EXPE

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How EXPE rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Risk Factors - "We rely on the value of our brands, and the costs of maintaining and enhancing our brand awareness are increasing” and “Our international operations involve additional risks and our exposure to these risks will increase as our business expands globally.” Lodging Lodging includes both hotel and alternative accommodations.
As a percentage of our total worldwide revenue in 2025, lodging accounted for 80%.
Room nights booked grew 8% in 2025, as compared to a growth of 9 % in 2024 .
ADRs for rooms booked for Expedia Group decreased 1% in 2024 and increased 1% in 2025.
As of December 31, 2025, our global lodging marketplace had approximately 3.6 million total lodging properties available, including approximately 2.4 million online bookable alternative accommodations through Vrbo and approximately 1.2 million hotels and alternative accommodations through our other brands.
We generate the majority of our revenue through the facilitation of hotel reservations (stand-alone and package bookings).
Our relationships and overall economics with hotel supply partners have been broadly stable in recent years.
As we continue to expand the breadth and depth of our global hotel offering, in some cases we have reduced our economics in various geographies based on local market conditions.
These impacts are due to specific initiatives intended to drive greater global size and scale through faster overall room night growth.
Additionally, increased promotional activities such as growing loyalty programs, discounting, and couponing have contributed to declines in revenue per room night and profitability in certain cases.
Further, while the global lodging industry remains very fragmented, there has been consolidation in the hotel space among chains as well as ownership groups.
In the meantime, certain hotel chains have been focusing on driving direct bookings on their own websites and mobile applications by advertising lower rates than those available on third-party websites as well as incentives such as loyalty programs, increased or exclusive product availability and complimentary benefits.
Over the past decade, we expanded into the alternative accommodations market.
Vrbo is a leader, specializing in unique whole home inventory, primarily in North American leisure markets, and represents an attractive growth opportunity for Expedia Group.
Vrbo has transitioned from a listings-based classified advertising model to an online transactional model that optimizes for both travelers and homeowner and property manager partners, with a goal of increasing monetization and driving growth through investments in marketing as well as in product and technology.
Vrbo primarily offers pay-per-booking service model and generates revenue from a traveler service fee for bookings, as well as insurance products.
Since our hotel and alternative accommodation supplier agreements are generally negotiated on a percentage basis, any increase or decrease in ADRs has an impact on the revenue we earn per room night.
In the future, we could see macroeconomic factors influence ADR trends, including rising living costs due to inflation and higher interest rates.
Other factors that could lead to moderating ADRs include growth in hotel supply and the increase in alternative accommodation inventory.
Advertising & Media Expedia Group (“EG”) Advertising is responsible for generating advertising revenue on our global online travel brands through a variety of digital marketing solutions.
In 2025, we generated $758 million of advertising and media revenue, a 19% increase from 2024.
We also generate advertising revenue from trivago, a leading hotel metasearch website.
In 2023, trivago adapted its marketing strategy and launched a new logo and visual identity, part of a push to rejuvenate its brand, demonstrate the relevance of its offerings and drive long-term growth.
During the fourth quarter of 2024, trivago returned to revenue growth, which continued throughout 2025.
In 2025, we generated $417 million of third-party revenue from trivago, a 33% increase from 2024.
As a percentage of our total worldwide revenue in 2025, total advertising and media accounted for 8%.
Air During 2025, air travel demand exhibited a mixed but improving trend.
While ticket volumes were positive throughout the year, pricing was pressured by softer consumer demand in the United States and weaker inbound international travel into the United States in early 2025.
By the end of the year, domestic and international travel demand improved, supporting air ticket price growth.
For the full year 2025, U.S. domestic trips were up approximately 2% year-over-year according to Airlines Report Corporation ("ARC") data.
Our air bookings grew in 2025 compared to 2024 but continued to lag the growth in our lodging business.
In the future, we could encounter pressure on air remuneration as air carriers combine, more air carriers shift to our "direct connect" technology, certain supply agreements renew, and as we continue to add airlines to ensure local coverage in new markets.
Booked air tickets increased 3% in 2025 and 6% in 2024.
As a percentage of our total worldwide revenue in 2025, air accounted for 3%.
Seasonality We generally experience seasonal fluctuations in the demand for our travel services.
For example, traditional leisure travel bookings are generally the highest in the first three quarters as travelers plan and book their spring, summer and winter holiday travel.
The number of bookings typically decreases in the fourth quarter.
Since revenue for most of our travel services, including merchant and agency hotel, is recognized as the travel takes place rather than when it is booked, revenue typically lags bookings by several weeks for our hotel business and can be several months or more for our alternative accommodations business.
Historically, Vrbo has seen seasonally stronger bookings in the first quarter of the year, with the relevant stays occurring during the peak summer travel months.
The seasonal revenue impact is exacerbated with respect to income by the nature of our variable cost of revenue and direct sales and marketing costs, which we typically realize in closer alignment to booking volumes, and the more stable nature of our fixed costs.

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Business Models We make travel products and services available both on a stand-alone and package basis, primarily through the following business models: the merchant model, the agency model and the advertising model. • Merchant Model.
For example, we provide travelers access to book hotel room reservations through our contracts with lodging suppliers, which provide us with rates and availability information for rooms but for which we have no control over the rooms and do not bear inventory risk.
The majority of our merchant transactions relate to lodging bookings. • Agency Model.
Under the agency model, we facilitate travel bookings and act as the agent in the transaction, passing reservations booked by the traveler to the relevant travel provider.
We record revenue on air transactions when the traveler books the transaction, as we do not typically provide significant post booking services to the traveler and payments due to and from air carriers are typically due at the time of ticketing.
Additionally, we generally record agency revenue from the hotel when the stayed night occurs as we provide post booking services to the traveler and, thus consider the stay as when our performance obligation is satisfied.
The majority of our agency gross bookings relate to air bookings. • Advertising Model.
Under the advertising model we offer travel and non-travel advertisers access to a potential source of incremental traffic and transactions through our various media and advertising offerings across several of our transaction-based websites, as well as on our majority-owned metasearch site, trivago.
For the year ended December 31, 2024, we had total revenue of $13.7 billion, with merchant, agency and advertising, media and other accounting for 69%, 23%, and 8% of total revenue, respectively.
Our Expedia Traveler Preference ("ETP") program offers, for participating hotels, customers the choice of whether to pay Expedia Group in advance under our merchant model (Expedia Collect) or pay at the hotel at the time of the stay under the agency model (Hotel Collect).
In addition, through various of our Expedia Group-branded and other multi-product websites, travelers can dynamically assemble multiple component travel packages for a specified period at a lower price as compared to booking each component separately.
Travelers typically select packages based on the total package price or by purchasing one product and receiving a discounted price to attach additional products.
The use of the merchant model enables us to make certain multi-product purchases available at prices lower than those charged on an individual component basis without impacting their other pricing models.
In addition, we also offer pre-assembled package offerings, further broadening our scope of products and services to travelers.
We expect the package product to continue to be marketed primarily using the merchant model.
Marketing and Promotions Our marketing programs are intended to build and maintain the value of our B2C brands, drive traffic and ultimately bookings while optimizing ongoing traveler acquisition costs.
Our long-term success and profitability depend on our continued ability to maintain and increase the overall number of traveler transactions flowing through our brand and shared platforms in a cost-effective manner, as well as our ability to attract repeat customers and customers that come directly to our brands.
We manage our marketing investments holistically across the brand portfolio in our B2C segment to optimize results for the Company and make decisions on a market by market and customer segment basis that we think are appropriate based on the relative growth opportunity, the expected returns and the competitive environment.
In aggregate, we put the majority of our marketing efforts towards our three core consumer brands: Expedia, Hotels.com and Vrbo.
Our marketing channels primarily include brand advertising through online and offline channels, loyalty programs, mobile apps, search engine marketing and optimization as well as metasearch, social media, direct and/or personalized traveler communications on our websites as well as through direct e-mail communication with our travelers.
Our marketing programs and initiatives include promotional offers such as coupons as well as seasonal or periodic special offers from our travel suppliers based on our supplier relationships.
More recently, we unified our existing loyalty programs into one global rewards platform called One Key spanning our core consumer brands, which launched in the United States in 2023 and United Kingdom in 2024.
We also make use of affiliate marketing.
Several of our branded websites receive bookings from consumers who have clicked through to the respective websites through links posted on affiliate partner websites.
In exchange for this traffic, we pay the affiliate partner a commission.
Travel Suppliers We make travel products and services available from a variety of hotel companies, property owners and managers, large and small commercial airlines, car rental companies, cruise lines, destination service providers, and other travel partners.
We seek to build and maintain long-term, strategic relationships with travel suppliers and global distribution system (“GDS”) partners.
An important component of the success of our business depends on our ability to maintain our existing, as well as build new, relationships with travel suppliers and GDS partners.
We strive to deliver value to our travel supply partners through a wide range of innovative, targeted merchandising and promotional strategies designed to generate consumer demand and increase their revenue, while simultaneously reducing their overall marketing transaction and customer service costs.
Our strategic account managers and local hotel market managers work directly with travel suppliers to optimize the exposure of their travel products and brands through our points of sale, including participation in need-based, seasonal and event-driven promotions and experimentation within the new channels we are building.
We developed proprietary technology to assist both hotel and alternative accommodation suppliers in managing and marketing their supply, whether this is direct through our proprietary central reservation tools or through third-party channel managers.
Our “direct connect” technology allows suppliers to upload information about available products and services and rates directly from their central reservation systems and dynamically manage reservations and traveler needs through our messaging and chat platforms.
Marketing tools assist hotels and alternative accommodations in tailoring demand to their requirements and our revenue management product provides pricing insights.
We also offer an “optimized distribution” product to help hotel suppliers distribute wholesale rates through authorized channels.
Our suite of white label website offerings power hotel, and package bookings on suppliers' own websites.
Vrbo's alternative accommodation listing services offers our supply partners a set of tools to help them manage an availability calendar, respond to customer inquiries, edit the content of a property listing, as well as provide various other services to manage reservations or drive incremental sales volume.
GDSs provide a centralized, comprehensive repository of travel suppliers’ ‘content’ — such as availability and pricing of airline tickets on various airline point-to-point flights, or ‘segments.’ The GDSs act as intermediaries between the travel suppliers and travel agencies, allowing agents to reserve and book flights, car rentals or other travel products.
Our relationships with GDSs primarily relate to our air business.
We use Amadeus and Sabre as our GDS segment providers in order to ensure the widest possible supply of content for our travelers.
Competition Our brands compete in rapidly evolving and intensely competitive markets.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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