Comfort Inn 2014 Annual Report Download - page 32

Table of Contents
• power losses, computer systems failures, internet and telecommunications or data network failures, service provider negligence, improper
operation by or supervision of employees, user error, physical and electronic losses of data and similar events; and
• computer viruses, penetration by individuals seeking to disrupt operations or misappropriate information and other breaches of security.
The hospitality industry is under increasing attack by cyber-criminals in the United States and other jurisdictions in which we operate. These attacks
can be deliberate attacks or unintentional events that could cause interruptions or delays in our business, loss of data, or render us unable to process
reservations. Accordingly, an extended interruption in the ability of any system to function could significantly curtail, directly and indirectly, our ability to
conduct our business and generate revenue.
We seek to minimize the impact of these attacks through various technologies, processes and practices designed to protect our networks, systems,
computers and data from attack, damage or unauthorized access. However, there are no guarantees that our cyber-security practices will be sufficient to thwart
all attacks. While we carry property and business operation interruption insurance, we may not be sufficiently compensated for all losses we may incur. These
losses include not only a loss of revenues but also potential reputational damage to our brands and litigation, fines or regulatory action against us.
Furthermore, the Company may also incur substantial remediation costs to repair system damage as well as satisfy liabilities for stolen assets or information
that may further reduce our profits.
Failure to protect our trademarks and other intellectual property could impact our business.
We believe that our trademarks and other intellectual property are fundamental to our brands and our franchising business. We generate, maintain,
license and enforce a substantial portfolio of trademarks and other intellectual property rights. We enforce our intellectual property rights to protect the value
of our trademarks, our development activities, to protect our good name, to promote our brand name recognition, to enhance our competitiveness and to
otherwise support our business goals and objectives. We rely on trademark laws to protect our proprietary rights. Monitoring the unauthorized use of our
intellectual property is difficult. Litigation has been and may continue to be necessary to enforce our intellectual property rights or to determine the validity
and scope of the proprietary rights of others. Litigation of this type could result in substantial costs and diversion of resources, may result in counterclaims or
other claims against us and could significantly harm our results of operations. In addition, the laws of some foreign countries do not protect our proprietary
rights to the same extent as do the laws of the United States. From time to time, we apply to have certain trademarks registered. There is no guarantee that
such trademark registrations will be granted. We cannot assure you that all of the steps we have taken to protect our trademarks in the United States and
foreign countries will be adequate to prevent imitation of our trademarks by others. The unauthorized reproduction of our trademarks could diminish the
value of our brand and its market acceptance, competitive advantages or goodwill, which could adversely affect our business.
Failure to maintain the integrity of internal or customer data could result in faulty business decisions, damage of reputation and/or subject us to costs,
fines or lawsuits.
Our business requires the collection and retention of large volumes of internal and customer data, including credit card numbers and other personally
identifiable information of our employees and customers as such information is entered into, processed, summarized, and reported by the various information
systems we use. The integrity and protection of that customer, employee, and company data is critical to us. Our customers have a high expectation that we
will adequately protect their personal information, and the regulatory environment surrounding information security and privacy is increasingly demanding,
both in the United States and in the international jurisdictions in which we operate. If the Company fails to maintain compliance with the various United
States and international laws and regulations applicable to the protection of such data or with the Payment Card Industry ("PCI") data security standards, the
Company’s ability to process such data could be adversely impacted and expose the Company to fines, litigation or other expenses or sanctions.
Changes in privacy law could adversely affect our ability to market our products effectively.
We rely on a variety of direct marketing techniques, including telemarketing, email, marketing and postal mailings. Any future restrictions in laws such
as Telemarketing Sales Rule, CANSPAM Act, and various United States state laws, or new federal laws regarding marketing and solicitation or international
data protection laws that govern these activities could adversely affect the continuing effectiveness of telemarketing, email and postal mailing techniques
and could force changes in our marketing strategies. If this occurs, we may not be able to develop adequate alternative marketing strategies, which could
impact the amount and timing of our revenues. We also obtain access to potential customers from travel service providers and other companies with whom we
have substantial relationships and market to some individuals on these lists directly or by including our marketing message in the other company’s
marketing materials. If access to these lists was prohibited or otherwise restricted, our ability to develop new customers and introduce them to our products
could be impaired.
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