TripAdvisor 2014 Annual Report Download - page 20

10
in which we operate. There are also a number of legislative proposals pending before the United States Congress, various state
legislative bodies, and foreign governments concerning data protection which could affect us.
In addition, we provide advertising data and information and conduct marketing activities that are subject to United States
federal and state consumer protection laws that regulate unfair and deceptive practices, domestically and internationally. The United
States and European Union have begun to adopt legislation that regulates certain aspects of the Internet, including online editorial and
user-generated content, user privacy, behavioral targeting and online advertising, taxation, and liability for third-party activities.
United States federal, state and foreign governments are also considering alternative legislative and regulatory proposals that
would increase regulation on Internet advertising. It is impossible to accurately predict whether new taxes or regulations will be
imposed on our services, and whether or how we might be affected. Increased regulation of the Internet could increase the cost of
doing business or otherwise materially adversely affect our business, financial condition or operational results.
Our Reportable Segments
During the fourth quarter of 2014, management changed TripAdvisor’s reportable segments to reflect changes in the
management reporting structure of the organization, primarily due to recent business acquisitions, and the manner in which the chief
operating decision maker, or CODM, regularly assesses information and evaluates performance for operating decision-making
purposes, including allocation of resources. We believe this new segment structure better provides the CODM with information to
assess performance and to make resource allocation decisions. The CODM for the company is our Chief Executive Officer.
The revised reporting structure includes two reportable segments: Hotel and Other. Our Other segment consists of the
aggregation of three operating segments, which include our Attractions, Restaurants and Vacation Rentals businesses.
Hotel Segment
Our Hotel segment accounted for 91% of our Company’s consolidated revenue in 2014.
Our Hotel segment includes revenue generated from services related to hotels, including click-based and display-based
advertising revenue from making hotel room nights, airline reservations, and cruise reservations available for price comparison and
booking, as well as subscription-based products such as Business Listings, transaction-based products such as Jetsetter and Tingo, and
other revenue related to hotels.
The Hotel segment’s financial performance is principally dependent on our ability to grow click-based advertising revenue. This
revenue stream is highly dependent upon growth in our hotel shoppers, how effectively we convert hotel shoppers into revenue, and
the price we get paid per hotel shopper, all of which equates to revenue per hotel shopper. The term “hotel shoppers” refers to users
who view servlets on our websites that contain a listing of hotels in a city or visitors to a specific hotel page on TripAdvisor.
More than half of TripAdvisor users visit pages that are not hotel related. Revenue generated from these users is reflected in our
Other segment below.
Other Segment
Our Other segment accounted for 9% of our consolidated revenue in 2014 and consists of the following businesses below:
x Attractions. We provide, through Viator, information and services for researching and booking destination activities
around the world. Viator works with local operators to provide travelers with access to tours and activities in popular
destinations worldwide, earning a commission for such service. In addition to its consumer-direct business, Viator also
provides local experiences to affiliate partners, including some of the world’s top airlines, hotels and travel agencies.
x Restaurants. We have several websites that provide online and mobile reservation services that connect restaurants with
diners. These websites are currently focused on the European market, primarily through Lafourchette. Lafourchette is an
online restaurant booking platform with a network of restaurant partners across Europe. Lafourchette also offers
management software solutions helping restaurants to maximize business by providing a flexible online booking, discount
and data tool. We generate revenue primarily by charging a fee for each restaurant guest seated through the online
reservation systems.