Expedia 2013 Annual Report Download - page 22

In addition, we may not be able to maintain our existing systems or replace or introduce new technologies
and systems as quickly as we would like or in a cost-effective manner. We have been engaged in a multi-year
effort, to migrate key portions of our consumer, affiliate, and corporate travel sites and back office application
functionality to new technology platforms to enable us to improve conversion, introduce innovation more
rapidly, achieve better search engine optimization and improve our site merchandising and transaction processing
capabilities, among other anticipated benefits. These migrations 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 adversely affected, and may continue to adversely affect, our ability to develop new site innovations.
In addition, during the migration process the sites may experience reduced functionality and decreases in
conversion rates. Also, we may be unable to devote financial resources to new technologies and systems in the
future. Overall, these implementations and systems enhancements may not achieve the desired results in a timely
manner, to the extent anticipated, or at all. If any of these events occur, our business and financial performance
could suffer.
Our international operations involve additional risks and our exposure to these risks will increase as
our business expands globally.
A large and growing portion of our revenue is derived from our international operations. We operate in a
number of jurisdictions outside of the United States and intend to continue to expand our international presence.
As we have expanded globally, our international (non-U.S.) revenue increased from 39% in 2010 to 47% in
2013. In foreign jurisdictions, we face complex, dynamic and varied risk landscapes. As we enter countries and
markets that are new to us, we must tailor our services and business models to the unique circumstances of such
countries and markets, which can be complex, difficult, costly and divert management and personnel resources.
Our failure to adapt our practices, systems, processes and business models effectively to the traveler and supplier
preferences of each country into which we expand could slow our growth. 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 as our revenues
from these markets grow over time.
In addition to the risks outlined elsewhere in this section, our international operations are also subject to a
number of other risks, including:
• Local economic or political instability;
• Threatened or actual acts of terrorism;
• Regulatory requirements, including the Foreign Corrupt Practices Act and U.K. Bribery Act, data
privacy requirements, labor laws and anti-competition regulations;
• Our ability to comply with additional U.S. laws applicable to U.S. companies operating internationally
as well as local laws and regulations;
• Weaker enforcement of our contractual rights;
• Lower levels of credit card usage and increased payment and fraud risk;
• Longer payment cycles, and difficulties in collecting accounts receivable;
• Increased risk and limits on our ability to enforce intellectual property rights;
• Preferences by local populations for local providers;
• Restrictions on, or adverse tax and other consequences related to, the withdrawal of non-
U.S. investments, cash balances and earnings;
• Currency exchange restrictions or costs;
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