TripAdvisor 2015 Annual Report Download - page 19

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,existing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.
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onourTripAdvisor-brandedsitesaswellasthroughourU.S.-basedFlipKeyandVacationHomeRentalsandEuropean-
basedHolidayLettingsandNiumbabusinesses.Theonlinevacationrentalmarketis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and/ortravelerspayusfeesuponbookingatransaction,ownersormanagerspayusfees
tolistandmarketvacationrentalpropertiestouserswhovisitthewebsitescomprisingourmarketplaceandpropertymanagerspayusfeesforemailandtelephone
leadsfrompotentialtravelersorfeesuponbookingatransaction.Asaresult,oursuccessinthisareaprimarilydependsonourabilitytoattractowners,managers,
travelersandadvertiserstoourmarketplace.Ifpropertyownersandmanagersdonotperceivethebenefitsofmarketingtheirpropertiesthroughourwebsites,or
electtolistthemwithacompetitorinsteadoflistingwithus,ourvolumeofnewlistingsandlistingrenewalsmaysuffer.Asaresult,wemaybeunabletooffera
sufficientsupplyandvarietyofvacationpropertiestoattracttravelerstoourwebsites.Largercompetitorsalreadyexistinthevacationrentalspace,with
significantlymoreusers,listedpropertiesandfinancialresources.
We may be subject to claims that we violated intellectual property rights of others and these claims can be extremely costly to defend and could require us to
pay significant damages and limit our ability to operate.
CompaniesintheInternetandtechnologyindustries,andotherpatentandtrademarkholdersseekingtoprofitfromroyaltiesinconnectionwithgrantsof
licenses,ownlargenumbersofpatents,copyrights,trademarksandtradesecretsandfrequentlyenterintolitigationbasedonallegationsofinfringementorother
violationsofthoseintellectualpropertyrights.Wehavereceivedinthepast,andmayinthefuturereceive,noticesthatclaimwehavemisappropriatedormisused
otherparties’intellectualpropertyrights.Anyintellectualpropertyclaimagainstus,regardlessofmerit,couldbetime-consumingandexpensivetosettleorlitigate
andcoulddivertmanagement’sattentionandotherresources.Theseclaimsalsocouldsubjectustosignificantliabilityfordamagesandcouldresultinourhaving
tostopusingtechnologyorcontentfoundtobeinviolationofanotherparty’srights.Wemightberequiredormayopttoseekalicenseforrightstointellectual
propertyheldbyothers,whichmaynotbeavailableoncommerciallyreasonableterms,oratall.Evenifalicenseisavailable,wecouldberequiredtopay
significantroyalties,whichwouldincreaseouroperatingexpenses.Wemayalsoberequiredtodevelopalternativenon-infringingtechnology,orcontent,which
couldrequiresignificanteffortandexpenseandmakeuslesscompetitiveintherelevantmarket.Anyoftheseresultscouldharmourbusinessandfinancial
performance.
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