TripAdvisor 2014 Annual Report Download - page 26

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We rely on information technology to operate our business and maintain competitiveness, and any failure to adapt to technological
developments or industry trends could harm our businesses.
We depend on the use of sophisticated information technologies and systems. As our operations grow in size and scope, we
must continuously improve and upgrade our systems and infrastructure while maintaining or improving the reliability and integrity of
our systems and infrastructure. 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 services in
response to competitive service and product offerings. The emergence of alternative platforms such as smartphone and tablet
computing devices and the emergence of niche competitors who may be able to optimize products, services or strategies for such
platforms will require new investment in technology. New developments in other areas, such as cloud computing, could also make it
easier for competition to enter our markets due to lower up-front technology costs. 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.
If we do not continue to innovate and provide tools and services that are useful to travelers, we may not remain competitive, and
our business and financial performance could suffer.
Our success depends in part on continued innovation to provide features and services that make our websites and smartphone
and tablet computing applications useful for travelers. Our competitors are continually developing innovations in online travel-related
services and features. As a result, we are continually working to improve our business model and user experience in order to drive user
traffic and conversion dates. We can give no assurances that the changes we make will yield the benefits we expect and will not have
adverse impacts that we did not anticipate. If we are unable to continue offering innovative products and services and quality features
that travelers want to use, existing users may become dissatisfied and use competitors’ offerings and we may be unable to attract
additional users, which could adversely affect our business and financial performance.
New technologies could block our ads, which would harm our business.
We derive most of our revenues from fees paid to us by advertisers in connection with the display of ads on web pages for our
users. Technologies have been developed that can block the display of online ads and that provide tools to users to opt out of some
web-based advertising products. As a result, these technologies and tools could adversely affect our business and financial
performance.
Our culture emphasizes rapid innovation and prioritizes user engagement over short-term financial results.
We operate in a culture that encourages rapid development and release of new and improved products, which may at times result
in unintended consequences or decisions that are poorly received by users or advertisers. Our culture also prioritizes user engagement,
or website “stickiness,” over short-term financial results. We have taken actions in the past and may continue to make product
decisions going forward that have the effect of reducing our short-term revenue or profitability if we believe that the decisions benefit
the aggregate user experience, conversion rates and/or CPC pricing, thereby ultimately improving our financial performance over the
long-term. The short-term reductions in revenue or profitability could be more severe than we anticipate or these decisions may not
produce the long-term benefits that we expect, in which case our user growth and engagement, our relationships with users and
advertisers, and our business and results of operations could be harmed.
The online vacation rental market is rapidly evolving and if we fail to predict the manner in which the market develops, our
business and prospects may suffer.
We offer vacation rental services through our U.S.-based FlipKey and Vacation Home Rentals and European-based Holiday
Lettings and Niumba. The online vacation rental market is relatively new and rapidly evolving in many respects, including acceptance
of the business model by travelers, property owners and property managers; from a business and marketing perspective as well as the
regulatory environment. We operate in various disparate jurisdictions and markets and have limited insight into trends that may
develop in those markets and may affect our business. Since we began offering such services, there have been and continue to be
significant business, marketing and regulatory developments. Operating in new and untested jurisdictions requires significant
management attention and financial resources. We cannot assure that our expansion efforts will be successful, and the investment and
additional resources required to establish operations and manage growth may not produce the desired levels of revenue or profitability.
If we fail to attract and maintain a critical mass of vacation rental listings and travelers, our vacation rental marketplaces will
become less valuable and this may have a negative impact on our business.
In our vacation rental business, revenue is generated when owners or managers of vacation rental properties pay us fees to list
and market vacation rental properties to users who visit the websites comprising our marketplace, owners and/or travelers pay us fees
upon booking a transaction and property managers pay us fees for email and telephone leads from potential travelers. As a result, our