Expedia 2014 Annual Report Download - page 26

We are involved in various legal proceedings and may experience unfavorable outcomes, which could
adversely affect our business and financial condition.
We are involved in various legal proceedings and claims involving taxes, property, personal injury, contract,
alleged infringement of third-party intellectual property rights, antitrust, consumer protection, securities laws,
and other claims, including, but not limited to, the legal proceedings described in Part I, Item 3, Legal
Proceedings. These matters may involve claims for substantial amounts of money or for other relief that might
necessitate changes to our business or operations. The defense of these actions is and will likely continue to be
both time consuming and expensive and their outcomes cannot be predicted with certainty. Determining reserves
for pending litigation is a complex, fact-intensive process that requires significant legal judgment. It is possible
that unfavorable outcomes in one or more such proceedings could result in substantial payments that could
adversely affect our business, consolidated financial position, results of operations, or cash flows in a particular
period.
Declines or disruptions in the travel industry could adversely affect our business and financial
performance.
Our business and financial performance are affected by the health of the worldwide travel industry. Travel
expenditures are sensitive to personal and business-related discretionary spending levels and tend to decline or
grow more slowly during economic downturns. Decreased travel expenditures could reduce the demand for our
services, thereby causing a reduction in revenue.
For example, during regional or global recessions, domestic and global economic conditions can deteriorate
rapidly resulting in increased unemployment and a reduction in available budgets for both business and leisure
travelers, which slow spending on the services we provide and have a negative impact on our revenue growth.
Additionally, if individual countries or regions experience deteriorating credit and economic conditions, and/or
significant fluctuations of currency values relative to other currencies such as the U.S. dollar, it can lead to a
negative impact on our foreign denominated net assets, gross bookings, revenues, operating expenses, and net
income as expressed in U.S. dollars. Further economic weakness and uncertainty may result in significantly
decreased spending on our services by both business and leisure travelers, which may have a material adverse
impact on our business and financial performance. Current sovereign debt issues and concern about regional
central bank activity and its potential to impact both local and global economies, are examples of events that
contribute to a somewhat uncertain economic environment, which could have a negative impact on the travel
industry in the future.
Our business is also sensitive to fluctuations in hotel supply, occupancy and ADRs, decreases in airline
capacity, periodically rising airline ticket prices, or the imposition of taxes or surcharges by regulatory
authorities, all of which we have experienced historically.
Other factors that could negatively affect our business include:
• Air fare increases;
• Continued air carrier consolidation;
• Reduced access to discount airfares;
• Travel-related strikes or labor unrest, bankruptcies or liquidations;
• Incidents of actual or threatened terrorism;
• Periods of political instability or geopolitical conflict in which travelers become concerned about safety
issues;
• Natural disasters or events such as severe weather conditions, volcanic eruptions, hurricanes or
earthquakes;
• Travel-related accidents or the grounding of aircraft due to safety concerns; and
• Health-related risks, such as the Ebola, H1N1, SARs and avian flu outbreaks.
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