stockholders
$
F- 45
Year ended December 31, 2020
Retail
B2B
trivago
Corporate &
Eliminations
Total
3,993 $
942 $
205 $
59 $
5,199
(In millions)
Third-party revenue
Intersegment revenue
Revenue
Adjusted EBITDA
Depreciation
$
$
$
—
3,993 $
298 $
(525)
—
942 $
(190) $
(128)
75
280 $
(14) $
(12)
Amortization of intangible assets
Impairment of goodwill
Intangible and other long-term asset impairment
Stock-based compensation
Legal reserves, occupancy tax and other
Restructuring and related reorganization charges
—
—
—
—
—
—
—
—
—
—
—
—
Realized (gain) loss on revenue hedges
(58)
(3)
—
—
—
—
—
—
—
$
(285) $
(321) $
(26) $
(2,087)
(2,719)
(75)
—
(16) $
5,199
(462) $
(74)
(154)
(799)
(175)
(205)
13
(231)
—
(368)
(739)
(154)
(799)
(175)
(205)
13
(231)
(61)
(432)
(3,151)
423
(2,728)
116
(2,612)
(75)
$
(2,687)
Operating loss
Other expense, net
Loss before income taxes
Provision for income taxes
Net loss
Net loss attributable to non-controlling interests
Net loss attributable to Expedia Group, Inc.
Preferred stock dividend
Net loss attributable to Expedia Group, Inc. common stockholders
F- 46
Revenue by Business Model and Service Type
The following table presents revenue by business model and service type for the years ended December 31, 2022,
2021 and 2020:
Business Model
Merchant
Agency
Advertising, media and other
Total revenue
Service Type
Lodging
Air
Advertising and media
Other(1)
Total revenue
Year Ended December 31,
2022
2021
(In millions)
2020
$
$
$
$
7,762 $
5,537 $
2,994
911
2,307
754
11,667 $
8,598 $
8,905 $
6,449 $
362
777
1,623
254
603
1,292
11,667 $
8,598 $
3,261
1,267
671
5,199
4,051
105
405
638
5,199
___________________________________
(1)
Other includes car rental, insurance, destination services, cruise and fee revenue related to our corporate travel
business prior to our sale of Egencia on November 1, 2021, among other revenue streams, none of which are
individually material. Other also includes product revenue of $59 million during the year ended December 31, 2020
related to Bodybuilding.com, which was sold in May 2020.
Our Retail and B2B segments generate revenue from the merchant, agency and advertising, media and other business
models as well as all service types. trivago segment revenue is generated through advertising and media.
Geographic Information
The following table presents revenue by geographic area, the United States and all other countries, based on the
geographic location of our websites or points of sale with the exception of trivago, which has all been allocated to
Germany, the location of its corporate headquarters, for the years ended December 31, 2022, 2021 and 2020. No sales to an
individual country other than the United States accounted for more than 10% of revenue for the presented years.
Revenue
United States
All other countries
2022
Year Ended December 31,
2021
(In millions)
2020
$
$
7,939 $
3,728
11,667 $
6,569 $
2,029
8,598 $
3,511
1,688
5,199
The following table presents property and equipment, net for the United States and all other countries, as of
December 31, 2022 and 2021:
Property and equipment, net
United States
All other countries
As of December 31,
2022
2021
(In millions)
$
$
2,111 $
99
2,210 $
2,056
124
2,180
F- 47
NOTE 19 — Valuation and Qualifying Accounts
The following table presents the changes in our valuation and qualifying accounts. 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 and cancellation fees as well as refund reserves in 2020, 2021 and 2022 primarily
due to COVID impacts.
Description
2022
Allowance for expected credit losses
Other reserves
2021
Allowance for expected credit losses
Other reserves
2020
Allowance for doubtful accounts
Other reserves
$
$
$
Balance at
Beginning of
Period
Charges to
Earnings
Charges to
Other
Accounts
(1)
(In millions)
Deductions
Balance at End
of Period
65 $
64
101 $
58
41 $
19
20 $
(28)
7 $
7
82 $
39
(3) $
(4)
(17) $
(1)
2 $
2
(42) $
(3)
(26) $
—
(24) $
(2)
40
29
65
64
101
58
___________________________________
(1)
Charges to other accounts primarily relates to amounts acquired through acquisitions or disposed of through sales
of businesses, net translation adjustments and reclassifications.
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BOARD OF DIRECTORS
OFFICERS
Barry Diller
Chairman and Senior Executive
Peter Kern
Vice Chairman and Chief
Executive Officer
Julie Whalen
Executive Vice President and
Chief Financial Officer
Robert Dzielak
Chief Legal Officer and Secretary
Lance Soliday
Senior Vice President,
Chief Accounting Officer
and Controller
DIRECTOR EMERITUS
Jonathan Dolgen
Principal
Wood River Ventures, LLC
Barry Diller
Chairman and Senior Executive
Expedia Group, Inc. and IAC Inc.
Peter Kern
Vice Chairman and
Chief Executive Officer
Expedia Group, Inc.
Samuel Altman
Chief Executive Officer
Open AI
Beverly Anderson
President and Chief Executive Officer
BECU
M. Moina Banerjee
Chief Financial Officer
JBG Smith Properties
Chelsea Clinton
Vice Chair
Clinton Foundation
Henrique Dubugras
Co-Chief Executive Officer
Brex Inc.
Craig Jacobson
Partner
Hansen, Jacobson, Teller, Hoberman,
Newman, Warren, Richman, Rush,
Kaller, Gellman, Meigs and Fox, L.L.P.
Dara Khosrowshahi
Chief Executive Officer
Uber Technologies, Inc.
Patricia Menendez Cambo
Senior Advisor
Softbank Group International
Alex von Furstenberg
Founder and Chief Investment Officer
Ranger Global Advisors, LLC
Julie Whalen
Executive Vice President and
Chief Financial Officer
Expedia Group, Inc.
STOCKHOLDER INFORMATION
Annual Meeting
The 2023 Annual Meeting will be held via
audio webcast on May 31, 2023 at 10:30
a.m. Pacific time. Online audio webcast:
www.virtualshareholdermeeting.com/
EXPE2023
Stock Market Listing
Expedia Group, Inc.’s common stock is
traded on the Nasdaq Global Select Market
under the symbol “EXPE”
Registrar and Transfer Agent
Computershare
Stockholder correspondence should be
mailed to:
Computershare
P.O. Box 505000
Louisville, KY 40233
Overnight correspondence should be
mailed to:
Computershare
462 South 4th Street Suite 1600
Louisville, KY 40202
Computershare stockholder website:
https://www-us.computershare.com/
-investor
Computershare stockholder
online inquiries:
https://www-us.computershare.com/
-Investor/Contact
Computershare
Toll Free Number 866-202-9254
U.S. 781-575-2694
Independent Registered
Public Accounting Firm
Ernst & Young LLP
920 5th Avenue
Suite 900
Seattle, WA
98104
Investor Inquiries
All inquiries can be directed
as follows:
206-481-3759
ir@expediagroup.com
Corporate Headquarters
1111 Expedia Group Way W.
Seattle, WA 98119
206-481-7200
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This annual report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking
statements reflect the views of our management regarding expectations about future events and are based on then available information. Actual results could
differ materially. The use of words such as "anticipates," "estimates," "expects," "intends," "plans" and "believes," among others, generally identify forward-looking
statements; however, these words are not the exclusive means of identifying such statements. These forward-looking statements are inherently subject to
uncertainties, risks and changes in circumstances that are difficult to predict. Please carefully review and consider the various disclosures made in our Annual
Report on Form 10-K enclosed herein and in our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the
risks and factors that may impact future results.
The logos on the front cover are service marks or trademarks of Expedia, Inc. and/or its affiliated companies.
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2022 Annual Report