Priceline 2015 Annual Report Download - page 55

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Revenues
We classify our revenue into three categories:
• Agency revenues are derived from travel-related transactions where we are not the merchant of record and where the prices of the travel services are
determined by third parties. Agency revenues include travel commissions, GDS reservation booking fees related to certain travel services, travel
insurance fees and customer processing fees and are reported at the net amounts received, without any associated cost of revenue. Substantially all of
the revenue for Booking.com is agency revenue comprised of travel commissions.
•Merchant revenues are derived from services where we are the merchant of record and therefore charge the customer's credit card for the travel
services provided. Merchant revenues include (1) transaction net revenues (i.e., to the extent applicable, the amount charged to a customer, less the
amount charged to us by travel service providers) in connection with (a) the accommodation reservations provided through our merchant price-
disclosed hotel reservation services at agoda.com, priceline.com and Booking.com and (b) the reservations provided through our merchant rental car
service at rentalcars.com and Express Deals ® reservation services at priceline.com; (2) transaction revenues representing the price of Name Your
Own Price ® hotel, rental car and airline ticket reservations and vacation packages charged to a customer (with a corresponding travel service
provider cost recorded in cost of revenues); (3) customer processing fees charged in connection with (a) priceline.com's Express Deals ® and Name
Your Own Price ® reservation services and (b) merchant retail hotel reservation services at priceline.com and agoda.com; and (4) ancillary fees,
including damage excess waiver and travel insurance fees and GDS reservation booking fees related to certain of the services listed above.
• Advertising and other revenues are derived primarily from (1) revenues earned by KAYAK for (a) sending referrals to OTCs and travel service
providers and (b) advertising placements on KAYAK's websites and mobile apps; (2) revenues earned by OpenTable for (a) reservation fees
(reservation fees paid by restaurants for diners seated through OpenTable's online reservation service) and (b) subscription fees earned by OpenTable
for restaurant reservation management services; (3) revenues earned by priceline.com for advertising on its websites; and (4) revenues generated by
Booking.com's BookingSuite branded accommodation marketing and business analytics services. Revenue from KAYAK is net of intercompany
revenues earned by KAYAK from other Priceline Group brands.
Year Ended December 31,
(in thousands)
2015
2014
Change
Agency Revenues $ 6,527,898
$ 5,845,802
11.7 %
Merchant Revenues 2,082,973
2,186,054
(4.7)%
Advertising and Other Revenues 613,116
410,115
49.5 %
Total Revenues $ 9,223,987
$ 8,441,971
9.3 %
Agency Revenues
Agency revenues for the year ended December 31, 2015 increased 11.7% compared to the year ended December 31, 2014 , primarily as a result of growth
in the business of Booking.com, the agency rental car businesses of rentalcars.com and priceline.com and the agency hotel businesses of priceline.com and
agoda.com. The U.S. Dollar was significantly stronger against the Euro and many other currencies throughout 2015 compared to 2014 , which significantly
adversely affected the growth of our agency revenues, expressed in U.S. Dollars.
Merchant Revenues
Merchant revenues for the year ended December 31, 2015 decreased 4.7% compared to the year ended December 31, 2014 , primarily due to decreases in
revenues from priceline.com's Name Your Own Price ® hotel, airline ticket and rental car reservation services, partially offset by increases in our merchant price-
disclosed hotel and rental car businesses. Our priceline.com Name Your Own Price ® reservation services, which declined year-over-year, are recorded "gross" with
a corresponding travel service provider cost recorded in cost of revenues. Our other merchant revenues, which in total grew year-over-year, are recorded in revenue
"net" of travel service provider costs. As a result, changes in Name Your Own Price ® reservation revenue disproportionately affect merchant revenues as compared
to our other merchant revenues. We therefore
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