UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 _____________________________________________________________________________________________
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 _____________________________________________________________________________________________
 
For the fiscal year ended: December 31, 20202023
Commission File No.: 1-36691
Booking Holdings Inc.
(Exact name of Registrant as specified in its charter)
Delaware06-1528493
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
800 Connecticut Avenue
Norwalk, Connecticut 06854
(address of principal executive offices)
Registrant's telephone number, including area code: (203) 299-8000
 _____________________________________________________________________________________________
 Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class:Trading SymbolName of Each Exchange on which Registered:
Common Stock par value $0.008 per shareBKNGThe NASDAQ Global Select Market
0.800% Senior Notes Due 2022BKNG 22AThe NASDAQ Stock Market LLC
2.150% Senior Notes Due 2022BKNG 22The NASDAQ Stock Market LLC
2.375% Senior Notes Due 2024BKNG 24The NASDAQ Stock Market LLC
0.100% Senior Notes Due 2025BKNG 25The NASDAQ Stock Market LLC
4.000% Senior Notes Due 2026BKNG 26The NASDAQ Stock Market LLC
1.800% Senior Notes Due 2027BKNG 27The NASDAQ Stock Market LLC
3.625% Senior Notes Due 2028BKNG 28AThe NASDAQ Stock Market LLC
0.500% Senior Notes Due 2028BKNG 28The NASDAQ Stock Market LLC
4.250% Senior Notes Due 2029BKNG 29The NASDAQ Stock Market LLC
4.500% Senior Notes Due 2031BKNG 31The NASDAQ Stock Market LLC
4.125% Senior Notes Due 2033BKNG 33The NASDAQ Stock Market LLC
4.750% Senior Notes Due 2034BKNG 34The NASDAQ Stock Market LLC
Securities Registered Pursuant to Section 12(g) of the Act: None.
 _____________________________________________________________________________________________
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes    No  
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes    No  
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes    No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes    No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filerNon-accelerated filer
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes    No 
The aggregate market value of common stock held by non-affiliates of Booking Holdings Inc. at June 30, 20202023 was approximately $65.0$97.2 billion based upon the closing price reported for such date on the NASDAQ Global Select Market. For purposes of this disclosure, shares of common stock held by executive officers and directors of Booking Holdings Inc. on June 30, 20202023 have been excluded because such persons may be deemed to be affiliates of Booking Holdings Inc. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
The number of outstanding shares of Booking Holdings Inc.’s's common stock was 40,961,79634,171,027 at February 17, 2021.15, 2024.





DOCUMENTS INCORPORATED BY REFERENCE
 
The information required by Part III of this Annual Report on Form 10-K, to the extent not set forth in this Form 10-K, is incorporated herein by reference from Booking Holdings Inc.'s definitive proxy statement relating to its annual meeting of stockholders to be held on June 3, 2021,4, 2024, to be filed with the Securities and Exchange Commission within 120 days after the end of Booking Holdings Inc.'s fiscal year ended December 31, 2020.2023.
 
Booking Holdings Inc. Annual Report on Form 10-K for the Year Ended December 31, 20202023 Index
 
  Page No.
  
 
  
 
  
 




Special Note Regarding Forward-Looking Statements
 
This Annual Report on Form 10-K, including "Management's Discussion and Analysis of Financial Condition and Results of Operation" in Part II, Item 7, and the documents incorporated herein by reference contain forward-looking statements. These forward-looking statements reflect our views regarding current expectations and projections about future events and conditions and are based on currently available information. These forward-looking statementsThey are not guarantees of future performance and are subject to risks, uncertainties, and assumptions that are difficult to predict, including the Risk Factors identified in Part I, Item 1A of this Annual Report; therefore, ourReport. Our actual results could differ materially from those expressed implied or forecastimplied in any such forward-looking statements. Expressions of future goals and expectations and similar expressions, including "may," "will," "should," "could," "aims," "seeks," "expects," "plans," "anticipates," "intends," "believes," "estimates," "predicts," "potential," "targets," and "continue," reflecting something other than historical fact are intended to identify forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the reports and documents we file or furnish from time to time with the Securities and Exchange Commission (the "SEC" or the "Commission"), particularly our quarterly reports on Form 10-Q and current reports on Form 8-K..
 

PART I 

Item 1.  Business

The COVID-19 pandemic has had a profound impact on our business, employees, partners, communities and stockholders. Although there was a significant decline in our business in 2020 as a result of the COVID-19 pandemic, we remain confident that the travel industry will recover when travelers feel safe to travel once again. In the beginning of the crisis, our priorities included the health and safety of our employees and stabilizing our business from the immediate shock of the pandemic by working with customers and partners to address unprecedented levels of cancellations. We also took numerous actions in response to the pandemic, including steps to increase our financial liquidity, reduce costs, restructure our operations to address our near- to medium-term business expectations and ensure we are well-positioned to capture travel demand when it returns so we can emerge from this crisis on a strong footing and work on extending our leadership position. While the timing of the recovery of the travel industry remains uncertain, we believe that demand for our services will return when government restrictions are lifted and people are confident itOur mission is once again safe to travel.
As a result, our mission to make it easier for everyone to experience the world remains unchanged.world. We seekaim to empower people to cut throughprovide consumers with a best-in-class experience offering the travel barriers, such as money, time, language and overwhelming options, so they can use our services to easily and confidently get wherechoices they want, to go, stay where they want to stay, dine where they want to dine, pay how they want to pay and experience what they want to experience. We connect consumers wishing to make travel reservations with providers of travel services around the world through our online platforms. Through one or more of our brands, consumers can: book a broad array of accommodations (including hotels, motels, resorts, homes, apartments, bed and breakfasts, hostelstailored language, payment, and other properties); make a car rental reservation or arrange for an airport taxi; make a dinner reservation; or book a flight, cruise, vacation package, tour or activity. Consumers can also useoptions, seamlessly connecting them with our meta-search services to easily compare travel reservation information, such as airline ticket, hotel reservation and rental car reservation information, from hundreds of online travel platforms at once. In addition, we offer various other services to consumers and partners, such as certain travel-related insurance products and restaurant management services to restaurants.

service provider partners. We offer these services through sixfive primary consumer-facing brands: Booking.com, Priceline, agoda, Rentalcars.com,Agoda, KAYAK, and OpenTable. While historicallyOpenTable:
Item 1. Business Brand and Services Table.jpg

We are proud that, despite challenges to our brands operated on a largely independent basisglobal community such as the wars in Ukraine and manythe Middle East and the impact of them focused on a particular service (e.g., accommodation reservations) or geography,inflation, we continue to increase the collaboration, cooperation and interdependency among our brands incontinued our efforts to providemake our brands the most trusted and convenient platforms for consumers with the best and most comprehensive services. We also seekpartners, including:
achieving record annual room nights in 2023;
continuing to maximize the benefits of our scale by sharing resourcesincrease room nights and technological innovations, co-developing new services and coordinating activitiesbrand awareness in key markets amongsuch as the U.S.;
strongly growing our brands. For example,alternative accommodations offering;
improving our loyalty programs, particularly the Genius program at Booking.com, the world’s leading brandand increasing our focus on value for booking online accommodation reservations (based on room nights booked), offers rental carour consumers;
further integrating artificial intelligence ("AI") technology into our offerings;
improving and other ground transportation services, flights, toursexpanding our flight offering at Booking.com and activities, restaurant reservationsextending our partnership with Etraveli Group through at least 2028; and other services, many of which are supported by our other
1


brands. Similarly, hotel reservations available through Booking.com are also generally available through agoda and Priceline. The following table shows the key services offered to consumers by our primary brands:
bkng-20201231_g1.jpg

Our business is driven primarily by international results, which consist of the results of Booking.com, agoda and Rentalcars.com and the international businesses of KAYAK and OpenTable. This classification is independent of where the consumer resides, where the consumer is physically located while using our services or the location of the travel service provider or restaurant. For example, a reservation made through Booking.com at a hotel in New York by a consumer in the United States is partincreasing adoption of our international results. During the year ended December 31, 2020, our international business (the substantial majority of which is generated by Booking.com) represented approximately 88% of our consolidated revenues. A significant majority of our revenues, including a significant majority of our international revenues, is earned in connection with facilitating accommodation reservations. See Note 18 to the Consolidated Financial Statements for more geographic information.payments platform and capabilities.

Our common stock is listed on the NASDAQ Global Select Market under the symbol "BKNG." We refer to our company and all of our subsidiaries and brands collectively as "Booking Holdings," the "Company," "we," "our""our," or "us."

The Booking Holdings
1


Our Business Model
 
We derive substantially all of our revenues from enabling consumers to makeproviding online travel reservation services, which facilitate online travel purchases between travel service reservations.providers and travelers (which we generally refer to as "partners" and "consumers," respectively). We also earn revenues from credit card processing rebates and customer processing fees, advertising services, restaurant reservations, and restaurant management services, and various other services, such as travel-related insurance.insurance and restaurant management services.

For the year ended December 31, 2020,2023, we had revenues of $6.8$21.4 billion, which we classify as "agency""merchant" revenues, "merchant""agency" revenues, and "advertising and other" revenues.

Merchant revenues are derived from transactions where we facilitate payments from travelers for the services provided, generally at the time of booking. Merchant revenues include travel reservation commissions and transaction net revenues (i.e., the amount charged to travelers, including the impact of merchandising, less the amount owed to travel service providers); credit card processing rebates and customer processing fees; and ancillary fees, including travel-related insurance revenues. The majority of our merchant revenue is from Booking.com's accommodation reservations.

Agency revenues are derived from travel-related transactions where we do not facilitate payments from travelers for the services provided. We invoice the travel service providers for our commissions after travel is completed. Agency revenues consist almost entirely of travel reservation commissions.

Merchant revenues are derivedcommissions from travel-related transactions where we facilitate payments from travelers for the service provided, generally at the time of booking. Merchant revenues include travelour reservation commissions and transaction net revenues (i.e., the amount charged to travelers less the amount owed to travel service providers) in connection with our merchant reservation services; credit card processing rebates and customer processing fees; and ancillary fees, including travel-related insurance revenues.services. Substantially all merchant revenues are derivedof our agency revenue is from transactions where travelers bookBooking.com's accommodation reservations or rental car reservations.

Advertising and other revenues are derived primarily from (a) revenues earned by KAYAK for sending referrals to online travel companies ("OTCs") and travel service providers and for advertising placements on its platforms and (b) revenues earned by OpenTable for its restaurant reservation services and subscription fees for restaurant management services.

2


The Booking HoldingsOur Strategy
 
We aim to achieve our mission to make it easier for everyone to experience the world throughdemonstrate global leadership in online travel and restaurant reservationbookings and related services by striving to:

by:
provide consumers with the best choices and prices at any time, in any place, on any device;
makemaking it easy for people to find, book, pay for, and experience their travel desires; andtravel;
provideproviding consumers with the most comprehensive choices and value on any device;
offering platforms, tools, and insights to our business partners to help them be successful.successful; and
operating our business sustainably and supporting sustainable travel choices by our consumers and partners.

We focus on relentless innovation and execution and a commitment to serve both consumers and our travel service provider and restaurant partners with unmatched service and best-in-class digital technology. We believe that as the COVID-19 pandemic subsides, people feel confident traveling and dining out and government restrictions are lifted, the global online travel and dining industriesbookings will recover and, after some period of higher growth through the recovery,generally continue to grow as they did before the COVID-19 pandemic as consumer purchasing shiftswhile shifting from traditional offline channelsmethods to interactive online channels including mobile channels. Aslike ours. We expect to benefit from this growth in travel demand returns,and the continued shift to online channels as we planwork to continue to participate broadly in this online growth by expandingexpand our service offerings and markets.increase our presence in key geographies. In particular, we seek to (a) leverage technology to provide consumers with the best experience, (b) partner with travel service providers and restaurants to our mutual benefit, (c) operate multiple brands that collaborate with each other, and (d) invest in profitable and sustainable growth.

ProvidingProvide the best consumer experienceexperience.. We believe that offering consumers an outstanding online experience is essential for our future success. To accomplish this, we focus on providing consumers with: (a) intuitive,personalized and easy-to-use online travel and restaurant reservation and search services; (b) a continually improvingcomprehensive selection of accommodations, other travel offerings, restaurants and payment options through our services;options; (c) informative and useful content, such as pictures, accommodation and restaurant details and reviews; andcontent; (d) excellent customer service. Ourservice; and (e) value through competitive prices and loyalty programs.

We continue to innovate to meet the needs of our consumers and partners through intuitive, easy-to-use websites and mobile apps. An increasing percentage of our room nights are booked on our mobile apps. We believe that our development of payments capabilities across the Company removes friction from the booking process and delivers additional value for travelers. We continue to execute against our long-term strategy to create an ideal traveler experience, offering our customers relevant options and connections at the times and in the language they want them, making trips booked with us seamless, easy, and valuable. We refer to this as the "Connected Trip." The goal of our Connected Trip vision is to makeoffer a differentiated and personalized online travel easy, frictionlessplanning, booking, payment, and personalin-trip experience for each trip, enhanced by a robust loyalty program that provides value to travelers and to offerpartners across all trips. In the near term, we are focused on providing consumers the most value,ability to build a complete travel itinerary on our platforms by, for example, enabling them to book convenient ground transportation to coincide with their flight arrival or attractions near their accommodation, and developing a generative AI assisted trip planner. We also continue to grow verticals such as our flight offering, with 2023 flight ticket growth across the most trusted brands, the most personalized experience and the most extensive, varied and comprehensive travel service selection in every geography. Further, we
2


Company of 58% year-over-year. We endeavor to provide excellent customer service, in a variety of ways, including through our call centers and online platforms and the use of chatbots and other technologies, so that consumers can be confident that booking reservations through us will be a positive experience.

Although we spent much of 2020 navigating the challenges of the COVID-19 pandemic, we continue to innovate and invest in our services in order to emerge from the pandemic in a strong position to meet the needs of consumers and our travel service provider and restaurant partners. We continue to seek to grow our business through innovation by, among other things, providing a best-in-class user experience with intuitive, easy-to-use online platforms (i.e., websites and mobile apps) to ensure that we are meeting the needs of online consumers while aiming to exceed their expectations. As a result, our long-term strategy is to build a seamless offering of multiple elements of travel, which we refer to as the "Connected Trip." We believe that through innovation and the utilization of emerging technologies such as artificial intelligence, the Connected Trip will simplify and improve all aspects of the travel experience, including: discovery, planning, booking, coordinating itineraries among travel service providers, automatic rescheduling/rebooking, etc. For example, if a traveler’s flight is delayed, we envision that ultimately the Connected Trip will not only alert the traveler, but also automatically arrange for a late arrival at the hotel, change a dinner reservation and alert companion diners, reschedule the airport transfer, find a later connecting flight, etc. We believe that such a system will benefit both the traveler and the travel service provider or restaurant, as well as provide a compelling and differentiated service offering for consumers that will drive enhanced loyalty and frequency over time.technologies.

PartneringPartner with travel service providers restaurants and OTCs.restaurants. We aim to establish mutually beneficial relationships with travel service providers and restaurantsour partners around the world. We believe that travel service providers and restaurantsthey benefit from participating in our services by increasing their distribution channels, demand, profile and reputation, and inventory utilization in an efficient and cost-effective manner. Travel service providers and restaurantsThey also benefit from our well-knowntrusted brands and marketing efforts, expertise in offering an excellent consumer experience, through our platforms and ability to offer their inventory in markets and to consumers that the travel service provider or restaurantthey may otherwise be unable or unlikely to reach.reach, for instance due to language or payments services we can offer on their behalf.

In addition, we have commercial relationships with other OTCs, such as Didi Chuxing (the leading ride hailing service in China) and Grab Holdings Inc. ("Grab") (the leading ride hailing company in Southeast Asia), whereby the customers of one company will have access to the services of the other. For example, through the Booking.com app, a Booking.com customer traveling in Southeast Asia can book a local ride arranged by Grab.

3


OperatingOperate multiple brands.We employ a strategy of operatingoperate multiple brands, which we believe allows us the opportunity to offer our services in ways thatprovide numerous service offerings, appeal to different consumers, pursue differentdistinct marketing and business strategies, encourage experimentation and innovation, provide different service offerings and focus on different markets. At the same time, we are continuingspecific markets or geographies. We continue to increase theoptimize collaboration cooperation and interdependency among our brands in our efforts to provide consumers with the best and most comprehensive and value-oriented services, sharing resources and technological innovations among our brands and co-developing new services. As we deem appropriate given the shape and speed of recovery from the COVID-19 pandemic, we intend toWe invest resources to support organic growth by all our brands, whether through increased marketing, geographic expansion, technological innovation, or increased access to accommodations, rental cars, restaurants, airline tickets or other services.travel service offerings.

InvestingInvest in profitable and sustainable growth. We seek to offer online services that meet the needs and the expectations of consumers travel service providers and restaurantspartners and that we believe will result in mutual long-term profitability and growth. We intend to accomplish this through continuous investment and innovation, growing our businesses in new and current markets, expanding our services and ensuring that we provide an appealing, intuitive and easy-to-use consumer experience. We have made significant investments in people, technology, marketing, and added or expanded new or additional services, such as improving the selection oftravel offerings. In 2023, we expanded our extensive collection of accommodations including homes, apartmentscommercial partnership with Etraveli Group to strengthen and other unique placesaccelerate our efforts to stay, expanded flightbuild a frictionless global flights offering, and ground transportation offeringswe increased our investments in generative AI functionalities both for internal productivity and other offerings. While we reduced the size of our workforce in response to the COVID-19 pandemic, we are preparing the business to capture more travel demand as it develops during the recovery and over the long term. We continue to seek to maximize the benefits of our scale by sharing resources and technological innovations among our brands, co-developing new services and coordinating activities in key markets among our brands.consumer-facing initiatives. We also regularly evaluate, and may pursue, and consummate, potential strategic acquisitions, partnerships, joint ventures, or investments whether to expandas part of our businesses into complementary areas, expand our current businesses, acquire innovative technology or for other reasons.long-term business strategy.

Service Offerings

Booking.com and Rentalcars.com.Booking.com. Booking.com is the world's leading brand for booking online accommodation reservations, based on room nights booked, with operations worldwide and headquarters in the Netherlands. At December 31, 2020,2023, Booking.com offered accommodation reservation services for approximately 2,373,0003.4 million properties in over 220 countries and territories and in over 40 languages, consisting of approximately 434,000over 475,000 hotels, motels, and resorts and approximately 1,939,000over 2.9 million homes, apartments, and other unique places to stay.

In 2023, Booking.com has expanded its offerings beyond accommodations to better help consumers experience the world. For example, Booking.com offersoffered flights in 55 markets and in-destination tours and activities in more than 1401,300 cities around the world, as well as flight, rental car and restaurant reservation services. Rentalcars.com is operated as part ofworld. Booking.com and offers online rental car reservation services in approximately 42,000 locations throughout the world and allows consumers to make rental car reservations inground transportation services at over 54,000 locations1,900 airports throughout the world, with customer support in over 40 languages. Booking.com and Rentalcars.com also offer pre-booked taxi and black car services at over 1,100 airports throughout the world.

Priceline. Priceline is a leader in the discount travel reservation business, and offersoffering online travel reservation services primarily in North America, and is headquarteredwith headquarters in Norwalk, Connecticut. Priceline offers consumers hotel, flight, activity, and rental car and airline ticket reservation services, as well as vacation packages, cruises, and cruises.hotel distribution services for partners and affiliates.

Agoda. Agoda is a leading online accommodation reservation service catering primarily to consumers in the Asia-Pacific region, with headquarters in Singapore and operations in Bangkok, Thailand, and elsewhere. Agoda also offers flight, ground transportation, and activities reservation services.

KAYAK. KAYAK, headquartered in Stamford, Connecticut, provides an online price comparison service (often referred to as "meta-search")meta-search services that allowsallow consumers to easily search and compare travel itineraries and prices including airline ticket, accommodation reservation and rental car reservation information, from hundreds of online travel platforms at once. KAYAK offers its servicesservices in over 60 countries and territories, with its largest market in the United States, being its largest market, through various websites including Momondo,momondo, Cheapflights, and HotelsCombined.HotelsCombined.

OpenTable. OpenTable is a leading brand for booking online restaurant reservations. With significant operations in San Francisco, California, OpenTable provides online restaurant reservation services to consumers and reservation management services to restaurants. OpenTable does businessrestaurants, primarily in the United States.

43


Marketing and Brand Awareness
 
We have established widely used and recognized e-commerce brands through marketing campaigns and promotional campaigns. Historically, ourstrategic use of performance marketing expenses increased significantly, however, we experienced more moderate growth rates in recent years, and since the COVID-19 pandemic, our marketing expenses have declined significantly.spend. We have invested considerable resources in the establishment and maintenance of our brands, and we intend to continue to invest resources in marketing and other brand building efforts to preserve and enhance consumer awareness of our brands when and to the extent we deem appropriate, in particular as the COVID-19 pandemic subsides and consumers begin to travel again.brands.

Competition

We compete globally with both online and traditional travel and restaurant reservation and related services. The markets for the services we offer are intensely competitive and constantly evolving and subject to rapid change, and currentevolving. Current and new competitors can launch new services at a relatively low cost. Some of our current and potential competitors such as Google, Apple, Alibaba, Tencent, Amazon and Facebook,include the largest global technology companies, which have significantly more customers or users, consumer data, and financial and other resources than we do, and they may be able to leverage other aspects of their businesses (e.g., search or mobile device businesses) to enable thembusinesses, or generative AI capabilities) to compete more effectively with us. For example, Google has entered various aspects of theGoogle's online travel market and hasofferings have grown rapidly in this area including by offering a flight meta-search product ("Google Flights"), a hotel meta-search product ("Google Hotel Ads"), a vacation rental meta-search product,linking travel search services to its "Book on Google" reservationdominant search functionality Google Travel, a planning tool that aggregates itsthrough flight, hotel, and packagesalternative accommodations meta-search products, in one website and by integrating its hotel meta-search products and restaurant information and reservationsuch products into its Google Maps app. In addition, Amazon has experimented with online travel in the past and continues to experiment in this area, such as by partnering with travel companies to offer its customers travel products, including a partnership with Booking.com to provide travel deals to Amazon Prime users in certain countries.

We currently, or may in the future, compete with a variety of companies, including:
online travel or restaurant reservation services and meta-search services;

large online companies, including search, social networking, and marketplace companies;

travel service providers (e.g., accommodations, rental car companies, or airlines);
traditional travel agencies, travel management companies, wholesalers, and tour operators, many of which combine physical locations, telephone servicesoperators; and online services;

travel service providers such as accommodation providers, rental car or car- or ride-sharing companies and airlines, many of which have their own branded online platforms to which they drive business;

online travel search and price comparison services (generally referred to as "meta-search" services);

online restaurant reservation services; and

companies offering technology services and software solutions to travel service providers.

For more information regarding current and potential competitors and the competitive nature of the markets in which we operate, please see Part I, Item 1A, Risk Factors - "Intense competition could reduce our market share and harm our financial performance." in this Annual Report on Form 10-K.

Government Regulation

As a global online travel company, ourOur ability to provide our services and any future services is affected by legal regulations (including laws, ordinances, rules, licensing requirements and other requirements and regulations) of national and local governments and regulatory authorities around the world, many of which are evolving and subject to the possibility of new or revised interpretations. Examples of these laws and regulations, which vary and sometimes conflict, include the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and local laws which also prohibit corrupt payments to governmental officials or third parties, data privacy requirements, labor relations laws, non-discrimination, human rights or anti-human trafficking laws and regulations, such as the U.K. Modern Slavery Act 2015, tax laws, anti-trust or competition laws, U.S., E.U. or U.N. sanctioned country or sanctioned persons mandates and consumer protection laws. Violations of theseany laws andor regulations could result in fines, penalties, and/orand criminal sanctions against us, our officers or our employees, and/orand prohibitions on thehow or where we conduct of our business. Any such violationsbusiness, which could also result in prohibitions on our ability to offer our
5


services in one or more countries, delay or prevent potential acquisitions, and materially damage our reputation, our brands, our global expansion efforts, our ability to attract and retain employees and business partners, our business, and our operating results. Even if we comply with these laws and regulations, doing business in certain jurisdictions or violations of these laws and regulations by the accommodations, restaurants, travel service providers or other parties with whomwhich we conduct business runs the risk of harming our reputation and our brands, which could adversely affect our results of operations or stock price. Government regulationsbrands. Regulations that impact our business and/or our industry include:

Data Protection and Privacy: Regulatory and legislative activity in the areas of privacy, data protection, and information and cyber security governing parts of our business continues to increase worldwide. We have established, and continue to maintain, policies and a global governance framework to comply with privacy laws that apply to our business, meet evolving stakeholder expectations, and support business innovation and growth. In the European Union, for example, the General Data Protection Regulation (the “GDPR”"GDPR") imposes significant compliance obligations and costs for us.costs. In the United States, the California Consumer Privacy Act (the “CCPA”"CCPA") and the recently enacted California Privacy Rights Act (“CPRA”("CPRA"), set to become operative in January 2023, impose new privacy requirements and rights for consumers in California that will result in additional compliance complexity, risks, and costs. Other U.S. states and jurisdictions globally have adopted or may adopt similar data protection regulations. Some data protection and privacy laws afford consumers a private right of action against companies like ours for certain statutory violations. Many other jurisdictions continually propose and consider enacting similar or other data protection laws. In many cases, these laws restrict the transfers of information among our subsidiaries, including employee information.
Competition, Consumer Protection and Online Commerce: We, the travel industry and the technology industry generally are subject to competitionCompetition and consumer protection laws and regulations around the world that impact aspects of our business including, among others, contractual parity arrangements with accommodation providers and the manner in which we display informationauthorities are increasingly focused on our platforms. There is significant legislative and public focus on thelarge technology industry, especially as technology companies, become larger, including in relation to the regulation of digital platforms. The European Commission’s proposed Digital Markets Act ("DMA") and Digital Services Act legislation is expected to("DSA") give regulators in the EU more instruments to investigate and regulate digital businesses and impose new rules and requirements on certain digital platforms if they are determineddesignated as "gatekeepers" under the DMA and online platforms more generally, with separate rules for "Very Large Online Platforms" ("VLOPs") under the DSA. In 2023, Booking.com received a VLOP designation notice from the European Commission. The Company has met the quantitative notification criteria set forth in the DMA and expects to be "gatekeepers."notify the European Commission of that fact within the required deadline.
4


Regulation of the Travel Industry: Our business could beis impacted by travel-related regulations such as those imposed by local jurisdictions to regulateregulation of the use of alternative accommodations andaccommodations. Local jurisdictions around the world have instituted a variety of measures to address the issueissues of “overtourism.”"overtourism" and the impact of tourism on the climate. As our business evolves, in particular as we offer linked travel arrangements or travel packages as a part of the Connected Trip, we expect to become subject to existing and new regulations. For example, some parts of our business are already subject to certain requirements of the EU Package Travel Directive (the “Package Directive”"Package Directive"), and as our offerings continue to diversify and expand, we may become subject to additional requirements of the Package Directive.
Payments: As we expand our payments services to consumers and business partners, we will likely becomeare subject to additional regulations, such as financial services regulations and license requirements, which could resulthas resulted in increased compliance costs and complexities, including those associated with the implementation of new or more stringentadvanced internal controls. We are also subject to payment card association rules and obligations under our contracts with payment card processors, including the Payment Card Industry Data Security Standard, compliance with which is complex and costly.

For further discussion of these regulations and how other global regulations may impact our business, see Part I, Item 1A-Risk1A, Risk Factors - "Information Security, Cybersecurity, and Data Privacy Risks" and"Legal, Tax, Regulatory, Compliance, and Reputational Risks."

Operations and Technology
 
Our business is supported by multiple systems and platforms which were designed with an emphasis on scalability, performance, reliability, redundancy, and security. TheseOur systems connect us with vendors and platformspartners. We are generally independent amongmodernizing our brands, though some have become increasingly connected or shared.  Our software systems, platforms and architecture use a variety of widely-used softwaretechnology by building new applications with modern development tools and database systems. 

These internal systemsapplication programming interfaces, and platforms are designed to include open application protocol interfaces that can provide connectivity to vendors in the industries in which we operate.  These include large global systems, such as accommodation, airline ticket and rental car reservation systems and financial service providers, as well as individual accommodation service providers, such as independent hotels.increasingly rely upon public cloud infrastructure. Our applications utilize digital certificates and other security technologies to help us conduct secure communications and transactions, as appropriate. The systems infrastructure and web and database servers of our worldwide operations are primarily hosted in the United Kingdom, Switzerland, the Netherlands, Germany, Singapore, Hong Kongdata centers in Europe, Asia, and four locations in the United States,North America, and each of which provides network connectivity, networking infrastructureservices and 24-hour monitoring and engineering support typical of hosted data centers. All data center facilities have a continuous power supply system, generators, redundant servers and multiple back-up systems.  Although we take steps to mitigate the effectsFor discussion of any loss or reduction in
6


service at one of our hosting facilities, if a hosting facility were inaccessible or otherwise experienced a disruption in service for any reason, we could experience a disruptionrisks relating to our services, loss of transactionstechnology, see Part I, Item 1A, Risk Factors - "Information Security, Cybersecurity, and revenue and consumer complaints.Data Privacy Risks."

We provide customer service through a mix of in-house call centers and outsourced third-party services.

Intellectual Property
 
Over time and through acquisitions, we have assembled a portfolio of patents, trademarks, service marks, copyrights, domain names and trade secrets covering our services. We regard theThe protection of our intellectual property asis important to our success. We protectrely on intellectual property such as trademarks, copyrights, patents, and trade secrets to support our business as well as domain names or other intangible rights or property secured through purchase, licensing, or other agreements with employees, travel service providers, vendors, and other parties. We have filed applications for protection of certain aspects of our intellectual property rights by relying on national, federal, state and common law rights in the United States and internationally, as well asother jurisdictions, and we currently hold a varietynumber of administrative procedures, regulations, conventions and treaties. We also rely on contractual restrictions to protect our proprietary rightsissued patents in our services. We enter into confidentiality and invention assignment agreements with employees and contractors and nondisclosure agreements with parties with whom we conduct business in order to limit access to and disclosure of our proprietary information. We also have procured various intellectual property licenses from third parties.several jurisdictions. See Part I, Item 1A, Risk Factors - "We face risks related to our intellectual property."

Seasonality and Other Timing Factors

In recent years, and prior to the COVID-19 pandemic, the majority of2023, our gross bookings are generatedwere generally similar in the first halfthree quarters of the year and higher than in the fourth quarter. We generally recognize our marketing activities as consumers plan and reserve their spring and summer vacationsthe expense is incurred, which is typically in Europe and North America.the quarter when the gross bookings for the associated reservations are recognized. However, we would generally recognize revenue from these bookings when the travel begins (at "check-in"), which can beand accommodation check-ins in a quarter other than when the associated reservationsEurope and North America are booked. In contrast, we expense the substantial majority of our marketing activities as the expense is incurred, which,generally highest in the case of performance marketing in particular, is typicallythird quarter during those regions' peak summer travel season and lowest in the quarter in which associated reservations were booked.first quarter. As a result of this timing difference between when we recordedrecord marketing expenseexpenses and when we recognizedgenerally recognize associated revenue,revenues, we hadtypically experience our highest levels of profitability in the third quarter of the year, which is when there were the highest levels of accommodation check-ins for the year for our European and North American markets. The first quarter of the year was typically our lowest level of profitability and highest level of volatility in earnings growth rates duethe first quarter. In addition to these seasonal timing factors. The COVID-19 pandemic impacted seasonality in 2020; for example, we witnessed a higher share of travel being booked during the second and third quarters as well as a higher share of stays during the third quarter than in prior years. We cannot currently predict travel patterns given the COVID-19 pandemic, and we may not experience typical seasonality effects on our business, in 2021. Additionally, in the thirdour quarterly results and fourth quarters, we saw a significant contractionquarterly year-over-year growth rates can be impacted by:
The length of the booking window versus(the average time between the comparable prior-year periodbooking of a travel reservation and when the travel begins), which impacts the relationship between our gross bookings (recognized at the time of booking) and our revenues (recognized at the time of check-in). In 2023, the booking window was longer than we experienced in 2022 as an increased percentage of newly-booked room nightsbookings were made for travel that was to occur close tofurther out from the time of booking. We expect that the lengthbooking;
The level of the booking window will be volatile and difficult to predict throughout the duration of the COVID-19 pandemic. Future changesacceleration or deceleration in the length ofgross bookings growth rate. For example, our operating margins are typically negatively impacted in the booking window will affect the degree to which ournear term from gross bookings and revenuesrelated variable marketing expense growth acceleration, as revenue growth is typically less impacted by accelerating gross bookings growth in the near term. Any such acceleration would positively impact revenue growth in subsequent periods as a portion of the revenue
5


recognized from such gross bookings will occur in the same period and, as a result, whetherfuture quarters. Conversely, in periods where our gross bookings growth ratesrate substantially decelerates, our operating margins typically benefit; and revenue growth rates converge or diverge. For additional information regarding factors affecting the seasonality of our business, see Part II, Item 7, Management’s Discussion
The date on which certain holidays (e.g., Easter and Analysis of Financial Condition and Results of Operations - Seasonality and Other Timing Matters.Ramadan) fall.

Human Capital Resources
 
We believe ourOur employees are one of the most important assets we havefundamental to furtherdelivering on our mission to make it easier for everyone to experience the world. In order to continue to deliver on this mission, ourOur goal is to attract, develop, and retain highly-skilled talent with a significant focus on a diverse workforce operating in an equitable and inclusive environment. In the past year, the COVID-19 pandemic has hadWe are committed to engaging with our employees across our Company and maintaining a significant impact on ourproductive workforce and our human capital management.that is proud to work for Booking Holdings.

Workforce

PartOur Board of Directors and the Talent and Compensation Committee have oversight of our strategy is to operatehuman capital management. As a result of our operating structure with multiple distinct brands, to appeal to different consumers, pursue different marketing and business strategies, encourage experimentation and innovation, provide different service offerings and focus on different markets. While we continue to increase the collaboration, cooperation and interdependency among our brands, this model inherently results in diversity of culture among our brands, which may manifest in different approachesapproach to human capital management in certain areas.can vary by brand.

At December 31, 2020,2023, we employed approximately 20,30023,600 employees, of which approximately 3,4003,100 were based in the United States, and approximately 16,90020,500 were based outside the United States. Approximately 99% of our employees are full-time employees. We also retain independent contractors, including to support our customer service, website content translation, and system support functions.

7


As a result of the COVID-19 pandemic, we made the difficult decision to restructure our workforce to align our total cost structure with our expectations of reduced near- to medium-term market demand for travel and restaurant reservation services. Although we took various steps to maintain jobs and reduce the need for workforce reductions, including participating in various wage assistance programs, our total workforce decreasedEmployees by approximately 23% year-over-year asGeography (as of December 31, 2020 primarily due to a combination of our restructuring actions and attrition. Throughout the restructuring process, we have prioritized treating our colleagues with fairness and respect by, among other things, offering severance packages, an Employee Assistance Program with access to counseling services and job placement support.2023)
Employees by Geography (as of December 31, 2023).jpg

Diversity, InclusionEquity, and BelongingInclusion

Our commitment to diversity, equity, and inclusion means honoring all experiences, valuing all voices, and leading with empathy on our journey to become a more inclusive company. We believe that a diverse workforce operating in an inclusive environment is critical to leveraging our human capital to achieve our long-term strategic goals, particularly in the technology industry where many populations remain underrepresented.goals. We strive for our leadership and workforce to reflect the broad spectrum of customers and partnerspeople we work with throughout the world because we believe this is the best way for us to connect with the broad viewpoints, backgrounds, and experiences of our customers and partners. In addition, we maintain a workplaceWe are committed to creating workplaces that embracesembrace and celebrate the different cultures and practices of our diverse employees and is consistent with our Code of Conduct. We believe we abide by the laws and regulations that govern our employment practices and we prohibit unlawful discrimination of any type.

As of December 31, 2020,2023, approximately 50%47% of our employees were women, approximately 22%23% of our technology positions were filled by women, and approximately 30%32% of our extended leadership team (which includes the Company'svice presidents and above for all brands except Booking.com, which includes senior leadershipdirectors and extends 1above due to 4 levels below the chief executive officer of each brand company (depending on thea greater number of employees within each brand))employees) were women. We are committed to pay equity, regardless of gender, race, or ethnicity. With the help of ouran independent compensation consultant, Mercer, we conduct pay equity studies every other year, and in the off years, we work on remediation plans to address outliers.

6


Gender Diversity of Employees(as of December 31, 2023)
Gender Diversity Chart (2.17.24).jpg

While a significant percentage of our workforce is located in jurisdictions that may present challenges to tracking employee racial or ethnic demographics for legal reasons, we seek other ways to assess our employees' experience of inclusion. For example, all of our brands include diversity and inclusion questions in annual employee engagement surveys to gauge our inclusivity progress. We supportalso publish our consolidated EEO-1 report for employees in the United States, although as of December 31, 2023, this represents only approximately 13% of our workforce.

We encourage equality and inclusivenessinclusivity across our workforce through various initiatives at all the brand companies. For example, Booking.com has several employee resource groups including: B.Ableinitiatives. As part of our recruitment efforts to support employees with differing physical and mental abilities; B.Boldensure that candidate slates are diverse, we use diversity-focused sourcing platforms, we apply an inclusive language tool to support the Black and persons-of-color (POC) community; and B.Equal to support gender equality. Agoda supports employee resource groups aimed at fostering greater workplace inclusion with initiatives such as the Agoda Colors and Women at Agoda. At Priceline, the Women Impacting Priceline resource group is empowering women to champion their professional development and improve gender intelligence. We are proud of the progress we have made in this space and recognize we can always improve. Part of advancing these initiatives involves facilitating a pipeline of candidates for open positions that are representative of the spectrum of communities we serve. KAYAK and OpenTable are diversifying their job board postings and partnering with underrepresented groups such as historically Black colleges and universities in the United States. Priceline is also partnering with organizations to access more diverse candidates and has rewritten job descriptions to be more appealingattract candidates of all backgrounds, and we hold recruiters accountable for presenting multicultural candidates by tying it to their performance goals. In addition, we provide training to ensure interviewers consider all candidates objectively.

We have invested in a broader audience of candidates.robust inclusive leadership training program and unconscious bias training for our leaders and we continue to cascade these initiatives further into the organization to ensure that these tenets contribute to our strategy. Additionally, we are entering our fiftheighth year of operating our Women in Leadership program, which is a Company-wide initiative designed to support the advancement and development of high-performing women within the Companyour company with the goal of building and enabling gender diversity in our executive pipeline. We sponsor various employee resource groups, including those that support the LGBTQ community and its allies, employees with differing physical and mental abilities, the Black and persons-of-color (POC) community, veteran employees, and gender equality, among others. We are proud of the progress we have made in this space, while recognizing the need for continuous improvement.

Attraction, Development, and Retention

We work diligently to attract the best and most innovative talent from a diversewide range of sources to grow our business and achieve our long term strategic goals. We believe that we offer a rich culture where employees feel included and empowered to do their best work with opportunities to grow as well as competitive compensation and benefits. For example, while the specifics can vary by brand, in the United States our employee benefit plans generally include: coverage for infertilityfertility treatments, gender reassignment surgery, gender-neutral domestic partner benefits, and paid parental leave.leave for new parents and grandparents, those caring for a loved one, or bereavement.

Despite the challenges of shifting the vast majority of our workforce to work-from-home due to the COVID-19 pandemic, we continue to prioritize and invest in creatingWe create opportunities for employees to grow and build their careers through training and development programs. These include offering tailored learning opportunities to enable employees to upskill while at work and driving deliberatefrequent career conversations between employees and their managers, as well as executive succession planning.

Competition for talent in our industry has historically been intense. However, the proliferation of global working from anywhere policies and the associated increased ability for employees to seek out and switch jobs that may not have been accessible to them previously has heightened the competition for employees even further, particularly software engineers, mobile communications talent, and other technology professionals. As a result, the competition for talent in our industry combined with inflationary pressure on compensation has caused our expenses to attract and retain key talent to increase. We continue to focus on our employees' engagement and mental well-being, career satisfaction, development, and succession planning.

7


We recognize that expectations for the ways and places in which employees work have shifted dramatically since 2020. Each of our brands has taken their own tailored approach to working policies that takes into account geographic location and the needs of current and prospective employees and many have adopted more flexible working location arrangements.

We measure organizational culture and engagement so we can be responsive to build onour employees' needs. Taking into account employee feedback, our engagement efforts include regular communication touchpoints with the competencies that are important for our future success. The disruptions stemming from the COVID-19 pandemic have presented particularly unique challenges to keeping employees engagedCEO and supported at work. We shifted our approach to employee engagement in response to changing employee needs in a mostly-virtual workplace, by, for example, providing regular video-based CEO updates and virtualother senior leaders, mental wellness workshops.workshops, and free access to a meditation app and telehealth services. We regularly touch baseconnect with our employees through formal engagement surveys, work-from-home
8


surveys and quick pulse surveys to request feedback on the employee experience. The results of these efforts are shared with senior management at each of our brands who analyze areas of progress or prioritize areas for improvement in order to encourage and sustain employee engagement. We are particularly proud that notwithstanding the difficulties faced by our employees due to the effects of COVID-19 on how we live and work, as well as the difficult restructuring actions taken by the Company, the results of our employee engagement surveys throughout 2023 broadly demonstrate a committed and engaged workforce.

Response to COVID-19 Pandemic

Throughout the crisis of the COVID-19 pandemic, we have prioritized the health and safety of our employees. We recognize that our employees have been faced with unprecedented challenges both professionally and personally, and as a result, we have increased the frequency of scheduled communication between management and the workforce, offered additional unscheduled holidays, shifted the vast majority of our workforce to work-from-home, offered additional meditation and wellness benefits to support employee mental well-being, encouraged alterations to meeting schedules during the work week to combat “virtual meeting fatigue” and designated specific days or periods in the year as “quiet periods” in recognition of the need for employees to rest and recharge.

RegulatoryEmployee Relations

Although we have works councils or employee representatives in certain countries, our U.S. employees are not represented by a labor union and are not covered by a collective bargaining agreement. Throughout the restructuring process, we workedWe work in close collaboration with works councils, employee representatives, and other organizations in the relevant jurisdictions. We have never had a work stoppage and we consider our relations with our employees to be good.
 
For more information, see Part I, Item 1A, Risk Factors - "We rely on the performance of highly skilled employees; and, if we are unable to retain or motivate key employees or hire, retain, and motivate well-qualified employees, our business would be harmed."
 
Company Websites
 
We maintain websites with the addresses www.bookingholdings.com, www.booking.com, www.priceline.com, www.agoda.com, www.rentalcars.com, www.kayak.com, and www.opentable.com, among others. We are not including the information contained on our websites as a part of, or incorporating it by reference into, this Annual Report on Form 10-K. We make available free of charge through the www.bookingholdings.com website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC. These reports and other information are also available, free of charge, at www.sec.gov. In addition, the Company's Code of Conduct is available through the www.bookingholdings.com website and any amendments to or waivers of the Code of Conduct will be disclosed on that website.

9
8


Item 1A.  Risk Factors

The following risk factorsOur business and other information included in this Annual Report on Form 10-K should be carefully considered. Thefinancial results are subject to risks and uncertainties, described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently believe are immaterial may also impairwhich could adversely affect our business, results of operations, or financial condition. If any of the following risks occur, our business, financial condition, operating results and cash flows could be materially adversely affected.flows.
The risk factors section below contains a description of the significant risks facing our Company and should be carefully considered in full. The following is only a summary of the principal risks that make an investment in our securities speculative or risky.

Risk Factors Summary
The adverse impact of the COVID-19 pandemic on our business, financial performanceIndustry and travel demand, generally, including the impact on our liquidity, credit ratings and ongoing access to capital, the restructuring of our business and our utilization of government stimulus packages;Business Risks
Adverse changes in general market conditions for travel services, including the effects of macroeconomic conditions, terrorist attacks, natural disasters, health concerns, civil or political unrest or other events outside our control;services;
The effects of competition;
Risks associated with the restructuring ofOur ability to successfully manage growth and expand our global business;
Any write-downs or impairments of goodwill or intangible assets related to acquisitions or investments, any increases in provisions for expected credit losses on receivables from and cash advances made to our travel service provider and restaurant partners and any increases in cash outlays to refund consumers for prepaid reservations;
Adverse changes in relationships with travel service providers and restaurants and other third parties on which we are dependent;
Our ability to attractperformance marketing efficiency and retain qualified personnel;
Our ability to successfully manage growth and expandthe effectiveness of our global business;marketing efforts;
Our ability to respond to and keep up with the rapid pace of technological and market changes;
Our performance marketing efficiencyability to attract and the general effectiveness of our marketing efforts;retain qualified personnel;
Information Security, Cybersecurity, and Data Privacy Risks
Any change by our searchRisks related to data privacy obligations and meta-search partners in how they present travel search results or conduct their auctions for search placement in a manner that is competitively disadvantageous to us;cyberattacks;
IT systems-related failures or security breaches and data privacy risks and obligations;breaches;
Tax Risks
Tax, legalRisks related to exposure to additional tax liabilities and maintaining tax benefits;
Legal, Regulatory, Compliance, and Reputational Risks
Legal and regulatory risks;
Risks associated with the facilitation of payments from consumers, including fraud and compliance with evolving rules and regulations and reliance on third parties;payments;
Financial Risks
Fluctuations in foreign currency exchange rates and other risks associated with doing business in multiple currencies and jurisdictions;
Financial risks including increased debt levels and stock price volatility; and
Success of investments and acquisitions, including integration of acquired businesses; and
Financial risks including increased debt levels and stock price volatility.businesses.

Industry and Business Risks

The COVID-19 pandemic has materially adversely affected, and may further adversely impact, our business and financial performance.

In response to the outbreak of the novel strain of the coronavirus, COVID-19 (the "COVID-19 pandemic"), many governments around the world have implemented, and continue to implement, a variety of measures to reduce the spread of COVID-19, including travel restrictions and bans, instructions to residents to practice social distancing, curfews, quarantine advisories, including quarantine restrictions after travel in certain locations, shelter-in-place orders, required closures of non-essential businesses and additional restrictions on businesses as part of re-opening plans. These government mandates have forced many of the partners on whom our business relies, including hotels and other accommodation providers, airlines and
10


restaurants, to seek government support in order to continue operating, to curtail drastically their service offerings, to file for bankruptcy protection or to cease operations entirely. Further, these measures have materially adversely affected, and may further adversely affect, consumer sentiment and discretionary spending patterns, economies and financial markets, and our workforce, operations and customers.

The COVID-19 pandemic and the resulting economic conditions and government orders have resulted in a material decrease in consumer spending and an unprecedented decline in travel and restaurant activities and consumer demand for related services.Our financial results and prospects are almost entirely dependent on the sale of such travel and restaurant-related services. Our results for the year ended December 31, 2020 were significantly and negatively impacted, with a material decline in gross bookings, room nights booked, total revenues, net income and cash flow from operations, as compared to 2019. Due to the uncertain and rapidly evolving nature of current conditions around the world, we are unable to predict accurately the impact that the COVID-19 pandemic will have on our business going forward. Newly-booked room night reservations, excluding the impact of cancellations, declined rapidly as the COVID-19 pandemic spread in the first quarter and the beginning of the second quarter of 2020, but then steadily improved through the end of the second quarter and into the summer travel period in the third quarter of 2020. In September 2020, variants of COVID-19 that spread more easily and quickly than other variants were discovered and have since spread to other countries. In the fourth quarter of 2020, multiple COVID-19 vaccines were approved for widespread distribution throughout various parts of the world, including the United States and in Europe. While this news is encouraging, it is still unknown when these vaccines will be available to broader populations and whether they will be as effective against variants of COVID-19, including the variants mentioned above. In the fourth quarter of 2020, we saw room nights decline further, as well as an increase in cancellation rates, in each case as compared to the third quarter of 2020. In January 2021, room nights declined slightly more than the decline in the fourth quarter of 2020, however, we have seen some improvement in these booking trends in recent weeks. If these recent trends were to continue, we currently expect that room nights and gross bookings in the first quarter of 2021 will decline relative to the first quarter of 2019 by a few percentage points less than those metrics declined in the fourth quarter of 2020 relative to the fourth quarter of 2019. We currently expect revenue in the first quarter of 2021 to decline by a similar amount as our expected decline in gross bookings in the first quarter of 2021, both relative to the first quarter of 2019. The comparison of the first quarter of 2021 to the first quarter of 2019 avoids the distortion created from comparing to the initial spread of the COVID-19 pandemic late in the first quarter of 2020. In addition, we currently expect that we will experience a greater operating loss in the first quarter of 2021 as compared to the fourth quarter of 2020. With the continued spread of COVID-19 and other variants throughout the world, we expect the COVID-19 pandemic and its effects to continue to have a significant adverse impact on our business, financial condition, results of operations and cash flows for the duration of the pandemic, during any resurgences of the pandemic and during the subsequent economic recovery, which could be an extended period of time. We believe that as effective vaccines become widely distributed, people will feel it is safe to travel again and government restrictions will be relaxed, although the timing remains uncertain.

The extent of the effects of the COVID-19 pandemic on our business, results of operations, cash flows and growth prospects is highly uncertain and will ultimately depend on future developments. These include, but are not limited to, the severity, extent and duration of the global pandemic, including as a result of any new variants of COVID-19 and any resurgences of the pandemic, and its impact on the travel and restaurant industries and consumer spending more broadly; actions taken by national, state and local governments to contain the disease or treat its impact, including travel restrictions and bans, required closures of non-essential businesses, constraints on businesses during reopening transitions and aid and economic stimulus efforts; the effect of our restructuring activities and attrition, as well as the changes in hiring levels and remote working arrangements that we have implemented on our operations, including the health and productivity of management and our employees, and our ability to maintain our financial reporting processes and related controls; the impact on our contracts and relationships with our partners, including the impact of invoking force majeure provisions; our ability to withstand increased cyberattacks that we and many businesses are experiencing; the speed and extent of the recovery across the broader travel ecosystem, including the speed at which customers feel comfortable traveling again once restrictions on travel have been lifted, which we believe will be impacted by how quickly there can be effective and widespread vaccinations, treatments or cures; and the duration, timing and severity of the impact on customer spending, including the length and the severity of the economic recession resulting from the pandemic. The pandemic may continue to expand throughout the world and/or worsen in areas that had seen progress in reducing or containing the disease, which could continue to affect our business. Also, existing restrictions in affected regions could be extended after the virus has been contained in order to avoid relapses and there may be restrictions on certain travel activity related to whether travelers have been vaccinated.

Our business is dependent on the availability of a large number of accommodations (particularly independently-owned accommodations) and restaurants, and on the ability of consumers to travel to such accommodations and restaurants on airlines, railways and rental cars. The ability of consumers to travel internationally has been significantly impacted by the various travel restrictions between countries, including for example, the restrictions on travel between the European Union and the United States. We do not expect economic and operating conditions for our business to improve until consumers are once again willing and able to travel, and our travel service provider and restaurant partners are once again willing and able to serve those
11


consumers. This may not occur until well after the broader global economy begins to improve. Additionally, our business is also dependent on consumer sentiment and discretionary spending patterns. Increased unemployment resulting from the COVID-19 pandemic is likely to have a negative impact on consumer discretionary spending, including for the travel and restaurant industries. Even if economic and operating conditions for our business improve, we cannot predict the long-term effects of the pandemic on our business or the travel and restaurant industries as a whole. If the travel and restaurant industries are fundamentally changed by the COVID-19 pandemic in ways that are detrimental to our operating model, our business may continue to be adversely affected even as the broader global economy recovers.

To the extent that the COVID-19 pandemic continues to adversely affect our business and financial performance, it may also have the effect of heightening many of the other risks identified in this section, such as those relating to our substantial amount of outstanding indebtedness.

Utilization of governmental stimulus packages may negatively impact our business, operations and/or reputation.

Certain governments have passed or are considering legislation to help businesses during the COVID-19 pandemic through loans, wage subsidies, tax relief or other financial aid, and some of these governments have extended or are considering extending these programs. We have participated in several of these programs, including the Netherlands' wage subsidy program and the United Kingdom's job retention scheme. In some cases, these programs restrict the ability of participating companies to take certain actions, such as restructurings, while participating in the program, though we are not currently under any such restrictions. Additionally, in certain jurisdictions, there has been public scrutiny of government aid beneficiaries, including us, and as a result, our reputation could be harmed by having participated in these programs or participating in the future.

Impairments of goodwill, long-term investments and long-lived assets, increases in provisions for expected credit losses on receivables from and cash advances made to our travel service provider and restaurant partners and increases in cash outlays to refund consumers for prepaid reservations have a negative impact on our results of operations.

As a result of the deterioration of our business due to the COVID-19 pandemic, we evaluated goodwill, long-term investments and long-lived assets for possible impairment as of March 31, 2020. As a result of this evaluation, we determined that our goodwill relating to OpenTable and KAYAK experienced a decline in value due to the COVID-19 pandemic, and therefore we recognized a goodwill impairment charge of $489 million (which is non-deductible for income tax purposes) as of March 31, 2020. In addition, we recorded an impairment charge of $100 million at March 31, 2020 related to our investment in Didi Chuxing due to the impact of the COVID-19 pandemic on the business of the investee and our estimate of the resulting decline in the value of the investment. As of September 30, 2020, we performed our annual goodwill impairment testing. As a result of this testing, we recognized an additional goodwill impairment charge of $573 million (which is non-deductible for income tax purposes) for the three months ended September 30, 2020 relating to OpenTable and KAYAK. The determination of the fair value reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding OpenTable and KAYAK’s expected growth rates and operating margins, expected length and severity of the impact from the COVID-19 pandemic and the shape and timing of the subsequent recovery, the performance of the businesses during and following the COVID-19 pandemic, as well as other key assumptions with respect to matters outside of our control, such as discount rates and market comparables. The evaluations required significant judgments and estimates and actual results could be materially different than those judgments and estimates utilized in the fair value estimates. Future events and changing market conditions may lead us to re-evaluate the assumptions reflected in the current forecast disclosed above, particularly the assumptions related to the length and severity of the COVID-19 pandemic, the shape and timing of the subsequent recovery and the performance of the businesses during and following the COVID-19 pandemic, which may result in a need to recognize an additional goodwill impairment charge, which could have a material adverse effect on our results of operations. See Notes 5, 6 and 11 to the Consolidated Financial Statements for additional information related to the impairment charges.

In addition, given the severe downturn in the global travel industry and the financial difficulties faced by many of our travel service provider and restaurant partners as a result of the COVID-19 pandemic, we have increased our provision for expected credit losses on receivables from and cash advances made to our travel service provider and restaurant partners. For the year ended December 31, 2020, there was a $161 million increase in expected credit loss expense compared to the same period in the prior year. Moreover, due to the high level of cancellations of existing reservations, we have incurred, and may continue to incur, higher than normal cash outlays to refund consumers for prepaid reservations. In some instances, we do not estimate a recovery of prepayment already made to a travel service provider where we have agreed to provide free cancellations to customers for non-refundable reservations, and this has resulted in an aggregate reduction in revenue of $44 million for the year ended December 31, 2020. Any additional significant increase in our provision for expected credit losses on receivables from and cash advances made to travel service provider and restaurant partners, and any additional significant increase in cash outlays to refund consumers, would have a corresponding negative effect on our results of operations and related cash flows.
12



We face risks associated with the restructuring of our business.

Due to the impact of the COVID-19 pandemic on our business volumes, we took actions to reduce the size of our workforce, and there could be further reductions in the size of our workforce and/or consolidations to optimize efficiency and reduce costs. See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Trends for more information on the workforce reductions. We have incurred and expect to incur charges related to the reductions in our workforce, changes in our facilities requirements, contract terminations and other non-cash charges, and there could be unanticipated costs in the future. Implementation of these restructuring actions presents several significant risks, including the potential negative impact on employee morale and productivity, the loss of talented employees that we would not otherwise want to lose, difficulty retaining valuable key employees that have not been terminated, adverse impact on our culture, diversion of attention away from operating our business, public scrutiny, personnel capacity constraints, adverse effects on our internal control environment, actual or perceived disruption of service to our customers and hampering of our ability to grow, develop innovative products and compete, any of which could adversely impact our business and reputation. If we do not successfully manage the restructurings, the anticipated efficiencies and cost savings may be delayed or not realized. Risks associated with managing any restructurings effectively include unforeseen delays in the implementation of workforce reductions, delays in completing required consultations with works councils or other relevant organizations or in obtaining any required approvals, regulatory impediments or litigation. Any of these risks associated with the implementation or management of the restructurings could adversely impact our business, results of operations and/or reputation.

Declines or disruptions in the travel industry could adversely affect our business and financial performance.

Our financial results and prospects are almost entirely dependentdepend upon the sale of travel services. Travel, including accommodation (including hotels, motels, resorts, homes, apartments and other unique places to stay), rental car and airline ticket reservations, is significantly dependent on discretionary spending levels. As a result, sales of travel services, which can fluctuate based on consumer discretionary spending levels. Demand for and sales of travel services often decline during generalperiods of perceived or actual adverse economic downturns and recessionsconditions and times of political or economic uncertainty. Economic and political uncertainty such as currently being experienced due to the COVID-19 pandemic, as consumers engage in less discretionary spending, are concerned about unemployment or inflation, have reduced access to credit or experience other concerns or effects that reduce their ability or willingness to travel.

Perceived or actual adverse economic conditions, including slow, slowing or negative economic growth, high or rising unemployment rates, inflation and weakening currencies, and concerns over government responses such as higher taxes or tariffs, increased interest rates and reduced government spending have impaired and could in the future impair consumer spending and adversely affect travel demand.

Political uncertainty, conditions or events can also negatively affect consumer spending and adversely affect travel demand. In the past, and prior to the significantly changed circumstances brought on by the onset of the COVID-19 pandemic, we experienced volatility inimpact transaction growth rates, increased cancellation rates, and weaker trends in accommodation average daily rates ("ADRs") across many regions of the world, particularly in those countries that appear to be most affected by economic and political uncertainties, which we believed were due at least in part to these macro-economic conditions and concerns. Further economic or political disruptions beyond those resulting from the COVID-19 pandemic could cause, contribute to or be indicative of deteriorating macro-economic conditions, which in turn could negatively affect travel or the travel industry in general and therefore have an adverse impact on our results of operations.. While lower occupancy rates have historically resulted in accommodation providers increasing theircan increase distribution of accommodation reservations through third-party intermediaries such as us, our remuneration for accommodation reservation transactions changes proportionately with price, and therefore,if there are lower ADRs, it generally havehas a negative effect on our accommodation reservation business and on our revenues and results of operations. AsFor a resultdiscussion of the COVID-19 pandemic and its material adverse impact on travel, we have generally seen a significant decrease in occupancy rates and ADRs.ADRs, see Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Trends.

These and other macro-economicMacroeconomic uncertainties such as oil prices, geopolitical tensions and differing central bank monetary policies, have led to significant volatility in the exchange rates between the U.S. Dollar and the Euro, the British Pound Sterling and other currencies. Significant fluctuations in foreign currency exchange rates, stock markets, and oil prices, which can also impact consumer travel behavior. For example, although lower oil prices may lead to increased travel activity as consumers could have more discretionary funds and airline fares decrease, declines in oil prices may be indicative of broader macro-economic weakness, which in turn could negatively affect the travel industry, our business and results of operations. Conversely, higher oil prices may result in higher airfares and decreased travel activity, which can negatively affect our business and results of operations.

13


As a result of the United Kingdom leaving the European Union ("Brexit"), we anticipate that we will face new regulatory costs and challenges as U.K. regulations and policies diverge from those of the European Union or if additional business licenses are required. Since some of the details of the United Kingdom's exit from the European Union continue to unfold, we are unable to predict all of the effects Brexit will have on our business and results of operations.

The uncertainty of macro-economicmacroeconomic factors and their impact on consumer behavior which may differ across regions, makes it more difficult to forecast industry and consumer trends and the timing and degree of their impact on our markets and business, which in turn could adversely affect our ability to effectively manage our business and adversely affect our results of operations.

In addition to the impact of the COVID-19 pandemic described earlier in these Risk Factors, other
9


Other events beyond our control such as oil prices, stock market volatility, terrorist attacks, changing, unusual or extreme weather or natural disasters such as earthquakes, hurricanes, tsunamis, floods, fires, droughts and volcanic eruptions (whether due to climate change or otherwise), travel-related health concerns including pandemics and epidemics, such as coronaviruses, Ebola and Zika, political instability, changes in economic conditions,terrorist attacks, natural disasters, wars and regional hostilities, imposition of taxes, tariffs or surcharges by regulatory authorities, changes in trade policies or trade disputes, changes in immigration policies or other travel restrictions, travel-related accidents, or increased focus on the environmental impact of travel have previously and may in the future disrupt travel,or limit the ability or willingness of travelers to visit certain locations, or otherwise result in declines in demand for our travel demand and adversely affectofferings. Responses to such events by governments or global organizations could restrict travel in ways that could impact our business and results of operations.ability to conduct our business. Because these events or concerns, and the full impact of their effects,impacts and responses to them are largely unpredictable, they can dramatically and suddenly affect travel behavior by consumers, and therefore demand for and provision of our services, and our relationships with travel service providers and other partners, any of which can adversely affect our business and results of operations.

Intense competition could reduce our market share and harm our financial performance.

We compete globally with both online and traditional travel and restaurant reservation and related services. The markets for the services we offer are intensely competitive and constantly evolving and subject to rapid change, and currentevolving. Current and new competitors can launch new services at a relatively low cost. Some of our current and potential competitors such as Google, Apple, Alibaba, Tencent, Amazon and Facebook,include the largest global technology companies, which have significantly more customers or users, consumer data, and financial and other resources than we do, and they may be able to leverage other aspects of their businesses (e.g., search or mobile device businesses)businesses or generative AI capabilities) to enable them to compete more effectively with us. For example, Google has entered various aspects of theGoogle's online travel market and hasofferings have grown rapidly in this area, including by offering a flight meta-search product ("Google Flights"), a hotel meta-search product ("Google Hotel Ads"), a vacation rental meta-search product,linking travel search services to its "Book on Google" reservationdominant search functionality Google Travel, a planning tool that aggregates itsthrough flight, hotel, and packages products in one website, and by integrating its hotelalternative accommodations meta-search products, and restaurant information and reservationintegrating such products into its Google Maps app. In addition, Amazon has experimented with online travel in the past and continues to experiment in this area, such as by partnering with travel companies to offer its customers travel products, including a partnership with Booking.com to provide travel deals to Amazon Prime users in certain countries. Moreover, as the economy and the travel industry recover from the impact of the COVID-19 pandemic, theMaps. The structure of the travel industry or consumer preferences could also change in ways that could disadvantage us and benefit certain of our existing competitors or new entrants. For example, as a result ofduring the COVID-19 pandemic, and the resulting international travel restrictions and social distancing practices, there has beenwe saw a shift in favor of domestic travel and alternative accommodations. This shift could benefitaccommodations, which benefited competitors that are more well established in domestic markets and alternative accommodations than we are. As a result, our historical strengths may not provide the competitive advantages that they did prior to the pandemic.those areas. If we are unable to successfully adapt to anysuch changes, in how the travel industry operates or to changes in the ways in which consumers purchase travel services, our ability to compete, and therefore our business and results of operations, would be adversely affected.

We currently, or may in the future, compete with companies that provide a variety of companies,products and services, including:

online travel reservation services such as Expedia, Hotels.com, Hotwire, Orbitz, Travelocity, Wotif, Cheaptickets, ebookersplatforms, including accommodation and CarRentals.com, which are owned by Expedia Group, Traveloka (in which Expedia Group holds a minority interest) and Despegar/Decolar (in which Expedia Group holds a minority interest); Trip.com Group (in which we hold a small minority interest), Trip.com (which is owned by Trip.com Group), Tongcheng-eLong (in which Trip.com Group holds a significant minority interest), ezTravel (in which Trip.com Group holds a majority interest) and MakeMyTrip (in which Trip.com Group holds a significant minority interest); Hotel Reservation Service (HRS) and hotel.de, which are owned by Hotel Reservation Service; and AutoEurope, CarTrawler, Meituan (in which we hold a small minority interest), Rakuten, Jalan (which is owned by Recruit), Fliggy (which is owned by Alibaba), HotelTonight (which is owned by Airbnb), CheapOair and eDreams ODIGEO;

14


onlinealternative accommodation search and/or reservation services, that are currently focused primarily on alternative accommodations, including individually owned properties such as homestravel meta-search and apartments, such as Airbnb, Vrbo (which is owned by Expedia Group), Tujia (in which Trip.com Groupprice comparison services, and Expedia Group hold investments) and Xiaozhu;

large online companies including in search, social networking, marketplace, artificial intelligence, and marketplace companies such as Google, Facebook, Alibaba, Tencent, Amazon and Baidu;ride-sharing;

travel service providers (e.g., accommodations, rental car companies, or airlines), which may offer lower prices on their direct channel than they provide to us;
traditional travel agencies, travel management companies, wholesalers and tour operators, many of which combine physical locations, telephone servicesoperators; and online services, such as Carlson Wagonlit, American Express, BCD Travel, Egencia and Expedia Partner Solutions (which are owned by Expedia Group), Concur (which is owned by SAP), TUI, Webjet and Hotelbeds Group, as well as thousands of individual travel agencies around the world;

travel service providers such as accommodation providers, rental car companies and airlines, many of which have their own branded online platforms to which they drive business, including large hotel chains such as Marriott International, Hilton and Intercontinental Hotel Group and emerging hotel chains such as OYO Rooms;

online travel search and price comparison services (generally referred to as "meta-search" services), such as Google Flights, Google Hotel Ads, Google's vacation rental meta-search product, TripAdvisor, trivago (in which Expedia Group holds a majority interest), Qunar (which is controlled by Trip.com Group) and Skyscanner (which is owned by Trip.com Group);

online restaurant reservation services, such as TheFork and Bookatable (which are owned by TripAdvisor), SeatMe (which is owned by Yelp), Zomato, Quandoo (which is owned by Recruit) and Resy (which is owned by American Express);

companies offering new rental car business models or car- or ride-sharing services that affect demand for rental cars, some of which have developed innovative technologies to improve efficiency of point-to-point transportation and extensively utilize mobile platforms, such as Uber, Lyft, Gett, Zipcar (which is owned by Avis), Turo, BlaBlaCar, Didi Chuxing (in which we hold a small minority interest), Grab (in which we hold a small minority interest), Go-Jek and Ola; and

companies offering technology services and software solutions to travel service providers, including large global distribution systems ("GDSs"), such as Amadeus, Sabre and Travelport, and hospitality software platforms, such as Oracle and Shiji.payments platforms.

Google, the world's largest search engine and one of the world's largest companies and other large, established companies with substantial resources and expertise in developing online commerce and facilitating internet traffic offer travel or travel-related search, meta-search and/or reservation booking services and may create additional inroads into online travel. Google's travel meta-search services, Google Hotel Ads and Google Flights, have grown rapidly and have achieved significant market share in a relatively short time. Meta-search services leverage their search technology to aggregate travel search results for the consumer's specific itinerary across travel service providers, (e.g., accommodations, rental car companies or airlines), online travel companies ("OTCs")OTCs, and other online platforms and in many instances, compete directly with us for customers. Meta-search services intend to appeal to consumers by showing broader travel search results than may be available through OTCs or other online platforms, which could lead to travel service providers or others gaining a larger share of search traffic. Google leverages its general search business to promotecompete with Kayak by showing its meta-search offerings by showingown meta-search results at the top of its organic search results. Further, TripAdvisorresults, and trivago, two other leading meta-search companies, support theiroffers its meta-search services with significant marketing efforts. Through our KAYAKfree to travel service providers. Furthermore, meta-search service, we compete directly with these and other meta-search services. If we are unable to effectively compete with these companies, our business and results of operations could be harmed.

Meta-search services may evolve into more traditional OTCs by offering consumers the ability to make travel reservations directly through their platforms. For example, TripAdvisor allows consumers to make a reservation at some accommodations while staying on TripAdvisor through its "Instant Booking" offering, which includes participation by many of the leading global hotel chains. Google also provides reservation services through "Book on Google." To the extent we participate in any such offerings provided by meta-search services, resulting reservations could be less profitable and could cannibalize business that would otherwise come directly to us or through other more profitable channels. If consumers book travel services through a service such as TripAdvisor's Instant Booking, Google's "Book on Google," a meta-search website or directly with a travel service provider after visiting a meta-search platform or using a meta-search utility on a traditional search
15


engine without using an OTC like us, or if meta-search services limit our participation within their search results or evolve into more traditional OTCs, we may need to increase our marketing or other customer acquisition costs to maintain or grow our reservation bookings and our business and results of operations could be adversely affected.directly.

Over the years, there has been a proliferation of new channels through which accommodation providers can offer reservations as theWe compete with constantly evolving online and/or mobile application platforms. The market for travel services has evolved. For example,accommodations covers a wide range of property types including alternative accommodations. As such, companies such aslike Airbnb and Expedia Group offer services providing alternative accommodation property owners, particularly individuals, an online place to list their accommodations where travelers can search and book such properties andVrbo (owned by Expedia) compete directly with our alternative accommodation services. In addition, Airbnb, which owns HotelTonight, offers some hotel reservations through its online platforms. Companies specializing in one type of travel service or product could expand their offerings to compete with us more broadly. Further, meta-searchaccommodations businesses. Meta-search services may lower the cost for new companies to enter the market by providing a distribution channel without the cost of promoting the new entrant's brand to drive consumers directly to its platform. New travel-related services are frequently being introduced to the market. For example, in 2019, Google launched Google Travel, which combines its hotel, flight and packages offerings into one website with trip-planning tools. Somebrand. Moreover, some of our competitors and potential competitors offer a variety of online services, such as food delivery, shopping, gaming or search services, many of which are used by consumers more frequently than online travel services. As a result, a competitorservices or potentialhave created "super-apps" where consumers can use such various services without leaving the company's app. A competitor that has established other, more frequent online or app-based interactions with consumers may be able to more easily or cost-effectively acquire customers for its online travel services than we can. For example, someSome competitors include private equity-funded platforms, which can more easily withstand significant losses for an extended period of time while building market share through heavy marketing and/or potentialdiscounting of their services. In addition, competitors withmay more frequenteffectively invest in new online interactions with consumers are seeking to create "super-apps" where consumers can use many online services without leaving that company's app, in particular in marketsmarketing channels such as Asia where online activity (including e-commerce) is conducted primarily through apps on mobile devices. If anyTikTok, which could hinder growth of these platforms are successful in offering new travel-related services or services similar to ours to consumers who would otherwise use our platforms or if we are unable to offer our services to consumers within these super-apps, our customer acquisition efforts could be less effective and our customer acquisition costs, including our marketing expenses, could increase, either of which would harm our business and results of operations.if they are more successful at promoting their platform via social media.

Although we believe that providing an extensive collection of properties, excellent customer service and an intuitive, easy-to-use consumer experience are important factors influencing a consumer's decision to make a reservation, forFor many consumers, particularly in certain markets, the price of the travel service is the primary factor determining whether a consumer willto book a reservation. As a result, itIt is increasingly important to offer travel services such as accommodation reservations, at competitive prices, whether through discounts, coupons, closed-user group rates or loyalty programs, increased flexibility in cancellation policies, or otherwise. Discounting and couponing coupled with a high degree of consumer shopping behavior is particularly common in Asian markets. In some cases, our competitors are willing to make little or no profit on a transaction or offer travel services at a loss in order to gain market share. As a result, in certain markets, we may need to provide discounts or other incentives in order to be competitive, which may make it difficult for us to maintain or grow market share, and to maintain historical profit margins. These initiativesmargins, and may also result in lower ADRs and lower revenues as a
10


percentage of gross bookings. As part of our strategy to provide more payment options to consumers andFurther, consolidation among travel service providers Booking.com is increasingly processing transactions on a merchant basis, where it facilitates payments on behalf of customers. This allows Booking.comcould result in lower OTC commission rates, increased discounting, and greater incentives for consumers to present consumers with more pricing options.join closed-user groups as such travel service providers expand their offerings. If we are unable to effectively offer competitive prices, our market share, business, and results of operations could be materially adversely affected.

Travel service providers, including hotel chains, rental car companies and airlines with which we conduct business, compete with us in online channels to drive consumers to their own platforms in lieu of third-party distributors such as us. Travel service providers may charge lower prices and, in some instances, offer advantages such as loyalty points or special discounts to members of closed-user groups (such as loyalty program participants or consumers with registered accounts), any of which could make their offerings more attractive to consumers than our services. For example, many large hotel chains have instituted additional initiatives, such as increased discounting and incentives, to encourage consumers to book accommodations directly through their online platforms. We also offer various incentives to consumers and may need to offer additional or increased advantages to maintain or grow our reservation bookings, which adversely impacts our profit margins. Further, consolidation among travel service providers, such as Marriott International's acquisition of Starwood Hotels & Resorts in 2017, could result in lower rates of commission paid to OTCs, increased discounting and greater incentives for consumers to join closed-user groups as such travel service providers expand their offerings. If we are not as effective as our competitors (including hotel chains) in offering discounted prices and other incentives to consumers, our ability to grow and compete and our results of operations could be harmed.

16


We face risks related to the growth rate and the global expansion of our business.

We derive a substantial portion of our revenues and have significant operations outside the United States. Our international businesses include our Netherlands-based OTC brand Booking.com (including Rentalcars.com, based in the United Kingdom), our Asia-based OTC brand agoda and, to a lesser extent, KAYAK's international meta-search services and OpenTable's international restaurant reservation services. Before the COVID-19 pandemic, our international OTC operations outside of the United States historically had achieved significant year-over-year growth in their gross bookings, in particular with respect to their accommodation reservation services.bookings. Without taking into consideration the recent declines caused by the COVID-19 pandemic, these growth rates which contributed significantly to our historical growth in consolidated revenues and earnings, had generally declined over time as the absolute level of our gross bookings increased and online travel growth rates declined. In addition to the general slowing growth rates of online travel, and the effects of the COVID-19 pandemic, other factors may also slow the growth rates of our international businesses outside of the United States, including for example, worldwide or regional economic conditions, strengthening of the U.S. Dollar versus the Euro, the British Pound Sterling and other currencies, declines in ADRs, increases in cancellations, adverse changes in travel market conditions, and the competitiveness of the market.competition. Any decline in the growth rates of our international businesses could negatively impactsimpact our revenue and earnings growth rates and as a consequence our stock price.
Our long-term strategy involves continued expansion throughout the world. Many regions have different economic conditions, customs, languages, currencies, consumer expectations, levels of consumer acceptance and use of online platforms for commerce, legislation, regulatory environments (including labor laws and customs), tax laws and levels of political stability, and we
We are also subject to associated risks typical of international businesses.related to expanding our business internationally. International markets may have strong local competitors with an established brand and travel service provider or restaurant relationships that may makemaking expansion in that market difficult or costlycostly. Certain markets in which we operate have unique localized preferences and take more time than anticipated. In addition, compliance with legal, regulatory or tax requirementslower operating margins compared to other markets. Scaling and growing our business in multiple jurisdictions places demandssuch markets could require significant investment, which could have a negative impact on our time and resources, and we may nonetheless experience unforeseen and potentially adverse legal, regulatory or tax consequences.profit margins. In some markets such as China, legal and other regulatory requirements may prohibit or limitrestrict participation by foreign businesses, such as by making foreign ownership or management of internet or travel-related businesses illegal or difficult, or may make direct participation in those markets uneconomic, whichbusinesses. Such restrictions could make our entry into and expansion in those markets difficult or impossible, require that we work with a local partner, or result in higher operating costs. Certain markets in which we operate that are in earlier stages of development have lower operating margins compared to more mature markets, which could have a negative impact on our overall profit margins as these markets increase in size over time. If we are unsuccessful in expanding in new and existing markets and effectively managing that expansion, our business and results of operations could be adversely affected.

We intend to continue to improvebelieve that the accommodation choices available for reservationbreadth, variety, and quality of accommodations on our platforms however theis a key driver of our growth. The growth rate of the number of accommodations on our platforms may vary in part as a result of removing accommodations from our platforms from time to time. We have seen a year-over-year increase in the number of accommodations removed from our platform during and resulting from the impacts of the COVID-19 pandemic, and we expect to see further accommodation removals in the future primarily due to properties not providing availability on our platforms, non-payment of invoices or property closures. Many of the newer accommodations we add to our travel reservation services, especially in highly-penetrated markets, may have fewer rooms or higher credit risk and may appeal to a smaller subset of consumers (e.g., hostels and bed and breakfasts). If occupancy rates increase, accommodation providers often limit the amount of business that flows through certain distribution channels. Also, certain jurisdictions have instituted regulations intended to address the issues of "overtourism" and the impact of tourism on climate, including by restricting accommodation offerings near popular tourist destinations, which has limited the number of tourists permitted to visit and stay near popular areas. As a result, we may experience constraints on the number of listings or accommodation room nights actually available to us or could experience a decrease in demand if consumers cannot book the experiences they would like during their trip, which could negatively impact our business growth rate and results of operations.

We are dependent on travel service providers, restaurants, search platforms, and other third parties.

We rely on providers of accommodations, rental cars, and airline tickets, and on restaurants, to make their services available to consumers for reservation through us. Our arrangements with travel service providers generally do not require them to make available any specific quantity of reservations, or to make reservations available in any geographic area, for any particular route, or at any particular price. Similarly, our arrangements with restaurants generally do not require them to provide all of their available tables and reservations to customers through us. Our arrangements with OTCs and travel service providers to provide pricing, schedules, availability, and other information in connection with Kayak's meta-search services are non-exclusive and can be terminated with little notice. A significant reduction on the part of any of our major travel service providers, or restaurants, for a sustained period of time or their complete withdrawal from our services could have a material adverse effect on our business, market share, and results of operations. Further, as consolidation among travel service providers increases, the potential adverse effect of a decision by a significant travel service provider to withdraw from or reduce its participation in our services also increases. In addition, the potential harm to our business and results of operations is greater if any significant partners declare bankruptcy or close. Moreover, to the extent partners withdraw from Kayak's meta-search services, consumers may not view us as a reliable source of comprehensive travel service information and fewer consumers are likely to utilize our meta-search websites, which would have a negative impact on our advertising revenue and results of operations.

We rely upon Google to generate a significant portion of traffic to our platforms and to a lesser extent, other search and meta-search services, principally through pay-per-click marketing campaigns. The pricing and operating dynamics on these platforms can experience rapid change commercially, technically, and competitively. If the logic determining placement and
11


display of results of a consumer's search changes, the placement of links to our platforms can be negatively affected and our costs to improve or maintain our placement in search results can increase. In addition, a decline or slowing growth in travel search traffic negatively impacts our ability to efficiently generate traffic to our platforms through performance marketing on general search platforms, which could have an adverse effect on our business and results of operations.

We rely on various third-party distribution channels (i.e., marketing affiliates) to distribute accommodation, rental car, and airline ticket reservations. Should one or more of such third parties cease distribution of reservations made through us, or suffer deterioration in its search or meta-search ranking, our business, market share, and results of operations could be adversely affected.

We offer a range of insurance products related to our travel offerings, primarily through third-party insurance providers. Our business and reputation may be adversely affected if such providers no longer make such offerings available to us on economically reasonable terms or at all.

We face risks related to the growth of our alternative accommodations business.

Our alternative accommodations business may face risks relating to claims of liability, regulatory developments, and continued growth and profitability. Because alternative accommodations are often either a single unit or a small collection of independent units, and may have additional costs to be offered on our platforms, these properties generally represent more limited booking opportunities and lower profit margins than hotels, motels, and resorts, which generally have more units to rent per property.resorts. Further, alternative accommodations in general may be subject to increased seasonality due to local tourism seasons, weather or other factors or may not be available at peak times due to use by the property owners. Lower profit margins are associated with alternative accommodation properties due to certain additional costs related to offering these accommodations on our platforms. As we increase our alternative accommodation business, these different characteristics negatively impact our profit margins; and, toTo the extent these propertiesalternative accommodations represent an increasing percentage of the properties addedwe add to our platforms, we expect that our room-night growth rate and property growth rate will continue to diverge over time, (since each such alternative accommodation property has fewer booking opportunities). As a result of the foregoing, as the percentage of alternative accommodation properties increases,and the number of reservations per property will likely continue to decrease.

In addition, as our alternative accommodation reservation business grows, we may incur increasing numbers of complaints relatedaccommodations are subject to non-existent properties or properties that are significantly different than as described in the listing, as well as claims of liability based on eventsinjury, death, discrimination, or criminal activities occurring at such properties such as robbery, injury, deaththese properties. We have no control over the actions of our consumers, property owners, and other similar events. Suchthird parties during the customer's stay, and cannot guarantee the safety of such individuals. In addition, we have not in the past and may not in the future undertake to systematically verify the safety, quality, and legal compliance of our alternative accommodation listings. We rely on property owners to disclose information relating to their listings and such information may be inaccurate or incomplete. In addition, Booking.com facilitates the provision of partner liability insurance that may protect alternative accommodation partners against liability claims, lawsuits by third parties for bodily injury, or personal property damage that occur during a stay at a partner property. This partner liability insurance, if applicable to the claim, may provide partners with up to $1.0 million equivalent (policy limit) of third party liability coverage related to the underlying claim. The Company could be required to pay amounts in excess of the partner liability policy limit. Any resulting complaints or claims could result in negative publicity and increased costs, which could adversely affect our reputation, business, and results of operations. Further, the

The regulatory environment related to somethe alternative accommodations such as homes and apartmentsbusiness is evolving, and laws, regulations, or property association rules could impose restrictions or burdens on these property owners and managers that limit or negatively affect their ability to rent their properties. For example, the European Commission has adopted a short-term rental regulation that imposes new obligations around property owner registration, property verification, and enforcement of local registration schemes, and in conjunction with the Digital Services Act. For additional discussion regarding the Digital Services Act, see - "Our business is subject to various competition/anti-trust, consumer protection, and online commerce laws and regulations around the world, and as the size of our business grows, scrutiny of our business by legislators and regulators in these areas may intensify."Some jurisdictions have adopted or are considering statutes or ordinanceslegal restrictions that prohibit owners and managers from renting certain properties for fewer
17


than a stated number of consecutive days or for more than an aggregate total number of days per year or that require online platforms, owners or managers to obtain a license to rent their properties. In addition, several jurisdictions have adopted or list alternative accommodations. From time to time, we are considering adopting statutessubject to inquiries related to compliance with alternative accommodation legal requirements that we may not be able to respond to in a timely manner or ordinances requiring online platforms that list certainin full satisfaction. The outcome of such inquiries has resulted in fines and could result in additional fines, adversely affect our reputation, or require modifications to our business operations. Legal requirements applicable to alternative accommodations are evolving and can be inconsistent among each individual locality. As governments adopt new legal requirements related to obtain a licensealternative accommodations, we are unable to list such accommodations and/or to comply with other restrictions or requirements.predict what effect they may have on our business. This dynamic regulatory environment requires us to expend significant time and resources and could negatively impact the growth and/or size of our alternative accommodation reservation business.

12


We face risks relating to our marketing efforts.

We believe that the number, variety and quality of accommodations on our platforms, and the corresponding access to accommodation room nights, had been a key driver of the growth of our accommodation reservation business prior to the COVID-19 pandemic. The breadth of our accommodation bookings typically made us an attractive source of consumer demand for our accommodation providers, and we believe it will continue to do so as the travel industry recovers. However, after accommodation providers recover from the COVID-19 pandemic, they may wish to limit the amount of business that flows through a single distribution channel. Also, certain jurisdictions, particularly in Europe, are considering regulations intended to address the issue of "overtourism," including by restricting accommodation offerings in city centers or near popular tourist destinations, such as by restricting construction of new hotels or the renting of homes or apartments. Such restrictions could also include limiting the number of tourists permitted to visit and stay near popular areas during peak seasons or as a general matter. As a result, we may experience constraints on the number of listings, or accommodation room nights, actually available to us, which could negatively impact our business growth rate and results of operations.

The number of our employees worldwide has grown from approximately 15,500 at December 31, 2015 to approximately 20,300 at December 31, 2020, which growth is mostly comprised of hires by our international operations. Changes in our workforce may make it more difficult to hire, train, retain, motivate and manage the required employees. Historically, our brands operated on a largely independent basis and many of them focused on particular services or geographies. As we look to develop the Connected Trip and pursue our other strategic objectives, we are increasing the collaboration, cooperation and interdependency among our brands. As we manage this shift, in addition to managing any changes in our workforce, whether due to organic growth, growth through acquisitions, workforce reductions or restructurings, we may find it difficult to maintain the beneficial aspects of our corporate culture at the brand companies and throughout the organization as a whole. In addition, as travel recovers from the COVID-19 pandemic, any future expansion or shift increases the complexity of our business and places additional strain on our management, operations, technical performance, financial resources and administrative, legal, tax, internal control and financial reporting functions. Our current and planned employees, systems, procedures and controls may not be adequate to support and effectively manage growth and increased complexity, especially as we employ employees in multiple geographic locations around the world and increase the number and variety of our products and payment systems. The implementation of new information technology, payment, enterprise resource planning (ERP) or other systems could be disruptive and/or costly or we may experience difficulty successfully integrating new systems into existing systems or migrating to new systems from existing systems, any of which could adversely affect our business and results of operations.

We rely on marketing channels to generate a significant amount of traffic to our platforms and grow our business.

We believe that maintaining and strengthening our brands are important aspects of our efforts to attract and retain customers. We have investedinvest considerable resources in the establishment and maintenance of our brands, and we intend to continue to invest resources in marketing and other brand building efforts to preserve and enhance consumer awareness of our brands when and to the extent we deem appropriate, in particular as the COVID-19 pandemic subsidesattract and consumers beginretain customers. Performance marketing costs to travel again. Effective marketing has been an important factor in our growth, and we believe it will continue to be important to our future success. Our marketing spend is influenced by the marketing spend of our competitors as we seek to maintain and increase our brand recognition among consumers and to maintain and grow traffic to our platforms through performanceare variable because they are dependent on others' marketing channels. We may not be able to successfully maintain or enhance consumer awareness and acceptance of our brands, and, even if we are successfulspend in our branding efforts, such efforts may not be cost-effective. For instance, increased marketing by OTCs, meta-search services and travel service providers, which we saw prior to the COVID-19 pandemic and would expect to see again as the COVID-19 pandemic subsides, make our marketing efforts more expensive and less effective.same channels. If we are unable to maintain or enhance consumer awareness and acceptance of our brands in aor if such efforts are not cost-effective, manner, our business, market share, and results of operations would be materially adversely affected.

Our marketing efficiency, expressed as marketing expense as a percentage of revenues, is impacted by a number of factors that are subject to variability and that are in some cases outside of our control, including ADRs, costs per click, cancellation rates, foreign currency exchange rates, our ability to convert paid traffic to booking customers, and the extent to which consumers come directly to our websites or mobile apps for bookings. If our marketing efforts are less effective at generating new bookings, our marketing efficiency could deteriorate and our margins, revenues, and earnings growth could be adversely affected. For example, competition for desired rankings in search results and/or a decline in ad clicks by consumers could increase our costs-per-click and reducenegatively impact our marketing efficiency. We use third-party websites, includingFor more information regarding the role of online search engines (primarily Google), meta-search and travel research services and
18


affiliate marketing as the primary means ofin generating traffic to our websites. Growth of some of these channels had slowed prior to the COVID-19 pandemic. Historically our marketing expenses have increased significantly, however, we have experienced more moderate growth rates in recent years,websites, see - "We are dependent on travel service providers, restaurants, search platforms, and since the COVID-19 pandemic, our marketing expenses have declined significantly year-over-year. Our marketing efficiency has declined in recent years, a trend we expect to continue in the long term, though the rate of decrease may fluctuate and there may be periods of stable or increasing returns on investment ("ROIs") from time to time, and we cannot predict how our marketing efficiency will trend during the recovery from the COVID-19 pandemic. Further, atother third parties." At times we may pursue a strategy of increasing marketing ROIs,returns on investment ("ROIs"), which could negatively affect our gross bookings and revenue growth rates. When evaluating our performance marketing spend generally, we consider several factors for each channel, such as the customer experience on the advertising platform, the incrementality of the traffic we receive and the anticipated repeat rate from a particular platform, as well as other factors. Currently, we have reduced our marketing spend significantly year-over-year and are generally limiting our performance marketing efforts to address particular booking characteristics that are identified as having a high likelihood of conversion and a low likelihood of cancellation under the current circumstances of the COVID-19 pandemic. Pursuing a strategy of improving performance marketing ROIs along with factors such as competitors' actions in the bidding environment, the amount of marketing invested by these channels to generate demand, and overall marketing platform traffic growth trends, which have shown volatility and long-term deceleration of growth rates, may also impact growth rates for marketing channels. Under market conditions excluding the impact of the COVID-19 pandemic, any reduction in our marketing efficiency could have an adverse effect on our business and results of operations, whether through reduced revenues or revenue growth, or through marketing expenses increasing faster than revenues and thereby reducing margins and earnings growth.

We believe that a number ofAdditionally, many factors could cause consumers to increase their shopping activity before making a travel purchase. Increased shopping activity reducesimpedes our marketing efficiency and effectiveness because traffic becomes less likely to result in a reservation through our platforms, and such traffic is more likely to be obtained through paid marketing channels than through direct channels. Further, consumers may favor travel services offered by search or meta-search companies over OTCs, which could reduce traffic to our travel reservation platforms, increase consumer awareness of our competitors' brands and platforms, increaseAny negative trends in our marketing and other customer acquisition costs and adversely affectefficiency, performance marketing ROIs, or consumer shopping activity could negatively impact our business, marginsmarket share, and results of operations. To the extent any such increased shopping behavior leads to growth in our KAYAK meta-search business, such growth may not result in sufficient increases in revenues from our KAYAK meta-search business to offset any related decrease in revenues or increase in marketing and other customer acquisition costs experienced by our OTC brands.

We may not be able to keep up with rapid technological or other market changes.

TheWe compete in markets in which we compete are characterized by rapidly changing technology, evolving industry standards, consolidation, frequent new service announcements, introductions and enhancementsdevelopments, and changing consumer demands and preferences. These characteristics are changing at an even greater pace as OTCs and travel service providers seek to address consumer needs and preferences resulting from the COVID-19 pandemic. We may not be able to keep up with these rapid changes. In addition, these market characteristics are heightened by the progress of technology adoption in various markets, including the continuing adoption of the internet and online commerce in certain geographies and the emergence and growth of the use of smartphones, tablets and other smart devices including those with voice and artificial intelligence capabilities, for mobile e-commerce transactions. New developments in other areas,We may not be able to keep up with these rapid changes. See - "Consumer adoption and use of mobile devices creates challenges and may enable device companies such as cloud computing, could make entering our markets easier for competitors dueGoogle and Apple to lower upfront technology costs. As a result, our future success will depend on our ability to adapt to rapidly changing technologies, to adapt our services and online platforms to evolving industry standards and local preferences and to continually innovate and improve the performance, features and reliability of our services and online platforms in response to competitive service offerings and the evolving demands of the marketplace. In particular, it is increasingly important forcompete directly with us to effectively offer our services on mobile devices through mobile apps and mobile-optimized websites and to tailor our services to varying devices and platforms. Any failure by us to successfully develop and achieve consumer adoption of our mobile platforms would have a material and adverse effect on our growth, market share, business and results of operations. Further, to the extent mobile devices or platforms enable users to block advertising content, our advertising revenue and our ability to market our brands and acquire new consumers may be negatively affected. We believe that ease-of-use, comprehensive functionality and the look and feel of our mobile platforms are increasingly competitively critical as consumers obtain more of their travel and restaurant services through mobile devices and platforms. As a result, we intend to continue to spend significant resources maintaining, developing and enhancing our mobile platforms and other technologies and platforms in the long term. ."

Additionally, our ability to achieve our long-term strategy to build the Connected Trip depends on successfully integrating and developing new and evolving technologies, which is likely towill require increased financial and personnel investments that could have an adverse impact on our results of operations until we achieve the expected return on these investments. However, theseWhile we believe that we have the ability to achieve our long-term strategy to build the Connected Trip, the development of the Connected Trip is subject to uncertainties, including further development of the verticals and technological capabilities necessary for the Connected Trip experience, the ability to collect, store, and use customer data in a compliant and integrated fashion, and the attraction and retention of employees dedicated to this development effort. As a result, it may take longer than we expect to realize the Connected Trip vision or it may not achieve the expected return on investment. These efforts may also not be successful in improving the travel experience or retaining and attracting new customers, which would harm our business and results of operations.customers. Further, regulatory authorities may subject us to existing or new restrictions that could prevent us from successfully commercializing the Connected Trip or expose us to unanticipated claims or liabilities. With any technical innovation often results insuch as the Connected Trip effort, there could be bugs, vulnerabilities, and other system failures. Any such bug, vulnerability or failure, especially in connection
19


with a significant technical implementation or change,failures, which could result in lost business, harm to our brand or reputation, consumer complaints, and other adverse consequences, any of which could adversely affect our business and results of operations.

We believe that another critical component to our future success will be our ability to enhanceare working toward enhancing our payments capabilities, including by offering alternative payment solutions to consumers even when those payment solutions may not be accepted by the travel service provider or restaurant. Alternate payment providers such as Alipay, Paytm and WeChat Pay operate closed-loop payments systems with direct connections to both consumers and merchants. In many markets, particularly in Asia where credit cards are not readily available and/or e-commerce is largely carried out through mobile devices, these and other emerging alternative payment methods are the exclusive or preferred means of payment for many consumers. Therefore, ifIf we are unable to offer consumers their preferred method of payment by integrating new or emerging payment methods into our platforms, we may not be able to effectively offer our services to these consumers, which would limit our growth opportunities in these markets and our business and results of operations could be harmed.

Furthermore, in the future the competitive pressure to innovate could encompass a wider range of services and technologies, including services and technologies that may be outside of our historical core business, and our ability to keep
13


pace may slow. Our current and potential competitors range from large and established companies to emerging start-ups. Emerging start-ups may be able to innovate and focus on developing a particularly new product or service faster than we can or may foresee consumer need for new services or technologies before we do. Some of our larger competitors or potential competitors have more resources or more established or varied relationships with consumers than we have, and they could use these advantages in ways that could affect our competitive position, including by making acquisitions, entering or investing in travel reservation businesses, investing in research and development and competing aggressively for highly-skilled employees.

In addition, the widespread adoption of new internet, networking or telecommunications technologies or other technological changes (including new devices and services, such as Amazon's Echo and Alexa and Google Home and Google Assistant, developing technologies, such as generative artificial intelligence chatbot and virtual reality technologies,machine learning ("AI"), could influence how customers search for and the creation of "super-apps" where consumers can use many online services without leaving a particular app) couldbook travel, require us to incur substantial expenditures to modify or adapt our services or infrastructure, and subject us to these new technologies,regulatory frameworks, which could adversely affect our results of operations or financial condition. Any failure to implementFor example, the development, adoption, and uses for AI technologies, which we are incorporating into certain of our offerings, are still in their early stages and the regulatory framework for its use is uncertain. The use of AI presents risks and challenges because in some instances we may make use of third-party foundational models that have been pre-trained on data which may be insufficient, erroneous, stale, contain biased information, or adapt to new technologies in a timely manner or at all could adversely affect our ability to compete, increase our consumer acquisition costsinfringe IP rights. Additionally, the output produced by these models may be inaccurate, misleading, discriminatory, offensive, illegal or otherwise adversely affect our business,harmful. Such risks are heightened if we or third-party developers or vendors lack sufficient responsible AI development or governance practices. These deficiencies and therefore adversely affect our brand, market share and resultsother failures of operations.

Our businessAI systems could be negatively affected by changes in online search and meta-search algorithms and dynamics or traffic-generating arrangements.

We use Google to generate a significant portion of the traffic to our platforms, and, to a lesser extent, we use other search and meta-search services to generate traffic to our platforms, principally through pay-per-click marketing campaigns. The pricing and operating dynamics on these search and meta-search platforms can experience rapid change commercially, technically and competitively. For example, Google frequently updates and changes the logic which determines the placement and display of results of a consumer's search, such that the placement of links to our platforms can be negatively affected and our costs to improve or maintain our placement in search results can increase. The European Commission has fined Google significant amounts for anti-competitive behavior relating to its comparison-shopping service and online search advertising services. Changes by Google in how it presents travel search results, including its promotion of its travel meta-search services, or the manner in which it conducts the auction for placement among search results, whether as a result of a court order, investigation or other reason, may be competitively disadvantageous to us and may impact our ability to efficiently generate traffic to our platforms, which in turn would have an adverse effect on our business, market share and results of operations. In January 2020, Google announced modifications to its flights display model, including that it would not be charging airlines and OTCs for sending referrals from Google Flights. As a result, certain airline and OTC partners have limited or eliminated their use of other meta-search services and have demanded cost savings from their other meta-search services. Further, Google may receive access to certain discounted fares not provided to meta-search services that charge for referrals. These modifications could adversely affect our meta-search business, profit margins and results of operations. Similarly, changes by our other search and meta-search partners in how they present travel search results or the manner in which they conduct the auction for placement among search results may be competitively disadvantageous to us and may impact our ability to efficiently generate traffic to our platforms. In addition, a decline or slowing growth in travel search traffic negatively impacts our ability to efficiently generate traffic to our platforms through performance marketing on general search platforms, which could have an adverse effect on our business and results of operations.

In addition, we purchase online traffic from a number of other sources, including some operated by our competitors, in the form of pay-per-click arrangements that can be terminated with little or no notice. If one or more of such arrangements is terminated, our business, market share and results of operations could be adversely affected. We rely on various third-party
20


distribution channels (i.e., marketing affiliates) to distribute accommodation, rental car and airline ticket reservations. Should one or more of such third parties cease distribution of reservations made through us, or suffer deterioration in its search or meta-search ranking, due to changes in search or meta-search algorithms or otherwise, our business, market share and results of operations could be negatively affected.

Consumer adoption and use of mobile devices creates challenges and may enable device companies such as Google and Apple to compete directly with us.

Widespread adoption of mobile devices, such as the iPhone and Android-enabled smartphones, coupled with the web browsing functionality and development of thousands of apps available on these devices, continues to drive substantial online traffic and commerce to mobile platforms. We have experienced a significant shift of business, both direct and indirect, to mobile platforms and our advertising partners are also seeing a rapid shift of traffic to mobile platforms. Some competitors offer last-minute discounts for mobile accommodation reservations. The revenues earned on a mobile transaction may be less than a typical desktop transaction due to different consumer purchasing patterns. For example, accommodation reservations made on a mobile device typically are for shorter lengths of stay, have lower ADRs and are not made as far in advance. Further, given the device sizes and technical limitations of smartphones, mobile consumers may not be willing to download multiple apps from multiple companies providing a similar service and instead prefer to use one or a limited number of apps for their mobile travel and restaurant research and reservation activity. As a result, the consumer experience with mobile apps as well as brand recognition and loyalty continue to be increasingly important. Our mobile offerings have received generally strong reviews and are driving a material and increasing share of our business. We believe that mobile bookings present an opportunity for growth and are necessary to maintain and grow our business as consumers increasingly turn to mobile devices instead of a personal computer. As a result, it is increasingly important forsubject us to developcompetitive harm, regulatory action, legal liability, and maintain effective mobile platforms to provide consumers with an appealing, easy-to-use mobile experience. If we are unable to continue to rapidly innovate and create new, user-friendly and differentiated mobile offerings and efficiently and effectively advertise and distribute on these platforms,brand or if our mobile offerings are not used by consumers, we could lose market share and our business, future growth and results of operations could be adversely affected.

Google's Android operating system is the leading smartphone operating system in the world. As a result, Google has the ability to leverage its Android operating system to give its travel services a competitive advantage, either technically or with prominence on its Google Play app store or within its mobile search results. Further, Google is the leading internet search service and has leveraged its search popularity to promote its travel services. The European Commission has fined Google significant amounts and the U.S. Justice Department (the "U.S. DOJ") has sued Google for breaching antitrust rules by imposing restrictions on Android device manufacturers and mobile network operators, including by mandating the pre-installation of Google apps and limiting access to its Google Play app store. The European Commission's decision requires Google to end those practices or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google's parent company. Google has appealed the European Commission's decision and refutes the U.S. DOJ's claims, and it is not yet clear how or whether these actions will affect Google's business, including its travel services.

Apple, the producer of, among other things, the iPhone and iPad, obtained a patent for "iTravel," a mobile app that would allow a traveler to check in for a travel reservation. In addition, Apple's iPhone operating system includes "Wallet," a virtual wallet app that holds tickets, boarding passes, coupons and gift cards, and, along with iTravel, may be indicative of Apple's intent to enter the travel reservations business in some capacity. Apple has substantial market share in the smartphone market and controls integration of offerings, including travel services, into its mobile operating system. Apple also has more experience producing and developing mobile apps and has access to greater resources than we have. Apple may use or expand iTravel, Wallet, Siri (Apple's voice recognition "concierge" service), Apple Pay (Apple's mobile payment system) or another mobile app or functionality as a means of entering the online travel reservations marketplace. To the extent Google or Apple use their mobile operating systems, app distribution channels or, in the case of Google, search services, to favor their own travel service offerings, our business and results of operations could be harmed.

We are dependent on providers of accommodations, rental cars and airline tickets and on restaurants.

We rely on providers of accommodations, rental cars and airline tickets and on restaurants to make their services available to consumers through us. Our arrangements with travel service providers generally do not require them to make available any specific quantity of accommodation reservations, rental cars or airline tickets, or to make accommodation reservations, rental cars or airline tickets available in any geographic area, for any particular route or at any particular price. Similarly, our arrangements with restaurants generally do not require them to provide all of their available tables and reservations to customers through us. We are in regular dialogue with our major travel service providers about the nature and extent of their participation in our services. A significant reduction on the part of any of our major travel service providers or providers that are particularly popular with consumers in their participation in our services for a sustained period of time or
21


their complete withdrawal, whether as a result of limitations on occupant capacity or business closures stemming from the COVID-19 pandemic or otherwise, could have a material adverse effect on our business, market share and results of operations. To the extent any of those major or popular travel service providers ceased to participate in our services in favor of one of our competitors' services or decided to require consumers to purchase services directly from them, our business, market share and results of operations could be harmed. During periods of higher occupancy rates, accommodation providers may decrease their distribution of accommodation reservations through third-party intermediaries like us, in particular through our discount services. Further, as consolidation among travel service providers increases, the potential adverse effect of a decision by any particular significant travel service provider (such as a large hotel chain, airline or rental car company) to withdraw from or reduce its participation in our services also increases. The COVID-19 pandemic has increased the risk that our travel service provider and restaurant partners voluntarily or involuntarily declare bankruptcy or otherwise cease or limit their operations, which could harm our business and results of operations. In particular, the potential harm to our business and results of operations is greater if there are bankruptcies or closures of larger partners such as airlines, hotel chains or large rental car companies. To the extent restaurants limit the availability of reservations through OpenTable or if a significant number of restaurants cease to participate in our services (whether as a result of the COVID-19 pandemic or otherwise) or if government orders restrict occupant capacity of any travel service providers or restaurants as a result of the COVID-19 pandemic, consumers may not continue to use our services and/or our revenues and results of operations could be adversely affected, especially if reservations during highly desirable times on high volume days are not made available through us.

KAYAK, a meta-search service, depends on access to information related to travel service pricing, schedules, availability and other related information from OTCs and travel service providers to attract consumers. Many of KAYAK's agreements with OTCs and travel service providers are short-term agreements that may be terminated on 30 days' notice. To the extent OTCs or travel service providers no longer provide such information to KAYAK, KAYAK's ability to provide comprehensive travel service information to consumers could be diminished and its brand, business and results of operations could be harmed. To the extent consumers do not view KAYAK as a reliable source of comprehensive travel service information, fewer consumers would likely visit its websites, which would also likely have a negative impact on KAYAK's advertising revenue and results of operations. In addition, if OTCs or travel service providers choose not to advertise with KAYAK or choose to reduce or eliminate the fees paid to KAYAK for referrals from query results, KAYAK's business and results of operations could be adversely affected.reputational harm.

We rely on the performance of highly skilled employees; and, if we are unable to retain or motivate key employees or hire, retain, and motivate well-qualified employees, our business would be harmed.

Our performance is largely dependent on the talents and efforts of highly skilled individuals. Our future success depends on our continuing ability to identify, hire, develop, motivate and retain highly skilled employees for all areas of our organization. In particular, the contributions ofindividuals, including key senior management in the United States, Europe, and Asia are critical to the overall management of our business.Asia. We may not be able to retain the services of any members of our senior management or other key employees, the loss of whom could harm our business and competitive position. We do not maintain any key person life insurance policies.Our future success and ability to innovate depends on our continuing to identify, attract, hire, develop, motivate, and retain a highly skilled, global, diverse workforce. In addition, our customer service resources and outsource arrangements for customer support may be unable to provide adequate customer service support. There may continue to be operational and workplace cultural challenges that may adversely affect our business, including talent retention, in connection with changes to work environments due to the COVID-19 pandemic.

In addition, competitionCompetition for well-qualified employees in all aspects of our business, includingespecially software engineers, mobile communication talent, product professionals, and other technology professionals, is intense. Our internationalintense and costly. In particular, our success in particularglobal markets has led to increased efforts by our competitors and others to hire our international employees. These difficulties may be amplified by increased ability to work remotely, evolving restrictions on immigration travel or availability of visas or work permits for skilled technology workers. Further,workers, requirements of applicable collective bargaining agreements, and laws in jurisdictions where we operate that make recruiting senior talent more difficult, such as a result of the COVID-19 pandemic,reductions in the potential for a long recovery period for(partial) tax exemption that benefits certain non-Dutch citizens working in the travel industry and our workforce reductions and restructurings, employees may not view employment with us as positively as they did prior to the pandemic, all of which makes attraction and retention of well-qualified employees more difficult.Netherlands. The competition for talent in our industry and with companies with whom we did not historically compete combined with inflationary pressure on compensation has in the past and may in the future increasecaused our personnel expenses to attract and retain key talent to increase, which may adversely affect our results of operations. Our continued ability to compete effectively and to innovate and develop products, services, technologies and enhancements depends on our ability to attract, retain and motivate well-qualified employees. If we do not succeed in attracting well-qualified employees orand retaining training, managing and motivating existingwell-qualified employees, our business, our ability to grow and innovate, competitive position, reputation, and results of operations would be adversely affected.

InvestmentConsumer adoption and use of mobile devices creates challenges and may enable device companies such as Google and Apple to compete directly with us.

Widespread adoption of mobile devices, particularly smartphones, coupled with the web browsing functionality and development of apps available on these devices, continues to drive substantial online traffic and commerce to mobile platforms. We have experienced a significant shift of business, both direct and indirect, to mobile platforms, and we believe that mobile bookings are necessary to maintain and grow our business as consumers increasingly turn to mobile devices instead of a personal computer. The revenues earned on a mobile transaction may be less than a typical desktop transaction due to different consumer purchasing patterns. To the extent mobile devices or platforms enable users to block advertising content, our advertising revenue and our ability to market our brands may also be negatively affected. Given the device sizes and technical limitations of smartphones, mobile consumers may not be willing to download multiple apps providing a similar service and instead prefer to use one or a limited number of apps for their mobile travel and restaurant reservation activity. As a result, the consumer experience with mobile apps as well as brand recognition and loyalty are critical. It is increasingly important for us to provide consumers with an appealing, easy-to-use mobile platform experience and that the features of our mobile platforms are competitive. If we are unable to attract consumers to our mobile platforms, we could lose market share and our business, future growth, and results of operations could be adversely affected.

As the primary smartphone manufacturers, Google and Apple could leverage their operating systems to give a competitive advantage to their services that overlap with ours. We rely heavily on Google and Apple's app stores to provide our mobile apps to users, and each of Google and Apple have more experience developing mobile apps and access to greater resources than us. To the extent Google or Apple use their mobile operating systems, app distribution channels, mobile payment systems, or search or other marketplace services to favor their services that overlap with ours, our business and results of operations could be harmed.
14



Impairments of goodwill, long-term investments, and long-lived assets, increases in provisions for expected credit losses on receivables from and cash advances made to our travel service provider and restaurant partners, and increases in cash outlays to refund consumers for prepaid reservations have a negative impact on our results of operations.

We have recorded and may in the future record impairments of goodwill, long-term investments, or long-lived assets. Future events and changing market conditions, like significant adverse changes in the market valuations of companies in the travel and technology industries, may result in the need to recognize goodwill, investment, and asset impairment charges, which could have a material adverse effect on our results of operations.

Any significant increase in our provision for expected credit losses and any significant increase in cash outlays to refund consumers could have a corresponding adverse effect on our results of operations and related cash flows. We could experience a high level of cancellations of existing reservations which could result in higher than normal cash outlays to refund consumers for prepaid reservations. In some instances, where we had agreed to provide free cancellations to consumers for non-refundable reservations, we did not estimate a recovery of prepayment already made to a travel service provider. We may also offer cancellable room rates on behalf of a partner to provide flexibility to our consumers even if the partner has not provided a cancellable room rate, which could have a negative impact on our revenues if we are unable to facilitate booking from another customer.

We face risks related to our operational and technological infrastructures.

Historically, our brands operated on a largely independent basis and many of them focused on particular services or geographies. We continue to optimize collaboration among our brands. As we manage this shift, in addition to managing any changes in our workforce, we may find it difficult to maintain the beneficial aspects of our corporate culture at the brand companies and throughout the organization as a whole. In addition, any future expansion or shift increases the complexity of our business and places additional strain on our management, operations, technical performance, financial resources, and administrative, legal, tax, internal controls, and financial reporting functions. Our current and planned employees and outsourced resources, systems, procedures, and controls may not be adequate to support and effectively manage growth and increased complexity, or could result in actual or perceived disruption of our service or customer support, especially as we have employees and outsourced resources in multiple geographic locations around the world and increase the number and variety of our products and payment systems.

In addition, we are conducting a multi-year phased migration to integrate and upgrade certain systems and processes. The implementation of new information technology, payment, enterprise resource planning, or other systems is disruptive and costly and may not be successful, which could adversely affect our business and results of operations. For example, during a recent upgrade of certain financial systems, some of Booking.com's partners experienced delays in receiving payment from us. Any failure to implement or adapt to new technologies in a timely manner or at all could adversely affect our ability to compete, increase our consumer acquisition costs or otherwise adversely affect our business, brand, market share, reputation, or results of operations.

Investments in new business strategies and acquisitions could disrupt our ongoing business and present risks not originally contemplated.

Our mission is to make it easier for everyone to experience the world. As a result, our strategy involves evaluating and potentially entering complementary businesses in furtherance of that mission. We have invested and in the future may invest in new business strategies and acquisitions. For example, we acquired FareHarbor in April 2018acquisitions of complementary businesses. Such endeavors may not be successful. In 2023 our agreement to increase our ability to offer local activities and experiences (such as tours and attractions). We also have acquired, and inacquire European-based flights booking provider Etraveli Group was terminated after the future may acquire,
22


businesses similar to those we already operate in an effort to expand our geographic markets, acquire technology or products or to otherwise improve or grow our business. For example, in July 2017 we acquiredEuropean Commission blocked the Momondo Group and in November 2018 we acquired HotelsCombined, in each case, among other things, to enhance the global reach of our meta-search services. Such endeavorstransaction. Additionally, such ventures may involve significant risks and uncertainties, including diversion of management's attention from current operations, greater than expected liabilities and expenses, increased regulatory scrutiny, inadequate return on capital, new risks with which we are not familiar, legal and compliance obligations that previously did not apply to us, integration risks, and difficulties and unidentified issues not discovered in our investigations and evaluations of those strategies and acquisitions. Further, we may issue shares of our common stock in these transactions, which could result in dilution to our stockholders. As a result, entering new businesses involves risks and costs that could, if realized, have an adverse effect on our business, reputation, results of operations, profit margins, cash flows or financial condition, as well as on our ability to achieve the expected benefits of any such investments or acquisitions.
We In addition, we may decide to make minority investments, including through joint ventures, in which we have limited or no management or operational control. The controlling person in such a case may have business interests strategies or goals that are inconsistent with ours, and decisions of the company or venture in which we invested may result in harm to our reputation or business or adversely affect the value of our investment. A substantial portion of our goodwill and intangible assets were acquired in acquisitions. If we determine that any of our goodwill and intangible assets, or any goodwill or intangible assets acquired in future transactions, experiences a decline in value, we may be required to record, as we did in the first and third quarters of 2020, an impairment (see Note 11 to our Consolidated Financial Statements), which could materially adversely affect our results of operations. Further, we may issue shares of our common stock in these transactions, which could result in dilution to our stockholders.

15


We may not be able to successfully integrate acquired businesses or combine internal businesses.

The integration of acquired businesses requires significant time and resources, and we may not manage these processes successfully. Further, as ourIn addition to acquired businesses, developed, our strategy evolved and market conditions changed, we have integrated certain of our businesses that had been managed independently, integrated certain functions across our businesses, and restructured or ceased operating certain assets or businesses, and we may do so in the future, including through divestitures. These integrations may be of varying degree, depending on many factors such as business compatibility, strategic goals or geographic location, among others. Integrations are complex, often involve additional or unexpected costscostly, and create a variety of issues and risks, including:

disruption or harm to the businesses involved;

disruptioninvolved, or to our other businesses, including as a result of the need for management to spend time and attention on the integration;

difficulty combining different company cultures, systems, reporting structures, titlesprocesses, and job descriptionshuman resource policies and compensation schemes;

practices, or implementing and maintaining effective internal controls, procedures, and policies;
problems retaining key personnel, in particular at the acquired or integrated company;

personnel; and
loss of travel service providers, restaurants, or other partners of the acquired business; and

difficulty implementing and maintaining effective controls, procedures and policies.business.

We may not successfully integrate companies or achieve the strategic, financial, or operating objectives of thean acquisition or integration, any of which could adversely affect our business, results of operations, or the value of our acquisitions.

Information Security, Cybersecurity, and Data Privacy Risks

Our processing, storage, use, and disclosure of personal data exposes us to risks of internal or external securitydata breaches and could give rise to liabilities and/or damage to our reputation.

We are an innovative technology company dependent on sophisticated software applications and computing infrastructure. Theinfrastructure for the operation of our business. If threat actors such as cyber-criminals, hackers, and state-sponsored organizations are able to circumvent our security measures, including as a result of data when engagingour own acts or omissions, it could result in e-commercea compromise or breach of consumer, partner, or employee data. Data security is essential to maintaining consumer and travel service providerpartner confidence in our services.services and the uninterrupted availability of our web and mobile platforms is essential for our business. Consumers may provide us with their personal identity data and payment information, which in turn attracts attention from threat actors. Cyberattacks by individuals, groups of hackers and state-sponsored organizations are increasing in frequency and sophistication and are constantly evolving. Cyberattacks on organizations have increased duringWe may not be able to defend against sophisticated cyberattacks from determined adversaries. In addition, our security policies and controls may not keep pace with the crisiscontinuous innovation of the COVID-19 pandemic. Any security breach whether instigated internally or externally on our systems or third-offerings.
23


party systemsVulnerabilities in our consumer and partner account security and workflow practices could significantly harm our reputation and therefore our business, brand, market share and results of operations. Consumers who use certain of our services provide us with their credit card information. We require user names and passwordshave resulted in order to access our information technology systems. We also use encryption and authentication technologies to secure the transmission and storage of data and prevent unauthorized access to our data or accounts. Computer circumvention capabilities, new discoveries or advances or other developments, including our own acts or omissions, could result in a compromise or breach of consumerpersonal and confidential data. For example, third parties may attempt to fraudulently induce employees, travel service provider partners or consumers to disclose user names, passwords or other sensitive information ("phishing"), which may in turn be used to access our information technology systems or to defraud our partners or consumers. Third parties may also attempt to take over consumer accounts by using passwords, usernames and other personal information obtained elsewhere to attempt to unlawfully access consumer accounts on our platforms. We have experienced targeted and organized phishing and account takeover attacks, which have increased during the COVID-19 pandemic, and we expect to continue to experience these events in the future. These risks are likely to increase as we expand our offerings, integrate our products and services, incorporate AI and Large Language Models, and store and process more data, including personal information. Our efforts to protect information from unauthorized access may be unsuccessful or may result in the rejectionand payment data. The disclosure of legitimate attempts to book reservations throughnon-public Company-sensitive information by our services, any of which could result in lost business and could materially and adversely affect our business, reputation and results of operations.

Our existing technical, administrative and physical security measures may not be successful in preventing security breaches. A party (whether internal, external, an affiliate or unrelated third party) that is able to circumvent our security systems could steal consumer information or transaction dataworkforce or other proprietary information. Asparties could lead to information loss, reputational harm, or loss of a result of increased numbers of employee exits due to the restructuring actions or otherwise, we face heightened risks related to the loss or unauthorized use of or access to our systems, intellectual property or other protected data. In the last few years, several major companies experienced high-profile security breaches that exposed their systems and information and/or their consumers' or employees' personal information, and it is expected that these types of events will continue to occur. We have a heightened risk of security breaches due to some of our operations being located in certain international jurisdictions.competitive advantage. We expend significant resources to protect against security breaches and regularly increase our security-related expenditures to maintain or increase our systems' security. We have experienced and responded to cyberattacks, which we believe have not had a significantmaterial impact on the integrity of our systems or the security of data, including personal information maintained by us. These issues are likely to become more difficult to manage as we expand the number of places where we operate and the number and variety of services we offer, and as the tools and techniques used in such attacks increasingly become more sophisticated. Security breaches could result in severe damage to our information technology infrastructure, including damage that could impair our ability to offer our services or the ability of consumers to make reservations or conduct searches through our services, as well as loss of consumer, financial or other data that could materially and adversely affect our ability to conduct our business, satisfy our commercial obligations or meet our public reporting requirements in a timely fashion or at all. Security breaches could also result in negative publicity, damage our reputation, expose us to risk of loss or litigation and possible liability, subject us to regulatory penalties and sanctions, or cause consumers to lose confidence in our security and choose to use the services of our competitors, any of which would have a negativean adverse effect on our brands, market share, results of operations, and financial condition. See -"Cyberattacks and system vulnerabilities could lead to sustained service outages, data loss, reduced revenue, increased costs, liability claims, or harm to our competitive position." Our insurance policies have coverage limits andefforts to protect information from unauthorized access may not be adequatealso result in the rejection of legitimate attempts to reimburse us for all losses caused by security breaches.

We also face risks associated with security breaches affecting third parties conducting business over the internet. Consumers generally are concerned with security and privacy on the internet, and any publicized security problems could negatively affect consumers' willingness to provide private information or effect online commercial transactions generally, including through our services. Some of our business is conducted with third-party marketing affiliates, which may generate travelbook reservations through our infrastructure or through other systems.services, which could result in lost business. Additionally, our consumers' personal data could be affected by security breaches at third parties upon which we rely, such as travel service providers, connectivity partners, payroll providers, health plan providers, payment processors or GDSs. A security breach at any such third-party marketing affiliate, travel service provider, payment processor, GDS or otherrely. See - "Our business relies on a global supply chain of third party on whichservices providers and we are exposed to risks because we rely such ason the resilience, security, breach experienced by MGM Resorts International in 2020, could be perceived by consumers as a security breachand legal compliance of our systemstheir products and in any event could result in negative publicity, subject us to notification requirements, damage our reputation, expose us to risk of loss or litigation and possible liability and subject us to regulatory penalties and sanctions. In addition, such third parties may not comply with applicable disclosure requirements or with parameters within which we permit them to process data, which could expose us to liability.services."

In the operation of our business, we receive and store a large volume of personally identifiable data and payment information. ThisThe handling and storage of such data, is increasinglyas well as privacy rights of consumers, are subject to legislationcomplex and evolving laws and regulations in numerous jurisdictions aroundjurisdictions. Regulations such as the world. The European Union's General Data Protection Regulation (the "GDPR") imposes, the California Consumer Privacy Act (the "CCPA"), the California Privacy Rights Act, and the Digital Markets Act ("DMA") add complexity and impose significant compliance obligations and costs foron us. UnderFor example, under the GDPR, violations could result in fines of up to 20 million Euros or up to 4% of the annual global revenues of the infringer, whichever is greater. Several data protection authorities have imposed significant fines on companies of various sizes across industry sectors for violations of the GDPR. The California Consumer Privacy Act (the "CCPA") became operative inThese
2416


January 2020, and the recently enacted California Privacy Rights Act, which is set to become operative in January 2023, impose new privacy requirements and rights for consumers in California and has resulted and will continue to result in additional complexity and costs related to compliance. Many other jurisdictions continue to consider adopting or may adopt similar data protection regulations. These regulations are typically intendedintend to protect the privacyintegrity and security of personal data that is collected, processed, and transmitted in or from the governing jurisdiction as well as to give individuals greater rights and/or control over how their data is processed. In many cases, these laws apply not only to third-party transactions, but also to transfers of information between us and our subsidiaries, including employee information. These laws and their interpretations continue to develop and may be inconsistent from jurisdiction to jurisdiction. For example, the recent invalidation of the EU-US Privacy Shield has altered one of the acceptable approaches upon which many companies have relied to ensure compliant data transfers between the European Union and the United States. Additionally, some of these regulations, such as the CCPA, give consumers a private right of action against companies for violations of these rules. While we have invested and continue to invest significant resources to comply with the GDPR, CCPA and othera growing patchwork of privacy regulations, many of these regulations (such as the Personal Information Protection Law in the People's Republic of China and the Digital Personal Data Protection Act in India) are new, extremely complex to implement and subject to uncertain interpretation. Non-compliance with these laws could result in negative publicity, damage to our reputation, significant penalties, or other legal liability. If legislationlaws or regulations are expanded to require changes in our business practices, or if governing jurisdictions interpret or implement their legislation or regulationsinterpreted in ways that negatively affect our business, our results of operations, financial condition, or competitive position could be adversely affected.

System capacity constraints,Cyberattacks and system failuresvulnerabilities could lead to sustained service outages, data loss, reduced revenue, increased costs, liability claims, or denial-of-service or other attacks could harm to our business and our reputation.competitive position.

Prior to the COVID-19 pandemic, we experienced rapid growth in consumer traffic to our online platforms, the number of accommodations on our extranets and the geographic breadth of our operations. Once consumers begin to travel again, ifIf our systems cannot be expanded to cope with increasedthe level of demand or failrequired to perform,service our consumers and partners, we could experience unanticipated disruptions in service, slower response times, decreased customer service and customer satisfaction, and delays in the introduction of new services, any of which could impair our reputation, damage our brands and materially and adversely affect our results of operations. Further, asservices. As an online business, we are dependent on the internet, connectivity, and maintaining connectivity between ourselves and consumers, sources of internet traffic, such as Google, and our travel service providers and restaurants. As consumers increasingly turn to mobile and other smart devices, we also become dependent on consumers' access tosystems throughout the internet through mobile carriers and their systems.world. Disruptions in internet access whether generally, in a specific market or otherwise, especially if widespread or prolonged, could materially adversely affect our business and results of operations. While we do maintain redundant systems and hosting services, it is possible that we could experience an interruption in our business,they are not always sufficient to prevent disruption, and we do not carry business interruption insurance sufficient to compensate us for all losses that may occur.

OurWe have computer hardware for operating our services is currently located atin hosting facilities around the world. TheseAlthough we have disaster recovery plans, these systems and operations are vulnerable to damage or interruption from human error, computer viruses, floods, fires, power loss, telecommunication failures and similar events. They are also subjectthey may not cover us in every region. If such events were to break-ins, sabotage, intentional acts of vandalism, terrorism and similar misconduct. Despite any precautionsoccur, we may take, the occurrence of any disruption of service duenot be able to any such misconduct, natural disaster or other unanticipated problems at such facilities, or the failure by such facilitiesswitch to provide our required data communications capacityback-up systems immediately and it could result in lengthy interruptions or delays in our services. Any system failure that causes an interruption or delay in service could impair our reputation, damage our brands, increase customer service costs, or result in lost business, or result in consumers choosing to use a competitive service, any of which could have a material adverse effect onadversely affect our business and results of operations.

Our existing security measures We seek to increase the reliability and redundancy of our systems. These steps are expensive, may reduce our margins, and may not be successful in preventing attacks on our systems, and any such attack could cause significant interruptions in our operations. For instance, from time to time, wereducing the frequency or duration of unscheduled downtime.

We have experienced denial-of-service typetargeted and organized malware, phishing, and account takeover attacks, on our systems that have made portions of our websites slow or unavailable for periods of time. There are numerousand may in the future experience these and other potential forms of attack such as phishing, ransomware, account takeover attacks, SQL injection (where a third party attempts to insert malicious code into our software through data entry fields in our websites in order to gain control of the system), and attemptingattempts to use our websites as a platform to launch a denial-of-service attack on another party, eachparty. Our existing security measures may not be successful in preventing attacks on our systems. For instance, we have incurred costs related to customer reimbursement and customer service, reputational harm, and lost revenue from fictitious listings and partner account takeovers. Our existing IT business continuity and disaster recovery practices are less effective against certain types of attacks such as ransomware, which could cause significant interruptionsresult in our operations and potentially adversely affect the valueinterruption of our brands, operations and results of operations services, data exposure, and/or involve us in legal or regulatory proceedings. We expend significant resources in an attempt to prepare for and mitigate the effects of any such attacks.extortion attempt. Reductions in the availability and response time of our online services could cause loss of substantial business volumes during the occurrence of any such attack on our systems and measures we may take to divert suspect traffic in the event of such an attack could result in the diversion of bona fide customers. These issues are more difficult to manage during any expansion of the number of places where we operate and the variety of services we offer, and as the tools and techniques used in such attacks become more advanced. We use sophisticated technology to identify cybersecurity threats; however, a cyberattack may go undetected for a period of time resulting in harm to our computer systems and the loss of data. This could result in regulatory fines and reputational harm, among other costs. Our insurance policies have coverage limits and may not be adequate to reimburse us for all losses caused by security breaches. Successful attacks could result in significant interruptions in our operations, severe damage to our information technology infrastructure, negative publicity, damage our reputation andreputational harm, and/or prevent consumers from booking travelusing our services researching travel services or making restaurant reservations through us during the attack, any of which could cause consumers to use the services of our competitors, which would have a negative effect on the value of our brands, our market share, business, and results of operations.

We use both internally-developed and third-party systems to operate our services, including transaction processing, order management, and financial and accounting systems. If the number of consumers using our services increases substantially, or if critical third-party systems stop operating as designed, we may need to repair, expand or upgrade our systems or infrastructure. If we are unable to meet the demand in a timely manner, it could have a negative impact on our business. Many of our processes and systems are highly automated and involve multiple inputs from various IT systems, which can mitigate the risk of human error but which can also make testing, troubleshooting, and auditing more difficult. As a result, it may be difficult to quickly detect and correct errors embedded in these processes or systems.

25
17


Our business relies on a global supply chain of third party services providers and we are exposed to risks because we rely on the resilience, security, and legal compliance of their products and services.

We rely on certain third-party computer systems and third-party service providers, including GDSs and computerized central reservation systems of the accommodation, rental car, and airline industries in connection with providing some of our services. Any damage to, breach of, or interruption in these third-party services and systems or deterioration in their performance could prevent us from booking related accommodation, rental car and airline reservations and have a material adverse effect on our business, brands, and results of operations. OurThird party business partners, service providers, and consultants may be given access to our computer networks. A cyberattack against one of these third parties that compromises their credentials may result in unauthorized access to our systems and data, resulting in a cyberattack against us. Furthermore, our agreements with some third-party service providers are terminable upon short notice and often do not provide recourse for service interruptions. In the event our arrangement with anyinterruptions, and such third party is terminated, we may not be able to find an alternative source of systems support on a timely basis or on commercially reasonable terms and, as a result, itservice interruptions could have a material adverse effectnegative impact on our business and results of operations. Further,

Consumers generally are concerned with security and privacy on the internet, and any publicized privacy and security problems could negatively affect consumers' willingness to use our services. Some of our business is conducted with third-party marketing affiliates, which may generate travel reservations through our infrastructure or through other systems. A security breach at any third-party that we conduct business with, such as the security breach experienced by MGM Resorts International in 2023, could be perceived by consumers as a result of the COVID-19 pandemic, somesecurity breach of our third-party service providerssystems and could result in negative publicity, subject us to notification requirements, damage our reputation, expose us to risk of loss or litigation, and subject us to regulatory penalties and sanctions, even if we had no direct involvement in the breach. In addition, such third parties may go out of business, suspend operations, reduce their support servicesnot comply with applicable disclosure requirements or system maintenance activities, any ofwith parameters within which we permit them to process data, which could adversely affect our business and reputation.expose us to liability.

We depend upon various third parties to process payments, including credit cards, for our merchant transactions around the world. In addition, we rely on third partiesor to provide credit card numbers which we use as afor payment mechanism for our merchant transactions. If any such third party were wholly or partially compromised or ceased or suspended operations, (whether due to the COVID-19 pandemic or otherwise), our cash flows could be disrupted or we may not be able to generate merchant transactions (and related revenues) until suchfor a period of time as a replacement process could be put in place with a different vendor, and this could have a negative effect on our business, reputation, and results of operations and, in certain cases of the insolvency of such a partner could result in additional payments by us and loss of the total transaction value, which would negatively affect our results of operations and financial condition.value.

We do not have a completely formalized or comprehensive disaster recovery plan in every geographic region in which we conduct business. In the event of certain system failures, we may not be able to switch to back-up systems immediately and the time to full recovery could be prolonged. Like many online businesses, we have experienced system failures from time to time. In addition to placing increased burdens on our engineering staff, these outages create a significant amount of consumer questions and complaints that need to be addressed by our customer support employees. Any unscheduled interruption in our service could result in an immediate loss of revenues that could be substantial, increase customer service costs, harm our reputation and result in some consumers switching to our competitors. If we experience frequent or persistent system failures, our reputation and brand could be permanently and significantly harmed. We have taken and continue to take steps to increase the reliability and redundancy of our systems. These steps are expensive, may reduce our margins and may not be successful in reducing the frequency or duration of unscheduled downtime.

We use both internally-developed systems and third-party systems to operate our services, including transaction processing, order management and financial and accounting systems. If the number of consumers using our services increases substantially, or if critical third-party systems stop operating as designed, we may need to significantly expand and upgrade our technology, transaction processing systems, financial and accounting systems or other infrastructure. We may not be able to upgrade our systems and infrastructure to accommodate such conditions in a timely manner, and, depending on the systems affected, our transactional, financial and accounting systems could be impacted for a meaningful amount of time before upgrade, expansion or repair. Many of our processes and systems, including those related to processing and recording revenue, are highly automated and involve multiple inputs from various IT systems, which can mitigate the risk of human error but which can also make testing, troubleshooting and auditing more difficult. As a result, it may be difficult to quickly detect and correct errors embedded in these processes or systems.

Legal, Tax Regulatory, Compliance and Reputational Risks

We may have exposure to additional tax liabilities.

As an international business providing reservation and marketing services around the world, we are subject to income taxes and non-income-based taxes in the United States and various international jurisdictions. Due to economic and political conditions, tax rates and tax regimes in various jurisdictions may be subject to significant change. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets or changes in tax laws or their interpretation. If our effective tax rates were to increase, our results of operations and cash flows would be adversely affected.

taxes. Although we believe that our tax filing positions are reasonable and comply with applicable law, we regularly review our tax filing positions, especially in light of tax law or business practice changes,them and we may change our positions or determine that previous positions should be amended, either of which could result in additional tax liabilities. The final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions and
26


accruals. To date, weWe have been audited in many taxing jurisdictions with no significant impact on our results of operations.jurisdictions. If current or future audits find that additional taxes are due, we may be subject to incremental tax liabilities, possibly including interest and penalties, which could have a material adverse effect on our results of operations, financial condition, and cash flows. For example, Booking.com isAn unfavorable outcome or settlement of pending litigation or audit proceedings could encourage the subjectcommencement of taxadditional litigation, audit proceedings, in Franceor other regulatory inquiries. See Notes 15 and has been assessed approximately 465 million Euros, the majority of which represents penalties and interest. In January 2019, we were required to pay the assessments for the years 2006 through 2012 (356 million Euros) in order to preserve our right to contest the assessments for that period in court, though the payment is not an admission that we owe the taxes. Although we believe that Booking.com has been, and continues to be, in compliance with French tax law, and we are contesting the assessments, during the third quarter of 2020, we contacted the French Tax Authorities regarding the potential to achieve resolution of the matter through a settlement. SeeNote 16 to our Consolidated Financial Statements for more information regarding the French tax matter and certain tax contingencies.matters and tax contingencies.

In general, governmentsGovernments are increasingly focused on ways to increase tax revenues, which has contributed to an increase in audit activity, more aggressive positions taken by tax authorities, more time and difficulty to resolve any audits or disputes, and an increase in new tax legislation. Any such additional taxes or other assessments may be in excess of our current tax provisions or may require us to modify our business practices in order to reduce our exposure to additional taxes going forward, any of which could have a material adverse effect on our business, results of operations, and financial condition.

In December 2017, theThe United States's Tax Cuts and Jobs Act (the "Tax Act") was enacted into law in the United States. The Tax Act introduced a tax on 50% of global intangible low-taxed income ("GILTI"), which is income determined to be in excess of a specified routine rate of return on qualifying business assets. The Tax Act further introduced a base erosion and anti-abuse tax ("BEAT") aimed at preventing the erosion of the U.S. tax base and a new tax deduction with respect to certain foreign-derived intangible income. If we are unable to operate our business so that BEAT does not impact us, our effective tax rate, results of operations and cash flows would be adversely affected. The interpretation and implementation of the Tax Act and regulations, rules or guidance that have been or may be adopted under, or result from, the Tax Act have had and could have a negative impact on our results of operations and cash flows. DuringIn addition, the 2020 U.S. presidential campaign, then presidential candidate Joseph Biden proposed making significantUnited States's recently enacted Inflation Reduction Act includes a 15% corporate minimum tax on book income and a 1% excise tax changes including raisingon stock repurchases. The interpretation and implementation of these provisions could have a negative impact on our results of operations and cash flows. Increases in the U.S. corporate income tax
18


rate, to 28% and increasing the percentage of GILTI subject to tax in the United States, or other changes to 75%. Increases in the U.S. corporate incomefederal tax rate or increasing the percentage of GILTI subject to tax in the United Stateslaws could have a negative impact on our results of operations and cash flows.

Additionally, there have been significant changes made and proposed to international tax laws that increase the complexity, burden and cost of tax compliance. The Organisation for Economic Co-operation and Development ("OECD") initiated the "base erosion and profit shifting" ("BEPS") project to ensure international tax standards keep pace with changes in global business practices and to address situations where multinational businesses may pay little or no tax in certain jurisdictions by shifting profits away from jurisdictions in which the profit generating activities take place. The OECD is working towards a consensus-based solution by the middle of 2021 to address the challenges posed to the current tax system by the digitalization of the economy. The OECD Secretariat's current proposal aims to ensure that multinational businesses are taxed in jurisdictions where they are conducting significant business but do not have a physical presence by establishing new nexus rules determining where tax should be paid and new profit allocation rules determining what portion of profits should be taxed.

Certain countries have taken steps to unilaterally introduce a digital services tax to address the issue of multinational businesses carrying on business in their jurisdiction without a physical presence and therefore generally not being subject to income tax in those jurisdictions. These digital services taxes are calculated as a percentage of revenue rather than income or profits. As a result, with the exception of the U.K digital services tax, these taxes apply even in situations where the business may be operating at an overall loss. In most cases, since these digital services taxes are based on revenue and not income, they cannot be credited against taxes paid on income in another jurisdiction for the same revenue. The interpretation and implementation of the various digital services taxes (especially if there is inconsistency in the application of these taxes across tax jurisdictions) could have a materially adverseadversely impact on our results of operations and cash flows. Further, digital services taxes may not apply to our competitors, such as hotel chains and smaller OTCs, which harmscould harm our business and competitive position. Any

Additionally, there have been significant changes made and proposed to international tax laws that increase the complexity, burden, and cost of tax compliance. The Organisation for Economic Co-operation and Development ("OECD") has been working on the "base erosion and profit shifting" ("BEPS") project to ensure international tax standards keep pace with changes in global business practices. This project could change various aspects of the existing rules under which our tax obligations are determined. In 2021, more than 130 countries agreed to a new OECD framework on BEPS that, among other provisions, includes proposed changes to how the right to tax income would be allocated among countries and imposes a 15% global minimum tax. The OECD recently issued additional commentary related to the 15% minimum tax, including the intention that provisions be incorporated into law with an effective date of January 1, 2024. Several member countries outside the U.S. have adopted these rules, effective January 1, 2024. The rules for the calculation of the 15% minimum tax are complex and additional guidance continues to be issued by the OECD and its member countries. The implementation of these rules could have a negative impact on our results of operations or cash flows.

Due to the large scale of our business activities outside of the United States, any changes in U.S. or international taxation of our activities, such as new definitions of permanent establishment, new nexus and profit allocation rules, or changes affecting the benefits of preferential tax regimes such as the Dutch "Innovation Box Tax" (discussed below), could impact the tax treatment of our foreign earnings and adversely impact our effective tax rate. Further, changes to tax laws and additional reporting requirements could increase the complexity, burden and cost of compliance. Due to the large scale of our international business activities, any changes in U.S. or international taxation of our activities or the combined effect of tax laws in multiple jurisdictions, may increase our worldwide effective tax rate, increase the complexity and costs associated with tax compliance, (especially if changes are implemented or interpreted inconsistently across tax jurisdictions) and adversely affect our cash flows and results of operations.

27


We are also subject to other non-income-based taxes, such as value-added, payroll, sales, use, excise, net worth, property, hotel occupancy, and goods and services taxes.services. We refer generally to taxes on travel transactions (e.g., value-added taxes, sales taxes, excise taxes, hotel occupancy taxes, etc.) as "travel transaction taxes." From time to time, we are under audit or investigation by tax authorities or involved in legal proceedings related to these non-income-based taxes or we may revise or amend our tax positions, which may result in additional non-income-based tax liabilities.

A number of jurisdictions in the United States have initiated lawsuits or other proceedings against OTCs, including us, related to, among other things, the payment of certain travel transaction taxes (such as hotel occupancy taxes) that could include historical taxes that are claimed to be owed, interest, penalties, punitive damages and/or attorney's fees and costs. In addition, a number of jurisdictions have initiated audit proceedings, issued proposed tax assessments or started inquiries relating to the payment of travel transaction taxes. Additional jurisdictions may assert that we are subject to among other things, travel transaction taxes and could seek to collect such taxes, either retroactively, prospectively or both. We continue to defend against these lawsuits and, where appropriate, intend to continue to assert that we should not be subject to such taxes. Although we believe we do not owe the taxes claimed in these lawsuits, litigation is uncertain, and if there was an adverse outcome in this litigation, or any similar litigation in other jurisdictions, it could result in liabilities for past and/or future bookings, and it could have an adverse effect on our business, profit margins, and results of operations. Jurisdictions could also seek to amend their tax statutes in order to collect travel transaction taxes from us on a prospective basis. Litigation is subject to uncertainty and there could be adverse developments in these pending or future cases and proceedings.

Additionally, a number of jurisdictions have adopted or may adopt laws that require us to collect and remit sales taxtravel transaction or other taxes on the total travel transaction value or on behalf of travel service providers, which in some instances may negatively impact our revenue. Adverse tax decisions or new laws could have a material adverse effect on our business,revenue, margins, cash flows, and results of operations. An unfavorable outcome or settlement of pending litigationoperations and may encourage the commencement of additional litigation, audit proceedings or other regulatory inquiries. In addition, an unfavorable outcome or settlement of these actions or proceedings could result in substantial liabilities for past and/or future bookings, including, among other things, interest, penalties, punitive damages and/or attorneys' feesrequire significant and costs.costly system changes to implement.

We may not be able to maintain our "Innovation Box Tax" benefit.

The Netherlands corporate income tax law provides that income generated from qualifying innovative activities is taxed at the rate of 7% prior to 2021 and 9% beginning in January 2021 and 7% prior to 2021 ("Innovation Box Tax") rather than the Dutch statutory rate of 25%. Effective January 1, 2022, the Netherlands corporate income tax rate increased from 25% to 25.8%. A portion of Booking.com's earnings historically has qualified for Innovation Box Tax treatment. In 2020, the Innovation Box Tax benefit reduced our consolidated income tax expense by $79 million.

In order to be eligible for Innovation Box Tax treatment, Booking.com must, among other things, apply for and obtain a research and development ("R&D") certificate from a Dutch governmental agency every six months confirming that the activities that Booking.com intends to be engaged in over the subsequent six-month period are "innovative." The R&D certificate is current but should Booking.com fail to secure such a certificate in any future period - for example, because the
19


governmental agency does not view Booking.com's new or anticipated activities as innovative, - or should this agency determine that the activities performed in a prior period were not performed as contemplated or did not comply with the agency's requirements, Booking.com may lose its certificate and, as a result, the Innovation Box Tax benefit may be reduced or eliminated. Booking.com intends to apply for continued Innovation Box Tax treatment for future periods. However, Booking.com's application may not be accepted, or, if accepted, the amount of qualifying earnings may be reduced.

The loss of the Innovation Box Tax benefit (or any material portion thereof), whether due to a change in tax law or a determination by the Dutch government that Booking.com's activities are not innovative or for any other reason, could substantially increase our effective tax rate and adversely impact our results of operations and cash flows in the future.

Legal, Regulatory, Compliance, and Reputational Risks

Our business is subject to various competition/anti-trust, consumer protection, and online commerce laws rules and regulations around the world, and as the size of our business grows, scrutiny of our business by legislators and regulators in these areas may intensify.

We the travel industry and the technology industry generally are subject to competition/anti-trustcompetition and consumer protection laws and regulations around the world. These laws and regulations constantly evolve, and change, and their interpretation, application, and enforcement can also change, be unpredictable, or be affected by changing political or social pressures. As we expand our business into new areas, including our evolution towards the Connected Trip vision, we may become subject to additional laws and regulations. At times, online travel platforms, including us,We have been the subject of investigations or inquiries by various national competition authorities ("NCAs") or other governmental authorities. For example, we have been and continue to beare involved in investigations related to whether Booking.com's contractual parity arrangements with accommodation providers sometimes also referred to as "most favored nation" or "MFN" provisions, are anti-competitive because they require accommodation providerspartners to provide Booking.com with room rates, conditions, orand availability that are at least as favorable as those offered to other OTCs or throughby the accommodation provider's website.partner itself. Recently, the Comisión Nacional de los Mercados y la Competencia in Spain issued a draft decision to impose a fine and to restrict certain business practices based on the allegation that certain practices by Booking.com may produce adverse effects for hotels and other OTCs. Additionally, in September 2017 the Swiss Price Surveillance Office opened an investigation into the level of commissions of Booking.com in Switzerland. The Swiss investigation is ongoing and if there is an adverse outcome in the investigation and any appeal, Booking.com could be required to reduce its commissions in Switzerland. To resolve and close certain of the investigations, we have from time to time made commitments to the investigating authorities regarding future business practices or activities. For example, Booking.com has made commitments to several NCAs, includingactivities, such as agreeing to narrow the scope of itsour parity arrangements, in orderarrangements. While we believe that we are complying with the commitments we have made, investigating authorities or third parties may determine otherwise and decide to resolve parity-related investigations. In August 2020, Booking.com voluntarily extended its
28


paritypursue legal action to compel compliance or seek other remedies. We are cooperating with regulators where applicable, but we are unable to predict what, if any, effect any investigations or their resolution, including the effect of any commitments inwe might make, will have on our business, industry practices, or online commerce more generally. An unfavorable outcome of an investigation could encourage additional regulatory inquiries that could become widespread over time, significantly increasing the European Union for another three years.potential financial and reputational impact on the Company. Additionally, these types of investigations can result and have resulted in the assessment of fines.fines, private litigation, and negative publicity. See Note 16 to our Consolidated Financial Statements for more information regarding our contingencies.

We have also been involved in investigations or inquiries involving consumer protection matters. For example, the United Kingdom's NCA (the Competitionmatters and Markets Authority,we have previously made certain voluntary commitments to consumer authorities to resolve investigations or CMA) launched a consumer protection law investigation into the clarity, accuracy and presentation of information on hotel booking sites. In connection with this investigation, in 2019, Booking.com, agoda and KAYAK, along with a number of other OTCs, voluntarily agreed to certain commitments with the CMA, which resolved the CMA's investigation without a finding by the CMA of an infringement or an admission of wrongdoing by the OTCs involved. Among other things, the commitments provided to the CMA includeinquiries that have included showing prices inclusive of all mandatory taxes and charges, providing information about the effect of money earned on search result rankings on or before the search results page, and making certain adjustments to how discounts and statements concerning popularity or availability are shown to consumers. The CMA has stated that it expects all market participants to adhere to the same standards, regardless of whether they formally signed the commitments. As a result of additional inquiries from other NCAs in the European Union, Booking.com has made similar commitments with the Consumer Protection Cooperation Network that became applicable in the European Union in June 2020. There are consumer protection investigations or inquiries in other countries as well, including in Brazil, and other countries may decide to investigate these or similar issues generally or with respect to specific businesses, including ours, and we are unable to predict the outcome of any such other investigations or inquiries. To the extent that these or any such other investigations or inquiries result in additional commitments, fines, damages or other remedies, our business, financial condition and results of operations could be harmed.

In light of the COVID-19 pandemic, certain travel service provider partners and consumers have issued complaints with NCAs to dispute our handling of force majeure provisions in our contracts with accommodation partners. As a result, NCAs could decide to investigate our handling of force majeure provisions, and if any NCA concludes the invocation of force majeure was inappropriate, there could be fines or other adverse impacts.

As markets evolve and NCAs or other governmental authorities continue to monitor our industry, new investigations of the industry generally or of us specifically could and have occurred, including revisiting issues that were the subject of prior investigations. For example, in July 2020, the European Commission announced that it will study the marketing and sale of hotel accommodations in six E.U. countries in 2021. Also, while we believe that we are complying with our commitments, investigating authorities or third parties may determine that we are not complying with the commitments we have made and decide to pursue legal action to compel compliance or seek other remedies. Further, in September 2017 the Swiss Price Surveillance Office opened an investigation into the level of commissions of Booking.com in Switzerland and the investigation is ongoing. If there is an adverse outcome and Booking.com is unsuccessful in any appeal, Booking.com could be required to reduce its commissions in Switzerland.

We are cooperating with regulators where applicable, but we are unable to predict what, if any, effect any investigations or resolutions thereof, including the effect of any commitments we might make, will have on our business, industry practices or online commerce more generally.

To the extent that regulatory authorities impose fines on us or require changes to our business practices, negative publicity, fines, damages from private litigation, or to those currently common to the industry,other remedies, it could have a material adverse effect on our business, competitive position and results of operations could be materially and adversely affected. Negative publicity regarding competition and/or consumer law investigations could adversely affect our brands and therefore our business, market share and results of operations. Competition and consumer law-related investigations, legislation or issues have and could in the future result in private litigation.

Another area of regulatory inquiry involves contractual search term bidding restrictions where one contracting party agrees not to bid on certain key search terms related to the other party (e.g., such other party’s name). Although we are generally moving away from these types of agreements, in some of our contracts, we or the other party have agreed to bidding restrictions. If bidding restrictions are held to be illegal or otherwise unenforceable or if we remove them from all of our contracts, our performance marketing costs may increase if bidding on affected key words (especially those related to us) becomes more expensive, which could adversely affect our performance marketing efficiency, businessfinancial condition, and results of operations.

There is significant legislative and public focus on the technology industry, especially as technology companies become larger. In some instances, countries have passed legislation that goes further to restrict business activities than actions taken by NCAs or other regulatory authorities. For example, France, Italy, Belgium and AustriaVarious jurisdictions in Europe have passed legislation prohibiting or restricting the use of parity contract clauses in their entirety.contracts. Additionally, the EU's Platform to Business Regulation regulates the relationship between online platforms such as Booking.com and European business users of online platforms. This new regulation requiresThe DMA and Digital Services Act ("DSA") give regulators in the EU more instruments to investigate and regulate digital businesses and impose additional rules and requirements on platforms designated as "gatekeepers" under the DMA and online platforms more generally, with separate rules for "Very Large Online Platforms" ("VLOPs") under the DSA. As a result, we are and will in the future become subject to provide additional disclosurerules and regulations that may not be applicable to our competitors. For example, the DMA restricts parity arrangements and imposes requirements regarding the usage of data across services, which could adversely impact our business. Designated gatekeepers also need to establish an independent compliance function to monitor compliance with the DMA. The Company has met the quantitative notification criteria set forth in the DMA and expects to notify the European Commission of that fact within the required deadline. Certain of the DMA's requirements will become enforceable later in 2024. As a result of the DMA, compliance costs may increase and changes to our products or business partners, such as terms related topractices may be required. The DMA and
2920


search result ranking and preferential pricing as well as provide for a mediation process to handle any disputes, among other changes. In December 2020, the European Commission proposed the Digital Markets Act and the Digital Services Act, which are expected to give regulators more instruments to investigate digital businesses and impose new rules on certain digital platforms if they are determined to be "gatekeepers." The proposed legislation is not final and it is not known what the lawsDSA will look like in their final forms if adopted. If the regulators were to determine that we are a gatekeeper under the proposed legislation, we couldlikely be subject to further interpretation and regulatory engagement. Under the DSA, we are required to collect more information from partners, which could disincentivize certain partners from using our services. Further, as a VLOP, Booking.com is subject to additional rulesscrutiny, obligations, and regulationscosts, such as payment of an annual supervisory fee, annual risk assessments and independent audits, and establishing an independent compliance function. The DMA and DSA each have significant penalties for non-compliance.

The European Commission designates VLOPs based on a platform's number of EU "monthly active recipients" ("MARs"). The European Commission requires counting users to whom information was displayed, even if a user does not applicablemake a transaction on the platform. The assessment of MARs and any other published information by our brands represents an estimate based on the data available to all our competitorsus and limited guidance, and is subject to limitations. The estimate is published solely as a requirement under the DSA, may be inaccurate, and should not be used for any other purpose. For information we consider relevant to the performance of our business, could be harmed. For example, the rules applicable to gatekeepers could prohibit single sign-in for different productssee Part II, Item 7, Management's Discussion and create new data sharing requirementsAnalysis of Financial Condition and limitations on the useResults of data from third parties. Operations.

New state and federal laws and regulations, including the U.S. executive order aimed at restricting anticompetitive practices and changing public perception relating tothose under consideration by the technology industryFederal Trade Commission, could impact our services, require us to change our business practices, or otherwise cause us to incurand impose additional operating costs to comply with or address these developments. Further, ascomplexity and costs. As market conditions change as a result of investigations, litigation, legislation, changing public perception of the industry, or political or social pressure, we may decide to voluntarily modify our business practices beyond what is required, the full effects of which may not be known when making the decision, but which could harm our competitive position and adversely affect our business and results of operations.

With additional attention on the size of travel or technology companies generally, our size and market share may negatively affect our ability to obtain regulatory approval of proposed acquisitions or other opportunities, our ability to expand into complementary businesses, or our latitude in dealing with travel service providers (such as by limiting our ability to provide discounts, rebates, or incentives or to exercise contractual rights), any of which could adversely affect our business, results of operations, or ability to grow and compete.

Another area of potential regulatory inquiry involves contractual online search term bidding restrictions where one contracting party agrees not to bid on certain key search terms related to the other party (e.g., such other party's name). In some of our contracts, we or the other party have agreed to bidding restrictions. If bidding restrictions are held to be illegal or otherwise unenforceable or if we remove them from all of our contracts, it could negatively impact our performance marketing efficiency, business, and results of operations.

Regulatory and legal requirements and uncertainties could subject us to business constraints, increased compliance costs and complexities, or otherwise harm our business.

Our ability to provide our services and any future services is and will continue to be affected by legal regulations (including laws, ordinances, rules, licensingLegal requirements and other requirements and regulations) of national and local governments and regulatory authorities, around the world, many of which are evolving and subject to the possibility of new or revised interpretations.interpretations, impact our ability to provide our services and can result in private litigation. For example, we currently offer optional rental car-related insurance products to customers protecting them against accidental damage to their rental vehicles, optional room and flight cancellation insurance products, and we intend to offer additional trip-related insurance products in the future, which subjects us to certain insurance distribution regulations and related increased compliance costs and complexities, any of which could negatively impact our business and results of operations. Laws in some countries relating to data localization, registration as a travel agent and other local requirements could, if applicable to us, adversely affect our ability to conduct business in those countries. Any increase in the number or complexity of the laws and regulations applicable to us and our businesses could increase our compliance costs and burdens and negatively affect our business and results of operations.

Laws in some countries relating to data localization, registration as a travel agent, and other local requirements could, if applicable to us, adversely affect our ability to conduct business in those countries. For example, in the European Union and the United Kingdom, the Package Travel Directive and other local laws governing the sale of travel services (the "Package Directive") setsset out broad requirements such as local registration, certain mandatory financial guarantees, disclosure requirements, and other rules regulating the provision of single travel sales, travel packages, and linked travel arrangements. The Package Directive also creates additionalarrangements, and certain liability for a provider of travel packages, which could be the OTC, for performance of the travel services within a packaged trip under certain circumstances.services. Some parts of our business are already subject to the broad scope of the Package Directive, and as our offerings continue to diversify and expand, we may become subject to additional requirements of the Package Directive.requirements. Compliance with this directive could be costly and complex or, as a result of these requirements, we could choose to limit offerings that would otherwise be beneficial for the business, any of which could adversely affect our business, results of operations, or ability to grow and compete. Any changes to the Package Directive could be costly or complex to comply with and may also adversely affect our business, results of operations, or ability to grow and compete.

The implementation of unfavorable regulations or unfavorable interpretations of existing regulations by judicial or regulatory bodies could require us to incur significant compliance costs, cause the development of the affected markets to
21


become impractical and otherwise have a material adverse effect on our business and results of operations. For example, in connection with a lawsuit begun in 2015 by the Association of Turkish Travel Agencies, a Turkish court ordered in 2019courts have ruled that Booking.com must meetis subject to certain registration requirements in order to offer Turkish hotels anddomestic accommodations to Turkish residents. If Booking.com does not successfullythe appeal of this decision or meet theis not successful, Booking.com would be subject to Turkish registration requirements Booking.com will be unablein order to resume offering Turkish hotels anddomestic accommodations to Turkish residents, which would continue to negatively impact our results of operations. Another example is that the U.S. Government announced in May 2019 that it will no longer suspend the right of private parties to bring litigation under Title III of the Cuban Liberty and Solidarity (Libertad) Act of 1996, popularly known as the Helms-Burton Act, allowing certain individuals whose property was confiscated by the Cuban government beginning in 1959 to sue anyone who "traffics" in the property in question in U.S. courts. We are a defendant in a number of these lawsuits, which seek remedies including the value of the expropriated property (generally, the applicable hotel), plus interest, treble damages, attorneys' fees and costs. We believe that we have meritorious defenses to existing and potential claims and that the results of any related litigation will not be material to our business, financial condition or results of operations. However, litigation is uncertain and there is little judicial history or interpretation of the relevant
30


claims and defenses, in particular as applied to businesses like ours. As a result, there can be no assurance that there will not be an adverse outcome to any such litigation or that such an outcome would not result in an adverse impact on our business, financial condition or results of operations.

Certain jurisdictions, particularly in Europe, are considering regulations intended to address the issue of "overtourism," including restrictions that may adversely affect our ability to offer accommodations, in particular, alternative accommodations, near city centers or popular tourist destinations. To the extent any such regulations require online platforms such as ours to comply with additional restrictions related to offering reservations for accommodations, tours and activities or other travel services in such areas, we could be subject to increased legal and compliance costs, and our business, growth and results of operations could be adversely affected.business.

Compliance with the laws and regulationslegal requirements of multiple jurisdictions increases our cost of doing business. Examples of these laws and regulations, which vary and sometimes conflict, include the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, the DSA and DMA, and local laws which also prohibit corrupt payments to governmental officials or third parties, data privacy requirements, emerging regulations governing the development, marketing, and use of AI, labor relations laws, non-discrimination, human rights or anti-human trafficking laws, and regulations, such as the U.K. Modern Slavery Act 2015, tax laws, anti-trust or competition laws, U.S., E.U., or U.N. sanctioned country or sanctioned persons mandates, and consumer protection laws. Violations of these laws and regulations have resulted in the past and could result in the future in fines, penalties, and/or criminal sanctions against us, our officers, or our employees and/or prohibitions on thehow or where we conduct of our business. Any such violations could also result in prohibitions on our ability to offer our services in one or more countries, delay or prevent potential acquisitions, and could materially damage our reputation, our brands, our global expansion efforts, our ability to attract and retain employees and business partners, our business, and our operating results. Even if we comply with these laws and regulations, doing business in certain jurisdictions or violations of these laws and regulations by the accommodations, restaurants, travel service providers or other parties with whom we conduct business could harm our reputation and brands, which could adversely affect our results of operations or stock price. In addition, if these restrictions are not applicable to competitors, it may provide them a competitive advantage to our competitors unless they are also subject to comparable restrictions.advantage. Our success depends, in part, on our ability to anticipate these risks and manage these difficulties. Additionally, our employees in certain countries in Europe are represented by works councils and/or trade unions. We are required to consult with works councils on certain matters such as restructurings, acquisitions and divestitures, and other matters that could impact our labor force. Consultation may not be completed on terms satisfactory to us and could result in increases in our cost of labor, diversion of management's attention away from operating our business, delays in certain initiatives, and expose us to claims and litigation. We are also subject to a variety of other regulatory, legal, and public policy risks and challenges in managing an organization operating in various countries, including those related to:

regulatory changes or other government actions;

including:
additional complexity to comply with regulations in multiple jurisdictions, as well as overlapping or inconsistent legal regimes, in particular with respect to tax, labor, consumer protection, digital content, advertising, promotions, privacy, and anti-trustcompetition laws;

difficulties in transferring funds from or converting currencies in certain countries;

reduced protection for intellectual property rights in some countries; and

changes in social or political conditions or policies relating to a wide range of sustainability topics.

Prior to the COVID-19 pandemic, our business had grown substantially over the last several years as we expanded into new geographies and added new services. In addition, weWe have made efforts and expect to make further efforts to integrate access to travel services across our various brands. These changes add complexity to legal and tax compliance and our internal controls, and our size and operating history may increase the likelihood that we will be subject to regulatory scrutiny or audits by tax authorities in various jurisdictions. In addition, by virtue of Booking.com's size and presence in the Netherlands, it is required to have a supervisory board to oversee the strategy and operations of Booking.com. While the existence of the supervisory board has not had a significant impact on our operations, under certain circumstances, this governance structure could require Booking.com to obtain supervisory board approval in order to take certain actions, which could result in delays or other unanticipated strategic or operational challenges.

There are various risks associated with the facilitation of payments, from consumers, including risks related to fraud, compliance with evolving rules and regulations, and reliance on third parties.

Our results have been and will likely continue to be negatively impacted by consumer purchases made using fraudulent creditpayment cards, claims the consumer did not authorize the purchase, or consumers who have closed bank accounts or have insufficient funds in their bank accounts to satisfy payments. We may be held liable for accepting fraudulent creditpayment cards on our platforms or in connection with other fraudulent transactions on our platforms, as well as other payment disputes with consumers.disputes. Accordingly, we calculate and record an allowance for the resulting chargebacks. We must also continuallyIf we are unable to successfully implement and evolve measures to detect and reduce the risk of fraud in particular as these methods become increasingly
31


sophisticated. If we are unable to successfully combat the use of fraudulent credit cards on our platforms, our business, profit margins, results of operations, and financial condition could be materially adversely affected.

We believe that an important component of our future success will be our ability to offer consumers their preferred method of payment in the most efficient manner on all our platforms, and, as a result, we are processing more of our transactions on a merchant basis where we facilitate payments from travelers through the use of creditpayment cards and other payment methods (such as PayPal, Alipay, Paytm and WeChat Pay).methods. While processing transactions on a merchant basis allows us to process transactions for properties that do not otherwise accept credit cards and to increase our ability to offer a variety of payment methods and flexible transaction terms to consumers, we incur additional payment processing costs (which are typically higher for foreign currency transactions) and other costs related to these transactions, such as costs related to fraudulent payments and transactions and fraud detection. As we expand our payments services to consumers and business partners, in addition to the revenues from these transactions, we may experience a significant increase in these costs, and our results of operations and profit margins could be materially adversely affected, in particular if we experience a significant increase in non-variable costs related to fraudulent payments and transactions.

22


As a greater percentage of our transactions involve us processing payments, our global systems and processes must be managed on a larger scale, which adds complexity, administrative burdens and costs, and increases the demands on our systems and controls, which could adversely affect our results of operations. In addition, as our payment processing activities continue to develop, we expect to be subject to additional regulations, including financial services regulations, which we expect to result in increased compliance costs and complexities, including those associated with the implementation of new or advanced internal controls. Forcontrols, including, by way of example, those arising from the E.U.'s Payment Services Directive 2 has further complicated the authentication process for accepting credit cards. As a result of this directive, payments made on our platforms by consumers in the European Economic Area are subject to Strong Customer Authentication, which requires the consumer to engage in additional steps to authenticate their transaction. This new requirement could cause consumer transactions to take longer to processand similar or otherwise inconvenience the consumer, which could result in consumers choosing not to utilize our platforms as often or at all.successor legislation. The implementation of this process has resulted andthese processes may continue to result in increased compliance costs and administrative burdens for us. Other newburdens.

Regulators (or we) may determine, and in some cases are likely to determine, that certain aspects of our business are subject to laws that govern payments activities, such as money transmission and online payments processing, which could require us to obtain licenses to continue to operate in certain jurisdictions or expandedresult in modification of our business plans. Certain of our subsidiaries that may provide payment services in support of our brands are subject to licensing and regulations that could apply to us asimpose notice and approval obligations on investors that seek indirect or direct ownership, in the aggregate, of 10% or more of our payments activities evolve include thoseoutstanding shares. Regulations relating to money transmission licenses, anti-money laundering, card scheme associations, sanctions,operational resilience, banking (including consumer protection), privacy, and security of our processes among others. Compliancealso apply to us. Further, our payments systems are susceptible to illegal and improper uses, including money laundering, terrorist financing, fraudulent sales of goods or services, and transactions by or with this changing regulatory environment creates significant additionalsanctioned parties. We have invested and will need to continue to invest substantial resources to comply with applicable laws and regulations, and failure to maintain compliance costs and burdenscould lead to fines or it could leadrequire us to modify or interrupt our business practices, plans, or operations, any of which could negatively impact our business, results of operations, and profit margins.

We are also subject to payment card association rules and obligations under our contracts with the card schemes and our payment card processors, and indirectly to the rules of payment systems in respect of credit (i.e., account to account) transfers. The rules of the card schemes and payment systems are often updated or interpreted by the schemes in different ways, and we may need to adjust our systems and/or processes to comply with any updated obligations. If we fail to comply with such obligations, we may lose our ability to accept certain credit and debit card payments from our customers, or facilitate other types of online payments, which would negatively impact our business and operating results. Under card association rules, including the Payment Card Industry Data Security Standard (the "Standard"). Under the Standard and these association rules and obligations,, if information is compromised, we could be liable to payment card issuers for associated expenses and penalties, and in some cases, we could be restricted in our ability to accept payment cards. Under certain circumstances in our agreements with the card schemes and in relation to the Standard, we are also subject to periodic audits, self-assessments, and other assessments of our compliance with the rules and obligations of the payment card associations and the Standard, which could result in additional expenses and administrative burdens. In addition, if we fail to follow payment card industry security standards, even if no consumer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs. Additionally, compliance with the Standard may not prevent all security incidents. If we are fined or required to pay additional processing fees or if our ability to accept payment cards is restricted in any way as a result of our failure to comply with these payment card industry rules, or otherwise, it could adversely impact our business, results of operations, and profit margins.

We rely on banks, card schemes, and other payment processors to execute certain components of the payments process. We generallyFor inbound payments, we pay these third parties interchange fees and other processing and gateway fees to help facilitate payments from consumers to travel service providers. As a result, if we are unable to maintain our relationships with these third parties on favorable terms, or if these fees are increased for any reason, or if we provide security, our profit margin, business, and results of operations could be harmed. Additionally, if these third parties experience service disruptions or if they cease operations, (whether as a result of the COVID-19 pandemic or otherwise), consumers and travel service providers could have difficulty making or receiving payments, which could adversely impact our reputation, business, and results of operations.

In addition, in the event that one of our major travel service providers voluntarily or involuntarily declares bankruptcy or otherwise ceases or limits operations, we could experience an increase in chargebacks from customers with travel reservations with such travel service provider and we could experience financial loss from certain prepayments made to such travel service provider if we are not able to recover the prepayment. The COVID-19 pandemic

We face risks relating to our environmental, social, and its resultinggovernance ("ESG") objectives, including climate-related commitments we have made that require us to invest effort, resources, and management time, and failing to meet those objectives may adversely impact on travel demand, the travel industryour reputation, employee retention, and the economy increases the riskwillingness of insolvency or disruptioncustomers and partners to the ability of our travel service providers to providedo business with us.

Investors, regulatory authorities, proxy advisory services, and in some cases, has already resulted inother stakeholders are increasingly focused on our ESG practices. We have made climate-related commitments to reduce our scope 1 & 2 emissions by 95% and our scope 3 emissions by 50% by the insolvency or closureend of travel service2030, and to achieve net zero by 2040. Additionally, we committed to making it easier for our customers
3223


providers. As a result, if oneto find more sustainable trip options and we continue to work on enhancing related disclosure of goals, progress, and other ESG matters.

Our ability to achieve ESG goals and initiatives is subject to risks including: (1) the availability and cost of limiting or offsetting our use of carbon-based energy sources and technologies, (2) evolving regulatory requirements affecting ESG standards and disclosures, (3) our ability to work with partners and providers that can meet our sustainability and other standards, (4) the availability of vendor or other third-party data, (5) the impact of our major travel service providers declares bankruptcyorganic growth and acquisitions or ceasesdispositions of businesses or limits operations on our ESG goals, and (6) customers' actual demand for ESG-oriented product offerings, which may be more expensive and less available than other options. We may need to invest significant effort and resources to progress our ESG objectives, including our climate commitments, and external factors such as rapidly changing regulations, policies, and related interpretation may arise that may lead us to revise our timelines, commitments, or if many travel service providers declare bankruptcyhow we measure and report ESG data. There are several regulatory developments regarding sustainability labeling that could result in changes to, or ceaserequire the discontinuation of, our Travel Sustainable Program.

If our ESG practices do not meet evolving investor or limit operations, itother stakeholder expectations or regulatory requirements, then our reputation, ability to attract or retain employees, and our attractiveness as an investment or business partner could be negatively impacted. Similarly, our failure or perceived failure to pursue or fulfill our ESG-related objectives or to satisfy increasingly broad reporting obligations could expose us to government enforcement actions, private litigation, and actions by stockholders or stakeholders, and adversely impact our business, and results of operations.brands, or reputation.

We face risks related to our intellectual property.

We regard our intellectual property as criticalimportant to our success, and we rely on intellectual property such as trademarks, copyrights, patents, and trade secrets to support our business as well as domain name, trademark, copyright and patent law, trade secret protection and confidentiality and/names or licenseother intangible rights or property secured through purchase, licensing or other agreements with our employees, travel service providers, partners, and others to protect our proprietary rights.other parties. We have filed various applications for protection of certain aspects of our intellectual property in the United States and other jurisdictions, and we currently hold a number of issued patents in several jurisdictions. Further, inIn the future we may acquire additional patents or patentintellectual property portfolios, which could require significant cash expenditures. However, we may choose not to patentregister or otherwise registerprotect some of our intellectual property and instead rely on trade secret or other means of protecting our intellectual property.protection. We have licensed in the past, and may license in the future, certain of our proprietary rights, such as trademarks or copyrighted material, to third parties, and these licensees may take actions that diminish the value of our proprietary rights or harm our reputation. We also have procured various intellectual property licenses from third parties. In addition, effectiveThere is uncertainty about the validity and enforceability of intellectual property rights that may result from our use of generative AI. Effective intellectual property protection may not be available in every country in which our services are made available, online, particularly in certain jurisdictions in which we operate in which theft of intellectual property may be more prevalent. We may be required to expend significant time and resources to prevent infringement or to enforce our intellectual property rights.

We believe that our intellectual property rights help to protect our business. We endeavor to defend our intellectual property rights diligently, but intellectual property litigation is extremely expensive and time-consuming, and may divert managerial attention and resources from our business objectives. We may not be able to successfully defend our intellectual property rights or theyour intellectual property rights may not be sufficient to effectively protect our business, which could materially adversely affect our business, brands, and results of operations.

From time to time, in the ordinary course of our business, we have been subject to, and are currentlymay be subject to legal proceedings and claims relating to the intellectual property rights of others, and we expect that third parties will continue to assert intellectual property claims in particular patent claims, against us, particularly as we expand the complexity and scope of our business.us. Successful infringement claims against us could result in a significant monetary liability and/or prevent us from operating our business, or portions of our business, or require us to change business practices or develop non-infringing intellectual property,alternatives, which could require significant effort and expense. In addition, resolution of claims may require us to obtain licenses to use intellectual property rights belonging to third parties, which may be expensive to procure, or possibly require us to cease using those rights altogether. Any of these events could have a materialan adverse effect on our business, results of operations, and financial condition.

Our use of "open source" software could adversely affect our ability to protect our proprietary software and subject us to possible litigation.

We periodically use open source software in connection with our software development. From time to time, companies that use open source software have faced claims challenging the use of open source software and/or compliance with open source license terms. We could be subject to suits by parties claiming ownership of what we believe to be open source software, or claiming non-compliance with open source licensing terms. Some open source licenses require users who distribute software containing open source to make available all or part of such software, which in some circumstances could include valuable proprietary code of the user. While we monitor our use of open source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, in part because open source license terms are
24


often ambiguous. Any requirement to disclose our proprietary source code or pay damages for breach of contract could be harmful to our business, results of operations, or financial condition, and could help our competitors develop services that are similar to or better than ours.
"Cookie" laws
Regulations and policies impacting the way corporations use cookies and other online tracking technologies could negatively impact the way we do business.

A "cookie" is a text fileThere are several privacy-driven initiatives that is stored on a user's computer or mobile device. Cookies are common tools used by thousandschanging the gathering and use of websites and mobile apps, including ours, to, among other things, store or gather information (e.g., remember log-on details so a user does not have to re-enter them when revisiting a website or opening an app), market to consumers and enhanceconsumer data in the user experience. Cookies are valuable tools for platforms like ours to improve the customer experience and increase conversion. Many jurisdictions, including the European Union and more recently, California, have adopted regulations governingdigital marketing ecosystem. These include: phasing out the use of "cookies." Tothird-party cookies (and other tracking technologies) by browsers such as Safari and Google Chrome; restrictions on the extent anyuse of the identifier for advertisers (such as the Apple "IDFA") by mobile device manufacturers; Apple's iCloud+ Private Relay (which hides a user's IP address from websites that the user accesses in favor of other IP addresses provided by Apple's partners); and the adoption of regulations by many jurisdictions that govern the use of cookies. For example, in the EU, the ePrivacy Directive regulates the use of cookies and similar technologies, including limitations on the use of data and guidelines for enabling users to accept or reject cookies. Authorities may assert, and in some cases are likely to determine, that our collection, use, or management of customer and other data is inconsistent with laws and regulations, including laws that apply to cookies or similar technology, and there may be significant penalties for non-compliance. In the EU, the ePrivacy Directive is implemented in national laws as a result of which different interpretations and requirements apply on a country by country basis. EU regulators continue to issue guidance concerning the ePrivacy Directive's requirements regarding the use of cookies and similar technologies and may impose specific measures which could impact our use of such regulations require "opt-in" consent beforetechnologies. In addition, the ePrivacy Directive and national implementation laws impose additional limitations on the use of data across messaging products and include significant penalties for non-compliance. In the U.S., disclosure requirements and limitations may apply to the use of certain cookies canand other online tracking technologies deemed to be placed on a user's computersales of personal information under the CCPA or mobile device,other state laws. If these privacy-driven initiatives or regulations impair our ability to serve certain customers optimally or if we are less effective than our competitors in the manner we currently do might be
33


adversely affected andaddressing these issues, our ability to continue to improve and optimize performance on our platforms, might be impaired, either of which could negatively affect a consumer's experience using our services and our business, market share, and results of operations.operations could be adversely affected. Further, any failure to comply with suchevolving privacy regulations, guidance, and interpretations could result in significant fines, government enforcement actions, private litigation, and harm to our business, results of operations, or reputation.

Financial Risks

Our liquidity, credit ratings, and ongoing access to capital could be materially and negatively affected by the impacts of the COVID-19 pandemic.global financial conditions and events.

Our continued access to sources of liquidity depends on multiple factors, including global economic conditions, the condition of global financial markets, the availability of sufficient amounts of financing, our ability to meet debt covenant requirements, our operating performance, and our credit ratings. Since the COVID-19 pandemic, there has been increasedIncreased volatility in the financial and securities markets whichin recent years has generally made access to capital less certain and increased the cost of obtaining new capital.certain. Further, if our credit ratings were to be downgraded or if financing sources were to ascribe higher risk to our rating levels, our industry or us, our access to capital, and the cost of any financing would be negatively impacted. We currently have $2.0$2 billion available under our revolving credit facility, which provides an additional potential source ofcontains certain financial covenants that we need to comply with in order to access such liquidity. The revolving credit facility contains a maximum leverage ratio covenant, compliance with which is a condition to our ability to borrow thereunder. In April 2020, we amended the revolving credit facility, pursuant to which the maximum leverage ratio covenant was suspended through and including the three months ending March 31, 2021, and has been replaced with a $4.5 billion minimum liquidity covenant based on unrestricted cash, cash equivalents, short-term investments and unused capacity under this revolving credit facility. At December 31, 2020, we were in compliance with the minimum liquidity covenant. In October 2020, we amended the revolving credit facility to extend the suspension of the maximum leverage ratio covenant and the related replacement with the minimum liquidity covenant through and including the three months ending March 31, 2022 and increase the permitted maximum leverage ratio for a period of time following the three months ending March 31, 2022. There can be no assurance that we will be able to meet either the minimum liquidity covenant or the maximum leverage ratio covenant, as applicable,requirements at any particular time, and our ability to borrow under the revolving credit facility depends on compliance with the applicable covenant.time. Further, the lenders have the right to require repayment of any amounts borrowed under the facility if we are not in compliance with the applicable covenant.compliance.

There is no guarantee that additional debt financing will be available in the future to fund our obligations, or that it will be available on commercially reasonable terms or at all, in which case we may need to seek other sources of funding. In addition, the terms of future debt agreements could include more restrictive covenants, which could restrict our business operations. See Part II, Item 7, Management’sManagement's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources for more information on our liquidity and capital resources.

We are exposed to fluctuations in foreign currency exchange rates.

We conduct a substantial majority of our business outside the United States but we report our results in U.S. Dollars. As a result, we face exposure to movements in foreign currency exchange rates as the financial results of our international businesses outside of the U.S. are translated from local currency (principally Euros and British Pounds Sterling) into U.S. Dollars. When the U.S. Dollar strengthens against other currencies in which we transact, as it generally did in 2015, our foreign-currency-denominated net assets, gross bookings, revenues, operating expenses, and net income are lower as expressed in U.S. Dollars. When the U.S. Dollar weakens against other currencies in which we transact, as it generally did in 2017 and 2018, our foreign-currency-denominated net assets, gross bookings, revenues, operating expenses, and net income are higher as expressed in U.S. Dollars. Foreign currency exchange rate fluctuations on transactions denominated in currencies other than the functional currency result in gains and losses that are reflected in our financial results.
25



Recent years have seen significant volatility in the exchange rate between the Euro, the British Pound Sterling, the U.S. Dollar and other currencies. Significant fluctuations in foreign currency exchange rates can affect consumer travel behavior. For example, the strengthening of the U.S. Dollar relative to the Euro in 2015 made it more expensive for Europeans to travel to the United States. Consumers traveling from a country whose currency has weakened against other currencies may book lower ADR accommodations, choose to shorten or cancel their international travel plans or choose to travel domestically rather than internationally, any of which could adversely affect our gross bookings, revenues, and results of operations, in particular when expressed in U.S. Dollars. Since the beginning of the COVID-19 pandemic, there has been an overall strengthening of the Euro and the British Pound Sterling relative to the U.S. Dollar. However, as a result of the travel restrictions and health concerns arising from the COVID-19 pandemic, we do not believe exchange rates have significantly altered consumer behavior since the pandemic began.

34


Volatility in foreign currency exchange rates and its impact on consumer behavior, which may differ across regions, make it more difficult to forecast industry and consumer trends and the timing and degree of their impact on our markets and business, which in turn makes it more difficult to manage our business and forecast our financial and operational performance.operations.

Our stock price is highly volatile.

The market price of our common stock is highly volatile and is likely to continue to be subject to wide fluctuations in response to factors such as the following, some of which are beyond our control:

financial or operating results that vary from the expectations of securities analysts and investors or ourany publicly-disclosed estimates;

quarterly variations in our financial or operating results;

estimates, changes in expectations as to our future financial or operating performance, including estimates by securities analysts and investors or changes in our publicly-disclosed estimates of future performance;

capital structure;
worldwide economic conditions in general and in Europe in particular;

particular, including the effects of inflation, changes in interest rates, trading volume fluctuations or other market volatility, or fluctuations in foreign currency exchange rates, particularly between the U.S. Dollar and the Euro;

changes in interest rates;

occurrence of a significant security breach;

breach or business interruptions, such as may result from catastrophes or other events;
announcementsimpact of technological innovations or new services by us or our competitors;

changes in our capital structure;

share repurchase and dividend programs;
changes in market valuations of other internet or online service companies;

companies, or announcements of significant business or operational changes by us or our competitors of price reductions, promotions, significant contracts, acquisitions, dispositions, strategic partnerships, joint ventures or capital commitments;

competitors;
loss of a major travel service provider participant such as a hotel chain, rental car company or airline, from our services;

initiation of significant claims, litigation, or regulatory proceedings against us or adverse developments in pending proceedings, or changes in the status of our intellectual property rights;

lack of success in the expansion ofexpanding our business models geographically;

business interruptions, such as may result from natural disasters, health concerns such as the COVID-19 pandemic or other events;

announcements by third parties of significant claims or initiation of litigation proceedings against us or adverse developments in pending proceedings;

business; and
additions or departures of key personnel; and

trading volume fluctuations or other market volatility.personnel.

Sales of a substantial number of shares of our common stock, including through the conversion of our convertible notes, could adversely affect the market price of our common stock by introducing a large number of sellers or short sellers to the market. Given the volatility that exists for our shares, suchSuch sales could cause the market price of our common stock to decline significantly. In addition, fluctuations in our stock price and our price-to-earnings multiple may have made or may make our stock attractive to momentum, hedge, or day-trading investors who often shift funds into and out of stocks rapidly, exacerbating price fluctuations in either direction, particularly when viewed on a quarterly basis.direction.

35


The trading prices of internettechnology company stocks in general, including ours, have experienced extreme price and volume fluctuations. To the extent that the public's perception of the prospects of internet ortechnology, e-commerce, or travel companies is negative, our stock price could decline, regardless of our results. Other broad market and industry factors, such as market fluctuations or political and economic conditions, may decrease the market price of our common stock, regardless of our operating performance. Market fluctuations, as well as general political and economic conditions, such as a recession, interest rate or foreign currency exchange rate fluctuations, political instability, changes in trade policy, trade disputes or a natural disaster, health concerns such as the COVID-19 pandemic, including any resurgences and the perceived pace or scale of any recovery from the pandemic, or a terrorist attack affecting a significant market for our business, such as Europe or the United States, could cause our stock price to decline. Negative market conditions could adversely affect our ability to raise additional capital or the value of our stock for purposes of acquiring other companies or businesses.

We have, inIn the past, we have been a defendant in securities class action litigation. Securities class action litigation hasis often been brought against a company following periods of volatility in the market price of its securities. To the extent our stock price declines or is volatile, we may in the future be the target of additional litigation. This additional litigation could result in substantial costs and divert management's attention and resources, either of which could adversely affect our business, financial condition, and results of operations.

We face increased risks if the level of our debt increases.

We have a substantial amount of outstanding indebtedness and we may incur substantial additional indebtedness in the future, including through public or private offerings of debt securities.future. Our outstanding indebtedness and any additional indebtedness we incur may have significant consequences, which may be amplified asif our cash flow and earnings have decreased as a result of the COVID-19 pandemicdecrease, and which could include:

requiring the dedication of a portion of our cash flow from operations to service our indebtedness, thereby reducing the amount of cash flow available for other purposes, including capital expenditures, meeting our operating expenses, share repurchases and acquisitions;purposes;
26


increased vulnerability to downturns in our business, to competitive pressures, and to adverse changes in general economic and industry conditions;

conditions, and less flexibility when planning for or reacting to changes in our business and industry; and
decreased or lost ability to obtain additional financing on terms acceptable to us for working capital, capital expenditures, acquisitions, share repurchases or other general corporate purposes; and

decreased flexibility when planning for or reacting to changes in our business and industry.us.

Our ability to make payments of principal and interest on our indebtedness depends upon our future performance, which will beis subject to the rate of economic and travel industry recovery as a result of the COVID-19 pandemic, general economic conditions, industry cycles and financial, business and othermany factors affecting our results of operations and financial condition, many of which are beyond our control. Further, we may not have access to equity or debt markets or other sources of financing, or such financing may not be available to us on commercially reasonable terms, to repay or refinance our debt as it comes due or, in the case of our convertible notes, upon conversion. Our ability to make share repurchases and the payment of dividends rely on our access to capital, which depends on cash flow generated by our business and the availability of financing.

The value of our investments could decline, which could adversely affect our financial condition and results of operations.

We maintain an investment portfolio, of various holdings, types and maturities. Our portfoliowhich typically includes marketable debt securities and equity securities of publicly-traded companies, the values of which are subject to market price volatility, and investments in private companies. Investments in government and corporate debt securities and preferred stock classified as debt securities for accounting purposes are generally classified as available-for-sale and, consequently, are recorded in our balance sheets at fair value with unrealized gains or losses, net of tax, reported in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. Credit losses, on such investments are recorded in the Consolidated Statement of Operations (see Notes 2impairments, and 5 to our Consolidated Financial Statements). Changeschanges in the fair values of our investments in publicly-traded equity securities are recognized in the Consolidated Statement of Operations. These changes could be volatile and they have had, and are likely to continue to have, a significant impact on our quarterly net income (or loss). Our investments in equity securities (other than those classified as debt securities for accounting purposes) of private companies are primarily measured at cost, less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, with changes in value also recognized in the Consolidated Statement of Operations (see Notes 2 and 5 to our Consolidated Financial Statements).
36



We have invested in Trip.com Group convertible notes. We have also invested in other Chinese internet companies (i.e., Meituan and Didi Chuxing). See Notes 5 and 6 to our Consolidated Financial Statements for more information regarding our investments in Trip.com Group, Meituan and Didi Chuxing securities. The value of these securities is subject to the risks associated with Trip.com Group's, Meituan's and Didi Chuxing's respective businesses, as well as any changes by the Chinese government in foreign investment laws or elevated scrutiny or regulation of foreign investments in Chinese companies. For example, Trip.com Group is a Cayman Islands company operating in China through what is commonly referred to as a variable interest entity, or VIE, structure where it conducts part of its business through contractual relationships with affiliated Chinese entities. Although VIE structures are commonly used by Chinese internet and e-commerce companies, there are substantial uncertainties regarding the interpretation and application of People's Republic of China ("PRC") laws and regulations to VIE structures, and it is possible that the PRC government may view the VIE structure as a violation of PRC law. VIE contractual relationships are not as effective in providing control over the affiliated Chinese companies as direct ownership, and Trip.com Group would have to rely on the PRC legal system to enforce those contracts in the event of a breach by one of these entities. Further, conflicts of interest could arise to the extent Trip.com Group's officers or directors are also shareholders, officers or directors of the affiliated Chinese entities. Any of these risks could materially and adversely affect Trip.com Group's business and therefore the value of our investment in Trip.com Group. Similar VIE-structure considerations and risks apply with respect to our investments in securities of Meituan and Didi Chuxing, each of which is a Cayman Islands company operating in China through a VIE structure.Statements.

Our investments in private companies are inherently risky in that such companies are typically at an early stage of development, may have no or limited revenues, may not be or ever become profitable, may not be able to secure additional funding, or their technologies, services, or products may not be successfully developed or introduced to the market. Further, our ability to liquidate any such investments is typically dependent on a liquidity event, such as a public offering or acquisition, as no public market exists for such securities. Valuations of privately-held companies are inherently complex and uncertain due to the lack of a liquid market for such securities. If we determine that any of our equity investments in such companies have experienced a decline in value, we are required to recognize the change in net income. For example, in the first quarterConsolidated Statements of 2020, we recognized an impairment of $100 million related to our investment in Didi Chuxing that resulted from the negative impact of the COVID-19 pandemic on Didi Chuxing's business.Operations. For investments classified as debt securities, any decline in value attributed to credit losses is also recognized in the Consolidated Statements of Operations.

We could lose the full amount of any of our investments, and any impairment of our investments have previously and could in the future have a material adverse effect on our financial condition and results of operations.

Item 1B.  Unresolved Staff Comments
 
None.
 
Item 1C.  Cybersecurity

    We are dedicated to upholding our commitment to our customers, partners, and employees to manage cybersecurity, privacy, and data protection and security risk. Our approach involves various tools, processes, technologies, and controls to identify and manage such risks.

Risk Management and Strategy

Identifying, assessing, and managing cybersecurity risk is generally integrated into our overall risk management systems and processes. The Company's internal audit function, with primary oversight by the Audit Committee, assesses key risks facing the organization across functions and regions. These risks are reviewed and discussed by the Company's management-level risk committee, which is a multi-disciplinary committee including representation from senior management in the finance, internal audit, and legal functions, among others. The risk committee is tasked with ensuring risks, including those related to cybersecurity, are managed and aligning strategic objectives with an appropriate level of risk tolerance.

Our Cyber Risk Management Policy establishes the framework for our cybersecurity risk management and governance. Our security teams operationalize the Policy across the Company and conduct cyber risk identification, assessment, management, monitoring, tracking, and reporting. Our privacy program is built upon the privacy principles of transparency, purpose, control, security, embedded privacy, and accountability. Our privacy teams are responsible for identifying, managing, and reporting on data protection risks. We leverage the National Institute of Standards and Technology (NIST) frameworks for cybersecurity and privacy. The NIST frameworks help us to align our security and privacy functions and provide a risk management approach across the Company. We annually measure our security and privacy program maturity against these frameworks, and engage a third party every other year to assess the current state against these frameworks. The results of these assessments are discussed with the Board and the Cybersecurity Subcommittee of the Audit Committee. In addition, our Global
27


Privacy Advisory Council, consisting of our privacy leaders, leads the development and implementation of strategies to monitor, manage, and remediate privacy risks.

As part of the Company's risk management strategy, we require that all employees complete regular data security and privacy trainings, and conduct phishing tests and specialized training such as secure coding training for our developers. We also maintain a Security Ambassadors program, where employees act as an extension of the Security and Fraud Department to foster a security-focused culture.

Our security teams engage in threat intelligence, predictive modeling, and penetration testing to understand the Company's threat landscape and reduce the risk and impact of cybersecurity incidents. These teams have established procedures for detecting, managing, and remediating cybersecurity incidents, and processes for personnel to escalate incidents within the organization. A cross-functional working group of security, privacy, and legal personnel review significant incidents to determine if further escalation is appropriate. If an incident could be deemed material, it is escalated, and we consult with outside counsel during this assessment as appropriate.

Our internal audit function collaborates with the security teams to participate in an integrated cybersecurity assurance program. The internal audit function also performs its own cybersecurity audits and reviews certain cybersecurity-related practices, such as access controls, as part of their assessment of our internal control over financial reporting. From time to time we have taken steps to improve our practices and remedy deficiencies that have been identified. Our enterprise-wide information security program is also independently assessed every other year by a third party as part of our enterprise risk management, and our Cybersecurity Subcommittee reviews the assessment findings. We seek to advance our program maturity in line with our review and management of cybersecurity risks.

We rely on certain third-party computer systems and third-party service providers, including global distribution systems ("GDSs") and computerized central travel reservation systems in connection with providing some of our services. We also depend upon various third parties to process payments for our transactions around the world. These third party business partners, service providers, and consultants need to access our customer and other data, and connect to our computer networks. We define expected security and privacy requirements through our contracting processes with third parties and we perform third-party cyber risk assessments to monitor the cyber risk management efforts of third parties as needed.

Although we expend significant resources to protect against security breaches, our existing security measures may not be successful in preventing all attacks on our systems. We have experienced cybersecurity incidents and threats, including malware, phishing, partner and customer account takeover attacks, and denial-of-service attacks on our systems. We do not believe these cybersecurity incidents have had a materially adverse effect on our Company, including our business strategy, results of operations, or financial condition. For further discussion, see Part I, Item 1A, Risk Factors - "Information Security, Cybersecurity, and Data Privacy Risks."

Governance

The Board and Audit Committee maintain responsibility for enterprise risk oversight related to cybersecurity, privacy, and data protection and security. The Audit Committee has delegated the primary responsibility for oversight of compliance and risk management efforts and processes related to these matters to the Cybersecurity Subcommittee, which was established in 2023 and is comprised of independent directors. The Cybersecurity Subcommittee oversees management's efforts and processes to identify, assess, manage, and monitor significant cybersecurity and privacy risks and regulatory developments in this area. Our cybersecurity and privacy leaders meet with the Cybersecurity Subcommittee to discuss the Company's cybersecurity and data protection risk exposures, including the steps management has taken to monitor and manage such exposures and their potential impact on the Company's business, operations, and reputation. The Cybersecurity Subcommittee reports periodically on these matters to the Audit Committee and Board.

The individuals serving in the roles of chief security officer and chief privacy officer have enterprise-wide responsibility for assessing and managing cybersecurity, data protection and security, and privacy risks, respectively. These leaders collectively have over 25 years of relevant work experience in public companies and extensive industry expertise.

28


Item 2.  Properties
 
We lease office space facilities for our corporate headquarters in Norwalk, Connecticut, United States of America. We lease additional space, including office space and data center facilities in various locations around the world, to support our operations, the largest being the headquarters of our Booking.com business in Amsterdam, Netherlands. Other than the office building for the future headquarters of Booking.com that is currently under construction in the Netherlands (see the section "Building Construction" within Note 16 to our Consolidated Financial Statements for more details, which is incorporated into this Item 2 by reference thereto), we did not own any real estate at December 31, 2020.
 
We believe that our existing facilities are adequate to meet our current requirements, and that suitable additional or substitute space will be available as needed to accommodate any further expansion of corporate operations. Due to the impact of the COVID-19 pandemic on our business volumes, we took actions to reduce the size of our workforce to optimize efficiency and reduce costs. As a result of such actions, we have made and expect to make further changes to our facilities requirements.

Item 3.  Legal Proceedings
 
A description of any material legal proceedings to which we are a party is included in Note 16 to our Consolidated Financial Statements included in this Annual Report on Form 10-K for the year ended December 31, 2020,2023, and is incorporated into this Item 3 by reference thereto.reference.

37


Item 4.  Mine Safety Disclosures
 
Not applicable.

29



PART II
 

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Common Stock
 
Our common stock is quoted on the NASDAQ Global Select Market under the symbol "BKNG."
 
Holders
 
At February 17, 2021,15, 2024, there were approximately 157 shareholdersapproximately 117 shareholders of record of Booking Holdings Inc.'s common stock.
 
Dividend Policy
 
We have not declared or paid anyOn January 25, 2024, our Board of Directors adopted a dividend policy pursuant to which we intend to pay quarterly cash dividends on our capital stock since our inception and do not expect to pay any cashcommon stock. Declaration of dividends for the foreseeable future. Our revolving credit facility includes a covenant that restricts us from declaring or making any cash distribution or repurchasing any of our shares (with certain exceptions including in connection with tax withholding related to shares issued to employees) unless (i) priorpursuant to the deliverypolicy will be subject to the Board’s consideration of, among other things, our financial statements for the three months ending June 30, 2022, we have at least $6.0 billion of liquidity on a pro forma basisperformance, cash flows, capital needs, and (ii) after the delivery of financial statements for the three months ending June 30, 2022, we are in compliance on a pro forma basis with the maximum leverage ratio covenant then in effect. Such restriction ends upon delivery of financial statements required for the three months ending June 30, 2023, or we have the ability to terminate this restriction earlier if we demonstrate compliance with the original maximum leverage ratio covenant in the revolving credit facility. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources.liquidity.

Pursuant to the dividend policy, on February 16, 2024 our Board of Directors declared a quarterly cash dividend of $8.75 per share of common stock, payable on March 28, 2024 to stockholders of record as of the close of business on March 8, 2024.

30


Performance Measurement Comparison

The following graph shows the total stockholder return through December 31, 20202023 of an investment of $100 in cash on December 31, 20152018 for our common stock and an investment of $100 in cash on December 31, 20152018 for (i) the NASDAQ Composite Index, (ii) the Standard and Poor's 500 Index, and (iii) the Research Data Group ("RDG") Internet Composite Index. The RDG Internet Composite Index is an index of stocks representing the internet industry, including internet software and service companies and e-commerce companies. Historic stock performance is not necessarily indicative of future stock price
38


performance. All values assume reinvestment of the full amount of all dividends and are calculated as of the last day of each month:

5 Yr Return Graph.jpg
bkng-20201231_g2.jpg
Measurement Point
December 31
Booking Holdings Inc.NASDAQ
Composite Index
S&P 500
Index
RDG Internet
Composite
2018100.00 100.00 100.00 100.00 
2019119.24 136.69 131.49 141.93 
2020129.31 198.10 155.68 194.91 
2021139.29 242.03 200.37 190.78 
2022117.00 163.28 164.08 115.68 
2023205.94 236.17 207.21 168.80 

Measurement Point
December 31
Booking Holdings Inc.NASDAQ
Composite Index
S&P 500
Index
RDG Internet
Composite
2015100.00 100.00 100.00 100.00 
2016114.99 108.87 111.96 104.75 
2017136.30 141.13 136.40 157.67 
2018135.10 137.12 130.42 156.03 
2019161.08 187.44 171.49 207.10 
2020174.69 271.64 203.04 318.18 
3931


Issuer Purchases of Equity Securities
 
The following table sets forth information relating to repurchases of our equity securities during the three months ended December 31, 2020:

2023 (in billions, except share and per share data):

ISSUER PURCHASES OF EQUITY SECURITIES

PeriodTotal Number
of Shares (or
Units) Purchased
 Average
Price Paid per
Share (or Unit)
Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum 
Number (or
Approximate Dollar Value)
of Shares (or Units) 
that May
Yet Be Purchased 
Under the
Plans or Programs
 
     
October 1, 2020 —— (1)N/A— $10,420,229,500 (1)
October 31, 2020249 (2)$1,698.37 N/AN/A
 —   
November 1, 2020 —— (1)N/A— $10,420,229,500 (1)
November 30, 20201,940 (2)$1,988.07 N/AN/A
    
December 1, 2020 —— (1)N/A— $10,420,229,500 (1)
December 31, 2020291 (2)$1,930.59 N/AN/A
Total2,480 $1,952.24 — $10,420,229,500  

PeriodTotal Number
of Shares (or
Units) Purchased
 
Average
Price Paid per
Share (or Unit) (1)
Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs
Maximum 
Number (or
Approximate Dollar Value)
of Shares (or Units) 
that May
Yet Be Purchased 
Under the
Plans or Programs
 
October 1, 2023 –358,082 (2)$2,902 358,082 $15.2 (2)
October 31, 202367 (3)$3,048 N/AN/A
November 1, 2023 –268,592 (2)$3,034 268,592 $14.3 (2)
November 30, 20232,064 (3)$3,073 N/AN/A
December 1, 2023 –176,957 (2)$3,362 176,957 $13.7 (2)
December 31, 2023780 (3)$3,465 N/AN/A
Total806,542 803,631 $13.7  
(1)    These amounts exclude the 1% excise tax mandated by the Inflation Reduction Act on share repurchases.
(2)    Pursuant to a stock repurchase program announced on May 9, 2019,February 23, 2023, whereby we arewere authorized to repurchase up to $15.0$20 billion of our common stock.
(2)(3)    Pursuant to a general authorization, not publicly announced, whereby we are authorized to repurchase shares of our common stock to satisfy employee withholding tax obligations related to stock-based compensation. The table above does not include adjustments induring the three months ended December 31, 20202023 to previously withheld share amounts (reduction(reduction of 26 shares)17 shares) that reflect changes to the estimates of employee tax withholding obligations.

Item 6.  [Reserved]

Item 6.  Selected Financial Data
On November 19, 2020, the SEC issued final rules to amend Regulation S-K. These changes are effective for annual filings for the first fiscal year ending on or after August 9, 2021 and early adoption is permitted. We elected to adopt the amendments to Item 301 of Regulation S-K in their entirety, which removed the requirement to furnish selected financial data for each of the last five fiscal years.
4032


Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion should be read in conjunction with our Consolidated Financial Statements including the notes to those statements, included elsewhere in this Annual Report on Form 10-K, and the Section entitled "Special Note Regarding Forward-Looking Statements" in this Annual Report on Form 10-K.  As discussed in more detail in the Section entitled "Special Note Regarding Forward-Looking Statements," this discussion contains forward-looking statements, which involve risks and uncertainties.  Our actual results may differ materially from the results discussed in the forward-looking statements.  Factors that might cause those differences include those discussed in "Risk Factors" and elsewhere in this Annual Report on Form 10-K.accompanying notes.

We evaluate certain operating and financial measures on both an as-reported and constant-currency basis. We calculate constant currency by converting our current-year periodcurrent year operating and financial results for transactions recorded in currencies other than U.S. Dollars using the corresponding prior-year periodprior year monthly average exchange rates rather than the current-year periodcurrent year monthly average exchange rates. Foreign exchange rate fluctuations impacted our year-over-year growth in gross bookings, revenues, and operating expenses for the years ended December 31, 2023 and 2022. Since our expenses are generally denominated in foreign currencies on a basis similar to our revenues, our operating margins have not been significantly impacted by currency fluctuations.

Overview

Our mission is to make it easier for everyone to experience the world. We seekaim to empower people to cut throughprovide consumers with a best-in-class experience offering the travel barriers, such as money, time, language and overwhelming options, so they can use our services to easily and confidently go wherechoices they want, to go, stay where they want to stay, dine where they want to dine, pay how they want to pay and experience what they want to experience. We connect consumers wishing to make travel reservations with providers of travel services around the world through our online platforms. Through one or more of our brands, consumers can: book a broad array of accommodations (including hotels, motels, resorts, homes, apartments, bed and breakfasts, hostelstailored language, payment, and other properties); make a car rental reservation or arrange for an airport taxi; make a dinner reservation; or book a flight, cruise, vacation package, tour or activity. Consumers can also useoptions, seamlessly connecting them with our meta-search services to easily compare travel reservation information, such as airline ticket, hotel reservation and rental car reservation information, from hundreds of online travel platforms at once. In addition, we offer various other services to consumers and partners, such as certain travel-related insurance products and restaurant management services to restaurants.

service provider partners. We offer these services through sixfive primary consumer-facing brands: Booking.com, Priceline, agoda, Rentalcars.com,Agoda, KAYAK, and OpenTable. While historically our brands operated on a largely independent basis and many of them focused on a particular service (e.g., accommodation reservations) or geography, we are increasing the collaboration, cooperation and interdependency among our brands in our efforts to provide consumers with the best and most comprehensive services. We also seek to maximize the benefits of our scale by sharing resources and technological innovations, co-developing new services and coordinating activities in key markets among our brands. For example, Booking.com, the world’s leading brand for booking online accommodation reservations (based on room nights booked), offers rental car and other ground transportation services, flights, tours and activities reservations, restaurant reservations and other services, many of which are supported by our other brands. Similarly, hotel reservations available through Booking.com are also generally available through agoda and Priceline. See Note 21 to theour Consolidated Financial Statements - Segment Reporting for information on our operating segments.

    We refer See Note 17 to our company and all of our subsidiaries and brands collectively as "Booking Holdings," the "Company," "we," "our" or "us."

    Our business is driven primarily by international results, which consist of the results of Booking.com, agoda and Rentalcars.com in their entirety and the international businesses of KAYAK and OpenTable. This classification is independent of where the consumer resides, where the consumer is physically located while using our services or the location of the travel service provider or restaurant. For example, a reservation made through Booking.com (which is domiciled in the Netherlands) at a hotel in New York by a consumer in the United States is part of our international results. In 2020, our international business (the substantial majority of which is generated by Booking.com) represented approximately 88% of our consolidated revenues. A significant majority of our revenues, including a significant majority of our international revenues, is earned in connection with facilitating accommodation reservations. See Note 18 to the Consolidated Financial Statements for moreinformation related to revenue by geographic information.area.

We derive substantially all of our revenues from enabling consumers to make travel service reservations. We also earn revenues from credit card processing rebates and customer processing fees, advertising services, restaurant reservations and restaurant management services, and various other services, such as travel-related insurance revenues.services.

Trends

Since the second quarter of 2020 and through 2023, changes in accommodation room nights versus the comparable period in 2019 have generally improved as government-imposed travel restrictions due to the COVID-19 pandemic have eased and consumer demand for travel has improved. In 2022, global room nights were 52% higher than in 2021 and 6% higher than in 2019. The year-over-year growth in room nights in 2022 was driven primarily by the recovery in Europe, Asia, and Rest of World, as well as by growth in North America. In 2023, global room nights increased 17% year-over-year driven primarily by the continued recovery in Asia and strong travel demand in Europe. Our global room nights in 2023 were up about 24% versus 2019. In 2023, we saw the booking window expand compared to 2022, which benefited year-over-year room night growth in 2023.

In March 2022, following Russia's invasion of Ukraine, we suspended the booking of travel services in Russia and Belarus. This led to the loss of new bookings from bookers in these countries. Excluding room nights from bookers in Russia, Ukraine, and Belarus in each comparable period, our overall room nights in 2023 were up about 17% versus 2022 and up about 29% versus 2019.

We saw a negative impact on room night growth in the fourth quarter of 2023 due to the Israel-Hamas war, particularly in Israel. In the fourth quarter of 2023, global room nights increased 9% year-over-year. Excluding room nights for bookers going to and from Israel, our overall room nights were up 11% year-over-year. There was also some impact on travel trends outside of the country, such as cancellations and a drop in new bookings. If the conflict continues or expands, it may adversely affect demand for our services, particularly in nearby areas.

4133


TrendsQuarterly Room Nights and Change versus the prior year and 2019

In response to the outbreak of the novel strain of the coronavirus, COVID-19 (the "COVID-19 pandemic"), many governments around the world have implemented, and continue to implement, a variety of measures to reduce the spread of COVID-19, including travel restrictions and bans, instructions to residents to practice social distancing, curfews, quarantine advisories, shelter-in-place orders and required closures of non-essential businesses. These government mandates have forced many of the partners on whom our business relies, including hotels and other accommodation providers, airlines and restaurants, to seek government support in order to continue operating, to curtail drastically their service offerings or to cease operations entirely. Further, these measures have materially adversely affected, and may further adversely affect, consumer sentiment and discretionary spending patterns, economies and financial markets, and our workforce, operations and customers. The COVID-19 pandemic and the resulting economic conditions and government orders have resulted in a material decrease in consumer spending and an unprecedented decline in travel and restaurant activities and consumer demand for related services. Our financial results and prospects are almost entirely dependent on the sale of travel-related services. Our results for the year ended December 31, 2020 have been materially and negatively impacted, with a material decline in gross travel bookings, room nights booked, total revenues, net income and cash flow from operations as compared to the year ended December 31, 2019. Newly-booked room night reservations, excluding the impact of cancellations, declined rapidly as the COVID-19 pandemic spread in the first quarter and the beginning of the second quarter of 2020, but then steadily improved through the end of the second quarter and into the summer travel period in the third quarter of 2020. However, in the fourth quarter of 2020, we saw an increased decline in newly-booked room night reservations, due in part to increased COVID-19 case counts and reimposed or additional government-imposed travel restrictions, particularly in Europe. In September 2020, a variant of COVID-19 that spreads more easily and quickly than other variants was first discovered in the United Kingdom, and has since spread across the country and to other countries, including the United States and in Europe. Another variant of COVID-19 that also appears to spread more easily and quickly than other variants was detected in South Africa in October 2020. In the fourth quarter of 2020, multiple COVID-19 vaccines were approved for widespread distribution throughout various parts of the world, including the United States and in Europe. While this news is encouraging, it is still unknown when these vaccines will be available to broader populations and whether they will be as effective against variants of COVID-19, including the variants mentioned above. We believe that as effective vaccines become widely distributed, people will feel it is safe to travel again and government restrictions will be relaxed, although the timing remains uncertain.1. Room Nights (millions).jpg

2. Change vs. PY (v3_1.26.2024).jpg
Since April 2020, we have seen a substantial year-over-year increase in the share of newly booked room nights booked for domestic travel (travelers booking a stay within their own country) while bookings for international travel have remained very limited throughout the pandemic. Over this same time period, we have seen a year-over-year increase in the share of our newly-booked room nights made on a mobile device. Also, while we saw an increase in the share of newly-booked room nights for alternative accommodation properties in the early months of the pandemic, more recently the share has been consistent with pre-pandemic levels. In addition, we have observed an improvement in cancellation rates since the high in April, though we have seen additional periods of highly elevated cancellation rates typically coinciding with newly imposed travel restrictions. The overall improvement in cancellation rates since April benefits our room nights booked including cancellations but does not impact newly-booked room nights.

Our revenue decline in 2020 was impacted to a greater extent than newly-booked room night growth due to the impact of higher cancellations and lower accommodation average daily rates ("ADRs") as compared to 2019. We expect to continue to see severely reduced new travel and restaurant reservation bookings as compared to 2019 levels for the foreseeable future, which will have a materially adverse impact on our business, financial condition, results of operations and cash flows. Further, given the volatility in the global travel industry and the financial difficulties faced by many of our travel service provider and restaurant partners, we have increased our provision for expected credit losses on receivables from and cash advances made to our travel service provider and restaurant partners.

Due to the uncertain and rapidly evolving nature of current conditions around the world, we are unable to predict accurately the impact that the COVID-19 pandemic will have on our business going forward. The approval and distribution of COVID-19 vaccines throughout the world is encouraging, however, the COVID-19 pandemic continues to impact global travel and travel restrictions remain in place, particularly in Europe. In the fourth quarter of 2020, we saw room nights decline further, as well as an increase in cancellation rates, in each case as compared to the third quarter of 2020. In January 2021, room nights declined slightly more than the decline in the fourth quarter of 2020, however, we have seen some improvement in these booking trends in recent weeks. If these recent trends were to continue, we currently expect that room nights and gross bookings in the first quarter of 2021 will decline relative to the first quarter of 2019 by a few percentage points less than those metrics declined in the fourth quarter of 2020 relative to the fourth quarter of 2019. We currently expect revenue in the first quarter of 2021 to decline by a similar amount as our expected decline in gross bookings in the first quarter of 2021, both relative to the first quarter of 2019. The comparison of the first quarter of 2021 to the first quarter of 2019 avoids the distortion created from comparing to the initial spread of the COVID-19 pandemic late in the first quarter of 2020. In addition, we3. Change vs. 2019.jpg
4234


currently expect thatThe cancellation rate in 2023 was in line with the prior year. We have observed a general improvement in cancellation rates in recent years, though we will experience a greater operating losshave seen periods of elevated cancellation rates from time to time. Because we recognize revenue from bookings when the traveler checks in, the first quarterour reported revenue is not at risk of 2021 as comparedbeing reversed due to the fourth quarter of 2020. With the continued spread of COVID-19 throughout the world, we expect the pandemic and its effects to continue to have a significant adverse impact on our business for the duration of the pandemic, during any resurgences of the pandemic and during the subsequent economic recovery, which could be an extended period of time. For more information, see Part II, Item 1A, Risk Factors - "The COVID-19 pandemic has materially adversely affected, and may further adverselycancellations. Increases in cancellation rates can negatively impact our business and financial performance."

In response to the COVID-19 pandemic, we have taken and are taking various actions to address the impact of the pandemic on our business. Among other actions, we have:

Raised $4.1 billion in debt and negotiated amendments to our revolving credit facility to provide additional financial flexibility
Undertaken restructuring activities at all of our brands
Participated in certain government aid programs, including employee wage support programs
Suspended general share repurchases
Eliminated non-essential business travel
Canceled internal company events and offsites
Significantly reduced marketing spend worldwide
Implemented a general temporary company-wide hiring freeze for much of 2020
Sold investments in government debt securities, corporate debt securities and Trip.com Group American Depositary
Shares ("ADSs")

Further, our Chief Executive Officer and the Chief Executive Officers of our brands voluntarily declined their salaries, certain other senior managers voluntarily reduced their salaries and our non-employee Directors voluntarily waived their cash fees for most of 2020.

In response to the reduction in our business volumesefficiency as a result of incurring performance marketing expense at the impacttime a booking is made even though that booking could be canceled in the future if it was booked under a flexible cancellation policy. There are many factors in addition to cancellation rates that contribute to marketing efficiency including average daily rates ("ADRs"), costs per click, foreign currency exchange rates, our ability to convert paid traffic to bookings, the timing and effectiveness of our brand marketing campaigns, and the extent to which consumers come directly to our platforms for bookings.

The mix of our room nights booked for international travel in 2023 was approximately 52%, up versus approximately 46% in 2022 due in part to government-imposed limitations on international travel (travelers booking a stay at a property located outside their own country) in some parts of the COVID-19 pandemic, during the year ended December 31, 2020, we took actions at allworld in 2022.

The mix of our brandsroom nights booked on a mobile device (including room nights booked on a mobile app or via a mobile website) in 2023 increased compared to reduce the size2022. The revenue earned on a transaction from a mobile device may be less than a typical desktop transaction as we see different consumer purchasing patterns across devices. For example, accommodation reservations made on a mobile device typically are for shorter lengths of stay and have lower accommodation ADRs. The mix of our workforceroom nights booked on a mobile app in 2023 was approximately 49%, up versus approximately 44% in 2022. We continue to optimize efficiencysee favorable repeat direct booking behavior from consumers in our mobile apps, which allow us more opportunities to engage directly with consumers.

Our global ADRs increased approximately 6% on a constant currency basis in 2023 as compared to 2022, driven primarily by higher ADRs in Europe and reduce costs,Asia. The increase in our global ADRs in 2023 as compared to 2022, was negatively impacted by approximately three percentage points from changes in geographical mix in our business driven primarily by a higher mix of room nights from Asia, which we expectis a lower ADR region, and a lower mix of room nights from North America, which is a higher ADR region. The year-over-year increase in our global ADRs has resulted in our accommodation gross bookings growing faster than our room nights in 2023. It is difficult to resultpredict what the trend in annualized cost savings of approximately $370 million in personnel-related expenses. In addition to the restructuring expenses recorded during the year ended December 31, 2020 and included in “Restructuring and other exit costs” in the Consolidated Statements of Operations, we estimate that weindustry ADRs will record approximately $40 million of additional restructuring expenses in early 2021 (see Note 20 to our Consolidated Financial Statements). Our headcount decreased 23% year-over-year as of December 31, 2020, primarily due to the restructuring activities and attrition.look like going forward.

We have also been working with travelers and our travel service provider partners to deal with reservation cancellations and other disruptions arising from the impact of the pandemic. For example, when the pandemic started, Booking.com committed to allow cancellations of certain non-refundable bookings that were impacted by government travel restrictions and OpenTable has waived fees payable by restaurants for diners seated through OpenTable's online reservation service and subscription fees for many restaurants. The impacts of the COVID-19 pandemic are wide-ranging and affect all aspects of our business. As a result, the pandemic has negatively affected our financial results and condition as described throughout this Annual Reportfocus on Form 10-K. We anticipate that we will continue to make decisions and take actions to address the impacts of the pandemic on our business, including additional efforts to reduce costs while preserving our ability to offer valuable services to consumers and partners when the industry recovers. The full impact of the pandemic on our business is impossible to predict, and therefore we may recognize additional negative impacts to our operating results and financial condition in future periods as a result of the pandemic.

Certain governments have passed or are considering modifying legislation to help businesses during the COVID-19 pandemic through loans, wage subsidies, tax relief or other financial aid, and some of these governments have extended or are considering extending these programs. We have participated in several of these programs, including the Netherlands' wage subsidy program and the United Kingdom's job retention scheme. In addition, certain governments have extended support for the travel and tourism industry through special programs whereby discounts are extended to travelers through travel service providers or through travel agents for reservations facilitated by them. We have participated in Japan's Go To Travel program and Thailand's We Travel Together program.

43


Prior to the COVID-19 pandemic, we experienced many years of significant growth in our accommodation reservation services. We believe this growth was the result of, among other things, the broader shift of travel purchases from offline to online, the widespread adoption of mobile devices and the growth of travel overall. We also believe this growth was the result of the continuedrelentless innovation and execution by our teams around the world to increase the number and the variety of accommodations we offer consumers, increase and improve content, build distribution and improve the consumer experience on our online platforms, as well as consistently and effectively marketing our brands through performance and brand marketing efforts. Prior to the COVID-19 pandemic, these year-over-year growth rates generally decelerated due to the size of our accommodation reservation business and the generally slowing growth rate of the online travel market. As the travel market recovers from the impact of the COVID-19 pandemic, we expect to see higher than pre-COVID-19 pandemic growth rates until we return to the level of travel market demand that we observed prior to the COVID-19 pandemic, after which we expect prior trends to generally resume.

We are a global business, and online travel growth rates vary across the world depending on numerous factors, including local and regional economic conditions, individual disposable income, access to the internet and adoption of e-commerce. Over the last several years, and prior to the COVID-19 pandemic, online travel growth rates had generally slowed in markets such as North America and Europe where online activity was high and consumers had been engaging in e-commerce transactions for many years, while online travel growth rates remained relatively high in markets such as Asia-Pacific where incomes were rising more quickly and the increased availability and use of mobile devices had accelerated the growth of internet usage and travel e-commerce transactions. Over the long term, we expect the broader global economy and online travel market to recover from the COVID-19 pandemic, and following the recovery of the travel industry to the level of pre-COVID-19 pandemic demand, we would expect online travel growth rates will slow as markets continue to mature. However, we believe that the opportunity to grow our business beyond pre-COVID-19 pandemic levels exists for the markets in which we operate, including in both mature and less mature markets. Further, we believe that this opportunity for growth exists because we believe we provide significant value to travel service providers, regardless of size or geography, due to our global reach and marketing expertise. For example, we believe that accommodation providers of all sizes, from large hotel chains to small, independent hotels and alternative accommodations such as homes and apartments, benefit from using our services, which enable them to reach a broader audience of potential customers.

Historically, our growth has primarily been generated by the worldwide accommodation reservation business of Booking.com, which is our most significant brand, and has been due, in part, to the availability of a large number of properties through Booking.com. Booking.com included approximately 2,373,000 properties on its website at December 31, 2020, consisting of approximately 434,000 hotels, motels and resorts and approximately 1,939,000 homes, apartments and other unique places to stay, compared to approximately 2,580,000 properties (including approximately 460,000 hotels, motels and resorts and approximately 2,120,000 homes, apartments, and other unique places to stay) at December 31, 2019. Booking.com categorizes properties listed on its website as either (a) hotels, motels and resorts, which groups together more traditional accommodation types (including hostels and inns), or (b) homes, apartments and other unique places to stay, also referred to as alternative accommodations, which encompasses all other types of accommodations, including bed and breakfasts, villas, apart-hotels and beyond.

We intend to continue to improve the accommodation choices available for reservation on our platforms, however, the number of accommodations on our platforms may vary in part as a result of removing accommodations from time to time. At December 31, 2020, we saw a year-over-year decrease in the number of properties on Booking.com’s website, as compared to December 31, 2019, driven by an elevated number of accommodations removed from the platform due primarily to the properties not providing availability on our platforms, non-payment of invoices, or property closures. We have continued to see a year-over-year increase in the number of accommodations removed from our platform during the COVID-19 pandemic, and we expect to see further accommodation removals in the future due to increases in property closures or changes in ownership.

Many of the newer accommodations we add to our travel reservation services, especially in highly-penetrated markets, may have fewer rooms or higher credit risk and may appeal to a smaller subset of consumers (e.g., hostels and bed and breakfasts). Because alternative accommodations are often either a single unit or a small collection of independent units, these properties generally represent more limited booking opportunities than hotels, motels and resorts, which generally have more units to rent per property. Further, alternative accommodations in general may be subject to increased seasonality due to local tourism seasons or other factors or may not be available at peak times due to use by the property owners. We may also experience lower profit margins with respect to these properties due to certain additional costs, such as increased customer service costs, related to offering these accommodations on our platforms. As our alternative accommodation business has grown, these different characteristics have negatively impacted our profit margins and we expect this trend to continue. Further, to the extent that these properties represent an increasing percentage of the properties on our platforms, the number of reservations per property will likely continue to decrease since alternative accommodation properties typically have fewer
44


booking opportunities per property. We believe that continuing to improve the choices of accommodations available through our services, in particular Booking.com, will help us to continue to grow our accommodation reservation business.

We are constantly innovating to grow our business by, among other things, providing a best-in-class user experience with intuitive, easy-to-use online platforms (i.e., websites and mobile apps)that aim to ensure that we are meetingexceed the needsexpectations of online consumers while aiming to exceed their expectations. As part of these ongoing efforts, weconsumers. We have a long-term strategy to build a more integratedcreate an ideal traveler experience, offering of multiple elements of travel, which weour customers relevant options and connections at the times and in the language they want them, making trips booked with us seamless, easy, and valuable. We refer to this as the "Connected Trip",Trip." The goal of our Connected Trip vision is to offer a differentiated and wepersonalized online travel planning, booking, payment, and in-trip experience for each trip, enhanced by a robust loyalty program that provides value to travelers and partners across all trips. We expect these efforts to increase room night growth and revenue growth over time. Although we expectbenefit our efforts to build the Connected Trip will increase revenue growth over time, we may see a negative impact on our operating margins in the near term as we incur the expenses associated with these investments. Further,however, to the extent our non-accommodation services grow faster than(e.g., airline ticket reservation services) have lower margins and increase as a percentage of our accommodation services, whether as part of the Connected Trip or otherwise,total business, our operating margins may be negatively affected if we experience an increasing mix of revenues from lower-margin services.affected.

As part of our strategy to provide more payment options to consumers and travel service providers, increase the number and variety of our accommodations, available on Booking.com and enable the growth of our in-destination activities businesses,long-term Connected Trip strategy, Booking.com is increasingly processingprocesses transactions on a merchant basis, where it facilitates payments from travelers for the services provided. This allows Booking.com to process transactions for travel service providers and to increase its ability to offer secure and flexible transaction terms to consumers, such as the form and timing of payment. We believe that addingexpanding these types of service offerings will benefit consumers and travel service providers, as well as our gross bookings, room night, and earnings growth rates. However, this results in additional expenses for personnel, payment processing, customer chargebacks (including those related to fraud), and other expenses related to these transactions, which are recorded in "Personnel" expenses and "Sales and other expenses" in our Consolidated Statements of Operations, as well as associated incremental revenues in the form of credit(e.g., payment card rebates, for example,rebates), which are recorded in "Merchant revenues." To the extent more of our business is generated on a merchant basis, we will incur a greater level of these merchant-related expenses, which would negatively impactimpacts our operating margins despite increases in associated incremental revenues. ComponentsThe mix of revenues and expenses related to our merchant business may be recognized in different periods. These timing factors could impact our operating margins as well as the relationship between our gross bookings generated on a merchant basis was 54% in 2023, an increase from 44% in 2022.

We have established widely-used and revenuesrecognized brands through marketing and promotional campaigns. Our total marketing expenses, which are comprised of performance and brand marketing expenses that are substantially variable in nature, were $6.8 billion in 2023, up 13% versus 2022 as a particular period, especiallyresult of the improving demand environment and our efforts to invest in marketing, partially offset by a year-over-year improvement in performance marketing returns on investment ("ROIs") and a higher share of room nights booked by consumers coming directly to our platforms. Our performance marketing expense,
35


which represents a substantial majority of our marketing expenses, is primarily related to the use of online search engines (primarily Google), affiliate marketing, and meta-search services to generate traffic to our platforms. Our brand marketing expense is primarily related to costs associated with producing and airing digital branding and television advertising.

Marketing efficiency, expressed as our merchant business increasesmarketing expense as a percentage of our overall business.

We compete globally with both onlinegross bookings, and traditional providersperformance marketing ROIs are impacted by a number of travel and restaurant reservation and related services. The markets for the services we offerfactors that are intensely competitive, constantly evolving and subject to rapid change,variability and current and new competitors can launch new services at relatively low cost. Someare in some cases outside of our current and potential competitors, such as Google, Apple, Alibaba, Tencent, Amazon and Facebook, have significantly more customers or users, consumer data and financial and other resources than we do, and they may be able to leverage other aspects of their businesses (e.g., search or mobile device businesses) to enable them to compete more effectively with us. For example, Google has entered various aspects of the online travel market and has grown rapidly in this area,control, including by offering a flight meta-search product (Google Flights), a hotel meta-search product (Google Hotel Ads), a vacation rental meta-search product, its "Book on Google" reservation functionality, Google Travel, a planning tool that aggregates its flight, hotel and packages products in one website and by integrating its hotel meta-search products and restaurant information and reservation products into its Google Maps app. Moreover, as the economy and the travel industry recover from the impact of the COVID-19 pandemic, the structure of the travel industry could change in unexpected ways, which could advantage or disadvantage us and benefit certain of our existing competitors or new entrants. As a result, our historical strengths may not provide the competitive advantages that they did prior to the pandemic. If we are unable to successfully adapt to any changes in how the travel industry operates or to changes in the ways in which consumers purchase travel services,ADRs, costs per click, cancellation rates, foreign currency exchange rates, our ability to compete, and therefore our business and results of operations, would be adversely affected.

Our markets are also subject to rapidly changing conditions, including technological developments, consumer behavior changes, regulatory changes and travel service provider consolidation. We expect these trends to continue. For example, we have experienced a significant shift of both direct and indirect business to mobile platforms and our advertising partners are also seeing a rapid shift ofconvert paid traffic to mobile platforms.booking customers, and the timing and effectiveness of our brand marketing campaigns. In addition,recent years, we observed periods of stable or increasing ROIs. Although it is difficult to predict how performance marketing ROIs will change in the revenue earnedfuture, ROIs could be negatively impacted by increased levels of competition and other factors. When evaluating our performance marketing spend, we typically consider several factors for each channel, such as the customer experience on the advertising platform, the incremental traffic we receive, and anticipated repeat rates. Marketing efficiency can also be impacted by the extent to which consumers come directly to our platforms for bookings. Marketing expenses as a mobile transaction may be lesspercentage of total gross bookings in 2023 were lower than a typical desktop transactionin 2022 due to different consumer purchasing patterns. For example, accommodation reservations made on a mobile device typically are for shorter lengths of stay, have lower accommodation ADRshigher performance marketing ROIs and are not made as faran increase in advance. We observed an increasingly higherthe share of our newly-booked room nights made on a mobile device throughout 2020, as comparedbooked by consumers coming directly to our platforms. Performance marketing ROIs were higher in 2023 versus 2022 due in part to our ongoing efforts to improve the corresponding periods in 2019. For more detail regarding the competitive trends and risks we face, see Part I, Item 1, Business - "Competition,"efficiency of our marketing spend. See Part I, Item 1A, Risk Factors- "Intense competition could reduceWe face risks relating to our market share and harm our financial performance." and "Consumer adoption and use of mobile devices creates challenges and may enable device companies such as Google and Apple to compete directly with us.marketing efforts." and "We may not be able to keep up with rapid technological orare dependent on travel service providers, restaurants, search platforms, and other market changes.third parties."

45Booking.com had approximately 3.4 million properties on its website at December 31, 2023, consisting of over 475,000 hotels, motels, and resorts and over 2.9 million alternative accommodation properties (including homes, apartments, and other unique places to stay), representing an increase from over 2.7 million properties at December 31, 2022. The year-over-year increase in total properties was driven primarily by an increase in alternative accommodation properties.


The mix of Booking.com's room nights booked for alternative accommodation properties in 2023 was approximately 33%, up versus approximately 30% in 2022. We have observed a longer-term trend of an increasing mix of room nights booked for alternative accommodation properties as consumer demand for these types of properties has grown, and as we have increased the number and variety of them on Booking.com. We may experience lower profit margins due to additional costs, such as increased customer service or certain partner related costs, related to offering alternative accommodations on our platforms. As our alternative accommodation business has grown, these different characteristics have negatively impacted our profit margins and this trend may continue.

Although we believe that providing an extensive collection of properties, excellent customer service, and an intuitive, easy-to-use consumer experience are important factors influencing a consumer's decision to make a reservation, for many consumers, particularly in certain markets, the price of the travel service is the primary factor determining whether a consumer will book a reservation. As a result, it is increasingly important to offer travel services, such as accommodation reservations, at competitive prices, whether through discounts, coupons, closed-user group rates or loyalty programs, or otherwise. These initiatives have resulted and in the future may result in lower ADRs and lower revenue as a percentage of gross bookings.book. Discounting and couponing coupled with a high degree(i.e., merchandising) occurs across all of consumer shopping behavior isthe major regions in which we operate, particularly common in Asian markets.Asia. In some cases, our competitors are willing to make little or no profit on a transaction or offer travel services at a loss in order to gain market share. As a result, it is increasingly important to offer travel services, such as accommodation reservations, at a competitive price, whether through discounts, coupons, closed-user group rates or loyalty programs, increased flexibility in cancellation policies, or otherwise. These initiatives have resulted and, in the future, may result in lower ADRs and lower revenue as a percentage of gross bookings. Total revenue as a percentage of gross bookings was negatively impacted by investments in merchandising at Booking.com in 2023 as compared to 2022.

We have experienced a meaningful decline in constant-currency accommodation ADRs since the outbreak of the COVID-19 pandemic and it is uncertain how long the COVID-19 pandemic will impact our ADRs. These declining ADR trends have resulted in and may continue to result in our gross bookings growing at a lower rate of growth than our accommodation room nights. Prior to the outbreak, we observed a trend of declining constant-currency accommodation ADRs. We believe the trend of declining ADRs, observed prior to the outbreak, was partially driven by the negative impact of the changing geographical mix of our business (e.g., lower ADR regions like Asia-PacificMany taxing authorities are generally growing faster than higher ADR regions like Western Europe) as well as pricing pressures within local markets from time to time which resulted from competitive conditions, weakening economic conditions or changes in travel patterns. As the travel market recovers from the impact of the COVID-19 pandemic, we expect travel industry ADRs generallyincreasingly focused on ways to increase tax revenues and ashave targeted large multinational technology companies in these efforts. As a result, we expect our ADRs similarly to increase duringmany countries and some U.S. states have implemented or are considering the recovery, however, it is uncertain whether industry ADRs will improve at the same pace as travel demand. In addition, we expect the ADR trends we observed before the COVID-19 pandemic will generally resume after the recovery, which would negatively pressure our ADRs, however, there may also be periodsadoption of stablea digital services tax or increasing ADRs.

We have established widely used and recognized e-commerce brands through marketing and promotional campaigns. Historically, our marketing expenses increased significantly, however, we experienced more moderate growth rates in recent years, and since the COVID-19 pandemic, our marketing expenses have declined significantly. Our marketing expense is comprised of performance marketing and brand marketing expenses. Our performance marketing expense, which representssimilar tax that imposes a substantial majority of our marketing expense, is primarily related totax on revenue earned from digital advertisements or the use of online search engines (primarily Google), meta-search and travel researchplatforms, even when there is no physical presence in the jurisdiction. Currently, rates for these taxes range from 1.5% to 10% of revenue deemed generated in the jurisdiction. The digital services and affiliate marketing to generate traffic to our websites. Our brand marketing expense is primarily related to costs associated with producing and airing television advertising, online video advertising (for example, on YouTube and Facebook), online display advertisingtaxes currently in effect, which we record in "Sales and other brand marketing. Total marketing expenses were $2.2 billion and $5.0 billion forexpenses" in the years ended December 31, 2020 and 2019, respectively. We expect that our marketing expenses in 2021 will remain significantly below 2019 levels.

Marketing efficiency, expressed as marketing expense as a percentageConsolidated Statements of total revenues, is impacted by a number of factors that are subject to variability and that are, in some cases, outside of our control, including ADRs, costs per click, cancellation rates, foreign currency exchange rates, our ability to convert paid traffic to booking customers, the timing difference between when revenue is recognized and when marketing expense is recorded, the timing and effectiveness of our brand marketing campaigns and the extent to which consumers come directly to our platforms for bookings. For example, competition for desired rankings in search results and/or a decline in ad clicks by consumers could increase our costs per click and reduce our marketing efficiency. Changes by Google or any of our other search or meta-search partners in how it presents travel search results, including, if applicable, by placing its own offerings at or near the top of search results, or the manner in which it conducts the auction for placement among search results may be competitively disadvantageous to us and may impact our ability to efficiently generate traffic to our websites.

WeOperations, have observed a long-term trend of decreasing performance marketing returns on investment ("ROIs"), however, in recent years, we observed periods of stable or increasing ROIs. During the first several months of the COVID-19 pandemic, we experienced large year-over-year declines in ROIs driven by a significant increase in cancellation rates. While we have observed year-over-year decreases in ROIs for the year ended December 31, 2020, ROIs have improved since the early months of the pandemic, though we expect volatility in our ROIs for the duration of the pandemic. When evaluating our performance marketing spend, we typically consider several factors for each channel, such as the customer experience on the advertising platform, the incrementality of the traffic we receive and the anticipated repeat rate from a particular platform, as well as other factors. However, with the significant decrease in demand due to the COVID-19 pandemic, our performance marketing spend is highly influenced by expected cancellation rates in addition to the other factors listed above. The amount of business we obtain through each performance marketing channel is impacted by numerous factors, including the level of consumer demand for travel, bidding decisions by us and our competitors (including decisions to optimize performance marketing ROIs) and the marketing efforts and success of those channels to attract consumers and generate demand. See Part I, Item 1A, Risk Factors- "We rely on marketing channels to generate a significant amount of traffic to our platforms and grow our business." and "Our
46


business could be negatively affected by changes in online search and meta-search algorithms and dynamics or traffic-generating arrangements."

In recent years, we experienced significant increases in our cancellation rates, which negatively affected our marketing efficiency and results of operations. However, from the third quarter of 2018 until the fourth quarter of 2019, our cancellation rates generally decreased, which benefited our marketing efficiency and results of operations. Since the COVID-19 pandemic we have experienced unprecedented increases in cancellation rates, which negatively impacted our marketing efficiency and results of operations. For example, increased cancellations, especially early in the pandemic, have resulted in increased customer service costs, as well as higher than normal cash outlays to refund consumers for prepaid reservations. However, in the second and third quarters of 2020, we saw a steady improvement in cancellation rates, which trended towards levels that we observed prior to the COVID-19 pandemic. In the fourth quarter of 2020, we saw a reversal of the improving cancellation rate trend. We expect to continue to see volatility in cancellation rates due to any resurgences of the pandemic leading to reinstituted or additional travel restrictions, shelter-in-place rules and reduced willingness to travel. Further, in the fourth quarter of 2020, a higher share of our newly-booked room night reservations were made with flexible cancellation policies, as compared to the corresponding period in 2019, which could result in higher than normal cancellation rates in future quarters.

Perceived or actual adverse economic conditions, including slow, slowing or negative economic growth, high or rising unemployment rates, inflation and weakening currencies, and concerns over government responses such as higher taxes or tariffs and reduced government spending have impaired and could, in the future, impair consumer spending and adversely affect travel demand. We expect the lingering concerns of consumers around the safety of traveling as well as reduced discretionary incomes could negatively impact leisure travel demand for an extended period of time. Further, political uncertainty, conditions or events, such as the variety of measures implemented by many governments around the world to reduce the spread of COVID-19, including travel restrictions and bans, instructions to residents to practice social distancing, quarantine advisories, shelter-in-place orders and required closures of non-essential businesses can also negatively affect consumer spending and adversely affect travel demand. At times, we have experienced volatility in transaction growth rates, increased cancellation rates and weaker trends in ADRs across many regions of the world, particularly in those countries that appear to be most affected by economic and political uncertainties, which we believe are due at least in part to these macro-economic conditions and concerns. For more detail,information, see Part I, Item 1A, Risk Factors - "The COVID-19 pandemic has materially adversely affected, andWe may further adversely impact, our business and financial performancehave exposure to additional tax liabilities." and "Declines or disruptions in the travel industry could adversely affect our business and financial performance."

TheseIncreased regulatory focus on online businesses, including online travel businesses like ours, could result in increased compliance costs or otherwise adversely affect our business. For example, the Digital Markets Act ("DMA") and other macro-economic uncertainties, such as geopolitical tensions and differing central bank monetary policies, have led to periods of significant volatilityDigital Services Act ("DSA") give regulators in the exchange rates betweenEU more instruments to investigate and regulate digital businesses and impose new rules and requirements on platforms designated as "gatekeepers" under the DMA and online platforms more generally, with separate rules for "Very Large Online Platforms" (VLOP) under the DSA. In early 2023, Booking.com received a VLOP designation notice from the European Commission. The Company has met the quantitative notification criteria set forth in the DMA and expects to notify the European Commission of that fact within the required deadline. Certain of the DMA’s requirements will become enforceable later in 2024. As a result of the DMA, compliance costs may increase and changes to our
36


products or business practices may be required. For information regarding risks related to the DMA and DSA, please see Part I, Item 1A, Risk Factors - "Our business is subject to various competition/anti-trust, consumer protection, and online commerce laws and regulations around the world, and as the size of our business grows, scrutiny of our business by legislators and regulators in these areas may intensify." For more information on the impacts of regulations on our business, see Note 16 to our Consolidated Financial Statements.

Our businesses outside of the U.S. Dollar and the Euro, the British Pound Sterling and other currencies. Significant fluctuations in foreign currency exchange rates, stock markets and oil prices can also impact consumer travel behavior.
As noted earlier,(see Note 17 to our international business representsConsolidated Financial Statements for information related to revenue by geographic area) represent a substantial majority of our financial results. Therefore,results, but because we report our results in U.S. Dollars, we face exposure to movements in foreign currency exchange rates as the financial results and the financial condition of our international businesses outside of the U.S. are translated from local currency (principally Euros and British Pounds Sterling) into U.S. Dollars. As a result of the movements in foreign currency exchange rates, both the absolute amounts of and percentage changes in our foreign-currency-denominated net assets, gross bookings, revenues, operating expenses, and net income as expressed in U.S. Dollars are affectedaffected. For example, our total gross bookings increased by foreign currency exchange rate changes. However, for24% in 2023 as compared to 2022, but without the year ended December 31, 2020, movementsimpact of changes in foreign currency exchange rates had little to no impactour total gross bookings increased year-over-year on our performance metrics and financial results.a constant-currency basis by approximately 25%. Since our expenses are generally denominated in foreign currencies on a basis similar to our revenues, our operating margins have not been significantly impacted by currency fluctuations. We generally enter into derivative instruments to minimize the impact of foreign currency exchange rate fluctuations. We enter into foreign currency forward contracts to hedge our exposure to the impact of movements in foreign currency exchange rates on our transactional balances denominated in currencies other than the functional currency. See Note 6 to our Consolidated Financial Statements for additional information related to our derivative contracts. In addition, we designate certain portions of the aggregate principal value of our Euro-denominated debt as a hedge againstof the impact of foreign currency exchange rate fluctuations onexposure of the net assets of one of ourinvestment in certain Euro functional currency subsidiaries. Foreign currency transaction gains or losses on the Euro-denominated debt that is not designated as a hedging instrument for accounting purposes are recognized in "Other income (expense), net" in the Consolidated Statements of Operations (see NoteNotes 12 and 19 to our Consolidated Financial Statements). Such foreign currency transaction gains or losses are dependent on the amount of net assets of the Euro functional currency subsidiary,subsidiaries, the amount of the Euro-denominated debt that is designated as a hedge, and fluctuations in foreign currency exchange rates. For more information, see Part I, Item 1A, Risk Factors - "We are exposed to fluctuations in foreign currency exchange rates.rates."

We generally enter into derivative instruments to minimize the impact of foreign currency exchange rate fluctuations on our transactional balances denominated in currencies other than the functional currency. In periods prior to the second quarter of 2020, we also entered into derivative instruments to minimize the impact of short-term foreign currency exchange rate fluctuations on the translation of our consolidated operating results into U.S. Dollars. However, these instruments were short-term in nature and not designed to hedge against currency fluctuations that could impact growth rates for our gross bookings or revenues. Since the first quarter of 2020, we have not entered into such derivative instruments as the impact of the
47


COVID-19 pandemic on our operating results are highly uncertain. We will continue to evaluate the use of derivative instruments in the future. See Note 6 to our Consolidated Financial Statements for additional information related to our derivative contracts.

Many taxing authorities are increasingly focused on ways to increase tax revenues and have targeted large multinational technology companies in these efforts.  As a result, many countries have implemented or are considering the adoption of a digital services tax that imposes a tax on revenue earned from digital advertisements and the use of online platforms, even when there is no physical presence in the jurisdiction.  Currently, rates for this tax range from 1.5% to 7.5% of revenue deemed generated in the jurisdiction. The digital services taxes currently in effect, which we record in "General and administrative" expense in Consolidated Statements of Operations, have negatively impacted our results of operations and if many other countries pass similar legislation, the collective impact of all of these measures could have a materially adverse impact on our results of operations and cash flows. For more information, see Part I, Item 1A, Risk Factors - "We may have exposure to additional tax liabilities."

Many national governments have conducted or are conducting investigations into competitive practices within the online travel industry, and we may be involved or affected by such investigations and their results. Some countries have adopted or proposed legislation that could also affect business practices within the online travel industry. For example, France, Italy, Belgium and Austria have passed legislation prohibiting parity contract clauses in their entirety. Also, a number of governments are investigating or conducting information-gathering exercises with respect to compliance by online travel companies ("OTCs") with consumer protection laws, including practices related to the display of search results and search ranking algorithms, claims regarding discounts, disclosure of charges and availability, and similar messaging. In December 2020, the European Commission proposed the Digital Markets Act and the Digital Services Act, which are expected to give regulators more instruments to investigate digital businesses and impose new rules on certain digital platforms if they are determined to be "gatekeepers." The proposed legislation is not final and it is not known what the laws will look like in their final forms if adopted. If the regulators were to determine that we are a gatekeeper under the proposed legislation, we could be subject to additional rules and regulations not applicable to all our competitors and our business could be harmed. For more information on these investigations and their potential effects on our business, see Note 16 to our Consolidated Financial Statements and Part I, Item 1A, Risk Factors - "Our business is subject to various competition/anti-trust, consumer protection and online commerce laws, rules and regulations around the world, and as the size of our business grows, scrutiny of our business by legislators and regulators in these areas may intensify." In addition to the price parity and consumer protection investigations, from time to time national competition authorities, other governmental agencies, trade associations and private parties take legal actions, including commencing legal proceedings, that may affect our operations.  In general, increased regulatory focus on online businesses, including online travel businesses like ours, could result in increased compliance costs or otherwise adversely affect our business.

Seasonality and Other Timing Factors

In recent years, the majority of our gross bookings have been generated in the first half of the year, as consumers planned and reserved their spring and summer vacations in Europe and North America. However, we would generally recognize revenue from these bookings when the travel begins (at "check-in"), which can be in a quarter other than when the associated reservations are booked. In contrast, we expensed the substantial majority of our marketing activities as the expense is incurred, which, in the case of marketing in particular, is typically in the quarter in which associated reservations were booked. As a result of this timing difference between when we recorded marketing expense and when we recognized associated revenue, we have experienced our highest levels of profitability in the third quarter of the year, which is when we experienced the highest levels of accommodation check-ins for the year for our European and North American markets. The first quarter of the year was typically the quarter in which we recognized the lowest amount of revenue as well as the lowest level of profitability and highest level of volatility in earnings growth rates due to these seasonal timing factors. The COVID-19 pandemic impacted seasonality in 2020; for example, we witnessed a higher share of travel being booked during the second and third quarters as well as a higher share of stays during the third quarter than in prior years. We cannot currently predict travel patterns given the COVID-19 pandemic, and we may not experience typical seasonality effects on our business in 2021.

For several years, we experienced an expansion of the booking window (the average time between the booking of a travel reservation and when the travel begins), which impacts the relationship between our gross bookings (recognized at the time of booking) and our revenues (recognized at the time of check-in).  However, we saw a contraction of the booking window throughout 2018 and 2019. Due to the impact of the COVID-19 pandemic on our booking trends, we saw an initial expansion in the booking window in the second quarter versus the comparable prior-year period as an increased percentage of newly-booked room nights were made for travel occurring in the third quarter. However, in the third and fourth quarters, we saw a significant contraction of the booking window versus the comparable prior-year period as an increased percentage of newly-
48


booked room nights were made for travel that was to occur close to the time of booking. We expect that the length of the booking window will be volatile and difficult to predict throughout the duration of the COVID-19 pandemic. Future changes in the length of the booking window will affect the degree to which our gross bookings and revenues occur in the same period and, as a result, whether our gross bookings growth rates and revenue growth rates converge or diverge.

In addition, the date on which certain holidays fall can have an impact on our quarterly results. For example, in 2019, Easter fell on April 21 and Easter-related travel began in the second quarter, when the associated revenue was recognized. By comparison, in 2018, Easter was on April 1 and a meaningful amount of Easter-related travel began in the week leading up to the holiday with the associated revenue being recognized in the first quarter of 2018.  As a result of the shift in Easter timing relative to 2018, our first quarter 2019 year-over-year growth rates in revenue, operating income and operating margins were negatively impacted and our second quarter 2019 year-over-year growth rates were positively impacted.  In 2020, Easter fell on April 12, in the second quarter as it did in 2019, and as a result we did not experience a meaningful impact to our year-over-year growth rates in 2020 from the Easter holiday. Due to the significant reduction in travel demand related to the COVID-19 pandemic, we do not expect the timing of the Easter holiday to have a meaningful impact on our growth rates in 2021. The timing of other holidays such as Ramadan can also impact our quarterly year-over-year growth rates.

The impact of seasonality can be exaggerated in the short term by the gross bookings growth rate of the business. For example, in periods where our gross bookings growth rate substantially decelerates, our operating margins typically benefit from relatively less variable marketing expense. In addition, revenue growth is typically less impacted by decelerating gross bookings growth in the near term due to the benefit of revenue related to reservations booked in previous quarters, but any such deceleration would negatively impact revenue growth in subsequent periods. Conversely, in periods where our gross bookings growth rate accelerates, our operating margins are typically negatively impacted by relatively more variable marketing expense. In addition, revenue growth is typically less impacted by accelerating gross bookings growth in the near term, but any such acceleration would positively impact revenue growth in subsequent periods as a portion of the revenue recognized from such gross bookings will occur in future quarters. As the travel market recovers from the impact of the COVID-19 pandemic, we expect to see higher than pre-COVID-19 pandemic growth rates, which will likely result in periods where our operating margins are negatively impacted due to the timing difference of when marketing expense is recorded and when revenue is recognized.

Other Factors

We believe that our future success depends in large part on our ability to continue to profitably grow our brands worldwide, and, over time, to offer other travel and travel-related services. Factors beyond our control, such as oil prices, stock market volatility, terrorist attacks, unusual or extreme weather or natural disasters such as earthquakes, hurricanes, tsunamis, floods, fires, droughts and volcanic eruptions, travel-related health concerns including pandemics and epidemics such as COVID-19 and other coronaviruses, Ebola and Zika, political instability, changes in economic conditions, wars and regional hostilities, imposition of taxes, tariffs or surcharges by regulatory authorities, changes in trade policies or trade disputes, changes in immigration policies or travel-related accidents or increased focus on the environmental impact of travel, can disrupt travel, limit the ability or willingness of travelers to visit certain locations or otherwise result in declines in travel demand. These kinds of events have negatively affected our business and results of operations in the past and may do so again in the future. Because these events or concerns, and the full impact of their effects, are largely unpredictable, they can dramatically and suddenly affect travel behavior by consumers, and therefore demand for our services and our relationships with travel service providers and other partners, any of which can adversely affect our business and results of operations. See Part I, Item 1A, Risk Factors - "The COVID-19 pandemic has materially adversely affected, and may further adversely impact, our business and financial performance" and "Declines or disruptions in the travel industry could adversely affect our business and financial performance."

The extent of the effects of the COVID-19 pandemic on our business, results of operations, cash flows and growth prospects is highly uncertain and will ultimately depend on future developments. We expect the pandemic and its effects to continue to have a significant adverse impact on our business for the duration of the pandemic and during the subsequent economic recovery, which could be an extended period of time. Over the long-term,long term, we intend to continue to invest in marketing and promotion, technology, and personnel within parameters consistent with attempts to improve long-term operating results, even if those expenditures create pressure on operating margins. In recent years, we have experienced pressure on operating margins as we investedour investments in initiatives to drive future growth.growth added pressure on operating margins. We also intend to broaden the scope of our business, and to that end, we exploreincluding exploring strategic alternatives from timesuch as acquisitions.

The competition for technology talent in our industry is intense. As a result of the competitive labor market and inflationary pressure on compensation, our personnel expenses to timeattract and retain key talent have increased, which has adversely affected our results of operations and may adversely affect our results of operations in the formfuture. See Part I, Item 1A, Risk Factors - "We rely on the performance of among other things, acquisitions. We believe competitive pressurehighly skilled employees; and, if we are unable to innovateretain or motivate key employees or hire, retain, and motivate well-qualified employees, our business would be harmed."

Outlook

For the first quarter of 2024, we expect:
the year-over-year growth in room nights will encompass a wider rangebe between 4% and 6%;
the year-over-year growth in gross bookings will be between 5% and 7%;
the year-over-year growth in revenues will be between 11% and 13%; and
operating profit will be higher than in the first quarter of services2023.

For the full year, we expect:
the year-over-year growth in gross bookings will be slightly higher than 7%;
the year-over-year growth in revenues will be similar to gross bookings; and technologies, including services and technologies that may
operating profit will be outside of our historical core business, and our ability to keep pace may slow. Potential competitors, such as emerging start-ups, may be able to innovate and focus on developing a particularly new product or service fasterhigher than we can or may foresee consumer need for new services or technologies before us. Some of our larger competitors or potentialin 2023.


4937


competitors have more resources or more established or diversified relationships with consumers than we do, and they could use these advantages in ways that could affect our competitive position, including by making acquisitions, entering or investing in travel reservation businesses, investing in research and development, and competing aggressively for highly-skilled employees. For example, because consumers often utilize other online services more frequently than online travel services, a competitor or potential competitor that has established other, more frequent online interactions with consumers may be able to more easily or cost-effectively acquire customers for its online travel services than we can. Our goal is to grow revenue and achieve healthy operating margins in an effort to maintain profitability. The uncertain and highly competitive environment in which we operate makes the prediction of future results of operations difficult, and accordingly, we may not be able to return to the levels of revenue growth and profitability we experienced prior to the COVID-19 pandemic.

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Our significant accounting policies and estimates are more fully described in Note 2 to our Consolidated Financial Statements. Certain of our accounting estimates are particularly important to our financial position and results of operations and require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Our management uses itsWe use our judgment to determine the appropriate assumptions to be used in the determination of certain estimates. Weestimates and we evaluate our estimates on an ongoing basis. Estimates are based on among other things, historical experience, terms of existing contracts, our observance of trends in the travel industry, and on various other assumptions that we believe to be reasonable under the circumstances. Our actual results may differ from these estimates under different assumptions or conditions. Our critical accounting policiesMatters that involve significant estimates and judgments of management include the following:valuation of investments in private companies, the valuation of goodwill and other long-lived assets, income taxes, and contingencies.

Valuation of Goodwill and Other Long-lived Assets

The application of the acquisition accounting for business combinations requires the use of significant estimates and assumptions to determine the fair value of the assets acquired and liabilities assumed. Our estimates of the fair value are based upon assumptions that we believe are reasonable. When we deem appropriate, we utilize assistance from a third-party valuation firm. The consideration transferred is allocated to the assets acquired and liabilities assumed based on their respective fair values at the acquisition date. The excess of the consideration transferred over the net of the amounts allocated to the identifiable assets acquired and liabilities assumed is recognized as goodwill. Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination as of the acquisition date.

A substantial portion of our intangible assets and goodwill relates to the acquisitions of OpenTable and KAYAK.

We review long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.  The assessment of possible impairment is based upon the ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related asset group.

Due to the significant and negative financial impact of the COVID-19 pandemic, we performed the recoverability test of our long-lived assets and concluded there was no impairment at March 31, 2020. For OpenTable and KAYAK, we tested the recoverability of the long-lived assets and concluded there was no impairment at September 30, 2020. We did not identify any additional impairment indicators for our long-lived assets at December 31, 2020.

We test goodwill for impairment annually and whenever an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We test goodwill at a reporting unit level. Our annual goodwill impairment tests are performed as of September 30.

Interim Goodwill Impairment Test

Due to the significant and negative financial impact of the COVID-19 pandemic, we performed an interim period goodwill impairment test at March 31, 2020. Under the current goodwill impairment standard adopted in the first quarter of 2020, a goodwill impairment loss is measured at the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill (see Note 2 to our Consolidated Financial Statements).

As of March 31, 2020, the estimated fair value of each of our reporting units, except the OpenTable and KAYAK reporting unit, substantially exceeded its respective carrying value. For the OpenTable and KAYAK reporting unit, we recognized a goodwill impairment charge of $489 million for the three months ended March 31, 2020, which is not tax-
50


deductible, resulting in an adjusted carrying value of goodwill for OpenTable and KAYAK of $1.5 billion at March 31, 2020. The goodwill impairment was primarily driven by a significant reduction in the forecasted near-term cash flows of OpenTable and KAYAK as well as the significant decline in comparable companies' market values as a result of the COVID-19 pandemic.

The estimated fair value of OpenTable and KAYAK was determined using a combination of standard valuation techniques, including an income approach (discounted cash flows) and a market approach (applying the recent decline in enterprise values of comparable publicly-traded companies to the recently calculated fair value for OpenTable and KAYAK as well as applying comparable company multiples).

The income approach estimates fair value utilizing long-term growth rates and discount rates applied to the cash flow projections. In the cash flow projections, we assumed that OpenTable and KAYAK will experience a significant decline in near-term cash flows with a recovery to 2019 levels of financial performance (including profitability) occurring in 2023. The shape and timing of the recovery was a key assumption in our fair value calculation (both in the income and market approaches).

Annual Goodwill Impairment Test

As of September 30, 2020, we performed our annual goodwill impairment test. Other than the OpenTable and KAYAK reporting unit, the fair values of our reporting units substantially exceeded their respective carrying values.

For the OpenTable and KAYAK reporting unit, we recognized a goodwill impairment charge of $573 million for the three months ended September 30, 2020, which is not tax-deductible, resulting in an adjusted carrying value of goodwill for OpenTable and KAYAK of $1.0 billion at September 30, 2020. The goodwill impairment was primarily driven by a significant reduction in the forecasted cash flows of OpenTable and KAYAK, reflecting a longer assumed recovery period to 2019 levels of profitability, mainly due to the continued material adverse impact of the COVID-19 pandemic, including its impact on the flight vertical at KAYAK, and the lowered outlook for monetization opportunities in restaurant reservation services.

The estimated fair value of OpenTable and KAYAK was determined using a combination of standard valuation techniques, including an income approach (discounted cash flows) and a market approach (applying comparable company multiples).

The income approach estimates fair value utilizing long-term growth rates and discount rates applied to the cash flow projections. The income approach, applied as of September 30, 2020, reflected a reduction in the forecasted cash flows of OpenTable and KAYAK and a longer assumed recovery period to 2019 levels of profitability, driven primarily by a lowered outlook for monetization opportunities in restaurant reservation services and slower than previously expected recovery trends for airline travel, which is a key vertical for KAYAK. For the interim goodwill impairment test at March 31, 2020, we expected a recovery to 2019 levels of financial performance occurring in 2023 for OpenTable and KAYAK. Based on our evaluation of all relevant information available as of September 30, 2020 for the annual goodwill impairment test, we expected that OpenTable and KAYAK would not return to the 2019 level of profitability within the next five years, and that it was uncertain whether the shape of the recovery would ultimately match our expectations. An increase or decrease of one percentage point to the profitability growth rates used in the cash flow projections would result in an increase or decrease of approximately $100 million to the estimated fair value of OpenTable and KAYAK at September 30, 2020. The discount rate is determined based on the reporting unit’s estimated weighted-average cost of capital and adjusted to reflect the risks inherent in its cash flows, which requires significant judgments. The discount rate used for the annual goodwill impairment test as of September 30, 2020 is higher than the discount rate used for the interim goodwill impairment test as of March 31, 2020. If the discount rate used in the income approach increases or decreases by 0.5%, the impact to the estimated fair value of OpenTable and KAYAK, at September 30, 2020, ranges from a decrease of approximately $65 million to an increase of approximately $70 million.

The estimation of fair value reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding OpenTable and KAYAK’s expected growth rates and operating margin, expected length and severity of the impact from the COVID-19 pandemic, the shape and timing of the subsequent recovery and the competitive environment, as well as other key assumptions with respect to matters outside of our control, such as discount rates and market comparables. It requires significant judgments and estimates and actual results could be materially different than the judgments and estimates used to estimate fair value. Future events and changing market conditions may lead us to re-evaluate the assumptions reflected in the current forecast disclosed above, particularly the assumptions related to the length and severity of the COVID-19 pandemic and the shape and timing of the subsequent recovery, which may result in a need to recognize an additional goodwill impairment charge that could have a material adverse effect on our results of operations.
51


No additional impairment indicators were identified as of December 31, 2020.

Valuation of Investments in Private Companies

See NoteNotes 2, 5, and 6 to our Consolidated Financial Statements for additional information related to the investments in private companies. Thecompanies and information on fair value measurements, including the three levels of inputs to the valuation techniques used to measure fair value. When inputs that are observable, either directly or indirectly (observable market data), are available at the measurement date and are not significantly adjusted using unobservable inputs, the observable inputs would be classified as Level 2 inputs. When little or no market data is available, the fair value of these investments are measured using unobservable inputs when little or no market data is available ("Level 3 inputs"). See Note 6 to our Consolidated Financial Statements for additional information.

Our investments measured using Level 3 inputs primarily consist of preferred stock investments in privately-held companies that arewere classified as either debt securities or equity securities without readily determinable fair values. Fair values of privately held securities are estimated using a variety of valuation methodologies, including both market and income approaches. We have useduse valuation techniques appropriate for the type of investment and the information available about the investee as of the valuation date to determine fair value. Recent financing transactions in the investee such as new investments in preferred stock, are generally considered the best indication of the enterprise value and therefore used as a basis to estimate fair value. However, based on a number of factors, such as the proximity in timing to the valuation date or the volume or other terms of these financing transactions, we may also use other valuation techniques to supplement this data, including the income approach. In addition, an option-pricing model (“OPM”)When a financing transaction occurs and represents fair value, we also use the calibration process, as appropriate, when estimating fair value on subsequent measurement dates. Calibration is utilized to allocate value to the various classesprocess of securities ofusing observed transactions in the investee includingcompany's own instruments to ensure that the class ownedvaluation techniques that will be employed to value the investee company investment on subsequent measurement dates begin with assumptions that are consistent with the original observed transaction as well as any more recent observed transactions in the instruments issued by us. The model includes assumptions around the investees’ expected time to liquidity and volatility.investee company.

Our investmentinvestments in Grab, which is classified as a debt security for accounting purposes, had an aggregate estimated fair valueequity securities of $200 millionprivate companies at December 31, 20202023 and 2019. We measured this investment using "Level 3" inputs and management's estimates that incorporate current market participant expectations2022, include $51 million originally invested in Yanolja Co., Ltd. ("Yanolja"). In July 2021, Yanolja announced a new round of future cash flows considered alongside recent financingfunding which was completed in October 2021 along with certain other transactions. As a result of these observable transactions, ofwe increased the investee and other relevant information.

We performed an impairment analysis on the investment in Didi Chuxing at March 31, 2020 considering the impact of the COVID-19 pandemic, which resulted in an adjusted carrying value of $400our investment in Yanolja to $306 million at March 31, 2020 and December 31, 2020. No additional impairment indicators were identified as of December 31, 2020.2021. As discussed below,of June 30, 2023 and 2022, we used unobservable inputsevaluated our investment in order to determine fair value. We used anYanolja for impairment using a combination of the market approach and the income approach in estimating the fair value of Didi Chuxingour investment as of Marchthose dates, and recognized impairment charges of $24 million and $184 million during the years ended December 31, 2020.2023 and 2022, respectively (see Note 6 to our Consolidated Financial Statements). The carrying value of our investment in Yanolja was $98 million and $122 million as of December 31, 2023 and 2022, respectively.

The market approach estimates value using prices and other relevant information generated by market transactions involving identical or comparable companies. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are discounted to their present values using a discount rate based on a company’s weighted- averagecompany's weighted-average cost of capital and is adjusted to reflect the risks inherent in its cash flows. The key unobservable inputs and ranges used for the June 2023 impairment evaluation include the weighted average cost of capital (12%-14%),of 10.5%-14.5% and a terminal Earningsearnings before interest, taxes, depreciation, and amortization (“EBITDA”("EBITDA") multiple (13x-15x), volatility (60%-70%of 14x-16x. The key unobservable inputs and ranges used for the June 2022 impairment evaluation include, for the market approach, percentage decrease in the calibrated EBITDA multiple (36%) and an estimated time to liquidityfor the income approach, the weighted average cost of 4 years.capital of 10%-14% and the terminal EBITDA multiple of 14x-16x. Significant changes in any of these inputs in isolation would result in significantly different fair value measurements. Generally, aA change in the assumption used for terminal EBITDA multiples would result in a
38


directionally similar change in the fair value and a change in the assumption used for weighted average cost of capital or volatility would result in a directionally opposite change in the fair value.

The determination of the fair values of investments, where we are a minority shareholder and have access to limited information from the investee, reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding the investee’sinvestee's expected growth rates and operating margin, expected length and severity of the impact of the COVID-19 pandemic on the investee and the shape and timing of the subsequent recovery, as well as other key assumptions with respect to matters outside of our control, such as discount rates and market comparables. It requires significant judgments and estimates and actual results could be materially different than those judgments and estimates utilized in the fair value estimate. Future events and changing market conditions may lead us to re-evaluate the assumptions reflected in ourthe valuation, particularly the assumptions related to the length and severity of the COVID-19 pandemic and the shape and timing of the subsequent recovery and the overall impact on the investee’s business, which may result in a need to recognize an additional impairment chargecharges.

Valuation of Goodwill and other Long-lived Assets

The application of the acquisition method of accounting for business combinations requires the use of significant estimates and assumptions to determine the fair value of the assets acquired and liabilities assumed. Our estimates of the fair value are based upon assumptions that we believe are reasonable. When we deem appropriate, we utilize assistance from third-party valuation firms. The consideration transferred is allocated to the assets acquired and liabilities assumed based on their respective values at the acquisition date. The excess of the consideration transferred over the net of the amounts allocated to the identifiable assets acquired and liabilities assumed is recognized as goodwill. Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination.

A substantial portion of our intangible assets and goodwill relates to the acquisitions of OpenTable, KAYAK, and Getaroom. See Note 18 to our Consolidated Financial Statements for additional information related to the acquisition of Getaroom in December 2021.

We review long-lived assets whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related asset group.

We test goodwill for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We test goodwill at a reporting unit level and our annual goodwill impairment tests are performed as of September 30. As of September 30, 2023, we performed our annual goodwill impairment test and concluded that there was no impairment of goodwill.    

The estimation of fair values of our reporting units reflect numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding each reporting unit's expected growth rates and operating margin and the competitive environment, as well as other key assumptions with respect to matters outside of our control, such as discount rates and market comparables. Generally, changes in the assumptions used for comparable company multiples would result in directionally similar changes in the fair value and changes in the assumptions used for discount rates would result in directionally opposite changes in the fair value. The estimation of fair value requires significant judgments and estimates and actual results could be materially different than the judgments and estimates used. During 2022 and part of 2023, there have been significant adverse changes in the market valuation of companies in the travel and technology industries. Discount rates have also been impacted during those periods due to rising interest rates and adverse changes in the macroeconomic environment. Future events and changing market conditions, including economic uncertainties such as inflation, rising interest rates and risks of a potential recession, may lead us to re-evaluate the assumptions used to estimate the fair values of our reporting units, which may result in a need to recognize additional goodwill impairment charges that could have a material adverse effect on our results of operations.

Income Taxes

We determine our tax expense based on our income and statutory tax rates applicable in the various jurisdictions in which we operate. Due to the complex and dynamic nature of tax legislation and frequent changes with such associated legislation, significant judgment is required in computing our tax expense and determining our tax positions. The U.S. Tax Cuts and Jobs Act (the "Tax Act") enacted in December 2017 made significant changes to U.S. federal tax law, including a reduction in the U.S. federal statutory tax rate from 35% to 21%, effective January 1, 2018. The Tax Act imposed a one-time deemed repatriation tax imposed on accumulated unremitted international earnings, to be paid over eight years.

52


We do not intend to indefinitely reinvest our international earnings that were subject to U.S. taxation pursuant to the mandatory deemed repatriation or subject to U.S. taxation as GILTI.global intangible low-taxed income ("GILTI").

39


We regularly review our deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of temporary differences, and tax planning strategies and record valuation allowances as required.

We are subject to ongoing tax examinations and assessments in various jurisdictions. We have been audited in many jurisdictions and, from time to time, face challenges from the tax authorities regarding the amount of taxes due.due from time to time. These challenges include questions regarding the timing and amount of deductions that we have taken on our tax returns. Although we believe that our tax filing positions are reasonable and comply with applicable law, we regularly review our tax filing positions, especially in light of tax law or business practice changes, and we may change our positions or determine that previous positions should be amended, either of which could result in additionalchanges to our tax liabilities. The final determination of tax audits or tax disputes may be different from what is reflected in our historical income tax provisions and accruals.

The evaluation of tax positions and recognition of income tax benefits require significant judgment and we consult with external tax and legal counsel as appropriate. We consider the technical merits of our tax positions along with the applicable tax statutes, related interpretations and precedents, and our expectation of the outcome of proceedings (or negotiations) with tax authorities. We recognize liabilities when we believe that uncertain positions may not be fully sustained upon audit by the tax authorities, including any related appeals or litigation processes. Liabilities recognized for uncertain tax positions are based on a two-step approach for recognition and measurement. First, we evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained based on its technical merits. Second, we measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Interest and penalties attributable to uncertain tax positions, if any, are recognized as a component of income tax expense. The tax benefits ultimately realized by us may be different than what is recorded in the financial statements due to future events such as our settling the matter with the tax authorities and our success in sustaining our tax positions.

See Notes 15 and 16 to our Consolidated Financial Statements for furtheradditional information.

Contingencies

Loss contingencies (other than income tax-related contingencies disclosed above) arise from actual or possible claims and assessments and pending or threatened litigation that may be brought against us by individuals, governments or other entities.us. Based on our assessment of loss contingencies at each balance sheet date, a loss is recorded in the financial statements if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. If the amount of the loss cannot be reasonably estimated, we disclose information about the contingency in the financial statements. We also disclose information in our financial statements about reasonably possible loss contingencies.

The determination of whether a loss is probable and whether the amount of the loss can be reasonably estimated requires significant judgment and evaluation of all the underlying facts and circumstances including judgments about the potential actions of third-party claimants, regulatory authorities, and courts. Claims, assessments, and litigations involve significant uncertainties such as the complexity of the facts, the legal theories involved, the nature of the claims, the judgment of the courts, the applicable methodology for determining potential damages, and, in the case of class actions, whether a class action can be certified and the extent to which members of a class would or would not file a claim and the uncertainty inherent in class actions.claim.

On a quarterly basis, we update our analysis and estimates considering all available information, including the impact of negotiations, settlements, rulings, and advice of legal counsel. Changes in our assessment of whether a loss is probable, our estimate of the loss, or our determination of whether the amount of loss can be reasonably estimated could have a material impact on our results of operations and financial position. Changes in our assumptions regarding a particular matter or the effectiveness of our strategies related to legal and other proceedings could also have a material impact on our results of operations and financial position. For all loss contingencies, until a matter is finally resolved, there may be an exposure to loss in excess of the liability accrued for the matter and such amounts could be material.

See Note 16 to our Consolidated Financial Statements for further information.additional information, including the accrual of a loss of $530 million related to a draft decision by the Spanish competition authority and a loss of $276 million related to the Netherlands pension fund matter, which are recorded in the Consolidated Statement of Operations for the year ended December 31, 2023.

40


Recent Accounting Pronouncements -

See Note 2 to our Consolidated Financial Statements for details, which is incorporated into this Item 7 by reference thereto.
5341


Results of Operations
 
Year Ended December 31, 2020 compared to Year Ended December 31, 2019

We evaluate certain operating and financial measures on both an as-reported and constant-currency basis. We calculate constant currency by converting our current-year period operating and financial results for transactions recorded in currencies other than U.S. Dollars using the corresponding prior-year period monthly average exchange rates rather than the current-year period monthly average exchange rates.
Operating and Statistical Metrics
 
Our financial results are driven by certain operating metrics that encompass the booking and other business activity generated by our travel and travel-related services. Specifically, reservations of accommodation room nights, rental car days, and airline tickets capture the volume of units booked through our OTConline travel companies' ("OTC") brands by our travel reservation services customers. Gross bookings is an operating and statistical metric that captures the total dollar value, generally inclusive of taxes and fees, of all travel services booked through our OTC brands by our customers, net of cancellations, and is widely used in the travel business.cancellations. Our non-OTC brands (KAYAK and OpenTable) have different business metrics from those of our OTC brands, and thereforeso search queries through KAYAK and restaurant reservations through OpenTable do not contribute to our gross bookings.

Accommodation room nights, rental car days and airline tickets reserved through our services for the years ended December 31, 2020 and 2019 were as follows:
 Year Ended December 31, 
(in millions)Increase (Decrease)
 20202019
Room nights355 845 (58.0)%
Rental car days31 77 (59.8)%
Airline tickets(21.6)%
Accommodation room nights, rental car days and airline tickets reserved through our services each declined for the year ended December 31, 2020, compared to the year ended December 31, 2019, due to the COVID-19 pandemic, which drove a substantial decline in new travel bookings and increased cancellation rates.

Gross bookings resulting from reservations of accommodation room nights, rental car days and airline tickets made through our agency and merchant models for the years ended December 31, 2020 and 2019 were as follows (numbers may not total due to rounding): 
 Year Ended December 31, 
(in millions)Increase (Decrease)
 20202019
Agency$24,475 $70,651 (65.4)%
Merchant10,920 25,791 (57.7)%
Total$35,395 $96,443 (63.3)%
Gross bookings decreased by 63.3% for the year ended December 31, 2020, compared to the year ended December 31, 2019 (decreased on a constant-currency basis by approximately 63%), almost entirely due to the 58.0% decline in accommodation room night reservations, as well as a decline in accommodation ADRs of approximately 14% on a constant-currency basis for the year ended December 31, 2020, compared to the year ended December 31, 2019. We believe that unit growth rates and growth in total gross bookings on a constant-currency basis, which excludes the impact of foreign currency exchange rate fluctuations, are important measures to understand the fundamental performance of the business.

Agency gross bookings are derived from travel-related transactions where we do not facilitate payments from travelers for the travel services provided. Agency gross bookings decreased by 65.4% for the year ended December 31, 2020, compared to the year ended December 31, 2019, almost entirely due to a decrease in gross bookings from agency accommodation room night reservations at Booking.com.
54



Merchant gross bookings are derived from services where we facilitate payments from travelers for the travel services provided. Merchant gross bookings decreased by 57.7% for the year ended December 31, 2020, compared to the year ended December 31, 2019, principally due to a decrease in gross bookings from our merchant accommodation reservation services at Booking.com, agoda and Priceline. Merchant gross bookings for the year ended December 31, 2020, compared to the year ended December 31, 2019, declined less than agency gross bookings due to the stronger growth of merchant gross bookings early in the year as Booking.com had been expanding its merchant accommodation reservation services prior to the COVID-19 pandemic, as well as due to relatively better performance from our merchant travel reservation services at Priceline.
Revenues

Online travel reservation services

Substantially all of our revenues are generated by providing online travel reservation services, which facilitate online travel purchases between travel service providers and travelers.

Revenues from online travel reservation services are classified into two categories:
Merchant. Merchant revenues are derived from travel-related transactions where we facilitate payments from travelers for the services provided, generally at the time of booking. Merchant revenues are derived from transactions where travelers book accommodation, rental car, airline reservations, and other travel related services. The majority of our merchant revenues is from Booking.com's accommodation reservations. Merchant revenues include:
travel reservation commissions and transaction net revenues (i.e., the amount charged to travelers, including the impact of merchandising, less the amount owed to travel service providers) in connection with our merchant reservation services;
revenues from facilitating payments, such as credit card processing rebates and customer processing fees; and
ancillary fees, including travel-related insurance revenues.
Agency. Agency revenues are derived from travel-related transactions where we do not facilitate payments from travelers for the services provided. Agency revenues consist almost entirely of travel reservation commissions.commissions from our accommodation, rental car, and airline reservation services. Substantially all of our agency revenuerevenues is from Booking.com agencyBooking.com's accommodation reservations.

Merchant. Merchant revenues are derived from travel-related transactions where we facilitate payments from travelers for the services provided, generally at the time of booking. Merchant revenues include (1) travel reservation commissions and transaction net revenues (i.e., the amount charged to travelers less the amount owed to travel service providers) in connection with our merchant reservation services; (2) credit card processing rebates and customer processing fees; and (3) ancillary fees, including travel-related insurance revenues. Substantially all merchant revenues are derived from transactions where travelers book accommodation reservations or rental car reservations.
Advertising and other revenues

Advertising and other revenues are derived primarily from (1) from:
revenues earned by KAYAK for (a) sending referrals to OTCs and travel service providers and (b) advertising placements on its platforms; and (2)
revenues earned by OpenTable for (a) restaurant reservation services (fees paid by restaurants for diners seated through OpenTable's online reservation service) and (b) subscription fees for restaurant management services.

 Year Ended December 31, 
 (in millions)Increase (Decrease)
 20202019
Agency revenues$4,314 $10,117 (57.4)%
Merchant revenues2,117 3,830 (44.7)%
Advertising and other revenues365 1,119 (67.3)%
Total revenues$6,796 $15,066 (54.9)%

Total revenues for the year ended December 31, 2020, as compared to the year ended December 31, 2019, respectively, decreased by 54.9% (decreased on a constant-currency basis by approximately 55%). A significant majority of the year-over-year decrease was related to revenues from our accommodation reservation services. Total revenues for the year ended December 31, 2020 were negatively impacted by a reduction in revenue of $44 million for refunds paid or estimated to be payable to travelers as a result of the COVID-19 pandemic where we agreed to provide free cancellation for certain non-refundable reservations without a corresponding estimated expected recovery from the travel service providers (see Notes 2 and 3 to the Consolidated Financial Statements). In addition, total revenues for the year ended December 31, 2020 were negatively impacted by additional rebates of approximately $100 million offered to travel service providers meeting certain eligibility requirements under an incentive program that ended in 2020 (see Note 3 to the Consolidated Financial Statements).

5542


Agency revenues decreased by 57.4%Year Ended December 31, 2023 compared to Year Ended December 31, 2022
Operating and Statistical Metrics

Room nights, rental car days, and airline tickets reserved through our services for the yearyears ended December 31, 2020,2023 and 2022 were as follows:
Year Ended December 31,Increase (Decrease)
(in millions)20232022
Room nights1,04989617.1 %
Rental car days746219.7 %
Airline tickets362357.6 %
Room nights reserved through our services increased in 2023 compared to 2022, driven primarily by the yearcontinued recovery in Asia and Europe. Rental car days reserved through our services increased in 2023 compared to 2022, driven primarily by year-over-year growth in rental car demand, which benefited from lower average daily car rental prices. Airline tickets reserved through our services increased in 2023 compared to 2022, driven primarily by the expansion of Booking.com's flight offering.

Gross bookings resulting from reservations of room nights, rental car days, and airline tickets made through our merchant and agency categories for the years ended December 31, 2019,2023 and 2022 were as follows (numbers may not total due to rounding): 
Year Ended December 31,Increase (Decrease)
(in millions)20232022
Merchant gross bookings$81,721 $53,873 51.7 %
Agency gross bookings68,906 67,379 2.3 %
Total gross bookings$150,627 $121,253 24.2 %
Merchant and agency gross bookings increased in 2023 compared to 2022, due to the continued improvement in travel demand. Merchant gross bookings increased more than agency gross bookings due to the ongoing impactsshift from agency bookings to merchant bookings at Booking.com.

The year-over-year increase in total gross bookings in 2023 was due primarily to the increase in room nights, the increase in constant-currency accommodation ADRs of approximately 6%, the COVID-19 pandemic.positive impact from year-over-year growth in gross bookings from reservations for airline tickets, partially offset by the negative impact of foreign exchange rate fluctuations.

Gross bookings resulting from reservations of airline tickets increased 64% year-over-year in 2023 due to higher airline ticket growth and higher average airline ticket prices. Gross bookings resulting from reservations of rental car days decreased 2% year-over-year in 2023 due primarily to lower average daily car rental prices, partially offset by higher rental car days growth.

Revenues
 Year Ended December 31,Increase (Decrease)
(in millions)20232022
Merchant revenues$10,936 $7,193 52.0 %
Agency revenues9,414 9,003 4.6 %
Advertising and other revenues1,015 894 13.4 %
Total revenues$21,365 $17,090 25.0 %
% of Total gross bookings14.2 %14.1 %

Merchant, agency, and advertising and other revenues decreased by 44.7% for the year ended December 31, 2020,increased in 2023 compared to the year ended December 31, 2019,2022 due primarily to decreasesthe continued improvement in gross bookings from our merchant accommodation reservation services and merchant rental car reservation servicestravel demand. Merchant revenues in 2023 increased more than agency revenues due to the ongoing impacts of the COVID-19 pandemic.shift from agency revenues to merchant revenues at Booking.com.

Advertising and other revenues decreased by 67.3% for the year ended December 31, 2020, compared to the year ended December 31, 2019, primarily due to the COVID-19 pandemic, which resulted in a decline in consumer demand for the travel and restaurant-related services offered by KAYAK and OpenTable. In addition, advertising and other revenue related to OpenTable has been further impacted by a program that waived fees payable by restaurants for diners seated through OpenTable's online reservation service and subscription fees for many restaurants.
43


Total revenues as a percentage of gross bookings was 19.2% for the year ended December 31, 2020 as compared to 15.6% for the year ended December 31, 201914.2% in 2023 up from 14.1% in 2022 due primarily to a more positive impact from differences in the timing of booking versus travel asin 2023 compared to 2022 and an increase in revenue benefited from travel earlyfacilitating payments, mostly offset by an increase in the year ended December 31, 2020 before the COVID-19 pandemic, whilemix of airline ticket gross bookings, were negatively impacted by cancellations of bookings madechanges in 2019.

Our international businesses accounted for approximately $6.0 billion of our total revenues for the year ended December 31, 2020, compared to $13.5 billion for the year ended December 31, 2019. Total revenues attributable to our international businesses for the year ended December 31, 2020 decreased by 55.6%, compared to the year ended December 31, 2019 (decreased on a constant-currency basis by approximately 55%). Total revenues attributable to our U.S. businesses decreased 49.0% for the year ended December 31, 2020 compared to the year ended December 31, 2019.geographical mix, and an increase in investments in merchandising.

Operating Expenses
 
Marketing expensesExpenses
Year Ended December 31,  Year Ended December 31,Increase (Decrease)
(in millions)Increase (Decrease)
20202019
(in millions)
Marketing expensesMarketing expenses$2,179 $4,967 (56.1)%
Marketing expenses
Marketing expenses$6,773 $5,993 13.0 %
% of Total gross bookings
% of Total revenues% of Total revenues32.1 %33.0 % 
% of Total revenues
% of Total revenues
 
We rely on marketing channels to generate a significant amount of traffic to our websites. Marketing expenses consist primarily of the costs of: (1)
search engine keyword purchases; (2)
affiliate programs;
referrals from meta-search websites;
online and travel research websites; (3) affiliate programs; (4) offline and online brand marketing; and (5)
other performance-based marketing and incentives. For the year ended December 31, 2020, our marketing expense declined significantly due to reduced travel demand as a result of the COVID-19 pandemic. marketing.

We adjust our marketing spend based on our growth and profitability objectives, as well as the travel demand and expected ROIs in our marketing channels. We rely on our marketing channels to generate a significant amount of traffic to our websites. Our marketing expenses, which are substantially variable in nature, increased year-over-year in 2023 to help drive additional gross bookings and revenues. Marketing expenses as a percentage of total revenuesgross bookings decreased for the year ended December 31, 2020, compared to the year ended December 31, 2019, primarilyyear-over-year in 2023 due to actions we took to reduce our brand andyear-over-year increases in performance marketing spendROIs and in responsethe mix of direct traffic. Performance marketing ROIs were higher in 2023 versus 2022, due in part to our ongoing efforts to improve the reduced travel demand.efficiency of our marketing spend.

Sales and Other Expenses
Year Ended December 31,  Year Ended December 31,Increase (Decrease)
(in millions)Increase (Decrease)
20202019
(in millions)
Sales and other expensesSales and other expenses$755 $955 (20.8)%
Sales and other expenses
Sales and other expenses$2,744 $1,986 38.2 %
% of Total gross bookings
% of Total revenues% of Total revenues11.1 %6.3 % 
% of Total revenues
% of Total revenues
 
Sales and other expenses consist primarily of: (1)
credit card and other payment processing fees associated with merchant transactions; (2)
fees paid to third parties that provide call center and other customer services;
digital services taxes and other similar taxes;
chargeback provisions and fraud prevention expenses associated with merchant transactions;
provisions for expected credit losses, primarily related to accommodation commission receivables and prepayments to certain customers; (3) fees paid to third parties that provide call center, website content translations and other services; (4)
customer relations costs; and (5) customer chargeback provisions and fraud prevention expenses associated with merchant transactions. For the year ended December 31, 2020, salescosts.

Sales and other expenses, which are substantially variable in nature, decreased compared to the year ended December 31, 2019,increased year-over-year in 2023 due primarily to decreasesan increase in merchant transaction costs of $461 million and an increase in third-party call center costs of $155 million. Merchant transactions increased year-over-year in 2023 due to the continued improvement in travel demand trends, as well as the ongoing shift from agency transactions to merchant transactions at Booking.com. The year-over-year increase in third-party call center costs in 2023 was due in part to the transfer of certain customer service operations of Booking.com to Majorel in June 2022, which shifted costs from personnel expenses related to sales and other expenses.

5644


transactions processed on a merchant basis, partially offset by an increase in expected credit loss expenses of $161 million primarily resulting from the impact of the COVID-19 pandemic (see Notes 2 and 7 to the Consolidated Financial Statements).

Personnel
Year Ended December 31,  Year Ended December 31,Increase (Decrease)
(in millions)Increase (Decrease)
20202019
(in millions)
Personnel
Personnel
PersonnelPersonnel$1,944 $2,248 (13.5)%$3,294 $$2,465 33.6 33.6 %
% of Total revenues% of Total revenues28.6 %14.9 % 
 
Personnel expenses consist of compensation to our personnel, including primarily of:
salaries, bonuses, and stock-based compensation, bonuses, compensation;
payroll taxes,taxes; and
employee health and other benefits.

Personnel expenses, decreased during the year ended December 31, 2020, comparedexcluding stock-based compensation, increased 34% year-over-year in 2023 due to an increase in salary expenses of $309 million, an accrual of $276 million related to the year ended December 31, 2019, primarily dueNetherlands pension fund matter (see Note 16 to $126 millionour Consolidated Financial Statements for additional information), and an increase in bonus expense accruals of government aid benefit and$75 million. Employee headcount of approximately $110 million of savings resulting from restructuring activities at all our brands, as well as a decrease in stock-based compensation expense and lower bonus accruals, both of which were impacted by reduced financial performance and reduced headcount as a result of the COVID-19 pandemic. Stock-based compensation expense was $233 million for the year ended December 31, 2020, compared to $308 million for the year ended December 31, 2019. Headcount decreased 23% year-over-year to approximately 20,30023,600 as of December 31, 2020,2023 increased by 9% as compared to approximately 26,400December 31, 2022. Personnel expenses in 2023 and employee headcount as of December 31, 2019, primarily2023 were reduced due to restructuring actionsthe transfer of certain customer service operations of Booking.com to Majorel in June 2022, which shifted costs from personnel expenses to sales and attrition, as well as a general temporary company-wide hiring freeze. Given the timing of our restructuring actions, the average quarter-end headcount for 2020 only decreased 6%other expenses. Stock-based compensation expense in 2023 was $530 million compared to 2019.$404 million in 2022.

General and Administrative
Year Ended December 31,  Year Ended December 31,Increase (Decrease)
(in millions)Increase (Decrease)
20202019
(in millions)
General and administrative
General and administrative
General and administrativeGeneral and administrative$581 $797 (27.1)%$1,555 $$766 102.7 102.7 %
% of Total revenues% of Total revenues8.6 %5.3 % 
 
General and administrative expenses consist primarily of: (1)
fees for certain outside professionals;
occupancy and office expenses; (2) fees for outside professionals, including litigation expenses; (3) indirect taxes such as
certain travel transaction taxes and digital services taxes; and (4)
personnel-related expenses such as travel, relocation, recruiting, and training expenses.

General and administrative expenses decreased during the year ended December 31, 2020, compared to the year ended December 31, 2019, due to lower personnel-related expenses associated with a general company-wide freeze on non-essential travel and entertainment and employee hiringincreased year-over-year in 2023 due to the COVID-19 pandemic, lower officeaccrual of a loss of $530 million related to a draft decision by the Spanish competition authority (see Note 16 to our Consolidated Financial Statements for additional information), a $90 million termination fee related to the acquisition agreement for the Etraveli Group (see Note 20 to our Consolidated Financial Statements for additional information), and year-over-year increases in certain travel transaction taxes and occupancy expenses due to employees working remotely, and lower professional service fees.office expenses.

Information Technology
Year Ended December 31,  Year Ended December 31,Increase (Decrease)
(in millions)Increase (Decrease)
20202019
(in millions)
Information technology
Information technology
Information technologyInformation technology$299 $285 4.9 %$655 $$526 24.5 24.5 %
% of Total revenues% of Total revenues4.4 %1.9 % 

Information technology expenses consist primarily of: (1)
software license and system maintenance fees; (2)
cloud computing costs and outsourced data center and cloud computing costs; (3)
payments to contractors; and (4)
data communications and other expenses associated with operating our services.

Information technology expenses increased during the year ended December 31, 2020,in 2023 compared to the year ended December 31, 2019,2022 due to increased software license fees related to cyber securitycloud computing costs and outsourced data privacy software,center costs, as well as increased outsourced data center costs.

software license and system maintenance fees.
5745



Depreciation and Amortization
Year Ended December 31,  Year Ended December 31,Increase (Decrease)
(in millions)Increase (Decrease)
20202019
(in millions)
Depreciation and amortization
Depreciation and amortization
Depreciation and amortizationDepreciation and amortization$458 $469 (2.4)%$504 $$451 11.8 11.8 %
% of Total revenues% of Total revenues6.7 %3.1 % 
 
Depreciation and amortization expenses consist of: (1)
amortization of intangible assets with determinable lives; (2) depreciation of computer equipment; (3)
amortization of internally-developed and purchased software;
depreciation of computer equipment; and (4)
depreciation of leasehold improvements, furniture and fixtures, and office equipment.

Depreciation and amortization expenses decreased during the year ended December 31, 2020,increased in 2023 compared to the year ended December 31, 2019,2022 due primarily to increased amortization expense related to internally-developed and purchased software, as a result of decreasedwell as depreciation of computer equipment, amortizationequipment.

Other Operating Expenses
 Year Ended December 31,Increase (Decrease)
(in millions)20232022
Other operating expenses$$(199)*
% of Total revenues— %(1.2)%
* Not meaningful
Other operating expenses in 2022 includes the gain of intangible assets$240 million on the sale and depreciation of leasehold improvements,leaseback transaction related to Booking.com's headquarters building, partially offset by increased internally-developed software amortization expenses.

Restructuring and other exit costs
 Year Ended December 31, 
 (in millions)Increase (Decrease)
 20202019
Restructuring and other exit costs$149 $— N/A
% of Total revenues2.2 %N/A 
During the year ended December 31, 2020, we took restructuring actions at all our brands in responsea loss of $41 million related to the impacttransfer of the COVID-19 pandemic on our business,certain customer service operations of Booking.com to Majorel. See Notes 10 and as a result incurred restructuring charges amounting to $149 million. These restructuring charges are primarily related to employee severance and benefits (see Note 20 to the Consolidated Financial Statements).

Impairment of Goodwill
 Year Ended December 31, 
 (in millions)Increase (Decrease)
 20202019
Impairment of Goodwill$1,062 $— N/A
% of Total revenues15.6 %N/A 
During the year ended December 31, 2020, we recorded impairment charges to goodwill related to OpenTable and KAYAK, which are not tax-deductible, of $1.1 billion (see Note 11 to our Consolidated Financial Statements and Critical Accounting Policies and Estimates included in this Management's Discussion and Analysis of Financial Condition and Results of Operations).Statements.

Interest expense
 Year Ended December 31, 
 (in millions)Increase (Decrease)
 20202019
Interest expense(356)(266)33.8 %
Interest expense increased for the year ended December 31, 2020, compared to the year ended December 31, 2019, primarily due to interest expense attributable to our Senior NotesExpense and Convertible Senior Notes issued in April 2020.Other Income (Expense), Net

Interest Expense
 Year Ended December 31,
(in millions)20232022
Interest expense$897 $391 
58


Other income (expense)Income (Expense), net

 Year Ended December 31, 
 (in millions)Increase (Decrease)
 20202019
Other income (expense), net1,554 879 76.8 %
Net

The following table sets forth the breakdowncomposition of "Other income (expense), net" for the years ended December 31, 20202023 and 2019:2022:
Year Ended December 31,Year Ended December 31,
(in millions)(in millions)20232022
Interest and dividend income
Net losses on equity securities
Year Ended December 31,
Foreign currency transaction (losses) gains
Foreign currency transaction (losses) gains
Foreign currency transaction (losses) gains
(in millions)
20202019
Interest and dividend income$54 $152 
Net gains on marketable equity securities1,811 745 
Impairment of investment(100)— 
Foreign currency transaction losses(207)(31)
Other
Other
OtherOther(4)13 
Other income (expense), netOther income (expense), net$1,554 $879 

46


The following table presents the changes in interest and dividend income and interest expense for the years ended December 31, 2023 and 2022:
 Year Ended December 31,Increase (Decrease)
(in millions)20232022
Interest and dividend income$1,020 $219 366.6 %
Interest expense(897)(391)129.6 %

Interest and dividend income decreasedincreased for the year ended December 31, 2020,2023, compared to the year ended December 31, 2019,2022, primarily due to lower average invested balancesthe impact of higher interest rates on cash management activities (with related expenses recorded in interest expense) and lower yields as well asinvestment activities. Interest expense increased usagefor the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to higher interest rates related to our cash management activities (with related income recorded in interest income) and the issuance of investments classified as cash equivalents.senior notes in November 2022 and May 2023, partially offset by the maturities of senior notes during 2022 and 2023.

Net gains on marketable equity securities for the years ended December 31, 2020 and 2019 primarily related to the unrealized gains on our equity investment in Meituan (seeSee Note 519 to our Consolidated Financial Statements for additional information).

Impairment of investment for the year ended December 31, 2020 related to our investment in Didi Chuxing (seeinformation on "Other income (expense), net." See Notes 5 and 6 to our Consolidated Financial Statements and Critical Accounting Policies and Estimates included in this Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information).information related to net losses on equity securities and the impairments of an investment in equity securities.

Foreign currency transaction (losses) gains for the year ended December 31, 2023 includes losses includelossesof $200 million and gains of $7$163 million related to the portion of our Euro-denominated debt and accrued interest that waswere not designated as a net investment hedgehedges and foreign currency losses of $106 million on derivative contracts of $31 million and $19 millioncontracts. Foreign currency transaction (losses) gains for the yearsyear ended December 31, 20202022 includes gains of $46 million related to our Euro-denominated debt and 2019, respectively.accrued interest that were not designated as net investment hedges and losses of $52 million on derivative contracts.

Income Taxes
Year Ended December 31,  Year Ended December 31,Increase (Decrease)
(in millions)Increase (Decrease)
20202019
(in millions)
Income tax expenseIncome tax expense$508 $1,093 (53.5)%
% of Earnings before income taxes89.5 %18.3 %
Income tax expense
Income tax expense$1,192 $865 37.8 %
% of Income before income taxes
 
Our 20202023 effective tax rate differs from the U.S. federal statutory tax rate of 21%, primarily due to thehigher international tax rates, non-deductible goodwill impairment charges related to OpenTablefines, certain other non-deductible expenses, and KAYAK, U.S. federal tax associated with our 2020the Company's international earnings, partially offset by the benefit of the Netherlands Innovation Box Tax (discussed below). Our 2022 effective tax rate differs from the U.S. federal statutory tax rate of 21%, primarily due to higher international tax rates, a valuation allowance recorded against deferred tax assets related to certain unrealized losses on equity securities, certain non-deductible expenses, and an increase in unrecognized tax benefits, partially offset by the benefit of the Netherlands Innovation Box Tax.

Our effective tax rate was lower for the year ended December 31, 2023, compared to the year ended December 31, 2022, primarily due to a lower valuation allowance recorded against deferred tax assets related to certain unrealized losses on equity securities, lower unrecognized tax benefits, and lower international tax rates, partially offset by an increase in non-deductible fines, and a decrease in the benefit of the Netherlands Innovation Box Tax.

Under Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 9% ("Innovation Box Tax") rather than the Dutch statutory rate of 25.8%. A portion of Booking.com's earnings during the years ended December 31, 2023 and 2022 qualified for Innovation Box Tax treatment, which had a significant beneficial impact on our effective tax rates for these periods. For more information regarding the Innovation Box Tax, see Part I, Item 1A, Risk Factors - "We may not be able to maintain our 'Innovation Box Tax' benefit."

47


Results of Operations

Year Ended December 31, 2022 compared to Year Ended December 31, 2021

In the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, we have reclassified certain indirect taxes, primarily digital services taxes, between "General and administrative" expenses and "Sales and other expenses" to conform to the presentation in the Consolidated Statement of Operations for the year ended December 31, 2023. See Note 2 to the Consolidated Financial Statements.

Operating and Statistical Metrics

Room nights, rental car days, and airline tickets reserved through our services for the years ended December 31, 2022 and 2021 were as follows:
Year Ended December 31,Increase (Decrease)
(in millions)20222021
Room nights89659151.6 %
Rental car days624730.7 %
Airline tickets231549.9 %
Room nights, rental car days, and airline tickets reserved through our services increased significantly in 2022 compared to 2021, due primarily to the continued improvement in travel demand trends as the impact of the COVID-19 pandemic lessened in 2022 versus 2021.

Gross bookings resulting from reservations of room nights, rental car days, and airline tickets made through our agency and merchant categories for the years ended December 31, 2022 and 2021 were as follows (numbers may not total due to rounding): 
Year Ended December 31,Increase (Decrease)
(in millions)20222021
Agency gross bookings$67,379 $50,741 32.8 %
Merchant gross bookings53,873 25,845 108.4 %
Total gross bookings$121,253 $76,586 58.3 %
Agency gross bookings are derived from travel-related transactions where we do not facilitate payments from travelers for the services provided, while merchant gross bookings are derived from services where we facilitate payments. Agency and merchant gross bookings increased in 2022 compared to 2021 due primarily to the continued improvement in travel demand trends. Merchant gross bookings increased more than agency gross bookings due to the expansion of merchant accommodation reservation services at Booking.com.

The year-over-year increase in gross bookings in 2022 was due primarily to the increase in room nights and the increase in accommodation ADRs of approximately 15% on a constant-currency basis, partially offset by the negative impact of foreign exchange rate fluctuations. Gross bookings resulting from reservations of airline tickets increased 86% year-over-year in 2022 due to higher unit growth and ticket price increases. Gross bookings resulting from reservations of rental car days increased 26% year-over-year in 2022 due primarily to higher unit growth.

Revenues
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
Agency revenues$9,003 $6,663 35.1 %
Merchant revenues7,193 3,696 94.6 %
Advertising and other revenues894 599 49.4 %
Total revenues$17,090 $10,958 56.0 %
% of Total gross bookings14.1 %14.3 %

48


Agency, merchant, and advertising and other revenues increased in 2022 compared to 2021 due primarily to the continued improvement in gross bookings as the impact of the COVID-19 pandemic lessened in 2022 versus 2021, partially offset by the negative impact of foreign exchange rate fluctuations. Merchant revenues in 2022 increased more than agency revenues due to the expansion of merchant accommodation reservation services at Booking.com.

Total revenues as a percentage of gross bookings was 14.1% in 2022, down from 14.3% in 2021 due to investments in merchandising and an increase in the mix of airline ticket gross bookings, partially offset by increased revenues from facilitating payments.

Operating Expenses
Marketing Expenses
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
Marketing expenses$5,993 $3,801 57.6 %
% of Total gross bookings4.9 %5.0 %
% of Total revenues35.1 %34.7 %
Marketing expenses consist primarily of the costs of:
search engine keyword purchases;
referrals from meta-search and travel research websites;
affiliate programs;
offline and online brand marketing; and
other performance-based marketing and incentives.

We adjust our marketing spend based on our growth and profitability objectives, as well as the travel demand and expected ROIs in our marketing channels. We rely on our marketing channels to generate a significant amount of traffic to our websites. Our marketing expenses, which are substantially variable in nature, increased significantly in 2022 compared to 2021, due primarily to the continued improvement in travel demand as the impact of the COVID-19 pandemic lessened in 2022 versus 2021. Marketing expenses as a percentage of total gross bookings decreased slightly in 2022 compared to 2021 due to year-over-year increases in the mix of direct traffic, partially offset by year-over-year decreases in performance marketing ROIs. Performance marketing ROIs were lower in 2022 versus 2021 due to our efforts to invest in marketing during the recovery in the travel industry in 2022.

Sales and Other Expenses
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
Sales and other expenses$1,986 $979 102.7 %
% of Total gross bookings1.6 %1.3 %
% of Total revenues11.6 %8.9 %
Sales and other expenses consist primarily of:
credit card and other payment processing fees associated with merchant transactions;
fees paid to third parties that provide call center, website content translations, and other services;
digital services taxes and other similar taxes;
chargeback provisions and fraud prevention expenses associated with merchant transactions;
provisions for expected credit losses, primarily related to accommodation commission receivables and prepayments to certain customers; and
customer relations costs.

49


Sales and other expenses, which are substantially variable in nature, increased significantly in 2022 compared to 2021, due primarily to an increase in merchant transaction costs of $573 million and an increase in third-party call center costs of $235 million. Merchant transactions increased year-over-year in 2022 due to the continued improvement in travel demand trends as the impact of the COVID-19 pandemic lessened in 2022 versus 2021, as well as the expansion of merchant accommodation reservation services at Booking.com. The year-over-year increase in third-party call center costs in 2022 was due in part to the transfer of certain customer service operations of Booking.com to Majorel, which shifted costs from personnel expenses to sales and other expenses.

Personnel
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
Personnel$2,465 $2,314 6.5 %
% of Total revenues14.4 %21.1 %
Personnel expenses consist primarily of:
salaries, bonuses, and stock-based compensation;
payroll taxes; and
employee health and other benefits.

Personnel expenses, excluding stock-based compensation, increased 6% in 2022 compared to 2021, due to an increase in salary expense of $139 million and an increase in bonus expense accruals of $66 million, partially offset by the $136 million expense, recorded in 2021, associated with the return of government assistance received through various government aid programs. Employee headcount of approximately 21,600 as of December 31, 2022 increased by 6% as compared to December 31, 2021. Personnel expenses in 2022 and employee headcount as of December 31, 2022 were reduced due to the transfer of certain customer service operations of Booking.com to Majorel which shifted costs from personnel expenses to sales and other expenses. Stock-based compensation expense was $404 million in 2022 compared to $370 million in 2021.

General and Administrative
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
General and administrative$766 $522 47.1 %
% of Total revenues4.5 %4.8 %
General and administrative expenses consist primarily of:
fees for outside professionals;
occupancy and office expenses;
personnel-related expenses such as travel, relocation, recruiting, and training expenses; and
certain travel transaction taxes.

General and administrative expenses increased in 2022 compared to 2021 due to an increase of $97 million in certain travel transaction taxes, including the $46 million accrual related to the settlement of an Italian indirect tax matter. See Note 16 to our Consolidated Financial Statements. The year-over-year increase in general and administrative expenses was also driven by an increase of $75 million in personnel-related expenses and an increase of $53 million in fees for professional services.

50


Information Technology
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
Information technology$526 $412 27.6 %
% of Total revenues3.1 %3.8 %

Information technology expenses consist primarily of:
software license and system maintenance fees;
cloud computing costs and outsourced data center costs;
payments to contractors; and
data communications and other expenses associated with operating our services.

Information technology expenses increased in 2022 compared to 2021 due to increased cloud computing costs, payments to contractors, and software license fees.

Depreciation and Amortization
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
Depreciation and amortization$451 $421 6.9 %
% of Total revenues2.6 %3.8 %
Depreciation and amortization expenses consist of:
amortization of intangible assets with determinable lives;
amortization of internally-developed and purchased software;
depreciation of computer equipment; and
depreciation of leasehold improvements, furniture and fixtures, and office equipment.

Depreciation and amortization expenses increased in 2022 compared to 2021 due to increased amortization expense related to the acquisition of Getaroom, partially offset by decreased depreciation of computer equipment and leasehold improvements.

Other Operating Expenses
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
Other operating expenses$(199)$13 *
% of Total revenues(1.2)%0.1 %
* Not meaningful
Other operating expenses in 2022 includes the gain of $240 million on the sale and leaseback transaction related to Booking.com's headquarters building, partially offset by a loss of $41 million related to the transfer of certain customer service operations of Booking.com to Majorel (see Notes 10 and 20 to our Consolidated Financial Statements). Other operating expenses for the year ended December 31, 2021 principally relate to the restructuring charges as a result of restructuring actions taken in 2020 and are primarily related to employee severance and other termination benefits at Booking.com.

51


Interest Expense and Other Income (Expense), Net

Interest Expense
 Year Ended December 31,
(in millions)20222021
Interest expense$391 $334 

Other Income (Expense), Net

The following table sets forth the composition of "Other income (expense), net" for the years ended December 31, 2022 and 2021:
Year Ended December 31,
(in millions)20222021
Interest and dividend income$219 $16 
Net losses on equity securities(963)(569)
Foreign currency transaction (losses) gains(43)111 
Loss on early extinguishment of debt— (242)
Other(1)(13)
Other income (expense), net$(788)$(697)

The following table presents the changes in interest and dividend income and interest expense for the years ended December 31, 2022 and 2021:
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
Interest and dividend income$219 $16 1,233.4 %
Interest expense(391)(334)16.9 %

Interest and dividend income increased for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to the impact of higher interest rates on cash management activities (with related expenses recorded in interest expense) and investment activities. Interest expense increased for the year ended December 31, 2022, compared to the year ended December 31, 2021, primarily due to higher interest rates relating to our cash management activities (with related income recorded in interest income) and the issuance of senior notes in November 2022. This was offset in part by the impact of the adoption on January 1, 2022 of the new accounting standards update for convertible instruments, the redemption of senior notes with higher interest rates in April 2021, and the maturity in September 2021 of convertible senior notes. The amortization of debt discount on convertible debt was recorded in Interest expense. With the adoption of the new accounting standards update, such amortization is not recorded in the financial statements for periods after January 1, 2022 (see Note 2 to our Consolidated Financial Statements).

See Note 19 to our Consolidated Financial Statements for additional information on "Other income (expense), net." See Notes 5 and 6 to our Consolidated Financial Statements for additional information related to net losses on equity securities and the impairments of an investment in equity securities.

Foreign currency transaction (losses) gains for the year ended December 31, 2022 includes gains of $46 million related to our Euro-denominated debt and accrued interest that were not designated as net investment hedges and losses of $52 million on derivative contracts. Foreign currency transaction gains for the year ended December 31, 2021 includes gains of $135 million related to our Euro-denominated debt and accrued interest that were not designated as net investment hedges and losses of $30 million on derivative contracts.

Loss on early extinguishment of debt is related to our Senior Notes due April 2025 and our Senior Notes due April 2027 that were redeemed in April 2021 (see Note 12 to our Consolidated Financial Statements).

52


Income Taxes
 Year Ended December 31,Increase (Decrease)
(in millions)20222021
Income tax expense$865 $300 188.6 %
% of Income before income taxes
22.1 %20.5 %
Our 2022 effective tax rate differs from the U.S. federal statutory tax rate of 21%, primarily due to higher international tax rates, a valuation allowance recorded against deferred tax assets related to certain unrealized losses on equity securities, certain non-deductible expenses, and an increase in unrecognized tax benefits, partially offset by the benefit of the Netherlands Innovation Box Tax (discussed below). Our 20192021 effective tax rate differs from the U.S. federal statutory tax rate of 21%, primarily due to the benefit of the Netherlands Innovation Box Tax, partially offset by the effect of higher international tax rates and U.S. federal and statean increase in unrecognized tax associated with our 2019 international earnings, resulting from the enactment of the Tax Act, as well as certain non-deductible expenses.benefits.

Our effective tax rate was higher for the year ended December 31, 2020,2022, compared to the year ended December 31, 2019,2021, primarily due to lower benefit resulting from the non-deductible goodwill impairment chargesNetherlands Innovation Box Tax and higher valuation allowance recorded against deferred tax assets related to OpenTable and KAYAK, an increase in U.S. federalcertain unrealized losses on equity securities, partially offset by lower international tax associated with our 2020 international earnings, and an increase in unrecognized tax benefits.
59


rates.

According toUnder Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 7%9% ("Innovation Box Tax") for periods beginning on or after January 1, 2021 rather than the Dutch statutory rate of 25%. Previously, the Innovation Box Tax rate was 7%. Effective January 1, 2022, the Netherlands corporate income tax rate increased from 25% to 25.8%. A portion of Booking.com's earnings during the years ended December 31, 20202022 and 20192021 qualified for Innovation Box Tax treatment, which had a significant beneficial impact on our effective tax rates for thosethese periods. In 2020, the Dutch government approved an increase inFor more information regarding the Innovation Box Tax, rate from 7% to 9%, effective January 2021. While we expect Booking.com to continue to qualify for Innovation Box Tax treatment with respect to a portion of its earnings for the foreseeable future, the loss of the Innovation Box Tax benefit, whether due to a change in tax law or a determination by the Dutch government that Booking.com's activities are not innovative or for any other reason, could substantially increase our effective tax rate and adversely impact our results of operations and cash flows in future periods. Seesee Part I, Item 1A, Risk Factors - "We may not be able to maintain our 'Innovation Box Tax' benefit."

Results of Operations

Year Ended December 31, 2019 compared to Year Ended December 31, 2018

    For a comparison of our results of operations for the fiscal years ended December 31, 2019 and 2018, see Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 26, 2020.
6053


Liquidity and Capital Resources
 
The COVID-19 pandemic and the resulting economic conditions and government orders have resulted in a material decrease in consumer spending and an unprecedented decline in travel and restaurant activities and consumer demand for related services. Our financial results and prospects are almost entirely dependent on facilitating the sale of travel-related services.

The extent of Marketing expenses and personnel expenses are the effects of the COVID-19 pandemic on our business, results of operations, cash flows and growth prospects is highly uncertain and will ultimately depend on future developments. These include, but are not limited to, the severity, extent and duration of the COVID-19 pandemic, including as a result of any new variants of COVID-19 and any resurgences of the pandemic, and its impact on the travel and restaurant industries and consumer spending more broadly. Even if economic andmost significant operating conditionsexpenses for our business improve, we cannot predict the long-term effects of the pandemicbusiness. We rely on our business or the travel and restaurant industries as a whole. If the travel and restaurant industries are fundamentally changed by the COVID-19 pandemic in ways that are detrimentalmarketing channels to generate traffic to our operating model,websites. See our business may continue to be adversely affected even as the broader global economy recovers.

Consolidated Statements of Operations and "Trends" and "Results of Operations" above for additional information on marketing expenses and personnel expenses, including stock-based compensation expenses. Our continued access to sources of liquidity depends on multiple factors, including global economic conditions, the condition of global financial markets, the availability of sufficient amounts of financing, our ability to meet debt covenant requirements, our operating performance and our credit ratings. If our credit ratings were to be downgraded, or financing sources were to ascribe higher risk to our rating levels or our industry, our access to capital and the cost of any financing would be negatively impacted. There is no guarantee that additional debt financing will be available in the future to fund our obligations, or that it will be available on commercially reasonable terms, in which case we may need to seek other sources of funding. In addition, the terms of future debt agreements could include more restrictive covenants than those we are currently subject to, which could restrict our business operations. For more information, seefactors. See Part I, Item 1A, Risk Factors - "Our liquidity, credit ratings, and ongoing access to capital could be materially and negatively affected by the impacts of the COVID-19 pandemic.global financial conditions and events."

At December 31, 2020,2023, we had $14.8$13.1 billion in cash, cash equivalents, and short-term and long-term investments, of which approximately $6.0$8.8 billion is held by our international subsidiaries. Cash, cash equivalents, and long-term investments held by our international subsidiaries are denominated primarily in Hong Kong Dollars, Euros, U.S. Dollars, and Euros. Cash equivalents and short-term and long-term investments are principally comprised of money market funds, time deposits and certificates of deposit, convertible debt securities of Trip.com Group, Meituan equity securities and our investments in private companies (seeJapanese Yen. See Notes 5 and 6 to the Consolidated Financial Statements). In May 2020, our May 2015 investment of $250 million in Trip.com Group's convertible senior notes was repaid upon maturity. We have the option to redeem our December 2015 investment of $500 million in Trip.com Group's convertible senior notes in December 2021, which we expect to exercise (see Note 5 to our Consolidated Financial Statements).Statements for additional information about our cash equivalents and investments. Our investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business. In February 2023, we completed the sale of our investment in equity securities of Meituan and received gross proceeds of $1.7 billion.

During the year endedDeferred merchant bookings of $3.3 billion at December 31, 2020, we realized $2.2 billion2023 represents cash payments received from travelers in cash from salesadvance of us completing our performance obligations and maturitiesare comprised principally of amounts estimated to be payable to travel service providers as well as our investments in governmentestimated future revenue for our commission or margin and corporate debt securities. In addition, we sold our entire investment in Trip.com Group ADSs, with a cost basis of $655 millionfees. The amounts are mostly subject to refunds for $525 million.cancellations.

At December 31, 2020,2023, we had a remaining transition tax liability of $1.0 billion$690 million as a result of the U.S. Tax Cuts and Jobs Act ("Tax Act"), which included $923$515 million reported as "Long-term U.S. transition tax liability" and $90$175 million included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet. This liability will be paid over the next sixthree years. In accordance with the Tax Act, generally, future repatriation of our international cash will not be subject to a U.S. federal income tax liability as a dividend, but will be subject to U.S. state income taxes and international withholding taxes, which have been accrued by us.

In August 2019,May 2023, we entered into a $2.0 billion five-year unsecured revolving credit facility with a group of lenders. The revolving credit facility extends a revolving line of credit up to $2 billion to us and provides for the issuance of up to $80 million of letters of credit, as well as borrowings of up to $100 million of borrowings on same-day notice, referred to as swingline loans. The proceeds of loans made under the facility can be used for working capital and general corporate purposes, including acquisitions, share repurchases and debt repayments. At December 31, 2020, there were no borrowings outstanding and $4 million of letters of credit issued under the facility.notice. The revolving credit facility contains a maximum leverage ratio covenant, compliance with which is a condition to our ability to borrow thereunder. In April 2020, we amended theborrow. Upon entering into this new revolving credit facility, pursuant to whichwe terminated the maximum leverage ratio covenant was suspended through and including the three months ending March 31, 2021, and was replaced with a $4.5$2 billion minimum liquidity covenant based on unrestricted cash, cash equivalents, short-term investments and unused capacity under the revolving credit facility. In October 2020, we further amended thefive-year revolving credit facility to extend the suspension of the maximum leverage ratio covenant and the related replacement with the minimum liquidity covenant through and including the three months ending March 31, 2022 and increase the permitted maximum leverage ratio from and including the three months ending June 30, 2022 through and including the three months ending March 31, 2023. We agreed not to declare or make any cash distribution and not to repurchase any of our shares (with certain exceptions includingentered into in connection with tax withholding
61


related to shares issued to employees) unless (i) prior to the delivery of financial statements for the three months ending June 30, 2022, we have at least $6.0 billion of liquidity on a pro forma basis, based on unrestricted cash, cash equivalents, short-term investments and unused capacity under this revolving credit facility and (ii) after the delivery of financial statements for the three months ending June 30, 2022, we are in compliance on a pro forma basis with the maximum leverage ratio covenant then in effect. Such restriction ends upon delivery of financial statements required for the three months ending June 30, 2023, or we have the ability to terminate this restriction earlier if we demonstrate compliance with the original maximum leverage ratio covenant in the revolving credit facility. Beginning with the quarter ending June 30, 2022, the minimum liquidity covenant will cease to apply and the maximum leverage ratio covenant, as increased, will again be in effect.August 2019. At December 31, 2020, we2023 there were in compliance with the minimum liquidity covenant.There can be no assurance that we will be able to meet either the minimum liquidity covenant or the maximum leverage ratio covenant, as applicable, at any particular time,borrowings outstanding and our ability to borrow$18 million of letters of credit issued under the new revolving credit facility depends on compliance with the applicable covenant. Further, the lenders have the right to require repayment of any amounts borrowed under the facility if we are not in compliance with the applicable covenant (see Note 12 to the Consolidated Financial Statements). facility.

In June 2020,See Note 12 to our Consolidated Financial Statements for additional information related to our debt arrangements, including principal amounts, interest rates, and maturity dates. Our convertible senior notes due in connection withMay 2025 are currently convertible at the maturityoption of our Convertible Senior Notes due June 2020,the holder and have been classified as "Short-term debt" in the Consolidated Balance Sheet at December 31, 2023. If the note holders exercise their option to convert, we paid $1.0 billiondeliver cash to satisfyrepay the aggregate principal amount dueof the notes and paid an additional $245 million in satisfactiondeliver shares of common stock or cash, at our option, to satisfy the conversion value in excess of the principal amount. In addition, the holders of our Convertible Senior Notes due September 2021 will have the right to convert all or any portion of the Notes beginning on June 15, 2021, regardless of our stock price (see Note 12 to our Consolidated Financial Statements).

In April 2020,At December 31, 2023, we issued Senior Notes due April 13, 2025had outstanding senior notes with an interest rate of 4.10%varying maturities for an aggregate principal amount of $1.0$14.2 billion, Senior Notes due April 13, 2027 with an$2 billion payable within the next twelve months. The outstanding senior notes at December 31, 2023 had cumulative interest rateto maturity of 4.50% for$2.7 billion, with $440 million payable within the next twelve months. In May 2023, we issued senior notes with an aggregate principal amount of $750 million and Senior Notes due April 13, 2030 with an interest rate of 4.625% for an aggregate principal amount of $1.5 billion. In addition, in April 2020, we issued $863 million aggregate principal amount of Convertible Senior Notes due May 1, 2025 with an interest rate of 0.75%.1.75 billion Euros. The proceeds from the issuance of these Senior Notes and Convertible Senior Notes can be usedsenior notes are available for general corporate purposes, which may include repayment of debt, including the repayment, at maturity or upon conversion prior thereto,to repurchase shares of our outstanding Convertiblecommon stock. In March 2023, we repaid $500 million in aggregate principal amount on the maturity of the Senior Notes (see Note 12 to the Consolidated Financial Statements).

At December 31, 2020 and December 31, 2019, there were $14.0 billion and $9.6 billion, respectively, of payment obligations related to the aggregate principal of our outstanding senior notes outstanding and cumulative interest to maturity. See Note 12 to the Consolidated Financial Statements for information related to the Company's debt including principal, interest rates and maturity dates.due March 2023.

During the year ended December 31, 2020,2023, we repurchased 684,827 shares of our common stock for an aggregate cost of $1.3$10.4 billion. At December 31, 2020,2022, we had a total remaining aggregate amountauthorization of $10.4$3.9 billion related to a program authorized by our Board of Directors ("the Board") in 2019 to repurchase up to $15 billion of our common stock. In the first quarter of 2023, the Board authorized a program to repurchase up to $20 billion of our common stock and at December 31, 2023, we had a total remaining authorization of $13.7 billion. We have not repurchased any shares since March 2020 under this stock repurchase authorization and do not intendstill expect to initiate anycomplete the share repurchases under thisthe remaining authorization until we have better visibility intoby the shape and timingend of 2026, assuming no major downturn in the travel market. Effective January 1, 2023, the Inflation Reduction Act of 2022 has mandated a recovery1% excise tax on share repurchases. Excise tax obligations that result from our share repurchases are accounted for as a cost of the COVID-19 pandemic.treasury stock transaction. See Note 1213 to theour Consolidated Financial Statements for a description of the impact of the October 2020 credit facility amendment onadditional information related to our ability to repurchase shares.stock repurchases.

54

In September 2016,
On January 25, 2024, the Board adopted a dividend policy pursuant to which we signed a turnkey agreementintend to construct an office building for Booking.com’s future headquarters in the Netherlands for 270 million Euros ($331 million). Upon signing this agreement, we paid 43 million Euros ($48 million) for the acquired land-use rights. In addition, since signing the turnkey agreement we have made several progress payments principally relatedpay quarterly cash dividends on our common stock. Declaration of dividends pursuant to the constructionpolicy will be subject to the Board’s consideration of, among other things, our financial performance, cash flows, capital needs, and liquidity. Pursuant to the dividend policy, on February 16, 2024 the Board declared a quarterly cash dividend of $8.75 per share of common stock, payable on March 28, 2024 to stockholders of record as of the building. close of business on March 8, 2024.

At December 31, 2020,2023, we had a remaining obligationhad lease obligations of 56 million Euros ($68 million)$961 million. See Note 10 to our Consolidated Financial Statements for more information on our obligations related to the turnkey agreement. This remaining obligation will be paid through 2022, when we anticipate construction will be complete. In addition to the turnkey agreement, we have a remaining obligationoperating and financing leases. Additionally, at December 31, 20202023, we had, in the aggregate, $361 million of non-cancellable purchase obligations individually greater than $10 million, of which $188 million is payable within the next twelve months. Such purchase obligations relate to pay 70 million Euros ($86 million) overagreements to purchase goods and services that are enforceable and legally binding, that specify all significant terms, including the remaining initial termquantities to be purchased, price provisions, and the approximate timing of the acquired land lease, which expires in 2065. transaction.
At December 31, 2020, we had 292023 there were $533 million Euros ($35 million) of outstanding commitments to vendors to fit outstandby letters of credit and furnish the office space. bank guarantees issued on our behalf. These are obtained primarily for regulatory purposes.

See Note 16 to our Consolidated Financial Statements for additional information related to our commitments and contingencies.contingencies, including the accrual of a loss of $530 million related to a draft decision by the Spanish competition authority and a loss of $276 million related to the Netherlands pension fund matter, which are recorded in the Consolidated Statement of Operations for the year ended December 31, 2023.

We have taken and are taking actions to improve our liquidity including, but not limited to, raising additional capital through the issuance of Senior Notes and Convertible Senior Notes as disclosed above, reducing capital expenditures and operating expenses by significantly reducing marketing spend worldwide and working to eliminate non-essential operating costs, monitoring the financial health of our partners, suppliers and other third-party relationships, implementing a general temporary company-wide hiring freeze for much of 2020 and undertaking certain personnel actions such as furloughs and workforce reductions. We believe that our existing cash balances and liquid resources will be sufficient to fund our operating activities, capital expenditures, and other obligations through at least the next twelve months. However, whether as a result of the COVID-19 pandemic or otherwise, if we are not successful in generating sufficient cash flow from operations or in raising additional capital when required in sufficient amounts and on terms acceptable to us, we may be required to reduce our planned capital expenditures and scale back the scope of our business plans, either of which could have a material adverse effect on our business, our ability to compete or our future growth prospects, financial condition, and results of operations. If additional funds were raised through the issuance of equity securities, the percentage ownership of our then current stockholders would be diluted. We may not generate sufficient cash flow from operations in the future, revenue growth or sustained profitability may not be realized, and future borrowings or equity sales may not be available in amounts sufficient to make anticipated capital expenditures, finance our strategies, or repay our indebtedness.
62



Cash Flow Analysis

Net cash provided by operating activities decreased for the year endedYear Ended December 31, 2020,2023 compared to the year endedYear Ended December 31, 2019, primarily due to the negative impact of the COVID-19 pandemic to our businesses and financial results, partially offset by the impact of the payment of $403 million in 2019 to French tax authorities to preserve our right to contest certain tax assessments in court (see Note 16 to our Consolidated Financial Statements).2022

Net cash provided by operating activities for the year ended December 31, 20202023 was $85 million,$7.3 billion, resulting from net income of $59 million and$4.3 billion, a favorable net impact of $1.3 billion from adjustments for non-cash and other items of $1.0 billion, partially offset by an unfavorableand a favorable net change in working capital and long-term assets and liabilities of $1.0$1.7 billion. Non-cash items were principally associated with net gains on marketable equity securities, impairment of goodwill,stock-based compensation expense and other stock-based payments, depreciation and amortization, deferred income tax benefit, provision for expected credit losses and chargebacks, stock-based compensation expense and other stock-based payments, deferred income tax expense and unrealized foreign currency transaction losses on(gains) related to Euro-denominated debt.debt, and operating lease amortization. For the year ended December 31, 2020, prepaid expenses and other current assets decreased by $161 million, primarily due to a refund for overpayment from a vendor and lower prepayment to third-party payment processors due to decreases in business volumes as a result of the COVID-19 pandemic. For the year ended December 31, 2020, accounts receivable decreased by $891 million and2023, deferred merchant bookings and other current liabilities decreasedincreased by $2.3$2.7 billion, and accounts receivable increased by $1.3 billion, primarily due to decreasesincreases in business volumesvolumes. During the year ended December 31, 2023, the Company accrued a loss of $530 million related to a draft decision by the Spanish competition authority and a loss of $276 million related to the Netherlands pension fund matter. The related liabilities are included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet as a result of the COVID-19 pandemic.December 31, 2023. See Note 16 to our Consolidated Financial Statements for additional information.

Net cash provided by operating activities for the year ended December 31, 20192022 was $4.9$6.6 billion, resulting from net income of $4.9$3.1 billion, and a favorable impact of $1.7 billion from adjustments for non-cash and other items, of $541 million, partially offset by an unfavorableand a favorable net change in working capital and long-term assets and liabilities of $541 million.$1.8 billion. Non-cash items were principally associated with net gainslosses on marketable equity securities, depreciation and amortization, stock-based compensation expense and other stock-based payments, operating lease amortization and thedeferred income tax benefit, provision for expected credit losses and chargebacks. The changes in working capital forchargebacks, and operating lease amortization. For the year ended December 31, 2019, reflecting the increase in business volumes and growth in Booking.com's merchant transactions, were primarily related to a $480 million increase in2022, deferred merchant bookings and other current liabilities offsetincreased by a $323 million increase in$3.7 billion, and accounts receivable and $263 million increase in prepaid expenses and other current assets. The net change in long-term assets and liabilities of $435 million wasincreased by $1.2 billion, primarily due to the increaseincreases in other long-term assets related to the payment of $403 millionto French tax authorities to preserve our right to contest the assessments in court (see Note 16 to our Consolidated Financial Statements).business volumes.

Net cash provided by investing activities for the year ended December 31, 2020 was $2.62023 was $1.5 billion, principally resulting from the proceeds from salesthe sale and maturitiesmaturity of investments of $3.0$1.8 billion, net ofpartially offset by purchases of $74property and equipment of $345 million. Net cash provided byused in investing activities for the year ended December 31, 20192022 was $7.1 billion,$518 million, principally
55


resulting from thepurchases of investments of $768 million, primarily in various corporate and government debt securities, as well as from purchases of property and equipment of $368 million. This was partially offset by proceeds from the Booking.com headquarters sale and leaseback transaction of $601 million and proceeds from the sales and maturities of investments of $8.1 billion, net of purchases of $0.7 billion. Cash invested in the purchase of property$32 million. See Notes 5 and equipment was $286 million and $368 million10 to our Consolidated Financial Statements for the years ended December 31, 2020 and 2019, respectively. Cash invested in the purchase of property and equipment for the years ended December 31, 2020 and 2019 includes payments of $52 million and $51 million, respectively, related to the turnkey agreement for constructing Booking.com's future headquarters.additional information.

Net cash provided byused in financing activities for the year ended December 31, 20202023 was $1.5$8.9 billion, almost entirelyprincipally resulting from payments for the repurchase of common stock of $10.4 billion and payments on the maturity of debt of $500 million, partially offset by the proceeds from the issuance of long-term debt of $4.1 billion, partially offset by payments for the repurchase of common stock of $1.3 billion and payments for the conversion of convertible notes of $1.2$1.9 billion. Net cash used in financing activities for the year ended December 31, 20192022 was $8.2$4.9 billion, almost entirely resultingprincipally resulting from payments for the repurchase of common stock.stock of $6.6 billion and payments on the maturity of debt of $1.9 billion. This was partially offset by the proceeds from the issuance of long-term debt of $3.6 billion.

Year Ended December 31, 2022 compared to Year Ended December 31, 2021

For a discussioncomparison of our liquidity and capital resources as of and our cash flow activities for the fiscal yearyears ended December 31, 2018,2022 and 2021, see Cash Flow Analysis in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2022, filed with the SEC on February 26, 2020.23, 2022.

Contingencies

French tax authorities conducted audits of Booking.com for the years 2003 through 2012 and years 2013 through 2015 and currently are conducting an audit for the years 2016 through 2018. In December 2015, the French tax authorities issued Booking.com assessments for unpaid income and value added taxes ("VAT") related to tax years 2006 through 2012 for approximately 356 million Euros ($403 million), the majority of which represents penalties and interest.  The assessments assert that Booking.com had a permanent establishment in France. In December 2019, the French tax authorities issued an additional assessment of 70 million Euros ($86 million), including interest and penalties, for the 2013 year asserting that Booking.com had taxable income attributable to a permanent establishment in France. The French tax authorities also have issued assessments totaling 39 million Euros ($48 million), including interest and penalties, for certain tax years between 2011
63


and 2015 on Booking.com's French subsidiary asserting that the subsidiary did not receive sufficient compensation for the services it rendered to Booking.com in the Netherlands. As a result of a formal demand from the French tax authorities for payment of the amounts assessed against Booking.com for the years 2006 through 2012, in January 2019, we paid the assessments of approximately 356 million Euros ($403 million) in order to preserve our right to contest those assessments in court. The payment, which is included in "Other assets, net" in the Consolidated Balance Sheets at December 31, 2020 and 2019, does not constitute an admission that we owe the taxes and will be refunded (with interest) to us to the extent we prevail. In December 2019 and October 2020, we initiated court proceedings with respect to certain of the assessments. Although we believe that Booking.com has been, and continues to be, in compliance with French tax law, and we are contesting the assessments,during the three months ended September 30, 2020, we contacted the French tax authorities regarding the potential to achieve resolution of the matter through a settlement. After assessing several potential outcomes and potential settlement amounts and terms, an unrecognized tax benefit in the amount of 50 million Euros ($61 million) has been recorded during the year ended December 31, 2020, of which the majority has been included as a partial reduction to the tax payment recorded in "Other Assets, net" in the Consolidated Balance Sheet at December 31, 2020. In December 2020, the French Administrative Court (Conseil d’Etat) delivered a decision in the "ValueClick" case that could have an impact on the outcome in our case. After considering the potential impact of the new decision on the potential outcomes for the Booking.com assessments, we currently estimate that the reasonably possible loss related to VAT is approximately 20 million Euros ($24 million). Additional assessments could result when the French tax authorities complete the outstanding audits. For additional information related to the Frenchcertain tax assessments and other tax matters, see Note 16 to our Consolidated Financial Statements and Part I, Item 1A,IA, Risk Factors - "We may have exposure to additional tax liabilities.liabilities."

Beginning in 2014, Booking.com received several letters from the Netherlands Pension Fund for the Travel Industry (Reiswerk) (“BPF”) claiming that Booking.com is required to participate in the mandatory pension scheme of the BPF with retroactive effect to 1999, which has a higher contribution rate than the pension scheme in which Booking.com is currently participating. BPF instituted legal proceedings against Booking.com and in 2016 the District Court of Amsterdam rejected all of BPF’s claims. BPF appealed the decision to the Court of Appeal, and, in May 2019, the Court of Appeal also rejected all of BPF’s claims, in each case by ruling that Booking.com does not meet the definition of a travel intermediary for purposes of the mandatory pension scheme. BPF has appealed to the Netherlands Supreme Court. In October 2020, the Dutch Advocate General issued an opinion to the Supreme Court stating that the Dutch Advocate General believes the decision of the Court of Appeal to be incorrect based on her interpretation of the pension scheme requirements. We have submitted to the Supreme Court a response to the Advocate General's opinion. While we continue to believe that Booking.com is in compliance with its pension obligations and that the Dutch Supreme Court should uphold the ruling of the Court of Appeal, based on the significant influence the Dutch Advocate General’s opinion typically has on the Supreme Court, we have reevaluated the probability of a loss and believe it is probable that we have incurred a loss related to this matter. We expect the Dutch Supreme Court to rule in the first quarter of 2021. In the event the Supreme Court overturns the decision of the Court of Appeal and remands the case to a lower court, we intend to pursue a number of defenses in any subsequent proceedings and may ultimately prevail in whole or in part. We are not able to reasonably estimate a loss or a range of loss because the litigation is ongoing and there are significant factual and legal questions yet to be determined. As a result, as of December 31, 2020, we have not recorded a liability in connection with a potential adverse outcome to this litigation. However, if Booking.com were to ultimately lose and all of BPF’s claims were to be accepted (including with retroactive effect to 1999), we estimate that as of December 31, 2020, the maximum loss, not including any potential interest or penalties, would be approximately $290 million. Such estimated potential loss increases as Booking.com continues not to contribute to the BPF and depends on Booking.com’s applicable employee compensation after December 31, 2020.

For additional information related to the pension mattercertain regulatory matters, and our other contingent liabilities, see Note 16 to our Consolidated Financial Statements.

64



Contractual ObligationsStatements and Commercial Commitments
Part I, Item IA, Risk Factors -
The following table represents our material contractual obligations"Our business is subject to various competition/anti-trust, consumer protection, and commercial commitments at December 31, 2020: 
 By Period (in millions)
TotalLess than
1 Year
1 to 3
Years
3 to 5 YearsMore than 5 Years
Operating lease obligations(1)
$585 $168 $196 $85 $136 
Building construction obligation(2)
103 87 16 — — 
Purchase obligations (3)
193 77 73 43 — 
Senior notes(4)
13,991 1,323 3,225 4,049 5,394 
U.S. transition tax liability1,013 90 212 453 258 
Letters of credit and bank guarantees(5)
138 110 20 
Revolving credit facility and other(6)
11 — 
Total(7) (8)
$16,034 $1,859 $3,734 $4,633 $5,808 

(1)    Includesonline commerce laws and regulations around the land lease for Booking.com's future headquarters. See Notes 10world, and 16 to our Consolidated Financial Statements for further details.
(2)    Includes commitments to vendors to fit out and furnishas the office space. See Note 16 to our Consolidated Financial Statements for further details.
(3)    Represents significant noncancellable contractual obligations individually greater than $10 million. The obligations are primarily related to sponsorship and cloud hosting arrangements. Purchase obligations included here are those related to agreements to purchase goods and services that are enforceable and legally binding, that specify all significant terms, including the quantities to be purchased, price provisions and the approximate timing of the transaction.
(4)    Represents the aggregate principal amountsize of our senior notes outstanding at December 31, 2020business grows, scrutiny of our business by legislators and cumulative interest to maturity of $1.8 billion.  Convertible debt does not reflect the market valueregulators in excess of the outstanding principal amount because we can settle the conversion premium amount in cash or shares of common stock at our option. See Note 12 to our Consolidated Financial Statements.
(5)    Standby letters of credit and bank guarantees issued on behalf of the Company at December 31, 2020 are primarily related to payment guarantees to third-party payment processors (see Notes 12 and 16 to our Consolidated Financial Statements).
(6)    Includes commitment fees on undrawn balances available under the revolving credit facility and fees on outstanding letters of credit at December 31, 2020.
(7)    We reported "Other long-term liabilities" of $111 million in the Consolidated Balance Sheet at December 31, 2020, the majority of which relates to unrecognized tax benefits of $57 million (see Note 15 to our Consolidated Financial Statements).  We have excluded these long-term liabilities from the contractual obligations table above as a variety of factors could affect the timing of payments for the liabilities; therefore, we cannot reasonably estimate the timing of such payments.  We believe that these matters will likely not be resolved in the next twelve months and, accordingly, we have classified the estimated liability as non-current in the Consolidated Balance Sheet. 
(8)    In 2018, we entered into an agreement to sign a future lease related to approximately 222,000 square feet of office space in the city of Manchester in the United Kingdom for the future headquarters of Rentalcars.com. Our obligation to execute the lease is conditional upon the lessor completing certain activities, which are expected to be completed in 2021. If these activities are completed, the lease will commence for a term of approximately 13 years and we will have a lease obligation of approximately 65 million British Pounds Sterling (areas may intensify."$88 million), excluding lease incentives. We will also make capital expenditures to fit out and furnish the office space. The obligation is not included in the table of contractual obligations presented above.

Off-Balance Sheet Arrangements
At December 31, 2020, we did not have any off-balance sheet arrangements that have, or are reasonably likely to have, a material current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.
65



Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
 
We have exposure to several types of market risk: changes in interest rates, foreign currency exchange rates, and equity prices.

We manage our exposure to interest rate risk and foreign currency risk through internally established policies and procedures and, when deemed appropriate, through the use of derivative financial instruments. We use foreign currency exchange derivative contracts to manage short-term foreign currency risk.

The objective of our policies is to mitigate potential income statement, cash flow, and fair value exposures resulting from possible future adverse fluctuations in rates. We evaluate our exposure to market risk by assessing the anticipated near-term and long-term fluctuations in interest rates and foreign currency exchange rates. This evaluation includes the review of leading market indicators, discussions with financial analysts and investment bankers regarding current and future economic conditions, and the review of market projections as to expected future rates. We utilize this information to determine our own investment strategies as well as to determine if the use of derivative financial instruments is appropriate to mitigate any potential future market exposure that we may face. Our policy does not allow speculation in derivative instruments for profit or, except in certain limited situations, execution of derivative instrument contracts for which there are no underlying exposures. We do not use financial instruments for trading purposes and are not a party to any leveraged derivatives. To the extent that changes in interest rates and foreign currency exchange rates affect general economic conditions, we would also be affected by such changes.

During the year ended December 31, 2020, we soldSee Note 12 to our investments in government and corporate debt securities other thanConsolidated Financial Statements for information about our investments in Trip.com Group convertible senior notes (see Note 5 to the Consolidated Financial Statements). Our investments in Trip.com Group convertible senior notes are more sensitive to the equity market price volatility of Trip.com Group's American Depositary Shares ("ADSs") than changes in interest rates. The estimated fair value of our Trip.com Group convertible senior notes will likely increase as the market price of Trip.com Group's ADSs increases and will likely decrease as the market price of Trip.com Group's ADSs falls.

At December 31, 2020 and 2019, the outstanding aggregate principal amount of our debt was $12.2 billionand $8.7 billion, respectively. We estimate that the fair value of such debt was approximately $14.0 billion and $9.8 billion at December 31, 2020 and 2019, respectively. The estimated fair value of our debt in excess of the outstanding principal amount at December 31, 2020 primarily relates to Senior Notes and the Convertible Senior Notes issued in April 2020. The estimated fair value of the Company's debt in excess of the outstanding principal amount at December 31, 2019 primarily relates to the conversion premium on the convertible senior notes.other debt. Excluding the effect on the fair value of our convertible senior notes, a hypothetical 100 basis point (1.0%) decrease in interest rates would have resulted in an increase in the estimated fair value of our other debt of approximately $544$612 million and $325$522 million at December 31, 20202023 and 2019,2022, respectively. Our convertible senior notes are more sensitive to the equity market price volatility of our shares than changes in interest rates. The fair value of the convertible senior notes will likely increase as the market price of our shares increases and will likely decrease as the market price of our shares falls. Our convertible senior notes due in May 2025 are currently convertible at the option of the holder. If the note holders exercise their option to convert, we deliver cash to repay the principal amount of the notes and deliver shares of common stock or cash, at our option, to satisfy the conversion value in excess of the principal amount.

56

Our international business represents a substantial majority of our financial results. Therefore, because we report our results in U.S. Dollars, we
We face exposure to movements in foreign currency exchange rates as the financial results and the financial condition of our international businesses outside of the U.S., which represent a substantial majority of our financial results, are translated from local currencies (principally Euros and British Pounds Sterling) into U.S. Dollars. If the U.S. Dollar weakens against the local currencies, the translation of these foreign-currency-denominated balances will result in increased net assets,For example, our total gross bookings revenues, operating expenses and net income. Similarly,increased by 24% in 2023 as compared to 2022, but without the impact of changes in foreign currency exchange rates our net assets,total gross bookings increased year-over-year on a constant-currency basis by approximately 25%. Our total revenues operating expenses and net income will decrease if the U.S. Dollar strengthens against the local currencies. However,increased by 56% for the year ended December 31, 2020, movements2022 as compared to the year ended December 31, 2021, but without the impact of changes in foreign currency exchange rates, had little to no impact on our performance metrics and financial results. Since our expenses are generally denominated in foreign currenciestotal revenues increased year-over-year on a constant-currency basis similarby approximately 71%. See Notes 6, 12, and 19 to our revenues, our operating margins have not been significantly impacted by currency fluctuations. Additionally,Consolidated Financial Statements and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for additional information about foreign currency exchange rate fluctuations on transactions, denominated in currencies other than the functional currency, result intransaction gains and losses, that are reflected in our Consolidated Statements of Operations. We have a significant investment that is denominated in Hong Kong Dollars and the related impact from the movementschanges in foreign currency exchange rates, is recognizedthe impact of such changes on the increase in "Other income (expense), net" in the Consolidated Statementsour revenues and Operations.

We designateoperating margins, our use of foreign currency exchange derivatives, and our designation of certain portions of the aggregate principal value of theour Euro-denominated debt as a hedge againstof the impact of foreign currency exchange rate fluctuations onexposure of the net assets of one of ourinvestment in certain Euro functional currency subsidiaries. Foreign currency transaction gains or losses on the Euro-denominated debt that is not designated as a hedging instrument for accounting purposes are recognized in "Other income (expense), net" in our Consolidated Statements of Operations (see Note 12 to our Consolidated Financial Statements). Such foreign currency transaction gains or losses are dependent on the amount of
66


net assets of the Euro functional currency subsidiary, the amount of the Euro-denominated debt that is designated as a hedge and fluctuations in foreign currency exchange rates.

We generally enter into foreign currency forward contractsexchange derivatives to hedge our exposure to the impact of movements in foreign currency exchange rates on our transactional balances denominated in currencies other than the functional currency. In periods prior to the second quarter of 2020, we also entered into foreign currency derivative contracts to hedge translation risks from short-term foreign currency exchange rate fluctuations for the Euro, British Pound Sterling and certain other currencies versus the U.S. Dollar. Since the first quarter of 2020, we have not entered into such derivative instruments as the impact of the COVID-19 pandemic on our operating results are highly uncertain. We will continue to evaluate the use of derivative instruments in the future. We also designate certain portions of the aggregate principal value of our Euro-denominated debt as a hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries. Foreign currency transaction gains or losses are dependent on the amount of net assets of the Euro functional currency subsidiaries, the amount of the Euro-denominated debt that is designated as a hedge, and fluctuations in foreign currency exchange rates.

See NoteNotes 5 and 6 to our Consolidated Financial Statements for further information.

information about our investments in equity securities of publicly-traded companies and private companies. We are exposed to equity price risk as it relates to changes in the fair values of our investments in equity securities of publicly-traded companies and private companies.  Due to the impact of the COVID-19 pandemic (see Note 2 to the Consolidated Financial Statements) on the business of the investee and the estimated decline in the value of our investment, we recorded a significant impairment charge related to our investment in a private company during the three months ended March 31, 2020 (see Notes 5 and 6 to the Consolidated Financial Statements). The estimated fair values of our investments in equity securities of publicly-traded companies and private companies, excluding certain investments classified as debt securities for accounting purposes, were $3.1 billion and $455 million, respectively, at December 31, 2020, and $1.8 billion and $501 million, respectively, at December 31, 2019.these investments. Our investments in private companies excluding certain investments classified as debt securities for accounting purposes, are measured at cost less impairment, if any, plus or minus changes resulting fromany. Such investments are also required to be measured at fair value as of the date of certain observable price changes in orderly transactions for the identical or a similar investment of the same issuer. A hypothetical 10% decrease in the fair values of these investments at December 31, 20202023 and 20192022 of our investments in equity securities of publicly-traded companies and private companies would have resulted in a loss, before tax, of approximately $355$45 million and $230$220 million, respectively, being recognized in net income.


Item 8.  Financial Statements and Supplementary Data
 
The following Consolidated Financial Statements of the Company and the report of our independent registered public accounting firm are filed as part of this Annual Report on Form 10-K (See Part IV, Item 15, Exhibits and Financial Statement Schedules): Consolidated Balance Sheets at December 31, 20202023 and 2019;2022; Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Stockholders' (Deficit) Equity, and Consolidated Statements of Cash Flows for the years ended December 31, 2020, 20192023, 2022, and 2018;2021; Notes to theour Consolidated Financial Statements; and Report of Independent Registered Public Accounting Firm.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
 
None.

Item 9A. Controls and Procedures
 
Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our principal executive officer and our principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Exchange Act Rule 13a-15(e). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we include a report of our management's assessment of the design and effectiveness of our internal controls over financial reporting for the year ended December 31, 2020.

Management's Report on Internal Control Over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in the Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

57


Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2020.2023. Our independent registered public accounting firm also attested to and reported on the effectiveness of internal control over financial reporting.
67



Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Controls. No changeIn 2022, we began a multi-year implementation to integrate and upgrade certain financial systems and processes, including SAP S4 HANA ("SAP").

As a result of these improvements, there were changes to our internal control over financial reporting processes and procedures. However, there were no changes in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) that occurred during the three months ended December 31, 20202023 that materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting. Further, as the phased implementation of SAP continues, there will be additional changes to our processes and procedures that are likely to impact our internal control over financial reporting. We believe we are taking the necessary steps to monitor and maintain appropriate internal control over financial reporting during this period of change.

While we expect this implementation to strengthen our internal financial controls by automating certain manual processes and standardizing business processes and reporting across our organization, management will continue to evaluate and monitor our internal controls as the implementation continues.
6858


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors and Stockholders of Booking Holdings Inc.
 
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Booking Holdings Inc. and subsidiaries (the "Company") as of December 31, 2020,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2020,2023, of the Company and our report dated February 24, 2021,22, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying "Management's Report on Internal Control Over Financial Reporting."Reporting". Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP
Stamford, Connecticut
February 24, 202122, 2024

6959


Item 9B. Other Information
None.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
 
None.

PART III
 
Item 10. Directors, Executive Officers and Corporate Governance
 
Information required by Part III, Item 10 will be included in our Proxy Statement relating to our 20212024 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2020,2023, and is incorporated herein by reference.
 
Item 11. Executive Compensation
 
Information required by Part III, Item 11 will be included in our Proxy Statement relating to our 20212024 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2020,2023, and is incorporated herein by reference.
 
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
 
Information required by Part III, Item 12 will be included in our Proxy Statement relating to our 20212024 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2020,2023, and is incorporated herein by reference.
 
Item 13. Certain Relationships and Related Transactions, and Director Independence
 
Information required by Part III, Item 13 will be included in our Proxy Statement relating to our 20212024 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2020,2023, and is incorporated herein by reference.
 
Item 14. Principal Accountant Fees and Services
 
Information required by Part III, Item 14 will be included in our Proxy Statement relating to our 20212024 annual meeting of stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal year ended December 31, 2020,2023, and is incorporated herein by reference.

PART IV
 
Item 15. Exhibits and Financial Statement Schedules.
 
(a)List of Documents Filed as a Part of this Annual Report on Form 10-K:
 
The following Consolidated Financial Statements of the Company and the report of our independent registered public accounting firm are filed as part of this Annual Report on Form 10-K: Consolidated Balance Sheets at December 31, 20202023 and 2019;2022; Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Stockholders' (Deficit) Equity, and Consolidated Statements of Cash Flows for the years ended December 31, 2020, 20192023, 2022, and 2018;2021; Notes to theour Consolidated Financial Statements; and Report of Independent Registered Public Accounting Firm.Firm; and Schedule I - Condensed Financial Information of Parent (Booking Holdings Inc.).
 
AllOther financial statement schedules have been omitted because they are not applicable, not material or the required information is shown in the Consolidated Financial Statements or the notes thereto.
 
60

(b)Exhibits
(b)    Exhibits

In reviewing the agreements included as exhibits to this Annual Report on Form 10-K, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. Some agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
70


should not be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
may have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Annual Report on Form 10‑K and the Company's other public filings, which are available without charge through the SEC's website at http://www.sec.gov.
Exhibit NumberDescription
3.1(a)
Restated Certificate of Incorporation of the Registrant.Company.
3.2(b)
Certificate of Amendment of the Restated Certificate of Incorporation, dated as of June 4, 2021.
3.3(b)
Amended and Restated By-Laws of the Registrant.Booking Holdings Inc., dated as of June 4, 2021.
4.1Reference is hereby made to Exhibits 3.1, 3.2, and 3.2.3.3.
4.2(c)
Specimen Certificate for Registrant'sthe Company's Common Stock.
4.3(d)
Indenture, dated as of August 20, 2014, between the Registrant and American Stock Transfer & Trust Company, LLC as Trustee.
4.4(e)
Indenture, dated as of September 23, 2014, between the RegistrantCompany and Deutsche Bank Trust Company Americas, as Trustee.
4.54.4(f)(e)
Indenture, dated as of August 8, 2017, between the Company and U.S. Bank National Association, as trustee.
4.64.5(g)(f)
Form of 2.375% Senior Note due 2024.
4.74.6(h)(g)
Officers' Certificate, dated September 23, 2014, for the 2.375% Senior Notes due 2024.
4.84.7(i)(h)
Form of 1.800% Senior Note due 2027.
4.94.8(j)(i)
Officers' Certificate, dated March 3, 2015, for the 1.800% Senior Notes due 2027.
4.104.9(k)(j)
Form of 3.650% Senior Note due 2025.
4.114.10(l)(k)
Officers' Certificate, dated March 13, 2015, for the 3.650% Senior Notes due 2025.
Form of 2.15% Senior Note due 2022.
4.13(e)
Officers' Certificate, dated November 25, 2015, for the 2.15% Senior Notes due 2022.
4.14(m)(l)
Form of 3.600% Senior Note due 2026.
4.154.12(m)(l)
Officers' Certificate, dated May 23, 2016, for the 3.600% Senior Notes due 2026.
4.16(n)
Form of 0.800% Senior Note due 2022.
Officers' Certificate, dated March 10, 2017, for the 0.800% Senior Notes due 2022.
4.18(o)
Form of 2.750% Senior Note due 2023.
4.19(o)
Officers' Certificate, dated August 15, 2017, with respect to the 2.750% Senior Notes due 2023.
4.20(o)(m)
Form of 3.550% Senior Note due 2028.
4.214.14(o)(m)
Officers' Certificate, dated August 15, 2017, with respect to the 3.550% Senior Notes due 2028.
4.224.15(gg)(bb)
Description of the Company's Common Stock Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
Description of the Company's 0.800% Senior Notes due 2022 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.24(gg)
Description of the Company's 2.150% Senior Notes due 2022 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.25(gg)(bb)
Description of the Company's 2.375% Senior Notes due 2024 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.264.17(gg)(bb)
Description of the Company's 1.800% Senior Notes due 2027 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.274.18(ee)(gg)
FormDescription of 4.100%the Company's 0.100% Senior NoteNotes due 2025.2025 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.284.19(ee)(gg)
Officer’s Certificate, dated April 13, 2020, with respect toDescription of the 4.100%Company's 0.500% Senior Notes due 2025.2028 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
Form of 4.500% Senior Note due 2027.
71


Exhibit NumberDescription
4.30(ee)
Officer’s Certificate, dated April 13, 2020, with respect to the 4.500% Senior Notes due 2027.
4.31(ee)(z)
Form of 4.625% Senior Note due 2030.
4.324.21(ee)(z)
Officer’sOfficers' Certificate, dated April 13, 2020, with respect to the 4.625% Senior Notes due 2030.
4.334.22(ee)(z)
Form of 0.750% Convertible Senior Note due 2025.
61


Exhibit NumberDescription
4.344.23(ee)(z)
Indenture, dated as of April 14, 2020, between Booking Holdings Inc. and U.S. Bank National Association, as trustee.
4.24(n)
Form of 0.100% Senior Note due 2025.
4.25(n)
Officers' Certificate, dated March 8, 2021, with respect to the 0.100% Senior Notes due 2025.
4.26(n)
Form of 0.500% Senior Note due 2028.
4.27(n)
Officers' Certificate, dated March 8, 2021, with respect to the 0.500% Senior Notes due 2028.
4.28(hh)
Form of 4.000% Senior Note due 2026.
4.29(hh)
Officers' Certificate, dated November 15, 2022, with respect to the 4.000% Senior Notes due 2026.
4.30(hh)
Form of 4.250% Senior Note due 2029.
4.31(hh)
Officers' Certificate, dated November 15, 2022, with respect to the 4.250% Senior Notes due 2029.
4.32(hh)
Form of 4.500% Senior Note due 2031.
4.33(hh)
Officers' Certificate, dated November 15, 2022, with respect to the 4.500% Senior Notes due 2031.
4.34(hh)
Form of 4.750% Senior Note due 2034.
4.35(hh)
Officers' Certificate, dated November 15, 2022, with respect to the 4.750% Senior Notes due 2034.
4.36(kk)
Description of the Company's 4.000% Senior Notes due 2026 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.37(kk)
Description of the Company's 4.250% Senior Notes due 2029 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.38(kk)
Description of the Company's 4.500% Senior Notes due 2031 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.39(kk)
Description of the Company's 4.750% Senior Notes due 2034 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
4.40(ll)
Form of 3.625% Senior Note due 2028.
4.41(ll)
Officers' Certificate, dated May 12, 2023, with respect to the 3.625% Senior Notes due 2028.
4.42(ll)
Form of 4.125% Senior Note due 2033.
4.43(ll)
Officers' Certificate, dated May 12, 2023, with respect to the 4.125% Senior Notes due 2033.
4.44(ll)
Agency Agreement, dated as of May 12, 2023, by and between Booking Holdings Inc., as issuer, Elavon Financial Services DAC, UK Branch, as paying agent, and U.S. Bank Trust Company, National Association, as transfer agent, registrar, and trustee.
Description of the Company's 3.625% Senior Notes due 2028 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
Description of the Company's 4.125% Senior Notes due 2033 Registered Pursuant to Section 12 of the Securities Exchange Act of 1934.
10.1(p)(b)+
Booking Holdings Inc. 1999 Omnibus Plan (As Amended(as amended and Restated Effectiverestated effective June 7, 2018)3, 2021).
10.2(q)(o)+
Form of Restricted Stock Unit Agreement for awards under the 1999 Omnibus Plan to non-employee directors.
10.3(hh)(cc)+
Form of Restricted Stock Unit Agreement for awards under the 1999 Omnibus Plan.
10.4(r)+
2018 Form of Performance Share Unit Agreement under the 1999 Omnibus Plan.
2019 Form of Performance Share Unit Agreement under the 1999 Omnibus Plan.
10.6(ii)(dd)+
Form of Performance Share Unit Agreement under the Company's 1999 Omnibus Plan.
10.710.5(s)(p)+
Amended and Restated KAYAK Software Corporation 2012 Equity Incentive Plan.
10.810.6(s)(p)+
OpenTable, Inc. Amended and Restated 2009 Equity Incentive Award Plan.
10.910.7(u)(q)+
Buuteeq, Inc. Amended and Restated 2010 Stock Plan.
10.1010.8(v)(r)+
Amended and Restated Rocket Travel, Inc. 2012 Stock Incentive Plan.
10.1110.9(v)(r)+
Amended and Restated Annual Bonus Plan.
10.1210.10(w)(s)+
Form of Non-Competition and Non-Solicitation Agreement.
10.1310.11(x)(t)+
Second Amended and Restated Employment Agreement, dated April 21, 2015, by and between the RegistrantCompany and Peter J. Millones.
10.1410.12(y)(u)+
Employment Agreement, dated December 15, 2016, by and between the RegistrantCompany and Glenn D. Fogel.
10.1510.13(y)(u)+
Non-Competition and Non-Solicitation Agreement, dated December 15, 2016, by and between the RegistrantCompany and Glenn D. Fogel.
10.1610.14(y)(u)+
Employee Confidentiality and Assignment Agreement, dated December 15, 2016, by and between the RegistrantCompany and Glenn D. Fogel.
10.1710.15(z)(v)+
Employment Agreement, dated January 19, 2018, between the RegistrantCompany and David I. Goulden.
62


Exhibit NumberDescription
10.1810.16(z)(v)+
Non-Competition and Non-Solicitation Agreement, dated March 1, 2018, between the RegistrantCompany and David I. Goulden.
10.1910.17(z)(v)+
Employee Confidentiality and Assignment Agreement, dated January 19, 2018, between the RegistrantCompany and David I. Goulden.
10.2010.18(aa)(w)
Credit Agreement, dated as of August 14, 2019, among the Registrant,Company, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent.
10.2110.19(b)(ii)+
Letter Agreement, dated October 24, 2019, by and between the RegistrantCompany and Glenn D. Fogel.
10.2210.20(bb)(x)+
Form of Employee Confidentiality and Assignment Agreement.
10.2310.21(dd)(y)
Amendment No. 1, dated as of April 7, 2020, to the Credit Agreement, dated as of August 14, 2019, by and among the Company, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.
10.2410.22(ff)(aa)
Amendment No. 2, dated as of October 28, 2020, to the Credit Agreement, dated as of August 14, 2019, by and among the Company, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.
10.23(ee)+
Letter Amendment to 2018 PSU Award and 2019 PSU Award Agreements with Glenn D. Fogel dated January 28, 2021.
10.24(ee)+
Letter Amendment to 2018 PSU Award and 2019 PSU Award Agreements with David I. Goulden dated January 28, 2021.
10.25(ee)+
Letter Amendment to 2018 PSU Award and 2019 PSU Award Agreements with Peter J. Millones dated January 28, 2021.
10.26(ff)+
Letter Agreement, dated July 31, 2021, by and between the Company and Paulo Pisano.
10.27(gg)
Amendment No. 3, dated as of December 22, 2021, to the Credit Agreement, dated as of August 14, 2019, by and among the Company, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.
10.28(jj)
Agreement for the Sale and Purchase of the Booking Campus in Amsterdam, the Netherlands, dated as of December 14, 2022, by and among Booking.com Real Estate Amsterdam B.V., as the Seller, D-IE WIIS Oosterdok Coöperatief U.A., as the Purchaser, and Booking.com Holding B.V., as the Guarantor.
10.29(mm)
Amendment No. 4, dated as of January 6, 2023, to the Credit Agreement, dated as of August 14, 2019, by and among the Company, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.
10.30(nn)+
Form of Performance Share Unit Agreement under the Company's 1999 Omnibus Plan.
10.31(nn)+
Form of Restricted Stock Unit Agreement under the Company's 1999 Omnibus Plan.
10.32(nn)+
Letter Agreement, dated February 23, 2023, by and between the Company and David I. Goulden.
10.33(oo)*
Credit Agreement, dated as of May 17, 2023, among the Company, the lenders from time to time party thereto, and JPMorgan Chase Bank, N.A. as Administrative Agent.
10.34(pp)+
Employment Agreement, dated December 4, 2019, by and between Booking.com International BV and Paulo Pisano.
10.35(qq)+
Description of Termination Pay Policy, effective as of April 5, 2023.
10.36(rr)+
Employment Agreement, dated December 1, 2023, by and between the Company and Ewout Steenbergen.
10.37(rr)+
Form of Restricted Stock Unit Agreement under the Company's 1999 Omnibus Plan.
10.38(rr)+
Non-Competition and Non-Solicitation Agreement, dated December 1, 2023, by and between the Company and Ewout L. Steenbergen.
10.39(rr)+
Employee Confidentiality and Assignment Agreement, dated December 4, 2023, by and between the Company and Ewout L. Steenbergen.
List of Subsidiaries.
Consent of Deloitte & Touche LLP.
Power of Attorney (included in the Signature Page).
Certification of Glenn D. Fogel, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of David I. Goulden, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Glenn D. Fogel, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).
Certification of David I. Goulden, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code).
Booking Holdings Inc. Financial Restatement Recovery Policy.
7263


Exhibit NumberDescription
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the inline XBRL document.
104Cover Page Interactive Data File - the cover page from this Annual Report on Form 10-K for the year ended December 31, 2020,2023, formatted in Inline XBRL (included in Exhibit 101).
____________________________
+    Indicates a management contract or compensatory plan or arrangement.
*    Schedules or similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish copies of any of the omitted schedules or similar attachments upon request by the Securities and Exchange Commission.
(a)Previously filed as an exhibit to the Current Report on Form 8-K filed on February 21, 2018 (File No. 1-36691).
(b)Previously filed as an exhibit to the Current Report on Form 8-K filed on October 25, 2019June 4, 2021 (File No. 1-36691).
(c)Previously filed as an exhibit to Amendment No. 2 to Registration Statement on Form S-1 filed on March 18, 1999 (File No. 333-69657).
(d)Previously filed as an exhibit to the Current Report on Form 8-K filed on August 20, 2014 (File No. 0-25581).
(e)Previously filed as an exhibit to the Current Report on Form 8-K filed on November 25, 2015 (File No. 1-36691).
(f)(e)Previously filed as an exhibit to the Registration Statement on Form S-3 filed on August 8, 2017 (File No. 333-219800).
(g)(f)Previously filed as an exhibit to the Current Report on Form 8-K filed on September 22, 2014 (File No. 0-25581).
(h)(g)Previously filed as an exhibit to the Current Report on Form 8-K filed on September 26, 2014 (File No. 0-25581).
(i)(h)Previously filed as an exhibit to the Current Report on Form 8-K filed on March 2, 2015 (File No. 1-36691).
(j)(i)Previously filed as an exhibit to the Current Report on Form 8-K filed on March 4, 2015 (File No. 1-36691).
(k)(j)Previously filed as an exhibit to the Current Report on Form 8-K filed on March 12, 2015 (File No. 1-36691).
(l)(k)Previously filed as an exhibit to the Current Report on Form 8-K filed on March 13, 2015 (File No. 1-36691).
(m)(l)Previously filed as an exhibit to the Current Report on Form 8-K filed on May 23, 2016 (File No. 1-36691).
(n)Previously filed as an exhibit to the Current Report on Form 8‑K filed on March 10, 2017 (File No. 1-36691).
(o)(m)Previously filed as an exhibit to our Current Report on Form 8-K filed on August 15, 2017 (File No. 1-36691).
(p)(n)Previously filed as an exhibit to our Current Report on Form 8-K filed on JuneMarch 8, 20182021 (File No. 1-36691).
(q)(o)Previously filed as an exhibit to the Current Report on Form 8‑K filed on March 9, 2011 (File No. 0-25581).
(r)Previously filed as an exhibit to the Current Report on Form 8-K filed on March 2, 2018 (File No. 1-36691).
(s)(p)Previously filed as an exhibit to the Current Report on Form 8‑K filed on March 3, 2017 (File No. 1-36691).
(t)Previously filed as an exhibit to the Current Report on Form 8-K filed on March 1, 2019 (File No. 1-36691).
(u)(q)Previously filed as an exhibit to the Registration Statement on Form S-8 filed on June 13, 2014 (File No. 333-196756).
(v)(r)Previously filed as an exhibit to the Annual Report on Form 10-K filed for the year ended December 31, 2015 (File No. 1-36691).
(w)(s)Previously filed as an exhibit to the Current Report on Form 8-K filed on March 4, 2013 (File No. 0-25581).
(x)(t)Previously filed as an exhibit to our Current Report on Form 8-K filed on April 24, 2015 (File No. 1-36691).
(y)(u)Previously filed as an exhibit to the Current Report on Form 8-K filed on December 16, 2016 (File No. 1-36691).
(z)(v)Previously filed as an exhibit to the Current Report on Form 8-K filed on January 22, 2018 (File No. 1-36691).
(aa)(w)Previously filed as an exhibit to the Current Report on Form 8-K filed on August 14, 2019 (File No. 1-36691).
(bb)(x)Previously filed as an exhibit to the Quarterly Report on Form 10-Q filed on May 9, 2019 (File No. 1-36691).
(cc)This document is being furnished in accordance with SEC Release Nos. 33‑8212 and 34‑47551.
(dd)(y)Previously filed as an exhibit to the Current Report on Form 8-K filed on April 8, 2020 (File No. 1-36691).
(ee)(z)Previously filed as an exhibit to the Current Report on Form 8-K filed on April 14, 2020 (File No. 1-36691).
(ff)(aa)Previously filed as an exhibit to the Current Report on Form 8-K filed on October 30, 2020 (File No. 1-36691).
73


(gg)(bb)Previously filed as an exhibit to the Annual Report on Form 10-K filed on February 26, 2020 (File No. 1-36691).
(hh)(cc)Previously filed as an exhibit to the Quarterly Report on Form 10-Q filed on May 7, 2020 (File No. 1-36691)
64


(ii)(dd)Previously filed as an exhibit to the Current Report on Form 8-K filed on July 17, 2020 (File No. 1-36691)
(ee)Previously filed as an exhibit to the Current Report on Form 8-K filed on January 29, 2021 (File No. 1-36691)
(ff)Previously filed as an exhibit to the Quarterly Report on Form 10-Q filed on November 3, 2021 (File No. 1-36691)
(gg)Previously filed as an exhibit to the Annual Report on Form 10-K filed on February 23, 2021 (File No. 1-36691).
(hh)Previously filed as an exhibit to the Current Report on Form 8-K filed on November 15, 2022 (File No. 1-36691).
(ii)Previously filed as an exhibit to the Current Report on Form 8-K filed on October 25, 2019 (File No. 1-36691).
(jj)Previously filed as an exhibit to the Current Report on Form 8-K filed on December 19, 2022 (File No. 1-36691).
(kk)Previously filed as an exhibit to the Annual Report on Form 10-K filed on February 23, 2023 (File No. 1-36691).
(ll)Previously filed as an exhibit to the Current Report on Form 8-K filed on May 12, 2023 (File No. 1-36691).
(mm)Previously filed as an exhibit to the Quarterly Report on Form 10-Q filed on May 4, 2023 (File No. 1-36691).
(nn)Previously filed as an exhibit to the Current Report on Form 8-K filed on February 23, 2023 (File No. 1-36691).
(oo)Previously filed as an exhibit to the Current Report on Form 8-K filed on May 19, 2023 (File No. 1-36691).
(pp)Previously filed as an exhibit to the Quarterly Report on Form 10-Q filed on August 3, 2023 (File No. 1-36691).
(qq)Previously filed as an exhibit to the Current Report on Form 8-K filed on April 11, 2023 (File No. 1-36691).
(rr)Previously filed as an exhibit to the Current Report on Form 8-K filed on December 13, 2023 (File No. 1-36691).
(ss)This document is being furnished in accordance with SEC Release Nos. 33‑8212 and 34‑47551.


Item 16. Form 10-K Summary.

None.

7465


Signatures
 
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 BOOKING HOLDINGS INC.
   
 By:/s/ Glenn D. Fogel
  Name:Glenn D. Fogel
  Title:Chief Executive Officer and President
  Date:February 24, 202122, 2024
 
Power of Attorney
 
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Glenn D. Fogel, David I. Goulden, and Peter J. Millones, and each of them severally, his or her true and lawful attorney-in-fact with power of substitution and resubstitution to sign in his or her name, place and stead, in any and all capacities, to do any and all things and execute any and all instruments that such attorney may deem necessary or advisable under the Securities Exchange Act of 1934 and any rules, regulations and requirements of the Securities and Exchange Commission in connection with this Annual Report on Form 10-K and any and all amendments hereto, as fully and for all intents and purposes as he or she might do or could do in person, and hereby ratifies and confirms all said attorneys-in-fact and agents, each acting alone, and his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
 
66


Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
75


SignatureTitleDate
 
 
/s/ Robert J. Mylod Jr.Director, ChairmanChair of the BoardFebruary 24, 202122, 2024
Robert J. Mylod Jr.
/s/ Glenn D. FogelDirector, Chief Executive Officer and PresidentFebruary 24, 202122, 2024
Glenn D. Fogel 
 
/s/ David I. GouldenExecutive Vice President and Chief FinancialFebruary 24, 202122, 2024
David I. GouldenOfficer (Principal Financial Officer)
/s/ Susana D'EmicChief Accounting Officer and ControllerFebruary 24, 202122, 2024
Susana D'Emic(Principal Accounting Officer)
/s/ Timothy M. ArmstrongDirectorFebruary 24, 2021
Timothy M. Armstrong
/s/ Mirian Graddick-Weir Director February 24, 202122, 2024
Mirian Graddick-Weir   
  
/s/ Bob van DijkKelly GrierDirectorFebruary 24, 202122, 2024
Bob van DijkKelly Grier
/s/ Wei HopemanDirectorFebruary 24, 202122, 2024
Wei Hopeman
 
/s/ Jeffery H. BoydDirectorFebruary 24, 2021
Jeffery H. Boyd
/s/ Charles H. Noski Director February 24, 202122, 2024
Charles H. Noski    
/s/ Larry Quinlan DirectorFebruary 22, 2024
Larry Quinlan 
/s/ Nicholas J. ReadDirectorFebruary 24, 202122, 2024
Nicholas J. Read
/s/ Thomas E. RothmanDirectorFebruary 24, 202122, 2024
Thomas E. Rothman
/s/ Sumit SinghDirectorFebruary 22, 2024
Sumit Singh
/s/ Lynn M. Vojvodich RadakovichDirectorFebruary 24, 202122, 2024
Lynn M. Vojvodich Radakovich
/s/ Vanessa A. WittmanDirectorFebruary 24, 202122, 2024
Vanessa A. Wittman
    

7667


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Page No.
  
Report of Independent Registered Public Accounting Firm (PCAOB ID: 34)
 
Consolidated Balance Sheets at December 31, 20202023 and 20192022
 
Consolidated Statements of Operations for the years ended December 31, 2020, 20192023, 2022, and 20182021
 
Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 20192023, 2022, and 20182021
Consolidated Statements of Changes in Stockholders' (Deficit) Equity for the years ended December 31, 2020, 20192023, 2022, and 20182021
 
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 20192023, 2022, and 20182021
 
Notes to Consolidated Financial Statements

7768


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Booking Holdings Inc.

Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Booking Holdings Inc. and subsidiaries (the "Company") as of December 31, 20202023 and 2019,2022, the related consolidated statements of operations, comprehensive income, changes in stockholders' (deficit) equity, and cash flows for each of the three years in the period ended December 31, 2020,2023, including the related notes and the schedule listed in the Index at Item 15 (collectively, the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 20202023 and 2019,2022, and the results of its operations and its cash flows, for each of the three years in the period ended December 31, 2020,2023, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020,2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 24, 2021,22, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Total RevenuesRevenue - Refer to Notes 2 and 3 to the financial statements
Critical Audit Matter Description
Total revenues for the year ended December 31, 2020 were $6.8 billion. Substantially all of the Company’s revenues arerevenue is generated by providing online travel reservation services, which principally allow travelers to book travel reservations with travel service providers through the Company’s platforms. Revenues consistRevenue consists of a significant volume of low-dollar transactions utilizing multiple custom systems.
We identified total revenuesrevenue as a critical audit matter as the majority of the processes to calculate and record revenuesrevenue are highly automated, rely on a number of custom systems, and involve interfacing significant volumes of data across multiple systems. Given the complex information technology (IT) environment, this required the involvement of professionals with expertise in IT to identify, test, and evaluate the revenue data flows, the revenue systems and the automated controls.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the Company's revenue transactions included the following, among others:
With the assistance of our IT specialists, we:
Identified the systems used to calculate and record revenue transactions.
7869


Tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.
Performed testing of system interface controls and automated controls within the relevant revenue streams.
We tested business process controls to reconcile the various systems to the Company's general ledgers.
We performed detail transaction testing by agreeing the amounts recognized to source documents and testing the mathematical accuracy of the recorded revenues.revenue.
Goodwill - Refer to Notes 2 and 11 to the financial statements
Critical Audit Matter Description
The Company's evaluation of goodwill impairment involves the comparison of the fair value of each of the Company's reporting units to its carrying value. The total goodwill balance was $1.9 billion as of December 31, 2020. A substantial portion of the Company's goodwill relatesAs it related to the acquisitions of KAYAK in 2013 and OpenTable in 2014. Theannual impairment test, the Company estimated the fair values using a combination of standard valuation techniques, including an income approach (discounted cash flows) and market approaches (earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples of comparable publicly traded companies). With respect to the income approach, management makes significant estimates and assumptions related to forecasts of future performance, including revenues, operating margins, and discount rates. Due to the significant and negative financial impact of the COVID-19 pandemic, the Company recognized goodwill impairment charges of $1.1 billion for the year ended December 31, 2020 for the OpenTable and KAYAK reporting unit, resulting in an adjusted carrying value of goodwill for this reporting unit of $1.0 billion at December 31, 2020.
Given the significant judgments made by management to estimate the fair value of the OpenTable and KAYAK reporting unit, performing audit procedures to evaluate the reasonableness of management's estimates and assumptions related to selection of the discount rates and forecasts of future revenues and operating margins required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the forecasts of future revenues and operating margins and the selection of the discount rates for the OpenTable and KAYAK reporting unit included the following, among others:
We tested the effectiveness of controls over goodwill impairment evaluation, including those over the forecasts and the selection of the discount rates.
We evaluated management's ability to accurately forecast by comparing actual results in previous years to management’s historical forecasts.
We evaluated the reasonableness of management’s forecasts of future revenues and operating margins by comparing management’s forecasts with:
Historical revenues and operating margins.
Internal communications to management and the Board of Directors.
Forecasted information inclusive of COVID-19 economic assumptions, within analyst, economist and industry reports of the Company and selected companies in its peer group.
We considered the impact of industry and market conditions on management's forecasts.
With the assistance of our fair value specialists, we evaluated the discount rates, including testing the underlying source information and the mathematical accuracy of the calculations and developing a range of independent estimates and comparing those to the discount rates selected by management.
We evaluated the reasonableness of management's forecasts of future cash flows and discount rates utilized in the income approach fair value calculation by comparing the income approach fair value to the market approach fair values.
Commitments and Contingencies - TaxCompetition and Consumer Protection Reviews and Other Matters- Refer to Note 16 to the financial statements
Critical Audit Matter Description
The Company ishas been the subject of an open investigation with Comisión Nacional de los Mercados y la Competencia in Spain (the "CNMC") as to ongoing tax examinationswhether certain practices by Booking.com may produce adverse effects for hotels and assessments in various jurisdictions.other online travel companies. The Company has received tax assessments relating to permanent establishment, transfer pricing matters, and/or value added taxes, including interest and penalties from French, Italian and Turkish tax authoritiesrecorded a loss contingency of 486 million Euros ($530 million) in the amountconsolidated statement of $537 million, $129 millionoperations for the year ended December 31, 2023. The related liability is included in "Accrued expenses and $103 million respectively. The Company believes that it has been, and continues to be,other current liabilities" in compliance with the relevant tax laws, and the Company is contesting these assessments. The Company has recorded a liabilityconsolidated balance sheet as of $61 million for France and a liability of $5December 31, 2023.
7970


million for Italy in connection with these assessments. In addition,
Given the Company currently estimates thatsignificant judgment made by management to determine both the reasonably possiblelikelihood and the estimated amount of a loss related to VAT is approximately $24 million.
Given the complexitysuch matters, performing audit procedures to evaluate management's accounting for and disclosure of the relevant tax lawsloss contingency related to the CNMC matter involved challenging and regulations, auditing management's evaluation and accounting forsubjective auditor judgment, including the tax positions associatedneed to involve professionals in our firm with these tax assessments involved subjective and complex judgments.expertise in Spanish competition law.

How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the accounting forloss contingency related to the tax positions associated with the tax assessmentsCNMC matter included the following, among others:
We tested the effectiveness of internal controls overrelated to management’s review of the loss contingency and approval of the accounting for uncertain tax positions.treatment and related disclosures.
With the assistanceinvolvement of a professional in our tax specialists, we evaluated management's analysis regardingfirm with expertise in Spanish competition law, we:
Inquired of the Company’s internal legal counsel to understand the legal merits and the basis for the Company’s conclusion specific to the likelihood of sustaining its tax positions upon examination byloss and the relevant tax authorities and, we evaluated management's estimate of the amountpotential loss or range of tax benefit recognized.loss.
We assessed the basisRequested and received written responses from internal and external legal counsel.
Obtained and evaluated management’s evaluation of the Company's analysisloss contingency, including making inquiries of management to evaluate and measurement by obtaining, reading,corroborate our understanding of information obtained from internal and evaluating relevant third-party specialists' reportsexternal legal counsel.
Read the draft decision from the CNMC and the Company's documentation.related response from the Company.
We obtained, read, and evaluated relevant correspondence betweenEvaluated whether the Company and the tax authorities.
We evaluated any developments in the matters during the current fiscal year through inquiry of both Company personnel and the Company's third-party specialists.Company’s disclosures were consistent with our testing.

/s/ DELOITTE & TOUCHE LLP
Stamford, Connecticut
February 24, 202122, 2024
We have served as the Company’s auditor since 1997.

8071


Booking Holdings Inc.
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
 
December 31, December 31,
20202019 20232022
ASSETSASSETS  
Current assets:Current assets:  
Current assets:
Current assets:
Cash and cash equivalentsCash and cash equivalents$10,562 $6,312 
Short-term investments (Available-for-sale debt securities:
Amortized cost of $500 and $998, respectively)
501 998 
Accounts receivable, net (Allowance for expected credit losses of $166 and $49, respectively)529 1,680 
Prepaid expenses, net (Allowance for expected credit losses of $22 and $6, respectively)337 479 
Cash and cash equivalents
Cash and cash equivalents
Short-term investments (Available-for-sale debt securities:
Amortized cost of $580 and $176, respectively)
Accounts receivable, net (Allowance for expected credit losses of $137 and $117, respectively)
Prepaid expenses, net
Other current assetsOther current assets277 364 
Total current assetsTotal current assets12,206 9,833 
Property and equipment, netProperty and equipment, net756 738 
Operating lease assetsOperating lease assets529 620 
Intangible assets, netIntangible assets, net1,812 1,954 
GoodwillGoodwill1,895 2,913 
Long-term investments (Includes available-for-sale debt securities:
Amortized cost of $225 and $2,192, respectively)
3,759 4,477 
Other assets, net (Allowance for expected credit losses of $33 at December 31, 2020)917 867 
Long-term investments (Includes available-for-sale debt securities:
Amortized cost of $576 at December 31, 2022)
Other assets, net
Total assetsTotal assets$21,874 $21,402 
LIABILITIES AND STOCKHOLDERS' EQUITY  
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:Current liabilities:  
Current liabilities:
Current liabilities:
Accounts payable
Accounts payable
Accounts payableAccounts payable$735 $1,239 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities1,382 1,578 
Deferred merchant bookingsDeferred merchant bookings323 1,561 
Convertible debt985 988 
Short-term debt
Total current liabilitiesTotal current liabilities3,425 5,366 
Deferred income taxesDeferred income taxes1,127 876 
Operating lease liabilitiesOperating lease liabilities366 462 
Long-term U.S. transition tax liabilityLong-term U.S. transition tax liability923 1,021 
Other long-term liabilitiesOther long-term liabilities111 104 
Long-term debtLong-term debt11,029 7,640 
Total liabilities Total liabilities16,981 15,469 
Commitments and contingencies (see Note 16)Commitments and contingencies (see Note 16)00Commitments and contingencies (see Note 16)
Stockholders' equity:  
Common stock, $0.008 par value,
Authorized shares: 1,000,000,000
Issued shares: 63,406,451 and 63,179,471, respectively
Treasury stock, 22,446,897 and 21,762,070 shares, respectively(24,128)(22,864)
Stockholders' (deficit) equity:
Stockholders' (deficit) equity:
Stockholders' (deficit) equity:
Common stock, $0.008 par value,
Authorized shares: 1,000,000,000
Issued shares: 64,048,000 and 63,780,528, respectively
Common stock, $0.008 par value,
Authorized shares: 1,000,000,000
Issued shares: 64,048,000 and 63,780,528, respectively
Common stock, $0.008 par value,
Authorized shares: 1,000,000,000
Issued shares: 64,048,000 and 63,780,528, respectively
Treasury stock: 29,650,351 and 25,917,558 shares, respectively
Additional paid-in capitalAdditional paid-in capital5,851 5,756 
Retained earningsRetained earnings23,288 23,232 
Accumulated other comprehensive lossAccumulated other comprehensive loss(118)(191)
Total stockholders' equity4,893 5,933 
Total liabilities and stockholders' equity$21,874 $21,402 
Total stockholders' (deficit) equity
Total liabilities and stockholders' (deficit) equity

See Notes to Consolidated Financial Statements.
8172


Booking Holdings Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except share and per share data)
 
Year Ended December 31,
202020192018
Year Ended December 31,Year Ended December 31,
2023202320222021
Merchant revenues
Agency revenuesAgency revenues$4,314 $10,117 $10,480 
Merchant revenues2,117 3,830 2,987 
Advertising and other revenuesAdvertising and other revenues365 1,119 1,060 
Total revenuesTotal revenues6,796 15,066 14,527 
Operating expenses:Operating expenses:   Operating expenses:   
Marketing expensesMarketing expenses2,179 4,967 4,956 
Sales and other expensesSales and other expenses755 955 830 
Personnel, including stock-based compensation of $233, $308 and $317, respectively1,944 2,248 2,042 
Personnel, including stock-based compensation of $530, $404, and $370, respectively
General and administrativeGeneral and administrative581 797 699 
Information technologyInformation technology299 285 233 
Depreciation and amortizationDepreciation and amortization458 469 426 
Restructuring and other exit costs149 
Impairment of goodwill1,062 
Other operating expenses
Total operating expensesTotal operating expenses7,427 9,721 9,186 
Operating (loss) income(631)5,345 5,341 
Total operating expenses
Total operating expenses
Operating income
Interest expenseInterest expense(356)(266)(269)
Interest expense
Interest expense
Other income (expense), net
Income before income taxes
Income before income taxes
Income before income taxes
Income tax expense
Net income
Other income (expense), net1,554 879 (237)
Earnings before income taxes567 5,958 4,835 
Income tax expense508 1,093 837 
Net income$59 $4,865 $3,998 
Net income applicable to common stockholders per basic common share
Net income applicable to common stockholders per basic common share
Net income applicable to common stockholders per basic common shareNet income applicable to common stockholders per basic common share$1.45 $112.93 $84.26 
Weighted-average number of basic common shares outstanding (in 000's)Weighted-average number of basic common shares outstanding (in 000's)40,974 43,082 47,446 
Net income applicable to common stockholders per diluted common shareNet income applicable to common stockholders per diluted common share$1.44 $111.82 $83.26 
Weighted-average number of diluted common shares outstanding (in 000's)Weighted-average number of diluted common shares outstanding (in 000's)41,160 43,509 48,017 

See Notes to Consolidated Financial Statements.

8273


Booking Holdings Inc.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)

Year Ended December 31,
202020192018
Net income$59 $4,865 $3,998 
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax50 (10)(114)
Net unrealized gains (losses) on available-for-sale securities, net of tax23 135 (199)
Total other comprehensive income (loss), net of tax73 125 (313)
Comprehensive income$132 $4,990 $3,685 


Year Ended December 31,
202320222021
Net income$4,289 $3,058 $1,165 
Other comprehensive loss, net of tax
Foreign currency translation adjustments(63)(111)(57)
Net unrealized gains (losses) on available-for-sale securities(12)31 
Total other comprehensive loss, net of tax(56)(123)(26)
Comprehensive income$4,233 $2,935 $1,139 

See Notes to Consolidated Financial Statements.


8374


Booking Holdings Inc.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT) EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020, 20192023, 2022, and 20182021
(In millions, except share data)
 Common StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss) Total
 Shares
(in 000's)
AmountShares
(in 000's)
Amount
Balance, December 31, 201762,689 $(14,217)$(8,699)$5,783 $13,939 $238 $11,261 
Cumulative effect of adoption of accounting standards updates— — — — — 430 (241)189 
Net income— — — — — 3,998 — 3,998 
Foreign currency translation adjustments, net of tax— — — — — — (114)(114)
Net unrealized losses on available-for-sale securities, net of tax— — — — — — (199)(199)
Exercise of stock options and vesting of restricted stock units and performance share units208 — — — — 
Repurchase of common stock— — (3,100)(6,012)— — — (6,012)
Stock-based compensation and other stock-based payments— — — — 320 — — 320 
Conversion of debt— — — — (770)— — (770)
Common stock issued in an acquisition52 — — 110 — — 110 
Balance, December 31, 201862,949 $(17,317)$(14,711)$5,445 $18,367 $(316)$8,785 
Net income— — — — — 4,865 — 4,865 
Foreign currency translation adjustments, net of tax— — — — — — (10)(10)
Net unrealized gains on available-for-sale securities, net of tax— — — — — — 135 135 
Exercise of stock options and vesting of restricted stock units and performance share units230 — — — — 
Repurchase of common stock— — (4,445)(8,153)— — — (8,153)
Stock-based compensation and other stock-based payments— — — — 308 — — 308 
Balance, December 31, 201963,179 $(21,762)$(22,864)$5,756 $23,232 $(191)$5,933 
Cumulative effect of adoption of accounting standard update— — — — — (3)— (3)
Net income— — — — — 59 — 59 
Foreign currency translation adjustments, net of tax— — — — — — 50 50 
Net unrealized gains on available-for-sale securities, net of tax— — — — — — 23 23 
Issuance of convertible senior notes— — — — 96 — — 96 
Conversion of debt— — — — (245)— — (245)
Exercise of stock options and vesting of restricted stock units and performance share units227 — — — — 
Repurchase of common stock— — (685)(1,264)— — — (1,264)
Stock-based compensation and other stock-based payments— — — — 238 — — 238 
Balance, December 31, 202063,406 $(22,447)$(24,128)$5,851 $23,288 $(118)$4,893 

 Common StockTreasury StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Loss Total
 Shares
(in 000's)
AmountShares
(in 000's)
Amount
Balance, December 31, 202063,406 $— (22,447)$(24,128)$5,851 $23,288 $(118)$4,893 
Net income— — — — — 1,165 — 1,165 
Foreign currency translation adjustments, net of tax— — — — — — (57)(57)
Net unrealized gains on available-for-sale securities, net of tax— — — — — — 31 31 
Conversion of debt— — — — (86)— — (86)
Exercise of stock options and vesting of restricted stock units and performance share units178 — — — — — 
Repurchase of common stock— — (71)(162)— — — (162)
Stock-based compensation and other stock-based payments— — — — 389 — — 389 
Balance, December 31, 202163,584 $— (22,518)$(24,290)$6,159 $24,453 $(144)$6,178 
Cumulative effect of adoption of accounting standards update— — — — (96)30 — (66)
Net income— — — — — 3,058 — 3,058 
Foreign currency translation adjustments, net of tax— — — — — — (111)(111)
Net unrealized losses on available-for-sale securities, net of tax— — — — — — (12)(12)
Exercise of stock options and vesting of restricted stock units and performance share units197 — — — — — 
Repurchase of common stock— — (3,400)(6,693)— — — (6,693)
Stock-based compensation and other stock-based payments— — — — 421 — — 421 
Balance, December 31, 202263,781 $— (25,918)$(30,983)$6,491 $27,541 $(267)$2,782 
Net income— — — — — 4,289 — 4,289 
Foreign currency translation adjustments, net of tax— — — — — — (63)(63)
Net unrealized gains on available-for-sale securities, net of tax— — — — — — 
Exercise of stock options and vesting of restricted stock units and performance share units267 — — — 134 — — 134 
Repurchase of common stock— — (3,732)(10,443)— — — (10,443)
Stock-based compensation and other stock-based payments— — — — 550 — — 550 
Balance, December 31, 202364,048 $— (29,650)$(41,426)$7,175 $31,830 $(323)$(2,744)
 

See Notes to Consolidated Financial Statements.
8475


Booking Holdings Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)

 Year Ended December 31,
 202020192018
OPERATING ACTIVITIES:   
Net income$59 $4,865 $3,998 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization458 469 426 
Provision for expected credit losses and chargebacks319 138 163 
Deferred income tax expense (benefit)213 122 (150)
Net (gains) losses on marketable equity securities(1,811)(745)367 
Stock-based compensation expense and other stock-based payments255 325 331 
Amortization of debt discount and debt issuance costs64 58 59 
Operating lease amortization184 172 
Unrealized foreign currency transaction losses (gains) on Euro-denominated debt200 (7)
Impairment of goodwill1,062 
Impairment of investment100 
Other19 
Changes in assets and liabilities, net of effects of acquisitions:   
Accounts receivable891 (323)(319)
Prepaid expenses and other current assets161 (263)(201)
Deferred merchant bookings and other current liabilities(2,266)480 635 
Long-term assets and liabilities194 (435)10 
Net cash provided by operating activities85 4,865 5,338 
INVESTING ACTIVITIES:   
Purchase of investments(74)(672)(2,686)
Proceeds from sale and maturity of investments2,997 8,099 5,616 
Additions to property and equipment(286)(368)(442)
Acquisitions and other investments, net of cash acquired(9)(273)
Net cash provided by investing activities2,637 7,050 2,215 
FINANCING ACTIVITIES:   
Proceeds from revolving credit facility and short-term borrowings400 25 
Repayments of revolving credit facility and short-term borrowings(425)
Proceeds from the issuance of long-term debt4,108 
Payments for conversion of debt(1,244)(1,487)
Payments for repurchase of common stock(1,303)(8,187)(5,971)
Other financing activities(33)(8)
Net cash provided by (used in) financing activities1,528 (8,220)(7,431)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents(8)(40)
Net increase in cash and cash equivalents and restricted cash and cash equivalents4,250 3,687 82 
Total cash and cash equivalents and restricted cash and cash equivalents, beginning of period6,332 2,645 2,563 
Total cash and cash equivalents and restricted cash and cash equivalents, end of period$10,582 $6,332 $2,645 
SUPPLEMENTAL CASH FLOW INFORMATION:   
Cash paid during the period for income taxes (see Note 15)$319 $1,074 $1,169 
Cash paid during the period for interest$278 $221 $219 
Non-cash operating and financing activity for an acquisition (see Note 19)$$$51 
Non-cash investing and financing activity for an acquisition (see Note 19)$$$59 
 Year Ended December 31,
 202320222021
OPERATING ACTIVITIES:
Net income$4,289 $3,058 $1,165 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization504 451 421 
Provision for expected credit losses and chargebacks330 232 109 
Deferred income tax benefit(478)(257)(445)
Net losses on equity securities131 963 569 
Stock-based compensation expense and other stock-based payments530 404 376 
Operating lease amortization161 156 178 
Unrealized foreign currency transaction losses (gains) related to Euro-denominated debt163 (46)(135)
Loss on early extinguishment of debt— — 242 
Gain on sale and leaseback transaction— (240)— 
Other38 71 
Changes in assets and liabilities, net of effects of acquisitions:   
Accounts receivable(1,330)(1,228)(1,002)
Prepaid expenses and other current assets155 (217)
Deferred merchant bookings and other current liabilities2,742 3,718 1,539 
Long-term assets and liabilities142 (478)(274)
Net cash provided by operating activities7,344 6,554 2,820 
INVESTING ACTIVITIES:
Purchase of investments(12)(768)(17)
Proceeds from sale and maturity of investments1,840 32 508 
Additions to property and equipment(345)(368)(304)
Acquisitions, net of cash acquired— — (1,185)
Proceeds from sale and leaseback transaction— 601 — 
Other investing activities(15)— 
Net cash provided by (used in) investing activities1,486 (518)(998)
FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt1,893 3,621 2,015 
Payments on maturity and redemption of debt(500)(1,880)(3,068)
Payments for repurchase of common stock(10,377)(6,621)(163)
Proceeds from exercise of stock options134 
Other financing activities(59)(24)(28)
Net cash used in financing activities(8,909)(4,897)(1,239)
Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents(37)(40)(13)
Net (decrease) increase in cash and cash equivalents and restricted cash and cash equivalents(116)1,099 570 
Total cash and cash equivalents and restricted cash and cash equivalents, beginning of period12,251 11,152 10,582 
Total cash and cash equivalents and restricted cash and cash equivalents, end of period$12,135 $12,251 $11,152 
SUPPLEMENTAL CASH FLOW INFORMATION:   
Cash paid during the period for income taxes$1,789 $600 $735 
Cash paid during the period for interest$842 $380 $318 
    
See Notes to Consolidated Financial Statements.
8576


Booking Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.BUSINESS DESCRIPTION
 
Booking Holdings Inc. ("Booking Holdings" or the "Company") seeks to make it easier for everyone to experience the world by providing consumers, travel service providers, and restaurants with leading travel and restaurant online reservation and related services. The Company offers its services through 6five primary consumer-facing brands: Booking.com, Priceline, agoda, Rentalcars.com,Agoda, KAYAK, and OpenTable. Through one or more of the Company's brands,OpenTable, which allow consumers can:to: book a broad array of accommodations (including hotels, motels, resorts, homes, apartments, bed and breakfasts, hostels, and other alternative and traditional accommodations properties); and a flight to their destinations; make a car rental reservation or arrange for an airport taxi; make a dinner reservation; or book a flight, cruise, vacation package, tour, activity, or activity.cruise. Consumers can also use the Company's meta-search services to easily compare travel reservation information, such as airline ticket,flight, hotel, reservation and rental car reservation information,reservations from hundreds of online travel platforms at once. In addition, the Company offers various other services to consumers, travel service providers and restaurants, such as certain travel-related insurance products and restaurant management services. The Company's portfolio of brands are organized into four operating segments which are aggregated into one reportable segment based on the similarity in economic characteristics, other qualitative factors, and the objectives and principles of Accounting Standards Codification ("ASC") 280, Segment Reporting.

2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation 
The Company's Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries, including acquired businesses from the dates of acquisition. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and footnotes thereto. Actual results may differ significantly from those estimates. The estimates underlying the Company's Consolidated Financial Statements relate to, among other things, the valuation of goodwill and other long-lived tangible and intangible assets, the valuation of investments in private companies, income taxes, contingencies, stock-based compensation, the allowance for expected credit losses (also referred to as allowanceprovision for doubtfulbad debts or provision for uncollectible accounts), customer chargeback provisions, and the accrual of obligations for loyalty and other incentive programs.

Impact of COVID-19

In response to the outbreak of the novel strain of the coronavirus, COVID-19 (the "COVID-19 pandemic"), many governments around the world have implemented, and continue to implement, a variety of measures to reduce the spread of COVID-19, including travel restrictions and bans, instructions to residents to practice social distancing, curfews, quarantine advisories, including quarantine restrictions after travel in certain locations, shelter-in-place orders, required closures of non-essential businesses and additional restrictions on businesses as part of re-opening plans. These government mandates have forced many of the customers on whom the Company’s business relies, including hotels and other accommodation providers, airlines and restaurants, to seek government support in order to continue operating, to curtail drastically their service offerings, to file for bankruptcy protection or to cease operations entirely. Further, these measures have materially adversely affected, and may further adversely affect, consumer sentiment and discretionary spending patterns and economies, and the Company’s workforce, operations and customers.

The COVID-19 pandemic and the resulting economic conditions and government orders have resulted in a material decrease in consumer spending and an unprecedented decline in travel and restaurant activities and consumer demand for related services. The Company’sCompany's financial results and prospects are almost entirely dependent on facilitating the sale of travel-related services. The Company’s results forCOVID-19 pandemic, since its outset in 2020, and the year ended December 31, 2020 have been materially and negatively impacted as compared to 2019 and 2018.

Due to the uncertain and rapidly evolving natureresulting implementation of current conditionstravel restrictions by governments around the world the Company is unable to predict accurately the impact that the COVID-19 pandemic will have on its business going forward. With the spread of COVID-19 to all major regions and the discovery of new variants of the coronavirus, the Company expects the COVID-19 pandemic and its effects to continue to haveresulted in a significant adverse impact on its business for the duration of the pandemic, during any resurgence of the pandemic and during the subsequent economic recovery, which could be an extended period of time.

86


Given the severe downturn in the global travel industry and the financial difficulties faced by many of the Company's travel service provider and restaurant customers and marketing affiliates, the Company has increased its provision for expected credit losses (also referred to as provision for bad debt or provision for uncollectible accounts) on receivables from and prepayments to its travel service provider and restaurant customers and marketing affiliates (see Note 7). Moreover, due to the high level of cancellations of existing reservations, the Company has incurred, and may continue to incur, higher than normal cash outlays to refund consumers for prepaid reservations, including certain situations where the Company has already transferred the prepayment to the travel service provider (see Note 3). Any material increase in the Company’s provision for expected credit losses and any material increase in cash outlays to refund consumers would have a corresponding adverse effect on the Company's results of operations and related cash flows.

As a result of the deterioration of the Company’s business due to the COVID-19 pandemic, the Company determined that a portion of its goodwill had experienced a decline in value at March 31,travel activities and consumer demand for travel related services, in 2020 and recorded a significant impairment charge (see Note 11). In addition, the Company recorded a significant impairment charge at March 31, 2020 for one of the Company's long-term investments due to the impact of the COVID-19 pandemic on the business of the investee and the Company's estimate of the resulting decline in the value of the investment (see Notes 5 and 6). At September 30, 2020, the Company recorded an additional significant impairment charge to its goodwill (see Note 11).particular. Even though no additional impairment indicators were identified as of December 31, 2020 for these assets, it is possible that the Company maythere have to record additional significant impairment charges in future periods.

See Note 12 for additional information about the Company’s existing debt arrangements, including $4.1 billion of debt issued in April 2020. The Company’s continued access to sources of liquidity depends on multiple factors, including global economic conditions, the condition of global financial markets, the availability of sufficient amounts of financing, the Company’s ability to meet debt covenant requirements, the Company’s operating performance and the Company's credit ratings. If the Company’s credit ratings were to be downgraded, or financing sources were to ascribe higher risk to the Company's rating levels, the Company or its industry, the Company’s access to capital and the cost of any financing would be negatively impacted. There is no guarantee that additional debt financing will be availablebeen improvements in the future to fund the Company’s obligations, or that it will be available on commercially reasonable terms, in which case the Company may need to seek other sources of funding.

The extent of the effects of the COVID-19 pandemic on the Company’s business, results of operations, cash flows and growth prospects is highly uncertain and will ultimately depend on future developments. These include, but are not limited to, the severity, extent and duration of the COVID-19 pandemic, including as a result of any new variants of COVID-19 and any resurgences of the pandemic, and its impact on the travel and restaurant industries and consumer spending more broadly. Even if economic and operating conditions for the Company’sCompany's business improve,since the outset of the pandemic, the Company cannot predict the long-term effects of the pandemic on its business or the travel and restaurant industries as a whole. If the travel and restaurant industries are fundamentally changed by the COVID-19 pandemic in ways that are detrimental to the Company’s operating model, the Company’s business may continue to be adversely affected even as the broader global economy recovers.

In response to the reduction in the Company's business volumes as a result of the impact of the COVID-19 pandemic, the Company has taken actions to reduce the size of its workforce to optimize efficiency and reduce costs. See Note 20 for additional information.

Certain governments have passed or are considering legislation to help businesses during the COVID-19 pandemic through loans, wage subsidies, tax relief or other financial aid, and some of these governments have extended or are considering extending these programs. The Company has participated in several of these programs, including the Netherlands' wage subsidy program and the United Kingdom's job retention scheme. See Note 21 for additional information.

Change in Presentation and Reclassification
Certain amounts from prior periods have been reclassified to conform to the current year presentation, including the change in the presentation of marketing expenses disclosed later in this Note.

Fair Value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
There are three levels of Financial Instrumentsinputs to valuation techniques used to measure fair value:
The Company's financial instruments, including cash, restricted cash, accounts payable, accrued expensesLevel 1:    Quoted prices in active markets that are accessible by the Company at the measurement date for identical assets and deferred merchant bookings,liabilities.
Level 2:    Inputs that are carried at cost which approximates their fair value because of the short-term nature of these financial instruments.  Accounts receivable and other financial assets measured at amortized costobservable, either directly or indirectly. Such prices may be based upon quoted prices for identical or comparable securities in active markets or inputs not quoted on active markets, but corroborated by market data.
Level 3:    Unobservable inputs are carried at cost less an allowance for expected credit losses to present the net amount expected to be collected (see Note 7). See Notes 5, 6 and 12 for information related to fair value for investments, derivatives and the Company's outstanding senior notes.used when little or no market data is available.
 
8777


Cash and Cash Equivalents
Cash and cash equivalents consists primarily of cash and highly liquid investment grade securities with an original maturity of three months or less. Cash equivalents are recognized based on settlement date.
Restricted Cash and Cash Equivalents
Restricted cash and cash equivalents are restricted through legal contracts or regulations. Restricted cash and cash equivalents at December 31, 2020, 2019 and 2018 principally relates See Note 20 for information related to the minimum cash requirement for the Company's travel-related insurance business. The following table reconciles cash and cash equivalents and restricted cash and cash equivalents reported in the Consolidated Balance Sheets to the total amount shown in the Consolidated Statements of Cash Flows (in millions):  
December 31,
202020192018
As included in the Consolidated Balance Sheets:
Cash and cash equivalents$10,562 $6,312 $2,624 
Restricted cash and cash equivalents included in "Other current assets"20 20 21 
Total cash and cash equivalents and restricted cash and cash equivalents as
shown in the Consolidated Statements of Cash Flows
$10,582 $6,332 $2,645 
equivalents.

Investments
Investments held by the Company include debt securities and equity securities. Investments in debt or equity securities that include embedded features, such as conversion or redemption features, are analyzed by the Company to determine if these features are embedded derivatives that require separate accounting treatment. Payments made for investments are reported in "Purchase of investments" and proceeds received from sales or maturities of investments are reported in "Proceeds from sale and maturity of investments" in the Consolidated Statements of Cash Flows.

Debt Securities
The Company has classified its investments in debt securities as available-for-sale securities. Preferred stock that is either mandatorily redeemable or redeemable at the option of the investor is considered a debt security for accounting purposes. These securities arepurposes and is reported at estimated fair value with the aggregate unrealized gains and losses, net of tax, reflected in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. The fair value of these investments is based on the specific quoted market price of the securities or comparable securities at the balance sheet dates. Unobservable inputs are also used when little or no market data is available. See Note 6 for information related to fair value measurements.

For periods prior to January 1, 2020, investments in debt securities were considered to be impaired when a decline in fair value was judged to be other than temporary because the Company either intended to sell or it was more-likely-than not that it would be required to sell the impaired security before recovery. Once a decline in fair value was determined to be other than temporary, an impairment charge was recorded and a new cost basis in the investment was established.  If the Company did not intend to sell the debt security, but it was probable that the Company would not collect all amounts due, then only the impairment due to the credit risk would be recognized in net income and the remaining amount of the impairment would be recognized in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets.

On January 1, 2020, the Company adopted the accounting standards update on the measurement of credit losses on financial instruments. Under the current accounting standard, if the amortized cost basis of an available-for-sale security exceeds its fair value and if the Company has the intention to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis, an impairment is recognized in the Consolidated Statements of Operations. If the Company does not have the intention to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis and the Company determines that the decline in fair value below the amortized cost basis of an available-for-sale security is entirely or partially due to credit-related factors, the credit loss is measured and recognized as an allowance for expected credit losses along with the related expense in the Consolidated Statements of Operations. The allowance is measured as the amount by which the debt security’ssecurity's amortized cost basis exceeds the Company’sCompany's best estimate of the present value of cash flows expected to be collected.

The fair value of these investments is based on the specific quoted market price of the securities or comparable securities at the balance sheet dates. Unobservable inputs are also used when little or no market data is available. See Note 6 for information related to fair value measurements.

88


The Company's investments in marketable debt securities are recognized based on the trade date. The cost of marketable debt securities generally havesold is determined using a term of less than five yearsfirst-in and first-out method. The Company's investments in debt securities are assessed for classification in the Consolidated Balance Sheets as short-term or long-term at the individual security level. Classification as short-term or long-term is based on the maturities of the securities, as applicable, and the Company's expectations regarding the timing of sales and redemptions. Investments of a strategic nature that have been made for the purpose of affiliation or potential business advantage or in connection with a commercial relationship are included in "Long-term investments" in the Consolidated Balance Sheets, except in situations where the Company expects the investment to be realized in cash, redeemed, or sold within one year. The cost of marketable debt securities sold is determined using a first-in and first-out method.

Equity Securities
Equity securities are reported as "Long-term investments" in the Consolidated Balance Sheets and include marketable equity securitiesinvestments with readily determinable fair values and equity investments without readily determinable fair values. Marketable equity securitiesEquity investments with readily determinable fair values are reported at estimated fair value with changes in fair value recognized in "Other income (expense), net" in the Consolidated Statements of Operations.

The Company holds investments in equity securities of private companies, over which the Company does not have the ability to exercise significant influence or control. The Company elected to measure theseThese investments, which do not have readily determinable fair values, are measured at cost less impairment, if any, plus or minus changes resulting fromany. Such investments are also required to be measured at fair value as of the date of certain observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

See Notes 5 and 6 for further information related to investments.

Accounts Receivable from Customers and Allowance for Expected Credit Losses
For periods prior to January 1, 2020, receivables from customers are recorded at the original invoiced amountsAccounts receivable is reported net of an allowance for doubtful accounts. The allowance for doubtful accounts was estimated based on historical experience, aging of the receivable, credit quality of the customers, economic trends and other factors that may affect the Company's ability to collect from customers.

On January 1, 2020, the Company adopted the accounting standards update on the measurement of expected credit losses, which requires thelosses. The Company to estimateestimates lifetime expected credit losses upon recognition of the financial assets. The Company has identifiedidentifies the relevant risk characteristics of its customers and the related receivables and prepayments, which include the following: size, type (alternative accommodations vs. hotels) or geographic location of the customer, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Company considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the expected credit loss analysis include customer demographics, payment terms offered in the normal course of business to customers, the nature of competition, and industry-specific factors that could impact the Company's receivables. Additionally, external data and macroeconomic factorsconditions are considered. This is assessed at each quarterbalance sheet date based on the Company’sCompany's specific facts and circumstances. See Note 7 for additional information.


78


Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets or, when applicable, the lease term of the lease related to leasehold improvements, whichever is shorter.

Building Construction-in-progress
Building construction-in-progress is associated with the construction of Booking.com's future headquarters in the Netherlands and is included in "Property and equipment, net" in the Consolidated Balance Sheets. Depreciation of the building and its related components will commence once it is ready for the Company’s use.

Website Costs and Internal-use Software Capitalization
Acquisition costs and certain direct development costs associated with website and internal-use software are capitalized and include external direct costs of services and payroll costs for employees devoting time to the software projects principally related to platform development, including support systems, software coding, designing system interfaces, and installation and testing of the software. These costs are recorded as property and equipment and are generally amortized beginning when the asset is substantially ready for use. Costs incurred for enhancements that are expected to result in
89


additional features or functionalities are capitalized and amortized over the estimated useful life of the enhancements. Costs incurred during the preliminary project stage, as well as maintenance and training costs, are expensed as incurred.

Cloud Computing Arrangements
The Company utilizes various third-party computer systems and third-party service providers, including global distribution systems ("GDSs") servingand computerized central reservation systems of the accommodation, rental car, and airline industries.industries in connection with providing some of its services. The Company uses both internally-developed systems and third-party systems to operate its services, including transaction processing, order management, and financial and accounting systems. For periods beginning after December 31, 2018, implementationImplementation costs incurred in a hosting arrangement that is a service contract are capitalized and amortized over the term of the hosting arrangement. The capitalized implementation costs are reported as "Prepaid expenses, net" or "Other assets, net" in the Company's Consolidated Balance Sheets, as appropriate. The related amortization expenses are reported asin "Information technology" expenses in the Company's Consolidated Statements of Operations.

Leases
On January 1, 2019, the Company adopted Accounting Standards Codification ("ASC") 842, Leases, using a modified retrospective method applied to all contracts as of January 1, 2019. Therefore, for reporting periods beginning after December 31, 2018, the financial statements are prepared in accordance with the current lease standard and the financial statements for all periods prior to January 1, 2019 are presented under the previous lease standard ("ASC 840").

Under the current lease standard, theThe Company determines if an arrangement is a lease, or contains a lease, when a contract is signed. The Company determines if a lease is an operating or finance lease and records a lease asset and a lease liability upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. The Company has operating leases for office space, and data centers and land for Booking.com's future headquarters.centers. For office space and data centers, and land, the Company has elected to combine the fixed payments to lease the asset and any fixed non-lease payments (such as maintenance or utility charges) when determining its lease payments. The Company's finance leases are mainly for computer equipment.

The Company uses its incremental borrowing rate as its discount rate to determine the present value of its remaining lease payments to calculate its lease assets and lease liabilities because the rate implicit in the lease is not readily determinable. The incremental borrowing rate approximates the rate the Company would pay to borrow in the currency of the lease payments on a collateralized basis for the weighted-average life of the lease. Operating lease assets also include any prepaid lease payments and lease incentives received prior to lease commencement.

The Company recognizes operating lease expensecosts and the amortization of finance lease assets on a straight-line basis over the lease term. The interest component of a finance lease is recognized using the effective interest method over the lease term. Certain of the Company's lease agreements include rent payments which are adjusted periodically for inflation.based on an index or rate. Any change in payments due to changes in inflation ratessuch adjustments are recognized as variable lease expense as they are incurred. Variable lease expense also includes costs for property taxes, insurance, and services provided by the lessor which are charged based on usage or performance (such as maintenance or utility charges).

Most leases have one or more options to renew with renewal terms that can extend thebeyond their initial lease term for various periods up to 9 years.term. The exercise of renewal options, mainly for office space and data centers, is at the Company’sCompany's discretion and are included in the determination of the lease term for accounting purposes if they are reasonably certain to be exercised. The land lease for Booking.com's future headquarters has an initial term which expires in 2065, at which time the lease payments will be adjusted based on the value of the land on the reassessment date. The Company considered the initial term of the land lease to be its expected period of use.
"Operating lease assets" in the Consolidated Balance Sheets includes the land-use rights related to payment in 2016 for the land lease for Booking.com's future headquarters as described above. The land-use rights are amortized on a straight-line basis over its expected period of use. This expense is recorded as lease expense in "General and administrative" expense in the Consolidated Statements of Operations. See Notes 10 and 16 for further information.

Business Combinations, Goodwill, and Intangible Assets
The Company accounts for acquired businesses using the acquisition method of accounting which requires thataccounting. The consideration transferred is allocated to the assets acquired and liabilities assumed be recordedbased on their respective values at the date of acquisition at their respective fair values.  Anydate. The excess of the purchase priceconsideration transferred over the estimated fair valuesnet of the netamounts allocated to the identifiable assets acquired and liabilities assumed is recordedrecognized as goodwill. The Company's Consolidated Financial Statements reflect anCompany generally recognizes and measures contract assets and contract liabilities in a business combination at amounts consistent with those recorded by the acquired business starting atbusiness.

79


Goodwill is assigned to reporting units that are expected to benefit from the datesynergies of the acquisition.
business combination. Goodwill is not subject to amortization and is tested annually for impairment on an annual basis and whenbetween annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company tests goodwill at a reporting unit level. The fair value of the reporting unit is compared to its carrying value,
90


including goodwill. Fair values are determined using a combination of standard valuation techniques, including an income approach (discounted cash flows) and market approaches (e.g., earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples of comparable publicly traded companies) and based on market participant assumptions. For periods prior to January 1, 2020, an impairment was recorded to the extent that the implied fair value of goodwill is less than the carrying value of goodwill. The Company adopted the accounting standards update on goodwill impairment in the first quarter of 2020, under which aA goodwill impairment loss is measured at the amount by which a reporting unit’sunit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. See Note 11 for furtheradditional information.

Intangible assets are carried at cost and amortized on a straight-line basis over their estimated useful lives.

Impairment of Long-lived Assets
The Company reviews long-lived assets, including intangible assets and operating lease assets, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the Company's ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related asset group. The amount of impairment loss, if any, is measured as the excess of the carrying value of the asset over the present value of estimated future cash flows, using a discount rate commensurate with the risks involved and based on assumptions representative of market participants.

Foreign Currency Translation
The functional currency of the Company's subsidiaries is generally the respective local currency. For international operations outside of the U.S., assets and liabilities are translated into U.S. Dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at monthly average exchange rates applicable for the period. Translation gains and losses are included as a component of "Accumulated other comprehensive loss" in the Company's Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in "Other income (expense), net" in the Company's Consolidated Statements of Operations.

Derivative Financial InstrumentsDerivatives
Derivatives not Designated as Hedges
As a result of the Company's international operations outside of the U.S., it is exposed to various market risks that may affect its consolidated results of operations, cash flows, and financial position. These market risks include, but are not limited to, fluctuations in foreign currency exchange rates. For the Company's international operations outside of the U.S., the primary foreign currency exposures are in Euros and British Pounds Sterling, the currencies in which the Company conducts a significant portion of its business activities. As a result, the Company faces exposure to adverse movements in foreign currency exchange rates as the financial results of its international operations outside of the U.S. are translated from local currencies into U.S. Dollars upon consolidation. Additionally, foreign currency exchange rate fluctuations on transactions denominated in currencies other than the functional currency of an entity result in gains and losses that are reflected in net income.
 
The Company may enter into derivative instruments to hedge certain net exposures of nonfunctional currency denominated assets and liabilities and the volatility associated with translating earnings for its international operations outside of the U.S. into U.S. Dollars, even though it does not elect to apply hedge accounting or hedge accounting does not apply. These contracts are generally short-term in duration. Certain of the Company's derivative instruments have master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. The Company is exposed to the risk that counterparties to derivative instruments may fail to meet their contractual obligations. The Company regularly reviews its credit exposure and assesses the creditworthiness of its counterparties. The Company reports the fair value of its derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets in "Other current assets" and "Accrued expenses and other current liabilities," respectively. Unless designated as hedges for accounting purposes, gains and losses resulting from changes in the fair value of derivative instruments are recognized in "Other income (expense), net" in the Consolidated Statements of Operations in the period that the changes occur and are classified within "Net cash provided by operating activities" or "Net cash used in financing activities," as appropriate, in the Consolidated Statements of Cash Flows. See Note 6 for furtheradditional information related to these derivative instruments.

The Company, from timeDerivatives Designated as Cash Flow Hedges
See Note 6 for information related to time in the past, has utilized derivative instruments to hedge the impact of changes in foreign currency exchange rates on the net assets of its foreign subsidiaries. These derivative instruments werederivatives designated as net investmentcash flow hedges.  Hedge ineffectiveness was assessed and measured based on changes in forward exchange rates.  The Company recorded gains and losses on these derivative instruments as foreign currency translation adjustments, which offset a portion of the foreign currency translation adjustments related to the foreign subsidiaries' net assets.  Gains and losses on these derivative instruments were recognized in the Consolidated Balance Sheets in "Accumulated other comprehensive loss" and will be realized upon a partial sale or liquidation of the investment.  
The Company is exposed to the risk that counterparties to derivative instruments may fail to meet their contractual obligations.  The Company regularly reviews its credit exposure and assesses the creditworthiness of its counterparties. 

9180


Non-derivative Instrument Designated as Net Investment Hedge
The foreign currency transaction gains or losses on the Company's Euro-denominated debt are measured based upon changes in spot rates. The foreign currency transaction gains or losses on the Euro-denominated debt that is designated as a hedging instrument for accounting purposes are recorded in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. The foreign currency transaction gains or losses on the Euro-denominated debt that is not designated as a hedging instrument are recognized in "Other income (expense), net" in the Consolidated StatementStatements of Operations. See Notes 12 and 14 for furtheradditional information related to the net investment hedge.

Revenue Recognition

On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, using a modified retrospective method applied to all contracts as of January 1, 2018. The Company recorded a net increase to its retained earnings of $189 million, net of tax, as of January 1, 2018, due to the cumulative impact of adopting the current revenue recognition standard, with substantially all of the impact related to the Company’s online travel reservation services. Under the current revenue recognition standard, the Company recognizes revenue for travel reservation services when the travel begins rather than when the travel is completed.

Online travel reservation services
Substantially all of the Company's revenues are generated by providing online travel reservation services, which principally allows travelers to book travel reservations with travel service providers through the Company’sCompany's platforms. While the Company generally refers to a consumer that books travel reservation services on the Company's platforms as its customer, for accounting purposes, the Company's customers are the travel service providers and, in certain merchant transactions, the travelers. The Company's contracts with travel service providers give them the ability to market their reservation availability without transferring to the Company the responsibility to deliver the travel service to the Company.services. Therefore, the Company's revenues are presented on a net basis in the Consolidated Statements of Operations. These contracts include payment terms and establish the consideration to which the Company is entitled, which includes either a commission or a margin on the travel transaction. Revenue is measured based on the expected consideration specified in the contract with the travel service provider, considering the effects of factors such as discounts and other sales incentives, "no show" cancellations (where the traveler has not cancelled the reservation but does not arrive on the scheduled reservation date) and "late" cancellations (where the travel service provider accepts a cancellation after its cancellation cut-off date).incentives. Estimates for cancellations and sales incentives are based on historical experience, current trends, and current trends.forecasts, as applicable. Coupons are recorded as a reduction of the transaction price, generally at the time they are redeemed. The local occupancy taxes, general excise taxes, value-added taxes, sales taxes, and other similar taxes ("travel transaction taxes"), if any, collected from travelers are reported on a net basis in revenues in the Consolidated Statements of Operations.

Revenues for online travel reservation services are recognized at a point in time when the Company has completed its post-booking services and the travelers begin using the arranged travel services. These servicesrevenues are classified into two categories:

Agency revenues are derived from travel-related transactions where the Company does not facilitate payments from travelers for the services provided. The Company invoices the travel service providers for its commissions in the month that travel is completed. Agency revenues consist almost entirely of travel reservation commissions. Substantially all of the Company's agency revenue is from Booking.com agency accommodation reservations.

Merchant revenues are derived from travel-related transactions where the Company facilitates payments from travelers for the services provided, generally at the time of booking. The Company records cash collectedMerchant revenues are derived from transactions where travelers which includes the amounts owed to thebook accommodation, rental car, airline reservations, and other travel service providers and the Company’s commission or margin and fees, as deferred merchant bookings until the arranged travel service begins.related services. Merchant revenues include travel reservation commissions and transaction net revenues (i.e., the amount charged to travelers less the amount owed to travel service providers) in connection with the Company's merchant reservations services; credit card processing rebates and customer processing fees; and ancillary fees, including travel-related insurance revenues. Substantially all merchant
Agency revenues are derived from the Company's commissions on travel-related transactions where the Company does not facilitate payments from travelers book accommodation reservations or rental car reservations.for the services provided.

92


Advertising and Other Revenues
Advertising and other revenues are primarily recognized by KAYAK and OpenTable. KAYAK recognizes advertising revenue primarily by sending referrals to online travel companies ("OTCs") and travel service providers and from advertising placements on its platforms. Revenue related to referrals is recognized when a consumer clicks on a referral placement or upon completion of the travel. Revenue for advertising placements is recognized based upon when a consumer clicks on an advertisement or when KAYAK displays an advertisement. OpenTable recognizes revenues for reservation fees when diners are seated through its online restaurant reservation service and revenues for subscription fees for restaurant management services on a straight-line basis over the contractual period in accordance with how the service is provided.

Accrued Liabilities for Loyalty and Other
81


Incentive Programs

See Note 3 for information relatedThe Company provides various incentive programs such as referral bonuses, rebates, credits, and discounts. In addition, the Company offers loyalty programs where participating consumers may be awarded loyalty points on current transactions that can be redeemed in the future. The estimated value of the incentives granted and the loyalty points expected to accrued liabilities for loyalty and other incentive programs.be redeemed is generally recognized as a reduction of revenue at the time they are granted.

Deferred RevenueMerchant Bookings
Cash payments received from travelers in advance of the Company completing its performance obligations are included in "Deferred merchant bookings" in the Company's Consolidated Balance Sheets and are comprised principally of amounts estimated to be payable to travel service providers as well as the Company's estimated future revenue for its commission or margin and fees. The amounts are mostly subject to refunds for cancellations. The Company expects to complete its performance obligations generally within one year from the reservation date. The increase in the Deferred Merchant Booking balance during the year ended December 31, 2023 was principally due to the increase in business volumes.

See Note 3 for information related to deferred revenue.

Advertising Expenses
Marketing Expenses

The Company's advertising expenses are reported in "Marketing expenses" in the Consolidated Statements of Operations.

Marketing expenses consist of performance marketing expenses and brand marketing expenses. These expenses consist primarily of the costs of: (1) search engine keyword purchases; (2) affiliate programs; (3) referrals from meta-search websites; and (4) online and offline brand marketing. Performance marketing expenses are expenses generally measured by return on investment or an increase in bookings over a specified time period. These expenses consist primarily of the costs of: (1) search engine keyword purchases; (2) referrals from meta-searchperiod and travel research websites; (3) affiliate programs; and (4) other performance-based marketing and incentives. Performance marketing expenses are recognized as incurred. Included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets are accrued performance marketing liabilities of $156 million and $333 million at December 31, 2020 and 2019, respectively. Brand marketing expenses are expenses incurred to build brand awareness over a specified time period. These expenses consist primarily of television advertising and online video and display advertising (including the airing of the Company's television advertising online), as well as other marketing expenses such as public relations and sponsorships. Brand marketing expenses are generally recognized as incurred with the exception of advertising production costs, which are deferred and expensed the first time the advertisement is displayed or broadcast.

In the year ended December 31, 2019 and prior periods, the Company's marketing expenses were presented in the Consolidated Statements of Operations as "Performance marketing" and "Brand marketing" expenses. In 2020, the Company changed the presentation of marketing expenses by combining "Performance marketing" and "Brand marketing" into "Marketing expenses" in the Consolidated Statement of Operations because of the increased convergence of performance marketing and brand marketing channels in areas including digital marketing and the Company's view of overall marketing expenditure as its investment in customer acquisition and retention. The change in presentation had no impact on
operating income or net income.

Sales and Other Expenses
Sales and other expenses are generally variable in nature and consist primarily of: (1) credit cardscard and other payment processing fees associated with merchant transactions; (2) fees paid to third parties that provide call center and other customer services; (3) digital services taxes and other similar taxes (4) chargeback provisions and fraud prevention expenses associated with merchant transactions; (5) provisions for expected credit losses, primarily related to accommodation commission receivables and prepayments to certain customers; (3) fees paid to third parties that provide call center, website content translations and other services; (4)(6) customer relations costs; (5) customer chargeback provisions and fraud prevention expenses associated with merchant transactions; and (6) insurance claim costs for the Company's travel-related insurance business.costs.

Personnel Expenses
Personnel expenses consist of compensation to the Company's personnel, including salaries, bonuses, and stock-based compensation, bonuses, payroll taxes, and employee health and other benefits.  Included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets are accrued compensation liabilities of $333 million and $344 million at December 31, 2020 and 2019, respectively.
93


Stock-Based Compensation
Stock-based compensation expense related to performance share units, restricted stock units and stock options is recognized based on fair value on a straight-line basis over the respective requisite service periods and forfeitures are accounted for when they occur. The fair value on the grant date of performance share units and restricted stock units is determined based on the number of units granted and the quoted price of the Company's common stock. For performance share units with market conditions, the effect of the market condition is also considered in the determination of fair value on the grant date using Monte Carlo simulations. The fair value of employee stock options is determined using the Black-Scholes model.

The Company records stock-based compensation expense for performance-based awards using its estimate of the probable outcome at the end of the performance period (i.e., the estimated performance against the performance targets)targets or performance goals, as applicable). The Company periodically adjusts the cumulative stock-based compensation expense recorded when the probable outcome for these performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable.
 
The benefits of tax deductions in excess of recognized compensation costs are recognized in the income statementConsolidated Statements of Operations as a discrete item when an option exercise or a vesting and release of shares occurs. Excess tax benefits are presented as operating cash flows and cash payments for employee statutory tax withholding related to vested stock awards are presented as financing cash flows in the Consolidated Statements of Cash Flows. 

See Note 4 for further information related to stock-based awards.
82


Government GrantsGeneral and Other AssistanceAdministrative Expenses
The Company recognizes government grants in the financial statements when it is probable that the grant will be receivedGeneral and the Company will comply with the conditionsadministrative expenses consist primarily of the grant. Government grants are recordedfees for certain outside professionals, occupancy and office expenses, certain travel transaction taxes, and personnel-related expenses such as a reduction in the related operating expense or the cost of the asset that they are intended to defray. The government grants received by the Company have principally been granted to defray personnel costs.travel, relocation, recruiting, and training expenses.

Information Technology Expenses
Information technology expenses consist primarily of: (1) software license and system maintenance fees; (2) cloud computing costs and outsourced data center and cloud computing costs; (3) payments to contractors; and (4) data communications and other expenses associated with operating the Company's services.

Restructuring and Other Exit Costs
The Company records employee severance and other termination costs that meet the requirements for recognition in accordance with the relevant guidance of ASC 420, Exit or Disposal Cost Obligations, or ASC 712, Compensation - Nonretirement Postemployment Benefits, as applicable. For involuntary termination benefits that are not provided under the terms of an ongoing benefit arrangement, the liability for the current fair value of expected future costs associated with a management-approved restructuring plan is recognized in the period in which the plan is communicated to the employees and the plan is not expected to change significantly. For ongoing benefit arrangements, inclusive of statutory requirements, employee termination costs are accrued when the existing situation or set of circumstances indicates that an obligation has been incurred, it is probable the benefits will be paid, and the amount can be reasonably estimated. Termination benefits associated with voluntary leaver schemes are recorded when the employee irrevocably accepts the offer and the amount can be reasonably estimated.

Income Taxes 
The Company accounts for income taxes under the asset and liability method. The Company records the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the Consolidated Balance Sheets, as well as operating loss and tax credit carryforwards. Deferred taxes are classified as noncurrentnon-current in the balance sheet.Consolidated Balance Sheets.
 
The Company records deferred tax assets to the extent it believes these assets will more likely than not be realized. The Company regularly reviews its deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences, the carryforward periods available for tax reporting purposes, and tax planning strategies. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible. In
94


determining the future tax consequences of events that have been recognized in the financial statements or tax returns, significant judgments, estimates, and interpretation of statutes are required.

Deferred taxes are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date of such change.
 
The Company recognizes liabilities when it believes that uncertain positions may not be fully sustained upon audit by the tax authorities. Liabilities recognized for uncertain tax positions are based on a two-step approach for recognition and measurement. First, the Company evaluates the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit based on its technical merits. Second, the Companymeasures the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Interest and penalties attributable to uncertain tax positions, if any, are recognized as a component of income tax expense. 

The Company adopted an accounting policy to treataccounts for taxes on global intangible low-taxed income ("GILTI") introduced by the U.S. Tax Cuts and Jobs Act (the "Tax Act") as period costs. See Note 15 for further details related to income taxes.

Government Grants and Other Assistance
The Company recognizes government grants in the financial statements when it is probable that the grant will be received and the Company will comply with the conditions of the grant. Government grants are recorded as a reduction in the related operating expense or the cost of the asset that they are intended to defray. The government grants received by the Company during the COVID-19 pandemic have principally been granted to defray personnel costs and were subsequently returned to the respective governments. See Note 20 for information related to government grants and other assistance.

Contingencies
Loss contingencies (other than income tax-related contingencies) arise from actual or possible claims and assessments and pending or threatened litigation that may be brought against the Company by individuals, governments or other entities. Based on the Company's assessment of loss contingencies at each balance sheet date, a loss is recorded in the financial statements if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.

Segment Reporting
83

The
Reclassification
In the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, the Company historically determined that its primary brands constituted its operating segments. In 2019, reflecting changeshas reclassified certain indirect taxes, primarily digital services taxes, between "General and administrative" expenses and "Sales and other expenses" to conform to the management structure,presentation in the Company reorganized its operating segments from 6Consolidated Statement of Operations for the year ended December 31, 2023. The current presentation of "Sales and other expenses" reflects the aggregation of costs that are generally more likely to 4 operating segments by combining Booking.com with Rentalcars.comvary based on changes in revenues. These reclassifications did not affect previously reported Revenue, Operating income, Income before income taxes, or Net income in the Consolidated Statements of Operations for the years ended December 31, 2022 and KAYAK with OpenTable. The Company's Booking.com and Rentalcars.com operating segment represents a substantial majority2021. See Note 21 for additional information on the impact of the Company's total revenues and operating income. reclassification by quarter.

The Company's operating segments continue to be aggregated into 1 reportable segment basedfollowing table presents the impact of the reclassifications on the similarity in economic characteristics, other qualitative factors and the objectives and principlesCompany's Consolidated Statements of ASC 280, Operations (in millions):
Year Ended December 31,
20222021
Sales and other expenses (Prior presentation)$1,818 $881 
Reclassifications168 98 
Sales and other expenses (New presentation)$1,986 $979 
General and administrative (Prior presentation)$934 $620 
Reclassifications(168)(98)
General and administrative (New presentation)$766 $522 
Segment Reporting. For geographic information, see Note 18.
Recent Accounting Pronouncements AdoptedDebt Securities
The Company has classified its investments in debt securities as available-for-sale securities. Preferred stock that is either mandatorily redeemable or redeemable at the option of the investor is considered a debt security for accounting purposes and is reported at estimated fair value with the aggregate unrealized gains and losses, net of tax, reflected in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. The fair value of these investments is based on the specific quoted market price of the securities or comparable securities at the balance sheet dates. Unobservable inputs are also used when little or no market data is available. See Note 6 for information related to fair value measurements.
Simplifying
If the Testamortized cost basis of an available-for-sale security exceeds its fair value and if the Company has the intention to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis, an impairment is recognized in the Consolidated Statements of Operations. If the Company does not have the intention to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis and the Company determines that the decline in fair value below the amortized cost basis of an available-for-sale security is entirely or partially due to credit-related factors, the credit loss is measured and recognized as an allowance for Goodwill Impairmentexpected credit losses along with the related expense in the Consolidated Statements of Operations. The allowance is measured as the amount by which the debt security's amortized cost basis exceeds the Company's best estimate of the present value of cash flows expected to be collected.

The Financial Accounting Standards Board ("FASB") issued an accounting update to simplifyCompany's investments in marketable debt securities are recognized based on the testtrade date. The cost of marketable debt securities sold is determined using a first-in and first-out method. The Company's investments in debt securities are assessed for goodwill impairment. The revised guidance eliminatesclassification in the previously required step twoConsolidated Balance Sheets as short-term or long-term at the individual security level. Classification as short-term or long-term is based on the maturities of the securities, as applicable, and the Company's expectations regarding the timing of sales and redemptions. Investments of a strategic nature that have been made for the purpose of affiliation or potential business advantage or in connection with a commercial relationship are included in "Long-term investments" in the Consolidated Balance Sheets, except in situations where the Company expects the investment to be realized in cash, redeemed, or sold within one year.

Equity Securities
Equity securities are reported as "Long-term investments" in the Consolidated Balance Sheets and include equity investments with readily determinable fair values and equity investments without readily determinable fair values. Equity investments with readily determinable fair values are reported at estimated fair value with changes in fair value recognized in "Other income (expense), net" in the Consolidated Statements of Operations. The Company holds investments in equity securities of private companies, over which the Company does not have the ability to exercise significant influence or control. These investments, which do not have readily determinable fair values, are measured at cost less impairment, if any. Such investments are also required to be measured at fair value as of the date of certain observable transactions for the identical or a similar investment of the same issuer.

Accounts Receivable from Customers and Allowance for Expected Credit Losses
Accounts receivable is reported net of expected credit losses. The Company estimates lifetime expected credit losses upon recognition of the financial assets. The Company identifies the relevant risk characteristics of its customers and the related receivables and prepayments, which include the following: size, type (alternative accommodations vs. hotels) or geographic location of the customer, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Company considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the expected credit loss analysis include customer demographics, payment terms offered in the normal course of business to customers, the nature of competition, and industry-specific factors that could impact the Company's receivables. Additionally, external data and macroeconomic conditions are considered. This is assessed at each balance sheet date based on the Company's specific facts and circumstances.


78


Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets or, when applicable, the lease term related to leasehold improvements, whichever is shorter.

Website Costs and Internal-use Software
Acquisition costs and certain direct development costs associated with website and internal-use software are capitalized and include external direct costs of services and payroll costs for employees devoting time to the software projects principally related to platform development, including support systems, software coding, designing system interfaces, and installation and testing of the software. These costs are recorded as property and equipment and are generally amortized beginning when the asset is substantially ready for use. Costs incurred for enhancements that are expected to result in additional features or functionalities are capitalized and amortized over the estimated useful life of the enhancements. Costs incurred during the preliminary project stage, as well as maintenance and training costs, are expensed as incurred.

Cloud Computing Arrangements
The Company utilizes various third-party computer systems and third-party service providers, including global distribution systems ("GDSs") and computerized central reservation systems of the accommodation, rental car, and airline industries in connection with providing some of its services. The Company uses both internally-developed systems and third-party systems to operate its services, including transaction processing, order management, and financial and accounting systems. Implementation costs incurred in a hosting arrangement that is a service contract are capitalized and amortized over the term of the hosting arrangement. The capitalized implementation costs are reported as "Prepaid expenses, net" or "Other assets, net" in the Company's Consolidated Balance Sheets, as appropriate. The related amortization expenses are reported in "Information technology" expenses in the Company's Consolidated Statements of Operations.

Leases
The Company determines if an arrangement is a lease, or contains a lease, when a contract is signed. The Company determines if a lease is an operating or finance lease and records a lease asset and a lease liability upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. The Company has operating leases for office space, and data centers. For office space and data centers, the Company has elected to combine the fixed payments to lease the asset and any fixed non-lease payments (such as maintenance or utility charges) when determining its lease payments. The Company's finance leases are mainly for computer equipment.

The Company uses its incremental borrowing rate as its discount rate to determine the present value of its remaining lease payments to calculate its lease assets and lease liabilities because the rate implicit in the lease is not readily determinable. The incremental borrowing rate approximates the rate the Company would pay to borrow in the currency of the lease payments on a collateralized basis for the weighted-average life of the lease. Operating lease assets also include any prepaid lease payments and lease incentives received prior to lease commencement.

The Company recognizes operating lease costs and the amortization of finance lease assets on a straight-line basis over the lease term. The interest component of a finance lease is recognized using the effective interest method over the lease term. Certain of the Company's lease agreements include rent payments which are adjusted periodically based on an index or rate. Any change in payments due to such adjustments are recognized as variable lease expense as they are incurred. Variable lease expense also includes costs for property taxes, insurance, and services provided by the lessor which are charged based on usage or performance (such as maintenance or utility charges).

Most leases have one or more options to renew beyond their initial term. The exercise of renewal options, mainly for office space and data centers, is at the Company's discretion and are included in the determination of the lease term for accounting purposes if they are reasonably certain to be exercised.

Business Combinations, Goodwill, and Intangible Assets
The Company accounts for acquired businesses using the acquisition method of accounting. The consideration transferred is allocated to the assets acquired and liabilities assumed based on their respective values at the acquisition date. The excess of the consideration transferred over the net of the amounts allocated to the identifiable assets acquired and liabilities assumed is recognized as goodwill. The Company generally recognizes and measures contract assets and contract liabilities in a business combination at amounts consistent with those recorded by the acquired business.

79


Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination. Goodwill is not subject to amortization and is tested for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company tests goodwill impairment test, which requiredat a hypothetical purchase price allocationreporting unit level. The fair value of the reporting unit is compared to measure goodwill impairment. Under the revised guidance,its carrying value, including goodwill. Fair values are determined using a combination of standard valuation techniques, including an income approach (discounted cash flows) and market approaches (e.g., earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples of comparable publicly traded companies) and based on market participant assumptions. A goodwill impairment loss will beis measured at the amount by which a reporting unit’sunit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. The Company adopted this update in the first quarter of 2020 and applied it on a prospective basis (seeSee Note 11 for additional information on the goodwill impairment tests performed in 2020).information.

Measurement of Credit LossesIntangible assets are carried at cost and amortized on Financial Instrumentsa straight-line basis over their estimated useful lives.

Impairment of Long-lived Assets
The FASB issued an accounting updateCompany reviews long-lived assets, including intangible assets and operating lease assets, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the Company's ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related asset group. The amount of impairment loss, if any, is measured as the excess of the carrying value of the asset over the present value of estimated future cash flows, using a discount rate commensurate with the risks involved and based on assumptions representative of market participants.

Foreign Currency Translation
The functional currency of the measurementCompany's subsidiaries is generally the respective local currency. For operations outside of creditthe U.S., assets and liabilities are translated into U.S. Dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at monthly average exchange rates applicable for the period. Translation gains and losses for certainare included as a component of "Accumulated other comprehensive loss" in the Company's Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in "Other income (expense), net" in the Company's Consolidated Statements of Operations.

Derivatives
Derivatives not Designated as Hedges
As a result of the Company's operations outside of the U.S., it is exposed to various market risks that may affect its consolidated results of operations, cash flows, and financial assets measured at amortized costposition. These market risks include, but are not limited to, fluctuations in foreign currency exchange rates. For the Company's operations outside of the U.S., the primary foreign currency exposures are in Euros and available-for-sale debt securities. ForBritish Pounds Sterling, the currencies in which the Company conducts a significant portion of its business activities. As a result, the Company faces exposure to adverse movements in foreign currency exchange rates as the financial assets measured at amortized cost, this update requiresresults of its operations outside of the U.S. are translated from local currencies into U.S. Dollars upon consolidation. Additionally, foreign currency exchange rate fluctuations on transactions denominated in currencies other than the functional currency of an entity result in gains and losses that are reflected in net income.
The Company may enter into derivative instruments to (1) estimatehedge certain net exposures of nonfunctional currency denominated assets and liabilities and the volatility associated with translating earnings for its lifetime expected credit losses upon recognitionoperations outside of the financialU.S. into U.S. Dollars, even though it does not elect to apply hedge accounting or hedge accounting does not apply. These contracts are generally short-term in duration. Certain of the Company's derivative instruments have master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. The Company is exposed to the risk that counterparties to derivative instruments may fail to meet their contractual obligations. The Company regularly reviews its credit exposure and assesses the creditworthiness of its counterparties. The Company reports the fair value of its derivative assets and establish an allowance to presentliabilities on a gross basis in the net amount expected to be collected, (2) recognize this allowanceConsolidated Balance Sheets in "Other current assets" and "Accrued expenses and other current liabilities," respectively. Unless designated as hedges for accounting purposes, gains and losses resulting from changes in the allowance during subsequent periods through net income and (3) consider relevant information about past events, current conditions and reasonable and supportable forecasts in assessing the lifetime expected credit losses. For available-for-sale debt securities, this update made several targeted amendments to the existing other-than-temporary impairment model, including (1) requiring disclosure of the allowance for expected credit losses, (2) allowing reversals of the previously recognized credit losses until the entity has the intent to sell or the entity is more-likely-than-not required to sell the securities or the maturity of the securities, (3) limiting impairment to the difference between the amortized cost basis and fair value of derivative instruments are recognized in "Other income (expense), net" in the Consolidated Statements of Operations in the period that the changes occur and (4) not allowing entitiesare classified within "Net cash provided by operating activities" or "Net cash used in financing activities," as appropriate, in the Consolidated Statements of Cash Flows. See Note 6 for additional information related to consider the length of time that fair value has been less than amortized costthese derivative instruments.

Derivatives Designated as a factor in evaluating whether a credit loss exists. The CompanyCash Flow Hedges
See Note 6 for information related to derivatives designated as cash flow hedges.

9580


adopted this updateNon-derivative Instrument Designated as Net Investment Hedge
The foreign currency transaction gains or losses on the Company's Euro-denominated debt are measured based upon changes in spot rates. The foreign currency transaction gains or losses on the Euro-denominated debt that is designated as a hedging instrument for accounting purposes are recorded in "Accumulated other comprehensive loss" in the first quarterConsolidated Balance Sheets. The foreign currency transaction gains or losses on the Euro-denominated debt that is not designated as a hedging instrument are recognized in "Other income (expense), net" in the Consolidated Statements of 2020Operations. See Notes 12 and applied this update on a modified retrospective basis. Upon adoption of the new standard on January 1, 2020, the Company recorded a net decrease to its retained earnings of $3 million, net of tax.See Note 714 for additional information related to allowance for expected credit losses on accounts receivable and other financial assets and Note 5 for additional information related to investments in available-for-sale debt securities.

SEC Amendments to Regulation S-K

On November 19, 2020, the U.S. Securities and Exchange Commission issued final rules to amend Regulation S-K. These changes are effective for annual filings for the first fiscal year ending on or after August 9, 2021 and early adoption is permitted. The Company elected to adopt the amendments to Item 302 of Regulation S-K in their entirety, which eliminates the requirement to disclose, in these Consolidated Financial Statements, selected financial information for each quarter during the two most recent fiscal years, except in situations with certain retrospective changes.

Other Recent Accounting Pronouncements

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the FASB issued a new accounting update relating to convertible instruments and contracts in an entity’s own equity. For convertible instruments, the accounting update reduces the number of accounting models for convertible debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features being separately recognized from the host contract as compared with current U.S. GAAP. The accounting update amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions. The accounting update also simplifies the diluted earnings per share calculation in certain areas.

For public business entities, the update is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. Entities are allowed to apply this update on either a full or modified retrospective basis. The Company is currently evaluating the impact to its Consolidated Financial Statements of adopting this update.

Simplifying the Accounting for Income Taxes

The FASB issued a new accounting update relating to income taxes.  This update provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year.  This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. 

The Company adopted this update on January 1, 2021 and applied the amendment related to franchise taxes that are partially based on income on a modified retrospective basis and all other amendments on a prospective basis. The adoption did not have a material impact on the Company's Consolidated Financial Statements. 

3.    REVENUE

Disaggregation of Revenuenet investment hedge.

Revenue by Type of ServiceRecognition

Online travel reservation services
Approximately 88%, 87% and 87%Substantially all of the Company's revenues for each of the years ended December 31, 2020, 2019 and 2018, respectively, relates to online accommodation reservation services. Revenue from all other sources ofare generated by providing online travel reservation services, which principally allows travelers to book travel reservations with travel service providers through the Company's platforms. While the Company generally refers to a consumer that books travel reservation services on the Company's platforms as its customer, for accounting purposes, the Company's customers are the travel service providers and, advertisingin certain merchant transactions, the travelers. The Company's contracts with travel service providers give them the ability to market their reservation availability without transferring to the Company the responsibility to deliver the travel services. Therefore, the Company's revenues are presented on a net basis in the Consolidated Statements of Operations. These contracts include payment terms and establish the consideration to which the Company is entitled, which includes either a commission or a margin on the travel transaction. Revenue is measured based on the expected consideration specified in the contract with the travel service provider, considering the effects of factors such as discounts and other sales incentives. Estimates for sales incentives are based on historical experience, current trends, and forecasts, as applicable. Coupons are recorded as a reduction of the transaction price, generally at the time they are redeemed. The local occupancy taxes, general excise taxes, value-added taxes, sales taxes, and other similar taxes ("travel transaction taxes"), if any, collected from travelers are reported on a net basis in revenues in the Consolidated Statements of Operations.

Revenues for online travel reservation services are recognized at a point in time when the Company has completed its post-booking services and the travelers begin using the arranged travel services. These revenues are classified into two categories:
Merchant revenues are derived from travel-related transactions where the Company facilitates payments from travelers for the services provided, generally at the time of booking. Merchant revenues are derived from transactions where travelers book accommodation, rental car, airline reservations, and other travel related services. Merchant revenues include travel reservation commissions and transaction net revenues (i.e., the amount charged to travelers less the amount owed to travel service providers) in connection with the Company's merchant reservations services; credit card processing rebates and customer processing fees; and ancillary fees, including travel-related insurance revenues.
Agency revenues are derived from the Company's commissions on travel-related transactions where the Company does not facilitate payments from travelers for the services provided.

Advertising and Other Revenues
Advertising and other revenues each individually represent less than 10%are primarily recognized by KAYAK and OpenTable. KAYAK recognizes advertising revenue primarily by sending referrals to online travel companies ("OTCs") and travel service providers and from advertising placements on its platforms. Revenue related to referrals is recognized when a consumer clicks on a referral placement or upon completion of the Company's totaltravel. Revenue for advertising placements is recognized based upon when a consumer clicks on an advertisement or when KAYAK displays an advertisement. OpenTable recognizes revenues for each year.reservation fees when diners are seated through its online restaurant reservation service and subscription fees for restaurant management services on a straight-line basis over the contractual period in accordance with how the service is provided.

9681



Incentive Programs
Revenue by Geographic Area

See Note 18 forThe Company provides various incentive programs such as referral bonuses, rebates, credits, and discounts. In addition, the information relatedCompany offers loyalty programs where participating consumers may be awarded loyalty points on current transactions that can be redeemed in the future. The estimated value of the incentives granted and the loyalty points expected to be redeemed is generally recognized as a reduction of revenue by geographic area.at the time they are granted.

Deferred Revenue

Merchant Bookings
Cash payments received from travelers in advance of the Company completing its performance obligations are included in "Deferred merchant bookings" in the Company's Consolidated Balance Sheets and are comprised principally of amounts estimated to be payable to the travel service providers as well as the Company's estimated deferredfuture revenue for its commission or margin and fees. The amounts are mostly subject to refunds for cancellations. The Company expects to complete its performance obligations generally within one year from the reservation date. The amounts are subject to refunds for cancellations.

The following table summarizes the activity of deferred revenue for online travel reservation services for the years ended December 31, 2020 and 2019 (in millions):
 Year Ended December 31,
20202019
Balance, beginning of year$220 $149 
Revenues recognized from the beginning balance(154)(134)
Cancellations(66)(15)
Payments received from travelers net of amounts estimated to be payable to travel
service providers and other changes
50 220 
Balance, end of year$50 $220 

Loyalty and Other Incentive Programs

The Company provides loyalty programs where participating consumers are awarded loyalty points on current transactions that can be redeemedincrease in the future. At December 31, 2020 and 2019, liabilities for loyalty program incentives of $21 million and $80 million, respectively, were included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets. The Company’s largest loyalty program is at OpenTable, where points can be redeemed for rewards such as qualifying reservations at participating restaurants, third-party gift cards and accommodation reservations booked through some of the Company’s other platforms. The estimated fair value of the loyalty points that are expected to be redeemed is recognized as a reduction of revenue at the time the incentives are granted. In March 2018, OpenTable introduced a three-year time-based expiration for points earned by diners, which reduced its loyalty program liability by $27 million, with a corresponding increase to revenue. Unredeemed loyalty points existing as of the date of introduction of the expiration provision will expire during the three months ending March 31, 2021. Unredeemed loyalty points earned after the date of introduction of the expiration provision expire three years after they were earned. In 2020, the Company recorded a decrease of $28 million to the liability, primarily due to changes in estimates of the number of loyalty points expected to be redeemed prior to expiration, with a corresponding increase to revenue.

In addition to the loyalty programs, at December 31, 2020 and 2019, liabilities of $60 million and $22 million, respectively, for other incentive programs, such as referral bonuses, rebates, credits and discounts, were included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets.  During 2020, the Company offered additional rebates to customers meeting certain eligibility requirements under an incentive program at Booking.com. The eligibility requirements include the customer's enrollment in Booking.com's Genius Program (program features include special discounts offered by customers to frequent travelers) and Preferred Partner Program (program features include greater visibility for customers in search results for payment of higher commission) and timely payment of invoices. The additional rebates resulted in a reduction of revenue of $100 millionDeferred Merchant Booking balance during the year ended December 31, 2020 and a liability of $25 million at December 31, 2020.2023 was principally due to the increase in business volumes.

RefundsMarketing Expenses
The Company's advertising expenses are reported in "Marketing expenses" in the Consolidated Statements of Operations. Marketing expenses consist of performance marketing expenses and brand marketing expenses. These expenses consist primarily of the costs of: (1) search engine keyword purchases; (2) affiliate programs; (3) referrals from meta-search websites; and (4) online and offline brand marketing. Performance marketing expenses are expenses generally measured by return on investment or an increase in bookings over a specified time period and are recognized as incurred. Brand marketing expenses are expenses incurred to Travelersbuild brand awareness over a specified time period. These expenses consist primarily of television advertising and online video and display advertising (including the airing of the Company's television advertising online), as well as other marketing expenses such as public relations and sponsorships. Brand marketing expenses are generally recognized as incurred with the exception of advertising production costs, which are deferred and expensed the first time the advertisement is displayed or broadcast.

DueSales and Other Expenses
Sales and other expenses are generally variable in nature and consist primarily of: (1) credit card and other payment processing fees associated with merchant transactions; (2) fees paid to the high level of cancellations of existing reservations as a result of the COVID-19 pandemic (see Note 2), the Company has incurred,third parties that provide call center and may continueother customer services; (3) digital services taxes and other similar taxes (4) chargeback provisions and fraud prevention expenses associated with merchant transactions; (5) provisions for expected credit losses, primarily related to incur, higher than normal cash outlaysaccommodation commission receivables and prepayments to refund travelers for prepaid reservations, including certain situations where the Company has already transferred the prepayment to the travel service provider. For the year ended December 31, 2020, the Company recorded a reduction in revenue of $44 million for refunds paid or estimated to be
97


payable to travelers where the Company agreed to provide free cancellation for certain non-refundable reservations without a corresponding estimated expected recovery from the travel service providers.customers; and (6) customer relations costs.

Personnel Expenses
4.STOCK-BASED COMPENSATIONPersonnel expenses consist of compensation to the Company's personnel, including salaries, bonuses, and stock-based compensation, payroll taxes, and employee health and other benefits.

The Company's 1999 Omnibus Plan, as amended and restated effective June 7, 2018, (the "1999 Plan") is the primary stock compensation plan from which broad-based employee, non-employee director and consultant equity awards may be made.  At December 31, 2020, there were 1,614,570 shares of common stock available for future grant under the 1999 Plan. In addition, under plans assumed in connection with various acquisitions, there were 52,192 shares of common stock available for future grant at December 31, 2020.
Stock-Based Compensation
Stock-based compensation issued under the plans generally consists ofexpense related to performance share units, restricted stock units performance share units and stock options. Performanceoptions is recognized based on fair value on a straight-line basis over the respective requisite service periods and forfeitures are accounted for when they occur. The fair value on the grant date of performance share units and restricted stock units are payable in sharesis determined based on the number of units granted and the quoted price of the Company's common stock. For performance share units with market conditions, the effect of the market condition is also considered in the determination of fair value on the grant date using Monte Carlo simulations. The fair value of employee stock upon vesting. options is determined using the Black-Scholes model.

The Company issues shares of its common stock upon the exercise of stock options.
Stock-basedrecords stock-based compensation expense included in "Personnel" expenses infor performance-based awards using its estimate of the Consolidated Statements of Operations was $233 million, $308 million and $317 million for the years ended December 31, 2020, 2019 and 2018, respectively. The related tax benefit for stock-based compensation was $30 million, $38 million and $36 million for the years ended December 31, 2020, 2019 and 2018, respectively.  Stock-based compensation for the years ended December 31, 2020, 2019 and 2018 includes benefits of $71 million and $4 million, and a charge of $48 million, respectively, representing the impact of adjusting the estimated probable outcome at the end of the performance period for outstanding unvested performance share units.

Due to the impact of the COVID-19 pandemic (see Note 2)(i.e., there was a significant decline in the estimated performance over the performance periods against the performance targets and consequently, a significant reduction in the number of shares that were probable to be issued as compared to December 31, 2019. As a result, the Company recognized a reduction in stock-based compensation expense of $73 million, which is included in "Personnel" expense in the Consolidated Statement of Operations for the year ended December 31, 2020. In 2020, considering pre-COVID-19 performance and the significant effect of the COVID-19 pandemic on Company performance and consequently on the number of shares that were probable to be issued to employees, the Company modified the performance-based awards granted in 2018 (other than the performance-based awards granted to executive officers and certain other employees) to fix the number of shares to be issued, subject to other vesting conditions. As a result, the Company incurred an additional stock-based compensation expense of $11 million to be recognized over the remaining requisite service period. In January 2021, the Company modified the performance-based awards granted in 2018 and 2019 to its executive officers, to fix the number of shares to be issued, subject to other vesting conditions. The modification, in the aggregate, will result in additional stock-based compensation expense of approximately $40 million, to be recognized over the remaining requisite service periods for the performance-based awards.

Restricted stock units and performance share units granted by the Company during the years ended December 31, 2020, 2019 and 2018 had aggregate grant-date fair values of $392 million, $380 million and $337 million, respectively.  Restricted stock units and performance share units that vested during the years ended December 31, 2020, 2019, and 2018 had aggregate fair values at vesting of $358 million, $373 million and $415 million, respectively. At December 31, 2020, there was $384 million of estimated total future stock-based compensation expense related to unvested restricted stock units and performance share units to be recognized over a weighted-average period of 1.9 years.

Stock options granted by the Company during the year ended December 31, 2020 had an aggregate grant-date fair value of $79 million. At December 31, 2020, there was $57 million of estimated total future stock-based compensation expense related to unvested stock options to be recognized over a weighted-average period of 2.2 years.

98


Restricted Stock Units

The Company makes broad-based grants of restricted stock units that generally vest during a period of one- to three-years, subject to certain exceptions for terminations other than for "cause," for "good reason" or on account of death or disability.

The following table summarizes the activity of restricted stock units for employees and non-employee directors during the year ended December 31, 2020: 
Restricted Stock UnitsSharesWeighted-average Grant-date Fair Value
Unvested at December 31, 2019256,745 $1,801 
Granted222,977 $1,659 
Vested(130,684)$1,822 
Forfeited(43,079)$1,737 
Unvested at December 31, 2020305,959 $1,697 
Performance Share Units

The Company grants performance share units to executives and certain other employees, which generally vest at the end of a three-year period, subject to certain exceptions for terminations other than for "cause," for "good reason" or on account of death or disability. The number of shares that ultimately vest depends on achieving certain performance metrics or performance goals, as applicable, byapplicable). The Company periodically adjusts the end ofcumulative stock-based compensation expense recorded when the performance period, assuming there is no accelerated vesting for, among other things, a termination of employment under certain circumstances.

The following table summarizes the activity of performance share units for employeesduring the year ended December 31, 2020:
Performance Share UnitsSharesWeighted-average Grant-date Fair Value
Unvested at December 31, 2019216,083 $1,835 
Granted9,040 $2,498 
Vested(82,023)$1,741 
Performance Shares Adjustment *(49,775)$1,944 
Forfeited(8,847)$1,829 
Unvested at December 31, 202084,478 $1,930 
*Probableprobable outcome for these performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable,applicable.
The benefits of tax deductions in excess of recognized compensation costs are recognized in the Consolidated Statements of Operations as a discrete item when an option exercise or a vesting and release of shares occurs. Excess tax benefits are presented as operating cash flows and cash payments for employee statutory tax withholding related to vested stock awards are presented as financing cash flows in the impactConsolidated Statements of modifications.Cash Flows. 

9982


The following table summarizes the estimated vesting,General and Administrative Expenses
General and administrative expenses consist primarily of fees for certain outside professionals, occupancy and office expenses, certain travel transaction taxes, and personnel-related expenses such as of December 31, 2020, of performance share units granted in 2020, 2019travel, relocation, recruiting, and 2018, net of forfeiture and vesting since the respective grant dates:
Performance Share Units, by grant year202020192018
Shares probable to be issued9,040 40,843 34,595 
Shares not subject to the achievement of minimum performance thresholds40,843 N/A*
Shares that could be issued if maximum performance thresholds are met18,080 108,522 N/A*
* The performance period for the performance share units granted in 2018 ended on December 31, 2020.training expenses.

Stock OptionsInformation Technology Expenses
Information technology expenses consist primarily of: (1) software license and system maintenance fees; (2) cloud computing costs and outsourced data center costs; (3) payments to contractors; and (4) data communications and other expenses associated with operating the Company's services.

Income Taxes 
The Company accounts for income taxes under the asset and liability method. The Company records the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the Consolidated Balance Sheets, as well as operating loss and tax credit carryforwards. Deferred taxes are classified as non-current in the Consolidated Balance Sheets.
The Company records deferred tax assets to the extent it believes these assets will more likely than not be realized. The Company regularly reviews its deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences, the carryforward periods available for tax reporting purposes, and tax planning strategies. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible. In May 2020,determining the future tax consequences of events that have been recognized in the financial statements or tax returns, significant judgments, estimates, and interpretation of statutes are required.

Deferred taxes are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date of such change.
The Company recognizes liabilities when it believes that uncertain positions may not be fully sustained upon audit by the tax authorities. Liabilities recognized for uncertain tax positions are based on a two-step approach for recognition and measurement. First, the Company granted stock optionsevaluates the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that vest in March 2023, subject to certain exceptions for terminations other than for "cause," for "good reason" orthe position will be sustained on account of death or disability. NaN stock options were granted to the executive officers of the Company. Stock options granted or assumed in acquisitions generally have a term of 10 years from the grant date. The fair value of stock options granted is estimated on the grant date using the Black-Scholes option pricing model and is affected by assumptions regarding a number of complex and subjective variables. The use of an option pricing model requires the use of several assumptions including expected volatility, risk-free interest rate, expected dividends, and expected term. Expected volatility isaudit based on the Company’s historical volatility over the expected term of the option and implied volatility of publicly traded options of the Company’s common stock. The expected term of the options represents the estimated period of time until option exercise. Sinceits technical merits. Second, the Company has limited historical stock option exercise experience,measures the Company used the simplified method in estimating the expected term, which is calculatedtax benefit as the averagelargest amount that is more than 50% likely of the sumbeing realized upon ultimate settlement. Interest and penalties attributable to uncertain tax positions, if any, are recognized as a component of the vesting term and the original contractual term of the options. The risk-free interest rate is based on U.S. Treasury zero-coupon issues at the time of grant for the expected term of the option.income tax expense. 

The following table summarizesCompany accounts for taxes on global intangible low-taxed income ("GILTI") introduced by the assumptions usedU.S. Tax Cuts and Jobs Act (the "Tax Act") as period costs. See Note 15 for further details related to value option grants granted during the year ended December 31, 2020 using the Black-Scholes options pricing model:
Black-Scholes assumptions
Risk-free interest rate0.56 %
Expected term in years6.4
Expected stock price volatility33.8 %
Expected dividend yield%
income taxes.

Government Grants and Other Assistance
The following table summarizesCompany recognizes government grants in the activity for stock options duringfinancial statements when it is probable that the year ended December 31, 2020:
Employee Stock OptionsNumber of SharesWeighted-average
Exercise Price
Aggregate
Intrinsic Value (in millions)
Weighted-average Remaining Contractual Term (in years)
Balance, December 31, 201915,122 $484 $24 2.6
Granted163,494 $1,411 
Exercised(13,217)$466 
Forfeited(12,653)$1,411 
Balance, December 31, 2020152,746 $1,401 $126 9.3
Exercisable at December 31, 20201,954 $660 $2.1

Stock options grantedgrant will be received and the Company will comply with the conditions of the grant. Government grants are recorded as a reduction in the related operating expense or the cost of the asset that they are intended to defray. The government grants received by the Company during the year ended December 31, 2020 had a weighted-average grant-date fair value per option of $485. The aggregate intrinsic value of employee stock options exercised duringCOVID-19 pandemic have principally been granted to defray personnel costs and were subsequently returned to the years ended December 31, 2020, 2019respective governments. See Note 20 for information related to government grants and 2018 was $15 million, $20 million and $5 million, respectively.other assistance.

100
Contingencies


5.INVESTMENTS
The following table summarizes,Loss contingencies (other than income tax-related contingencies) arise from actual or possible claims and assessments and pending or threatened litigation that may be brought against the Company by major security type,individuals, governments or other entities. Based on the Company's investmentsassessment of loss contingencies at December 31, 2020 (in millions):
 CostGross
Unrealized
Gains
/Upward Adjustments
Gross
Unrealized
Losses
/Downward Adjustments
Carrying Value
Short-term investments:
Debt securities:
Trip.com Group convertible debt securities$500 $$$501 
Long-term investments:
Investments in private companies:
  Debt securities$200 $$$200 
  Equity securities552 (100)455 
Other long-term investments:
  Debt securities:
Trip.com Group convertible debt securities25 (1)24 
  Equity securities463 2,617 3,080 
Total$1,240 $2,620 $(101)$3,759 

The following table summarizes, by major security type,each balance sheet date, a loss is recorded in the Company's investments at December 31, 2019 (in millions): 
prvCostGross
Unrealized
Gains
/Upward Adjustments
Gross
Unrealized
Losses
/Downward Adjustments
Carrying Value
Short-term investments:
Debt securities:
International government securities$109 $$$109 
U.S. government securities138 138 
Corporate debt securities751 (1)751 
Total$998 $$(1)$998 
Long-term investments:
Investments in private companies:
  Debt securities$250 $$$250 
  Equity securities501 501 
Other long-term investments:
  Debt securities:
International government securities68 68 
U.S. government securities136 (1)135 
Corporate debt securities963 (2)963 
Trip.com Group convertible debt securities775 (8)767 
  Equity securities1,117 684 (8)1,793 
Total$3,810 $686 $(19)$4,477 
financial statements if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.


10183



Reclassification
Investments in GovernmentIn the Consolidated Statements of Operations for the years ended December 31, 2022 and Corporate Debt Securities

The2021, the Company has classified its investmentsreclassified certain indirect taxes, primarily digital services taxes, between "General and administrative" expenses and "Sales and other expenses" to conform to the presentation in international government securities, U.S. government securities and corporate debt securities as available-for-sale securities. Duringthe Consolidated Statement of Operations for the year ended December 31, 2020,2023. The current presentation of "Sales and other expenses" reflects the Company realized $2.2 billionaggregation of costs that are generally more likely to vary based on changes in cash from sales and maturities of its investments in government and corporate debt securities.

Investments in Trip.com Group

At December 31, 2020, the Company had $525 million invested in convertible senior notes issued at par value by Trip.com Group including $25 million six-year convertible senior notes issued in September 2016 and $500 million ten-year convertible senior notes issued in December 2015. The $500 million convertible senior notes include a put option allowing the Company, at its option, to require a prepayment in cash from Trip.com Group at the end of the sixth year of the note. The $500 million convertible senior notes were classified as "Short-term investments" in the Consolidated Balance Sheet at December 31, 2020 as the Company expects to exercise the put option and redeem the investment. In May 2020, the Company's May 2015 investment of $250 million in Trip.com Group's convertible senior notes was repaid upon maturity.

The Company determined that the economic characteristics and risks of the put option related to the $500 million convertible senior notes are clearly and closely related to the notes, and thereforerevenues. These reclassifications did not meet the requirement for separate accounting as embedded derivatives. The Company monitors the conversion features of these notes to determine whether they meet the definition of an embedded derivative during each reporting period. The conversion feature associated with the $25 million convertible senior notes meets the definition of an embedded derivative that requires separate accounting. The embedded derivative is bifurcated for fair value measurement purposes only and isaffect previously reported in the Consolidated Balance Sheets with its host contract in "Long-term investments." The mark-to-market adjustments of the embedded derivative are included in "OtherRevenue, Operating income, (expense), net" in the Company's Consolidated Statements of Operations.

At December 31, 2019, the Company had $655 million invested in Trip.com Group American Depositary Shares ("ADSs") with a fair value of $726 million, which is reported in "Long-term investments" in the Consolidated Balance Sheet. During the year ended December 31, 2020, the Company sold its entire investment in these ADSs for $525 million. "OtherIncome before income (expense), net"taxes, or Net income in the Consolidated Statements of Operations includes a net realized loss of $201 million, a net unrealized gain of $141 million and a net unrealized loss of $368 million for the years ended December 31, 2020, 20192022 and 2018, respectively, related to these ADSs.

Investment in Meituan

In 2017, the Company invested $450 million in preferred shares of Meituan, the leading e-commerce platform2021. See Note 21 for local services in China. The investment has been converted to ordinary shares and classified as a marketable equity security since Meituan's initial public offering in 2018. The investment had a fair value of $3.1 billion and $1.1 billion at December 31, 2020 and 2019, respectively, which is included in "Long-term investments" in the Consolidated Balance Sheets. Net unrealized gains of $2.0 billion, $602 million and $1 million for the years ended December 31, 2020, 2019 and 2018, respectively, related to this investment, are included in "Other income (expense), net" in the Consolidated Statements of Operations.
Investments in Private Companies
Equity Securities without Readily Determinable Fair Values

The Company had $501 million invested in equity securities of private companies at December 31, 2019, including $500 million invested in Didi Chuxing. Consideringadditional information on the impact of the COVID-19 pandemic (see Note 2), the Company performed an impairment analysis, as of March 31, 2020, on the investment in Didi Chuxing. The Company recognized an impairment charge of $100 million during the three months ended March 31, 2020, resulting in an adjusted carrying value of $400 million at March 31, 2020 and December 31, 2020 (see Note 6). No additional impairment indicators were identified as of December 31, 2020.reclassification by quarter.

In 2020,The following table presents the Company changed its classification as a debt security of an investment in the preferred shares of a private company due to changes in the redemption featuresimpact of the preferred shares. As of December 31, 2020, the investment is classified as an equity security and had a carrying value of $51 million. These equity investments are measured at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer and are included in "Long-term investments" inreclassifications on the Company's Consolidated Balance Sheets.Statements of Operations (in millions):
102


Year Ended December 31,
20222021
Sales and other expenses (Prior presentation)$1,818 $881 
Reclassifications168 98 
Sales and other expenses (New presentation)$1,986 $979 
General and administrative (Prior presentation)$934 $620 
Reclassifications(168)(98)
General and administrative (New presentation)$766 $522 

Debt Securities

The Company had $200 million and $250 million investedhas classified its investments in preferred sharesdebt securities as available-for-sale securities. Preferred stock that is either mandatorily redeemable or redeemable at the option of private companies, including Grab Holdings Inc. ("Grab"), with an aggregate estimated fair value of $200 million and $250 million at December 31, 2020 and 2019, respectively. The investment in Grabthe investor is classified asconsidered a debt security for accounting purposes and categorized as available-for-sale. The preferred shares are convertible to ordinary shares at the Company’s option and are mandatorily convertible upon an initial public offering. The preferred shares also contain a redemption feature that can be exercised by the Company after certain points of time. The investment is reported at estimated fair value in "Long-term investments" in the Company's Consolidated Balance Sheets, with the aggregate unrealized gains and losses, net of tax, reflected in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. As discussed above in "Equity Securities without Readily Determinable Fair Values", in 2020,The fair value of these investments is based on the specific quoted market price of the securities or comparable securities at the balance sheet dates. Unobservable inputs are also used when little or no market data is available. See Note 6 for information related to fair value measurements.

If the amortized cost basis of an available-for-sale security exceeds its fair value and if the Company changed its classificationhas the intention to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis, an impairment is recognized in the Consolidated Statements of Operations. If the Company does not have the intention to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis and the Company determines that the decline in fair value below the amortized cost basis of an available-for-sale security is entirely or partially due to credit-related factors, the credit loss is measured and recognized as an allowance for expected credit losses along with the related expense in the Consolidated Statements of Operations. The allowance is measured as the amount by which the debt security's amortized cost basis exceeds the Company's best estimate of the present value of cash flows expected to be collected.

The Company's investments in marketable debt securities are recognized based on the trade date. The cost of marketable debt securities sold is determined using a first-in and first-out method. The Company's investments in debt securities are assessed for classification in the Consolidated Balance Sheets as short-term or long-term at the individual security level. Classification as short-term or long-term is based on the maturities of the securities, as applicable, and the Company's expectations regarding the timing of sales and redemptions. Investments of a strategic nature that have been made for the purpose of affiliation or potential business advantage or in connection with a commercial relationship are included in "Long-term investments" in the Consolidated Balance Sheets, except in situations where the Company expects the investment to be realized in cash, redeemed, or sold within one year.

Equity Securities
Equity securities are reported as "Long-term investments" in the Consolidated Balance Sheets and include equity investments with readily determinable fair values and equity investments without readily determinable fair values. Equity investments with readily determinable fair values are reported at estimated fair value with changes in fair value recognized in "Other income (expense), net" in the Consolidated Statements of Operations. The Company holds investments in equity securities of private companies, over which the Company does not have the ability to exercise significant influence or control. These investments, which do not have readily determinable fair values, are measured at cost less impairment, if any. Such investments are also required to be measured at fair value as of the date of certain observable transactions for the identical or a similar investment of the same issuer.

Accounts Receivable from Customers and Allowance for Expected Credit Losses
Accounts receivable is reported net of expected credit losses. The Company estimates lifetime expected credit losses upon recognition of the financial assets. The Company identifies the relevant risk characteristics of its customers and the related receivables and prepayments, which include the following: size, type (alternative accommodations vs. hotels) or geographic location of the customer, or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Company considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the expected credit loss analysis include customer demographics, payment terms offered in the normal course of business to customers, the nature of competition, and industry-specific factors that could impact the Company's receivables. Additionally, external data and macroeconomic conditions are considered. This is assessed at each balance sheet date based on the Company's specific facts and circumstances.


78


Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets or, when applicable, the lease term related to leasehold improvements, whichever is shorter.

Website Costs and Internal-use Software
Acquisition costs and certain direct development costs associated with website and internal-use software are capitalized and include external direct costs of services and payroll costs for employees devoting time to the software projects principally related to platform development, including support systems, software coding, designing system interfaces, and installation and testing of the software. These costs are recorded as property and equipment and are generally amortized beginning when the asset is substantially ready for use. Costs incurred for enhancements that are expected to result in additional features or functionalities are capitalized and amortized over the estimated useful life of the enhancements. Costs incurred during the preliminary project stage, as well as maintenance and training costs, are expensed as incurred.

Cloud Computing Arrangements
The Company utilizes various third-party computer systems and third-party service providers, including global distribution systems ("GDSs") and computerized central reservation systems of the accommodation, rental car, and airline industries in connection with providing some of its services. The Company uses both internally-developed systems and third-party systems to operate its services, including transaction processing, order management, and financial and accounting systems. Implementation costs incurred in a hosting arrangement that is a service contract are capitalized and amortized over the term of the hosting arrangement. The capitalized implementation costs are reported as "Prepaid expenses, net" or "Other assets, net" in the Company's Consolidated Balance Sheets, as appropriate. The related amortization expenses are reported in "Information technology" expenses in the Company's Consolidated Statements of Operations.

Leases
The Company determines if an arrangement is a lease, or contains a lease, when a contract is signed. The Company determines if a lease is an operating or finance lease and records a lease asset and a lease liability upon lease commencement, which is the date when the underlying asset is made available for use by the lessor. The Company has operating leases for office space, and data centers. For office space and data centers, the Company has elected to combine the fixed payments to lease the asset and any fixed non-lease payments (such as maintenance or utility charges) when determining its lease payments. The Company's finance leases are mainly for computer equipment.

The Company uses its incremental borrowing rate as its discount rate to determine the present value of its remaining lease payments to calculate its lease assets and lease liabilities because the rate implicit in the lease is not readily determinable. The incremental borrowing rate approximates the rate the Company would pay to borrow in the currency of the lease payments on a collateralized basis for the weighted-average life of the lease. Operating lease assets also include any prepaid lease payments and lease incentives received prior to lease commencement.

The Company recognizes operating lease costs and the amortization of finance lease assets on a straight-line basis over the lease term. The interest component of a finance lease is recognized using the effective interest method over the lease term. Certain of the Company's lease agreements include rent payments which are adjusted periodically based on an index or rate. Any change in payments due to such adjustments are recognized as variable lease expense as they are incurred. Variable lease expense also includes costs for property taxes, insurance, and services provided by the lessor which are charged based on usage or performance (such as maintenance or utility charges).

Most leases have one or more options to renew beyond their initial term. The exercise of renewal options, mainly for office space and data centers, is at the Company's discretion and are included in the determination of the lease term for accounting purposes if they are reasonably certain to be exercised.

Business Combinations, Goodwill, and Intangible Assets
The Company accounts for acquired businesses using the acquisition method of accounting. The consideration transferred is allocated to the assets acquired and liabilities assumed based on their respective values at the acquisition date. The excess of the consideration transferred over the net of the amounts allocated to the identifiable assets acquired and liabilities assumed is recognized as goodwill. The Company generally recognizes and measures contract assets and contract liabilities in a business combination at amounts consistent with those recorded by the acquired business.

79


Goodwill is assigned to reporting units that are expected to benefit from the synergies of the business combination. Goodwill is not subject to amortization and is tested for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company tests goodwill at a reporting unit level. The fair value of the reporting unit is compared to its carrying value, including goodwill. Fair values are determined using a combination of standard valuation techniques, including an income approach (discounted cash flows) and market approaches (e.g., earnings before interest, taxes, depreciation, and amortization ("EBITDA") multiples of comparable publicly traded companies) and based on market participant assumptions. A goodwill impairment loss is measured at the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. See Note 11 for additional information.

Intangible assets are carried at cost and amortized on a straight-line basis over their estimated useful lives.

Impairment of Long-lived Assets
The Company reviews long-lived assets, including intangible assets and operating lease assets, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the Company's ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related asset group. The amount of impairment loss, if any, is measured as the excess of the carrying value of the asset over the present value of estimated future cash flows, using a discount rate commensurate with the risks involved and based on assumptions representative of market participants.

Foreign Currency Translation
The functional currency of the Company's subsidiaries is generally the respective local currency. For operations outside of the U.S., assets and liabilities are translated into U.S. Dollars at the rate of exchange existing at the balance sheet date. Income statement amounts are translated at monthly average exchange rates applicable for the period. Translation gains and losses are included as a component of "Accumulated other comprehensive loss" in the Company's Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in "Other income (expense), net" in the Company's Consolidated Statements of Operations.

Derivatives
Derivatives not Designated as Hedges
As a result of the Company's operations outside of the U.S., it is exposed to various market risks that may affect its consolidated results of operations, cash flows, and financial position. These market risks include, but are not limited to, fluctuations in foreign currency exchange rates. For the Company's operations outside of the U.S., the primary foreign currency exposures are in Euros and British Pounds Sterling, the currencies in which the Company conducts a significant portion of its business activities. As a result, the Company faces exposure to adverse movements in foreign currency exchange rates as the financial results of its operations outside of the U.S. are translated from local currencies into U.S. Dollars upon consolidation. Additionally, foreign currency exchange rate fluctuations on transactions denominated in currencies other than the functional currency of an entity result in gains and losses that are reflected in net income.
The Company may enter into derivative instruments to hedge certain net exposures of nonfunctional currency denominated assets and liabilities and the volatility associated with translating earnings for its operations outside of the U.S. into U.S. Dollars, even though it does not elect to apply hedge accounting or hedge accounting does not apply. These contracts are generally short-term in duration. Certain of the Company's derivative instruments have master netting arrangements, which reduce credit risk by permitting net settlement of transactions with the same counterparty. The Company is exposed to the risk that counterparties to derivative instruments may fail to meet their contractual obligations. The Company regularly reviews its credit exposure and assesses the creditworthiness of its counterparties. The Company reports the fair value of its derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets in "Other current assets" and "Accrued expenses and other current liabilities," respectively. Unless designated as hedges for accounting purposes, gains and losses resulting from changes in the fair value of derivative instruments are recognized in "Other income (expense), net" in the Consolidated Statements of Operations in the period that the changes occur and are classified within "Net cash provided by operating activities" or "Net cash used in financing activities," as appropriate, in the Consolidated Statements of Cash Flows. See Note 6 for additional information related to these derivative instruments.

Derivatives Designated as Cash Flow Hedges
See Note 6 for information related to derivatives designated as cash flow hedges.

80


Non-derivative Instrument Designated as Net Investment Hedge
The foreign currency transaction gains or losses on the Company's Euro-denominated debt are measured based upon changes in spot rates. The foreign currency transaction gains or losses on the Euro-denominated debt that is designated as a hedging instrument for accounting purposes are recorded in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. The foreign currency transaction gains or losses on the Euro-denominated debt that is not designated as a hedging instrument are recognized in "Other income (expense), net" in the Consolidated Statements of Operations. See Notes 12 and 14 for additional information related to the net investment hedge.

Revenue Recognition
Online travel reservation services
Substantially all of the Company's revenues are generated by providing online travel reservation services, which principally allows travelers to book travel reservations with travel service providers through the Company's platforms. While the Company generally refers to a consumer that books travel reservation services on the Company's platforms as its customer, for accounting purposes, the Company's customers are the travel service providers and, in certain merchant transactions, the travelers. The Company's contracts with travel service providers give them the ability to market their reservation availability without transferring to the Company the responsibility to deliver the travel services. Therefore, the Company's revenues are presented on a net basis in the Consolidated Statements of Operations. These contracts include payment terms and establish the consideration to which the Company is entitled, which includes either a commission or a margin on the travel transaction. Revenue is measured based on the expected consideration specified in the contract with the travel service provider, considering the effects of factors such as discounts and other sales incentives. Estimates for sales incentives are based on historical experience, current trends, and forecasts, as applicable. Coupons are recorded as a reduction of the transaction price, generally at the time they are redeemed. The local occupancy taxes, general excise taxes, value-added taxes, sales taxes, and other similar taxes ("travel transaction taxes"), if any, collected from travelers are reported on a net basis in revenues in the Consolidated Statements of Operations.

Revenues for online travel reservation services are recognized at a point in time when the Company has completed its post-booking services and the travelers begin using the arranged travel services. These revenues are classified into two categories:
Merchant revenues are derived from travel-related transactions where the Company facilitates payments from travelers for the services provided, generally at the time of booking. Merchant revenues are derived from transactions where travelers book accommodation, rental car, airline reservations, and other travel related services. Merchant revenues include travel reservation commissions and transaction net revenues (i.e., the amount charged to travelers less the amount owed to travel service providers) in connection with the Company's merchant reservations services; credit card processing rebates and customer processing fees; and ancillary fees, including travel-related insurance revenues.
Agency revenues are derived from the Company's commissions on travel-related transactions where the Company does not facilitate payments from travelers for the services provided.

Advertising and Other Revenues
Advertising and other revenues are primarily recognized by KAYAK and OpenTable. KAYAK recognizes advertising revenue primarily by sending referrals to online travel companies ("OTCs") and travel service providers and from advertising placements on its platforms. Revenue related to referrals is recognized when a consumer clicks on a referral placement or upon completion of the travel. Revenue for advertising placements is recognized based upon when a consumer clicks on an advertisement or when KAYAK displays an advertisement. OpenTable recognizes revenues for reservation fees when diners are seated through its online restaurant reservation service and subscription fees for restaurant management services on a straight-line basis over the contractual period in accordance with how the service is provided.

81


Incentive Programs
The Company provides various incentive programs such as referral bonuses, rebates, credits, and discounts. In addition, the Company offers loyalty programs where participating consumers may be awarded loyalty points on current transactions that can be redeemed in the future. The estimated value of the incentives granted and the loyalty points expected to be redeemed is generally recognized as a reduction of revenue at the time they are granted.

Deferred Merchant Bookings
Cash payments received from travelers in advance of the Company completing its performance obligations are included in "Deferred merchant bookings" in the Company's Consolidated Balance Sheets and are comprised principally of amounts estimated to be payable to travel service providers as well as the Company's estimated future revenue for its commission or margin and fees. The amounts are mostly subject to refunds for cancellations. The Company expects to complete its performance obligations generally within one year from the reservation date. The increase in the Deferred Merchant Booking balance during the year ended December 31, 2023 was principally due to the increase in business volumes.

Marketing Expenses
The Company's advertising expenses are reported in "Marketing expenses" in the Consolidated Statements of Operations. Marketing expenses consist of performance marketing expenses and brand marketing expenses. These expenses consist primarily of the costs of: (1) search engine keyword purchases; (2) affiliate programs; (3) referrals from meta-search websites; and (4) online and offline brand marketing. Performance marketing expenses are expenses generally measured by return on investment or an increase in bookings over a specified time period and are recognized as incurred. Brand marketing expenses are expenses incurred to build brand awareness over a specified time period. These expenses consist primarily of television advertising and online video and display advertising (including the airing of the Company's television advertising online), as well as other marketing expenses such as public relations and sponsorships. Brand marketing expenses are generally recognized as incurred with the exception of advertising production costs, which are deferred and expensed the first time the advertisement is displayed or broadcast.

Sales and Other Expenses
Sales and other expenses are generally variable in nature and consist primarily of: (1) credit card and other payment processing fees associated with merchant transactions; (2) fees paid to third parties that provide call center and other customer services; (3) digital services taxes and other similar taxes (4) chargeback provisions and fraud prevention expenses associated with merchant transactions; (5) provisions for expected credit losses, primarily related to accommodation commission receivables and prepayments to certain customers; and (6) customer relations costs.

Personnel Expenses
Personnel expenses consist of compensation to the Company's personnel, including salaries, bonuses, and stock-based compensation, payroll taxes, and employee health and other benefits.

Stock-Based Compensation
Stock-based compensation expense related to performance share units, restricted stock units and stock options is recognized based on fair value on a straight-line basis over the respective requisite service periods and forfeitures are accounted for when they occur. The fair value on the grant date of performance share units and restricted stock units is determined based on the number of units granted and the quoted price of the Company's common stock. For performance share units with market conditions, the effect of the market condition is also considered in the determination of fair value on the grant date using Monte Carlo simulations. The fair value of employee stock options is determined using the Black-Scholes model.

The Company records stock-based compensation expense for performance-based awards using its estimate of the probable outcome at the end of the performance period (i.e., the estimated performance against the performance targets or performance goals, as applicable). The Company periodically adjusts the cumulative stock-based compensation expense recorded when the probable outcome for these performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable.
The benefits of tax deductions in excess of recognized compensation costs are recognized in the Consolidated Statements of Operations as a discrete item when an option exercise or a vesting and release of shares occurs. Excess tax benefits are presented as operating cash flows and cash payments for employee statutory tax withholding related to vested stock awards are presented as financing cash flows in the Consolidated Statements of Cash Flows. 

82


General and Administrative Expenses
General and administrative expenses consist primarily of fees for certain outside professionals, occupancy and office expenses, certain travel transaction taxes, and personnel-related expenses such as travel, relocation, recruiting, and training expenses.

Information Technology Expenses
Information technology expenses consist primarily of: (1) software license and system maintenance fees; (2) cloud computing costs and outsourced data center costs; (3) payments to contractors; and (4) data communications and other expenses associated with operating the Company's services.

Income Taxes 
The Company accounts for income taxes under the asset and liability method. The Company records the estimated future tax effects of temporary differences between the tax bases of assets and liabilities and amounts reported in the Consolidated Balance Sheets, as well as operating loss and tax credit carryforwards. Deferred taxes are classified as non-current in the Consolidated Balance Sheets.
The Company records deferred tax assets to the extent it believes these assets will more likely than not be realized. The Company regularly reviews its deferred tax assets for recoverability considering historical profitability, projected future taxable income, the expected timing of the reversals of existing temporary differences, the carryforward periods available for tax reporting purposes, and tax planning strategies. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible. In determining the future tax consequences of events that have been recognized in the financial statements or tax returns, significant judgments, estimates, and interpretation of statutes are required.

Deferred taxes are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date of such change.
The Company recognizes liabilities when it believes that uncertain positions may not be fully sustained upon audit by the tax authorities. Liabilities recognized for uncertain tax positions are based on a two-step approach for recognition and measurement. First, the Company evaluates the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position will be sustained on audit based on its technical merits. Second, the Company measures the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Interest and penalties attributable to uncertain tax positions, if any, are recognized as a component of income tax expense. 

The Company accounts for taxes on global intangible low-taxed income ("GILTI") introduced by the U.S. Tax Cuts and Jobs Act (the "Tax Act") as period costs. See Note 15 for further details related to income taxes.

Government Grants and Other Assistance
The Company recognizes government grants in the financial statements when it is probable that the grant will be received and the Company will comply with the conditions of the grant. Government grants are recorded as a reduction in the related operating expense or the cost of the asset that they are intended to defray. The government grants received by the Company during the COVID-19 pandemic have principally been granted to defray personnel costs and were subsequently returned to the respective governments. See Note 20 for information related to government grants and other assistance.

Contingencies
Loss contingencies (other than income tax-related contingencies) arise from actual or possible claims and assessments and pending or threatened litigation that may be brought against the Company by individuals, governments or other entities. Based on the Company's assessment of loss contingencies at each balance sheet date, a loss is recorded in the financial statements if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated.


83


Reclassification
In the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021, the Company has reclassified certain indirect taxes, primarily digital services taxes, between "General and administrative" expenses and "Sales and other expenses" to conform to the presentation in the Consolidated Statement of Operations for the year ended December 31, 2023. The current presentation of "Sales and other expenses" reflects the aggregation of costs that are generally more likely to vary based on changes in revenues. These reclassifications did not affect previously accountedreported Revenue, Operating income, Income before income taxes, or Net income in the Consolidated Statements of Operations for the years ended December 31, 2022 and 2021. See Note 21 for additional information on the impact of the reclassification by quarter.

The following table presents the impact of the reclassifications on the Company's Consolidated Statements of Operations (in millions):
Year Ended December 31,
20222021
Sales and other expenses (Prior presentation)$1,818 $881 
Reclassifications168 98 
Sales and other expenses (New presentation)$1,986 $979 
General and administrative (Prior presentation)$934 $620 
Reclassifications(168)(98)
General and administrative (New presentation)$766 $522 

Recent Accounting Pronouncements Adopted
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity
On January 1, 2022, the Company adopted the new accounting standards update relating to convertible instruments and contracts in an entity's own equity. Compared to legacy U.S. GAAP, the accounting standards update reduces the number of accounting models for convertible debt instruments, requires fewer embedded conversion features to be separately recognized from the host contract, and amends certain guidance to reduce form-over-substance-based accounting conclusions. Under the updated guidance, upon the initial recognition of convertible debt, the Company presents the entire amount attributable to the debt as a liability. The initial carrying amount of the convertible debt liability is reduced by any direct and incremental issuance costs paid to third parties that are associated with the convertible debt issuance. No amount attributable to the debt is initially recognized within equity unless the instrument is issued at a substantial premium. In calculating diluted earnings per share, the accounting standards update also requires the use of the if-converted method for the Company's convertible debt.

The Company adopted the accounting standards update on a modified retrospective basis applied to the 0.75% convertible senior notes due May 2025 (see Note 12) resulting in an increase of $30 million to "Retained earnings" as of January 1, 2022. The significant corresponding balance sheet changes as of that date were an increase of $86 million to "Long-term debt" and decreases of $96 million to "Additional paid-in capital" and $21 million to "Deferred income taxes." For the Company's convertible debt, interest expense for the periods beginning on January 1, 2022 is reflected in the financial statements using interest rates that are closer to the coupon interest rate of the debt rather than the higher imputed interest expense that resulted from the separation of conversion features required by legacy U.S. GAAP. See Note 8 for additional information on net income per share calculations.

Other Recent Accounting Pronouncements

Improvements to Income Tax Disclosures
In December 2023, the Financial Accounting Standards Board (“FASB”) issued an accounting standards update related to income taxes that requires companies to provide additional information on the rate reconciliation and additional disclosures about taxes paid. The update requires disclosure of additional categories of information in the tax rate reconciliation table about federal, state and foreign income taxes and more details about certain items that meet a quantitative threshold. Income taxes paid (net of refunds received) are required to be disclosed disaggregated by federal (national), state and foreign taxes and also by jurisdiction based on a quantitative threshold. The update is effective for annual financial statements beginning with the fiscal year 2025. The Company is currently evaluating the impact of the accounting standards update on its Consolidated
84


Financial Statements.

Improvements to Reportable Segment Disclosures
In November 2023, the FASB issued an accounting standards update that requires companies to provide disclosures of significant segment expenses and other segment items. Disclosures about a reportable segment’s profit or loss and assets that are currently required annually will have to be provided in interim periods also. In addition, companies with a single reportable segment have to provide all the disclosures required by ASC 280, Segment Reporting, including the significant segment expense disclosures. The update is effective for annual financial statements beginning with the fiscal year 2024 and for interim financial statements beginning with the quarter ending March 31, 2025. The Company is currently evaluating the impact of the accounting standards update on its Consolidated Financial Statements.

3.    REVENUE

Disaggregation of Revenue

Revenue by Type of Service

Approximately 89%, 89%, and 87% of the Company's revenues for the years ended December 31, 2023, 2022, and 2021, respectively, relate to online accommodation reservation services. Revenues from all other sources of online travel reservation services and advertising and other revenues each individually represent less than 10% of the Company's total revenues for each year. The majority of the Company's merchant revenues and substantially all of its agency revenues are from Booking.com's accommodation reservations.

Revenue by Geographic Area

See Note 17 for the information related to revenue by geographic area.

Incentive Programs

At December 31, 2023 and 2022, liabilities of $149 million and $143 million, respectively, were included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets for incentives granted to consumers, including referral bonuses, rebates, credits, discounts, and loyalty programs.

4.    STOCK-BASED COMPENSATION

The Company's 1999 Omnibus Plan, as amended and restated effective June 3, 2021, (the "1999 Plan") is the primary stock compensation plan from which broad-based employee, non-employee director, and consultant equity awards may be made. At December 31, 2023, there were approximately one million shares of common stock available for future grants under the 1999 Plan.
Stock-based compensation issued under the plans generally consists of restricted stock units, performance share units, and stock options. Performance share units and restricted stock units are payable in shares of the Company's common stock upon vesting. The Company issues shares of its common stock upon the exercise of stock options. The tax benefit related to stock-based compensation was $52 million, $40 million, and $37 million for the years ended December 31, 2023, 2022, and 2021, respectively.

In 2021, the Company modified the performance-based awards granted in 2018 and 2019 to its executive officers to adjust the number of shares to be issued, subject to other vesting conditions. The modification, in aggregate, resulted in additional stock-based compensation expense of $40 million, which was recognized over the remaining requisite service periods for the performance-based awards.

85


Restricted Stock Units and Performance Share Units

The Company makes broad-based grants of restricted stock units that generally vest during a period of one- to three-years, subject to certain exceptions for terminations other than for "cause," for "good reason," or on account of death or disability. The Company grants performance share units to executives and certain other employees, which generally vest at the end of a three-year period (with the exception of certain shorter-term performance share units), subject to certain exceptions for terminations other than for "cause," for "good reason," or on account of death or disability. The number of shares that ultimately vest depends on achieving certain performance metrics, performance goals, stock price increase and/or relative total shareholder return, as applicable, by the end of the performance period, assuming there is no accelerated vesting for, among other things, a termination of employment under certain circumstances.

Restricted stock units and performance share units granted by the Company during the years ended December 31, 2023, 2022, and 2021 had an aggregate grant-date fair value of $586 million, $490 million, and $421 million, respectively. Restricted stock units and performance share units that vested during the years ended December 31, 2023, 2022, and 2021 had an aggregate fair value at vesting of $459 million, $400 million, and $395 million, respectively. At December 31, 2023, there was $698 million of estimated total future stock-based compensation expense related to unvested restricted stock units and performance share units to be recognized over a weighted-average period of 1.8 years.

The following table summarizes the activity in restricted stock units and performance share units for employees and non-employee directors during the year ended December 31, 2023: 
Restricted Stock UnitsPerformance Share Units
SharesWeighted-average Grant-date Fair ValueSharesWeighted-average Grant-date Fair Value
Unvested at December 31, 2022 (1)
280,460$2,070143,702$2,294
Granted (2)
169,409$2,64051,941$2,679
Vested(141,115)$2,032(30,151)$2,327
Performance shares adjustment (3)
74,776$2,577
Forfeited(17,350)$2,330(7,242)$2,267
Unvested at December 31, 2023291,404$2,404233,026$2,467
(1)    Excludes 14,087 performance share units awarded during the years ended December 31, 2022 and 2021 for which the grant date under ASC 718, Compensation - Stock Compensation, was not established as of December 31, 2022. Among other conditions, for the grant date to be established, a mutual understanding is required to be reached between the Company and the employee of the key terms and conditions of the award, including the performance targets. The performance targets for each of the annual performance periods under the award are set at the beginning of the respective year.
(2)     Includes 9,688 performance share units awarded during the year ended December 31, 2022 and 2021 for which the grant date under ASC 718 was established during the year ended December 31, 2023.
(3)    Probable outcome for performance-based awards is updated based upon changes in actual and forecasted operating results or expected achievement of performance goals, as applicable, and the impact of modifications.

86


Stock Options

The following table summarizes the activity for stock options during the year ended December 31, 2023:
Employee Stock OptionsNumber of SharesWeighted-average
 Exercise Price
Aggregate
 Intrinsic Value (in millions)
Weighted-average Remaining Contractual Term
(in years)
Balance, December 31, 2022120,813 $1,408 $73 7.3
Exercised (1)
(95,228)$1,408 $124 
Forfeited(62)$1,411 
Balance, December 31, 202325,523 $1,411 $55 6.4
Exercisable at December 31, 202325,523 $1,411 $55 6.4
(1)    The stock options exercised during the year ended December 31, 2023 primarily consist of stock options granted to certain employees in May 2020 that vested in March 2023. No stock options were granted to the executive officers of the Company.

5.    INVESTMENTS

The following table summarizes the Company's investments by major security type at December 31, 2023 (in millions):
 CostGross
Unrealized Gains /Upward Adjustments
Gross
Unrealized Losses /Downward Adjustments
Carrying Value
Short-term investments:
Debt securities:
International government securities$63 $— $— $63 
U.S. government securities (1)
152 — (1)151 
Corporate debt securities365 — (3)362 
Total short-term investments$580 $— $(4)$576 
Long-term investments:
Equity securities:
Equity securities with readily determinable fair values$715 $— $(404)$311 
Equity securities of private companies78 259 (208)129 
Total equity securities793 259 (612)440 
Total long-term investments$793 $259 $(612)$440 
(1)    Includes investments in U.S. municipal bonds.

87


The following table summarizes the Company's investments by major security type at December 31, 2022 (in millions): 
CostGross
Unrealized Gains /Upward Adjustments
Gross
Unrealized Losses /Downward Adjustments
Carrying Value
Short-term investments:
Debt securities:
International government securities$13 $— $— $13 
U.S. government securities (1)
131 — (1)130 
Corporate debt securities32 — — 32 
Total short-term investments$176 $— $(1)$175 
Long-term investments:
Debt securities:
International government securities$63 $— $(1)$62 
U.S. government securities (1)
147 — (3)144 
Corporate debt securities366 — (7)359 
Total debt securities576 — (11)565 
Equity securities:
Equity securities with readily determinable fair values1,165 1,352 (446)2,071 
Equity securities of private companies78 259 (184)153 
Total equity securities1,243 1,611 (630)2,224 
Total long-term investments$1,819 $1,611 $(641)$2,789 
(1)    Includes investments in U.S. municipal bonds.
The Company's investment policy seeks to preserve capital and maintain sufficient liquidity to meet operational and other needs of the business. The Company's investments in available-for-sale debt securities at December 31, 2023 and 2022, had investment grade credit quality ratings. At December 31, 2023 and 2022, investments in international government securities principally included debt securities issued by the governments of Germany, France, Norway, Canada, and Sweden. At December 31, 2022, the Company’s long-term investments in available-for-sale debt securities had maturity dates between 1 and 2 years.

Equity securities with readily determinable fair values at December 31, 2023 include the Company's investments in DiDi Global Inc. ("DiDi") and Grab Holdings Limited ("Grab"), with fair values of $155 million and $143 million, respectively. At December 31, 2022, equity securities with readily determinable fair values included the Company's investments in Grab, DiDi, and Meituan, with fair values of $136 million, $125 million, and $1.8 billion, respectively. During the year ended December 31, 2023, the Company sold its entire investment in Meituan for $1.7 billion, resulting in a loss of $149 million included in "Other income (expense), net" in the Consolidated Statement of Operations for the year ended December 31, 2023. The cost basis of the Company's investment in Meituan was $450 million. Equity securities with readily determinable fair values are included in "Long-term investments" in the Consolidated Balance Sheets. Net unrealized gains (losses) related to these investments included in "Other income (expense), net" in the Consolidated Statements of Operations for the years ended December 31, 2023, 2022, and 2021 were as follows (in millions):
Year Ended December 31,
202320222021
DiDi$30 $(70)$(205)
Grab(165)101 
Meituan— (526)(731)

88


The Company invested $200 million in preferred shares of Grab Holdings Inc. Prior to the business combination transaction involving Grab Holdings Inc., Grab and Altimeter Growth Corp. (the "Grab Transaction"), the Company's investment in Grab was classified as a debt security.security for accounting purposes with the aggregate unrealized gains and losses, net of tax reflected in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. In December 2021, the Company's investment in preferred shares were converted to Class A ordinary shares of Grab and such ordinary shares began publicly trading on the NASDAQ Stock Market. As a result, the Company's investment was classified as equity securities with readily determinable fair values and the aggregate unrealized gains of $265 million was reclassified from "Accumulated other comprehensive loss" in the Consolidated Balance Sheet to "Other income (expense), net" in the Consolidated Statement of Operations for the year ended December 31, 2021 (see Note 14).

The Company invested $500 million in preferred shares of DiDi. As a result of DiDi's initial public offering in 2021, the Company's investment was converted to Class A ordinary shares and classified as equity securities with readily determinable fair values. In June 2022, DiDi delisted its American Depository Shares ("ADSs") from the New York Stock Exchange. The shares are currently trading in the over-the-counter market with trade prices publicly reported by OTC Markets Group Inc.

The Company's investments in equity securities of private companies at December 31, 2023 and 2022, includes $51 million originally invested in Yanolja Co., Ltd. ("Yanolja"). A new round of funding and certain other transactions in the equity securities of Yanolja were completed in October 2021. As a result of these observable transactions, the Company recorded an unrealized gain of $255 million in "Other income (expense), net" in the Consolidated Statement of Operations for the year ended December 31, 2021 that resulted in an adjusted carrying value of $306 million as of December 31, 2021. The Company evaluated its investment in Yanolja for impairment as of June 30, 2023 and 2022 and recognized impairment charges of $24 million and $184 million during the years ended December 31, 2023 and 2022, respectively (see Note 6). The carrying value of the Company's investment in Yanolja was $98 million and $122 million as of December 31, 2023 and 2022, respectively.

6.    FAIR VALUE MEASUREMENTS
 
Financial assets and liabilities carriedmeasured at fair value on a recurring basis at December 31, 20202023 and nonrecurring fair value measurements are classified incategorized below based on the categories described inlevel of inputs to the tables belowvaluation techniques used to measure fair value (see Note 2) (in millions):
Level 1Level 2Level 3Total Level 1Level 2Level 3Total
Recurring fair value measurementsRecurring fair value measurements
ASSETS:ASSETS:    
ASSETS:
ASSETS: 
Cash equivalents and restricted cash equivalents:Cash equivalents and restricted cash equivalents:
Money market fund investmentsMoney market fund investments$10,208 $$$10,208 
Time deposits and certificates of deposit32 32 
Money market fund investments
Money market fund investments
Certificates of deposit
Certificates of deposit
Certificates of deposit
Short-term investments:Short-term investments:
Trip.com Group convertible debt securities501 501 
International government securities
International government securities
International government securities
U.S. government securities
Corporate debt securities
Long-term investments:Long-term investments:
Investments in private companies:
Debt securities200 200 
Other long-term investments:
Trip.com Group convertible debt securities24 24 
Long-term investments:
Long-term investments:
Equity securities
Equity securities
Equity securitiesEquity securities3,080 3,080 
Derivatives:Derivatives:
Foreign currency exchange derivativesForeign currency exchange derivatives
Foreign currency exchange derivatives
Foreign currency exchange derivatives
Total assets at fair valueTotal assets at fair value$13,320 $534 $200 $14,054 
LIABILITIES
LIABILITIES:
LIABILITIES:
LIABILITIES:
Foreign currency exchange derivatives
Foreign currency exchange derivatives
Foreign currency exchange derivativesForeign currency exchange derivatives$$$$
Nonrecurring fair value measurementsNonrecurring fair value measurements
Investments in equity securities of private companies (1)
$$$404 $404 
Goodwill of the OpenTable and KAYAK reporting unit (2)
1,000 1,000 
Total nonrecurring fair value measurements$$$1,404 $1,404 
Nonrecurring fair value measurements
Nonrecurring fair value measurements
Investment in equity securities of a private company (1)
Investment in equity securities of a private company (1)
Investment in equity securities of a private company (1)
(1)    At MarchDuring the year ended December 31, 2020,2023, the Company's investment in Didi ChuxingYanolja was written down to its estimated fair value of $400 million, resulting in an impairment charge of $100 million (see Note 5).
(2) At March
89


Financial assets and liabilities measured at fair value on a recurring basis at December 31, 2020,2022 and nonrecurring fair value measurements are categorized below based on the goodwilllevel of inputs to the OpenTable and KAYAK reporting unitvaluation techniques used to measure fair value (see Note 2) (in millions):
 Level 1Level 2Level 3Total
Recurring fair value measurements
ASSETS:    
Cash equivalents and restricted cash equivalents:
Money market fund investments$11,483 $— $— $11,483 
Certificates of deposit60 — — 60 
Short-term investments: 
International government securities— 13 — 13 
U.S. government securities— 130 — 130 
Corporate debt securities— 32 — 32 
Long-term investments:
International government securities— 62 — 62 
U.S. government securities— 144 — 144 
Corporate debt securities— 359 — 359 
Equity securities2,071 — — 2,071 
Derivatives:
Foreign currency exchange derivatives— 65 — 65 
Total assets at fair value$13,614 $805 $— $14,419 
LIABILITIES:
Foreign currency exchange derivatives$— $26 $— $26 
Nonrecurring fair value measurements
Investment in equity securities of a private company (1)
$— $— $122 $122 
(1)    During the year ended December 31, 2022, the Company's investment in Yanolja was written down to its estimated fair value of $1.5 billion, resulting in an impairment charge of $489 million. At September 30, 2020, the goodwill was further written down to its estimated fair value of $1.0 billion, resulting in an additional impairment charge of $573 million(see Note 11)5).
103



Financial assets and liabilities carried at fair value at December 31, 2019 are classified in the categories described in the tables below (in millions):
 Level 1Level 2Level 3Total
Recurring fair value measurements
ASSETS:    
Cash equivalents and restricted cash equivalents:
Money market fund investments$5,734 $$$5,734 
Corporate debt securities
Time deposits and certificates of deposit29 29 
Short-term investments:    
International government securities109 109 
U.S. government securities138 138 
Corporate debt securities751 751 
Long-term investments:
Investments in private companies:
Debt securities250 250 
Other long-term investments:
International government securities68 68 
U.S. government securities135 135 
Corporate debt securities963 963 
Trip.com Group convertible debt securities767 767 
Equity securities1,793 1,793 
Derivatives:
Foreign currency exchange derivatives12 12 
Total assets at fair value$7,556 $2,945 $250 $10,751 
LIABILITIES
Foreign currency exchange derivatives$$$$

There are three levels of inputs to measure fair value.  The definition of each input is described below:

Level 1:    Quoted prices in active markets that are accessible by the Company at the measurement date for identical assets and liabilities.

Level 2:    Inputs that are observable, either directly or indirectly. Such prices may be based upon quoted prices for identical or comparable securities in active markets or inputs not quoted on active markets, but corroborated by market data.

Level 3:    Unobservable inputs are used when little or no market data is available.
 
Investments

See Note 5 for additional information related to the Company's investments.

The valuation of the Company's investments in corporate debt securities U.S. and international government securities and Trip.com Group convertible debt securities areis considered a "Level 2" valuationsvaluation because the Company has access to quoted prices for identical or comparable securities, but does not have visibility into the volume and frequency of trading for these investments.this investment. A market approach is used for recurring fair value measurements and the valuation techniques use inputs that are observable, or can be corroborated by observable data, in an active marketplace.

104


Investments in private companies measured using Level 3 inputs

The Company’sCompany's investments measured using Level 3 inputs primarily consist of preferred stock investments in privately-held companies that are classified as either debt securities or equity securities without readily determinable fair values.companies. Fair values of privately heldprivately-held securities are estimated using a variety of valuation methodologies, including both market and income approaches. The Company has useduses valuation techniques appropriate for the type of investment and the information available about the investee as of the valuation date to determine fair value. Recent financing transactions in the investee such as new investments in preferred stock, are generally considered the best indication of the enterprise value and therefore used as a basis to estimate fair value. However, based on a number of factors, such as the proximity in timing to the valuation date or the volume or other terms of these financing transactions, the Company may also use other valuation techniques to supplement this data, including the income approach. In addition, an option-pricing model (“OPM”)When a financing transaction occurs and represents fair value, the Company also uses the calibration process, as appropriate, when estimating fair value on subsequent measurement dates. Calibration is utilized to allocate value to the various classesprocess of securities ofusing observed transactions in the investee includingcompany's own instruments to ensure that the class ownedvaluation techniques that will be employed to value the investee company investment on subsequent measurement dates begin with assumptions that are consistent with the original observed transaction as well as any more recent observed transactions in the instruments issued by the Company. The model includes assumptions around the investees' expected time to liquidity and volatility.investee company.

The Company's
90


As of June 30, 2023 and 2022, the Company evaluated its investment in Grab, which is classified asYanolja for impairment using a debt security for accounting purposes, had an aggregate estimated fair value of $200 million at December 31, 2020 and 2019. The Company measured this investment using Level 3 inputs and management's estimates that incorporate current market participant expectations of future cash flows considered alongside recent financing transactionscombination of the investeemarket approach and other relevant information.

For the investment in equity securities of Didi Chuxing, considering the impact of the COVID-19 pandemic, the Company performed an impairment analysis as of March 31, 2020 resulting in an adjusted carrying value of $400 million at March 31, 2020 and December 31, 2020. No additional impairment indicators were identified as of December 31, 2020. As discussed below, the Company used unobservable inputs in order to determine fair value. The Company used an income approach in estimating the fair value of Didi Chuxingthe investment as of March 31, 2020.those dates, and recognized impairment charges. The market approach estimates value using prices and other relevant information generated by market transactions involving comparable companies. The income approach estimates value based on the expectation of future cash flows that a company will generate. These future cash flows are discounted to their present values using a discount rate based on a company’scompany's weighted-average cost of capital and is adjusted to reflect the risks inherent in its cash flows. The key unobservable inputs and ranges used for the June 2023 impairment evaluation, primarily using the income approach, include the weighted average cost of capital (12%-14%capital (10.5%-14.5%), and the terminal EBITDA multiple (13x-15x), volatility (60%-70%(14x-16x). The key unobservable inputs and ranges used for the June 2022 impairment evaluation include, for the market approach, percentage decrease in the calibrated EBITDA multiple (36%) and an estimated time to liquidityfor the income approach, the weighted average cost of 4 years.capital (10%-14%) and the terminal EBITDA multiple (14x-16x). Significant changes in any of these inputs in isolation would result in significantly different fair value measurements. Generally, aA change in the assumption used for terminal EBITDA multiples would result in a directionally similar change in the fair value, and a change in the assumption used for weighted average cost of capital or volatility would result in a directionally opposite change in the fair value.

The determination of the fair values of investments, where the Company is a minority shareholder and has access to limited information from the investee, reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding the investee’sinvestee's expected growth rates and operating margin, expected length and severity of the impact of the COVID-19 pandemic on the investee and the shape and timing of the subsequent recovery, as well as other key assumptions with respect to matters outside of the Company's control, such as discount rates and market comparables. It requires significant judgments and estimates and actual results could be materially different than those judgments and estimates utilized in the fair value estimate. Future events and changing market conditions may lead the Company to re-evaluate the assumptions reflected in the valuation particularly the assumptions related to the length and severity of the COVID-19 pandemic and the shape and timing of the subsequent recovery and the overall impact on the investee’s business, which may result in a need to recognize an additional impairment charge that could have a material adverse effect on the Company's results of operations.charges.

Derivatives

The Company's derivative instruments are valued using pricing models.  Pricing models take into account the contract terms as well as multiple inputs where applicable, such as interest rate yield curves, option volatility and foreign currency exchange rates. The valuation of derivatives are considered "Level 2" fair value measurements. The Company's derivative instruments are typically short-term in nature.

In the normal course of business, the Company is exposed to the impact of foreign currency fluctuations. The Company mitigates these risks by following established risk management policies and procedures, including the use of derivatives. The Company enters into foreign currency forward contracts to hedge its exposure to the impact of movements in foreign currency exchange rates on its transactional balances denominated in currencies other than the functional currency. In periods prior to the second quarter of 2020, the Company also entered into foreign currency derivative contracts to hedge translation risks from short-term foreign currency exchange rate fluctuations for the Euro, British Pound Sterling and certain other currencies versus the U.S. Dollar. Since the first quarter of 2020, the Company has not entered into such derivative
105


instruments as the impact of the COVID-19 pandemic on the Company’s operating results are highly uncertain. The Company does not use derivatives for trading or speculative purposes.

The Company's derivative instruments are valued using pricing models. Pricing models take into account the contract terms as well as multiple inputs where applicable, such as interest rate yield curves, option volatility, and foreign currency exchange rates. The valuation of derivatives is considered "Level 2" fair value measurement. The Company's derivative instruments are typically short-term in nature. The Company reports the fair values of its derivative assets and liabilities on a gross basis in the Consolidated Balance Sheets in "Other current assets" and "Accrued expenses and other current liabilities," respectively. Unless designated

As of December 31, 2023 and 2022, the Company did not designate any derivatives as hedges for accounting purposes, gainspurposes. Gains and losses resulting from changes in the fair values of derivative instruments are recognized in "Other income (expense), net" in the Consolidated Statements of Operations in the period that the changes occur and cash flow impacts, if any, are classified within "Net cash provided by operating activities" or "Net cash used in financing activities," as appropriate, in the Consolidated Statements of Cash Flows. As of December 31, 2020 and 2019, the Company did not designate any derivatives as hedges for accounting purposes.

The table below provides estimated fair values and notional amounts of foreign currency exchange derivatives outstanding at December 31, 20202023 and 20192022 (in millions). The notional amount of a foreign currency forward contract is the contracted amount of foreign currency to be exchanged and is not recorded in the balance sheet.
December 31,December 31,
December 31, 2020December 31, 2019 20232022
Estimated fair value of derivative assetsEstimated fair value of derivative assets$$12 
Estimated fair value of derivative liabilitiesEstimated fair value of derivative liabilities
Notional amount:Notional amount:
Notional amount:
Notional amount:
Foreign currency purchases
Foreign currency purchases
Foreign currency purchases Foreign currency purchases898 1,770 
Foreign currency sales Foreign currency sales839 901 
91



The effect of foreign currency exchange derivatives recorded in "Other income (expense), net" in the Consolidated Statements of Operations for the years ended December 31, 2020, 2019,2023, 2022, and 20182021 is as follows (in millions):
For the Year Ended December 31,
202020192018
Losses on foreign currency exchange derivatives$31 $19 $44 
Year Ended December 31,
202320222021
Losses on foreign currency exchange derivatives$106 $52 $30 

Derivatives designated as cash flow hedges

In March 2021, the Company entered into reverse treasury lock agreements with certain financial institutions, with an aggregate notional amount of $1.8 billion and expiration date of March 31, 2021, to hedge the risk of changes in the cash flows related to the planned redemption, in April 2021, of the Senior Notes due April 2025 (the "April 2025 Notes") and the Senior Notes due April 2027 (the "April 2027 Notes") attributable to changes in the underlying U.S. treasury notes' interest rates. The Company designated the reverse treasury lock agreements as cash flow hedges. As of March 31, 2021, the Company recognized unrealized losses of $15 million in "Accumulated other comprehensive loss" in the Consolidated Balance Sheet. In April 2021, the Company settled the reverse treasury lock agreements for an aggregate amount of $15 million and also redeemed the April 2025 Notes and the April 2027 Notes. The cash flows related to the reverse treasury lock agreements are classified within "Net cash used in financing activities" in the Consolidated Statement of Cash Flows. During the three months ended June 30, 2021, the Company reclassified the losses on the cash flow hedges from "Accumulated other comprehensive loss" in the Consolidated Balance Sheet to "Other income (expense), net" in the Consolidated Statement of Operations, concurrently with the recognition of the losses upon early extinguishment of the April 2025 Notes and the April 2027 Notes (see Note 12).

Other Financial Assets and Liabilities

At December 31, 20202023 and 2019,2022, the Company's cash consisted of bank deposits. Cash equivalents principally include money market fund investments time deposits and certificates of deposit.deposit and their carrying value generally approximates the fair value as they are readily convertible to known amounts of cash. Other financial assets and liabilities, including restricted cash, accounts payable, accrued expenses, and deferred merchant bookings, are carried at cost which approximates their fair valuevalues because of the short-term nature of these items. Accounts receivable and other financial assets measured at amortized cost are carried at cost less an allowance for expected credit losses to present the net amount expected to be collected (see Note 7). See Note 12 for the estimated fair value of the Company's outstanding senior notes, and Note 5 for information related to an embedded derivative associated withincluding the $25 million Trip.com Groupestimated fair value of the Company's convertible notes issued in 2016.senior notes.

Goodwill

See Note 11 for nonrecurring fair value measurements related to the goodwill impairment test.
106


7.ACCOUNTS RECEIVABLE AND OTHER FINANCIAL ASSETS
 
Accounts receivable in the Consolidated Balance Sheets at December 31, 20202023 and 20192022 includes receivables from customers of$510 million $1.9 billion and $1.2$1.5 billion, respectively, and receivables from marketing affiliatespayment processors and networks of $32 million$1.3 billion and $110$730 million, respectively. The remaining balance principally relates to receivables from third-party payment processors.marketing affiliates. The Company's receivables are short-term in nature. In addition, the Company had prepayments to certain customers of $107$10 million and $232$29 million, at December 31, 2020 and 2019, respectively, which are included in "Prepaid expenses, net," and $45$16 million at December 31, 2020, which isand $5 million, included in "Other assets, net" in the Consolidated Balance Sheets.Sheets at December 31, 2023 and 2022, respectively. The amounts mentioned above are stated on a gross basis, before deducting the allowance for expected credit losses.

For periods prior to January 1, 2020, receivables from customers were recorded at the original invoiced amounts net of an allowance for doubtful accounts. On January 1, 2020, the Company adopted the accounting standards update on the measurement of expected credit losses, which requires the CompanySignificant judgments and assumptions are required to estimate lifetime expected credit losses upon recognition of the financial assets.

The Company records a provisionallowance for expected credit losses on receivables fromand such assumptions may change in future periods, particularly the assumptions related to the business prospects and financial condition of customers and marketing affiliates. affiliates, including the impact of the COVID-19 pandemic, macroeconomic conditions, inflationary pressures, potential recession, and the Company's ability to collect the receivable or recover the prepayment.

92


The following table summarizes the activity of the allowance for expected credit losses on receivables (in millions): 
For the Year Ended December 31, Year Ended December 31,
202020192018 202320222021
Balance, beginning of yearBalance, beginning of year$49 $51 $35 
Provision charged to earningsProvision charged to earnings216 69 79 
Write-offs and adjustmentsWrite-offs and adjustments(116)(70)(62)
Foreign currency translation adjustmentsForeign currency translation adjustments17 (1)(1)
Balance, end of yearBalance, end of year$166 $49 $51 

TheIn addition to the allowance for expected credit losses on receivables, as of December 31, 2020 includes a portion of the amounts related to refunds paid or payable to certain travelers without a corresponding estimated expected recovery from the travel service providers, primarily due to the impact of the COVID-19 pandemic (see Note 3). For the year ended December 31, 2020, the Company recorded a reduction in revenue of $37 million for such refunds, which is included in "Provision charged to earnings" in the table above.

In addition, the Company recorded an allowance for expected credit losses on prepayments to certain customers, of $55 million and $6 million at December 31, 2020 and 2019, respectively, which are included in "Prepaid expenses, net" and "Other assets, net", as applicable, in the Consolidated Balance Sheets. For the year endedSheets, of $17 million and $23 million at December 31, 2020, the Company recorded expected credit loss expenses of $51 million for the prepayments, which is included in "Sales2023 and other expenses" in the Consolidated Statement of Operations.

Due to the impact of the COVID-19 pandemic (see Note 2), given the severe downturn in the global travel industry and the financial difficulties faced by many of the Company’s travel service provider and restaurant customers and marketing affiliates, the Company has increased its allowance for expected credit losses on receivables from and prepayments to its customers and marketing affiliates. Expected credit loss expenses included in "Sales and other expenses" in the Consolidated Statements of Operations, increased from $69 million for the year ended December 31, 2019 to $230 million for the year ended December 31, 2020. Significant judgments and assumptions are required to estimate the allowance for expected credit losses on receivables from and prepayments to customers and such assumptions may change in future periods, particularly the assumptions related to the impact of the COVID-19 pandemic on the business prospects and financial condition of customers and the Company’s ability to collect the receivable or recover the prepayment.2022, respectively.

8.    NET INCOME PER SHARE
 
The Company computes basic net income per share by dividing net income applicable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income per share is based upon the weighted-average number of common and common equivalent shares outstanding during the period. Only dilutive common equivalent shares that decrease the net income per share are included in the computation of diluted net income per share.
 
Common equivalent shares related to stock options, restricted stock units, and performance share units are calculated using the treasury stock method. Performance share units are included in the weighted-average common equivalent shares
107


based on the number of shares that would be issued if the end of the reporting period were the end of the performance period, if the result would be dilutive.

The Company's convertible senior notes have net share settlement features requiring the Company, upon conversion, to settle the principal amount of the debt for cash and the conversion premium for cash or shares of the Company's common stock, at the Company's option. Under the treasury stock method, ifIf the conversion prices for the convertible senior notes exceed the Company's average stock price for the period, the convertible senior notes generally have no impact on diluted net income per share. TheFor periods prior to January 1, 2022, the treasury stock method was used for convertible senior notes are included in the calculation of diluted net income per share if their inclusionshare. Following the adoption of the accounting standards update on January 1, 2022 (see Note 2), the if-converted method is dilutive under the treasury stock method.used for all periods after that date.

A reconciliation of the weighted-average number of shares outstanding used in calculating diluted net income per share is as follows (in thousands): 
For the Year Ended December 31, Year Ended December 31,
202020192018 202320222021
Weighted-average number of basic common shares outstandingWeighted-average number of basic common shares outstanding40,974 43,082 47,446 
Weighted-average dilutive stock options, restricted stock units and performance share unitsWeighted-average dilutive stock options, restricted stock units and performance share units158 203 236 
Assumed conversion of convertible senior notesAssumed conversion of convertible senior notes28 224 335 
Weighted-average number of diluted common and common equivalent shares outstandingWeighted-average number of diluted common and common equivalent shares outstanding41,160 43,509 48,017 

For the year ended December 31, 2020, 125,000 potential common shares related to stock options and restricted stock units were excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive for the year.
93


9.PROPERTY AND EQUIPMENT, NET
 
Property and equipment, net at December 31, 20202023 and 20192022 consist of the following (in millions):
December 31,December 31,Estimated
Useful Lives
(years)
20202019Estimated
Useful Lives
(years)
Capitalized software
Capitalized software
Capitalized software$1,096 $900 1 to 7 years
Computer equipmentComputer equipment$746 $736 2 to 6 yearsComputer equipment608 758 758 2 to 4 years2 to 4 years
Capitalized software565 442 2 to 5 years
Leasehold improvementsLeasehold improvements278 265 1 to 15 yearsLeasehold improvements228 277 277 Up to 15 yearsUp to 15 years
Office equipment, furniture and fixturesOffice equipment, furniture and fixtures63 61 2 to 8 yearsOffice equipment, furniture and fixtures71 58 58 1 to 7 years1 to 7 years
Building construction-in-progress257 161 
Total
Total
TotalTotal1,909 1,665  2,003 1,993 1,993   
Less: Accumulated depreciationLess: Accumulated depreciation(1,153)(927) Less: Accumulated depreciation(1,219)(1,324)(1,324)  
Property and equipment, netProperty and equipment, net$756 $738  Property and equipment, net$784 $$669   

Depreciation expense was $291$282 million, $294$227 million, and $248$259 million for the years ended December 31, 2020, 20192023, 2022, and 2018,2021, respectively. Additions to capitalized software during the years ended December 31, 2020, 20192023, 2022, and 20182021 were $144$229 million, $109$217 million, and $103$191 million, respectively.

10.    LEASES

The Company has operating and finance leases for office space, data centers, and the land for Booking.com's future headquarters (see Note 16). The Company’s weighted-average discount rate was approximately 2.2% and 2.0% as of December 31, 2020 and 2019, respectively. The weighted-average remaining lease terms were approximately 8.1 years and 7.8 years as of December 31, 2020 and 2019, respectively.computer equipment.

108


The Company recognized the following related to operatingits leases in its Consolidated Balance Sheets at December 31, 2020 and 2019 (in millions):
December 31,
Classification in Consolidated Balance Sheets20232022
Operating lease assetsOperating lease assets$705 $645 
Operating lease liabilities:
Current operating lease liabilitiesAccrued expenses and other current liabilities$152 $125 
Non-current operating lease liabilitiesOperating lease liabilities599 552 
Total operating lease liabilities$751 $677 
Finance lease assetsProperty and equipment, net$70 $52 
Finance lease liabilities:
Current finance lease liabilitiesAccrued expenses and other current liabilities$34 $21 
Non-current finance lease liabilitiesOther long-term liabilities34 32 
Total finance lease liabilities$68 $53 

December 31,
Classification in Consolidated Balance Sheet20202019
Operating lease assetsOperating lease assets$529 $620 
Lease Liabilities:
Current operating lease liabilitiesAccrued expenses and other current liabilities$159 $161 
Non-current operating lease liabilitiesOperating lease liabilities366 462 
Total operating lease liabilities$525 $623 
The Company recognized the following costs related to operatingits leases in its Consolidated Statements of Operations (in millions):
Year Ended December 31,
Classification in Consolidated Statement of Operations20202019
Lease expenseGeneral and administrative and Information technology$194 $183 
Variable lease expenseGeneral and administrative and Information technology46 56 
Less: Sublease incomeGeneral and administrative(2)(2)
Total lease expense, net of sublease income$238 $237 
Year Ended December 31,
Classification in Consolidated Statements of Operations202320222021
Finance lease costDepreciation and amortization$28 $$
Operating lease costGeneral and administrative and Information technology180 160 185 
Variable lease costGeneral and administrative and Information technology82 45 46 
OtherGeneral and administrative and Interest expense(4)(5)(3)
Total lease cost$286 $209 $231 

For the year ended December 31, 2018, the Company recognized lease expense of $149 million under ASC 840.
94


As of December 31, 2020,2023, the operating lease liabilities will mature over the following periods (in millions):
2021$168 
2022122 
202374 
202450 
202535 
Thereafter136 
Total remaining lease payments$585 
Less: Imputed interest(60)
Total operating lease liabilities$525 
As of December 31, 2020, the Company has entered into leases that have not yet commenced with future lease payments of approximately $7 millionwhichfor operating and finance leases are not reflected in the table above. These leases will commence in 2021as follows (in millions):
Operating LeasesFinance Leases
2024$176 $36 
2025156 30 
202696 
202781 — 
202861 — 
Thereafter320 — 
Total future lease payments890 71 
Less: Imputed interest(139)(3)
Total lease liabilities$751 $68 
with lease terms of up to 7.5 years and will be recognized upon lease commencement. In addition, the Company entered into an agreement to sign a future lease in the city of Manchester in the United Kingdom for the future headquarters of Rentalcars.com (see Note 16).
Supplemental cash flow information related to operating and finance leases is as follows (in millions):
Year Ended December 31,
20202019
Cash paid for amounts included in the measurement of lease liabilities$200 $189 
Operating lease assets obtained in exchange for lease liabilities67 155 
Year Ended December 31,
202320222021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$172 $175 $186 
Financing cash flows from finance leases31 
Operating lease assets obtained in exchange for new operating lease liabilities200 392 162 
Finance lease assets obtained in exchange for new finance lease liabilities44 50 

"Operating lease amortization" presented in the operating activities section of the Consolidated Statements of Cash Flows reflects the portion of the operating lease expensecost from the amortization of the operating lease assets.

At December 31, 2023 and 2022 the weighted-average lease term and discount rate for operating and finance leases are as follows:
December 31,
20232022
Operating leases:
Weighted-average remaining lease term8.7 years9.8 years
Weighted-average discount rate4.0 %3.2 %
Finance leases:
Weighted-average remaining lease term2.1 years2.7 years
Weighted-average discount rate3.1 %2.0 %

In September 2016, the Company signed a turnkey agreement to construct a building for Booking.com's headquarters in the Netherlands and acquired a land lease upon signing the turnkey agreement. During the year ended December 31, 2022, the construction of the building was completed and the Company entered into a sale and leaseback transaction whereby the Company transferred ownership of the building and the acquired lease rights to a subsidiary of Deka Immobilien Investment GmbH for an aggregate consideration of approximately $601 million. The Company concurrently entered into an agreement to lease the building from the purchaser for an initial term of 16.5 years, with up to five renewal options of five years each. The initial annual base rent under the lease was $26 million, which will increase annually based on the consumer price index, subject to a specified ceiling. The lease commenced in December 2022 and has been classified by the Company as an operating lease. The Company recognized a gain of $240 million on the sale and leaseback transaction, which was recorded in "Other operating expenses" in the Consolidated Statement of Operations for the year ended December 31, 2022.

109
95


11.GOODWILL AND INTANGIBLE ASSETS AND OTHER LONG-LIVED ASSETS
 
A substantial portion of the Company's intangible assets and goodwill relates to the acquisitions of KAYAK, OpenTable, and KAYAK.Getaroom. See Note 18 for additional information related to the acquisition of Getaroom in December 2021.

Goodwill

The changes in the balance of goodwill for the years ended December 31, 20202023 and 20192022 consist of the following (in millions): 
 20202019
Balance, beginning of year$2,913 $2,910 
Acquisitions
Impairments(1,062)
Foreign currency translation adjustments44 (4)
Balance, end of year (1)
$1,895 $2,913 
 Year Ended December 31,
 20232022
Balance, beginning of year$2,807 $2,887 
Foreign currency translation adjustments and other adjustments (1)
19 (80)
Balance, end of year (2)
$2,826 $2,807 
(1)    During the year ended December 31, 2022, measurement period adjustments relating to the acquisition of Getaroom resulted in a decrease to goodwill of $38 million.
(2)    The balance of goodwill as of December 31, 20202023 and 20192022 is stated net of cumulative impairment charges of $2.0 billion and $941 million, respectively.
Interim Goodwill Impairment Test
Due to the significant and negative financial impact of the COVID-19 pandemic (see Note 2), the Company performed an interim period goodwill impairment test at March 31, 2020. Under the current goodwill impairment standard adopted in the first quarter of 2020, a goodwill impairment loss is measured at the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill (see Note 2).
As of March 31, 2020, the estimated fair value of each of the Company’s reporting units, except the OpenTable and KAYAK reporting unit, exceeded its respective carrying value. For the OpenTable and KAYAK reporting unit, the Company recognized a goodwill impairment charge of $489 million for the three months ended March 31, 2020, which is not tax-deductible, resulting in an adjusted carrying value of goodwill for OpenTable and KAYAK of $1.5 billion at March 31, 2020. The goodwill impairment was primarily driven by a significant reduction in the forecasted near-term cash flows of OpenTable and KAYAK as well as the significant decline in comparable companies' market values as a result of the COVID-19 pandemic.
The estimated fair value of OpenTable and KAYAK was determined using a combination of standard valuation techniques, including an income approach (discounted cash flows) and a market approach (applying the recent decline in enterprise values of comparable publicly-traded companies to the recently calculated fair value for OpenTable and KAYAK, as well as applying comparable company multiples).$2 billion.
The income approach estimates fair value utilizing long-term growth rates and discount rates applied to the cash flow projections. In the cash flow projections, the Company assumed that OpenTable and KAYAK will experience a significant decline in near-term cash flows with a recovery to 2019 levels of financial performance (including profitability) occurring in 2023. The shape and timing of the recovery was a key assumption in the fair value calculation (both in the income and market approaches).
Annual Goodwill Impairment Test
As ofAt September 30, 2020,2023, the Company performed its annual goodwill impairment test. Other than the OpenTabletest and KAYAK reporting unit, the fair valuesconcluded that there was no impairment of the Company’s reporting units exceeded their respective carrying values.
For the OpenTable and KAYAK reporting unit, the Company recognized a goodwill impairment charge of $573 million for the three months ended September 30, 2020, which is not tax-deductible, resulting in an adjusted carrying value of goodwill for OpenTable and KAYAK of $1.0 billion at September 30, 2020. The goodwill impairment was primarily driven by a significant reduction in the forecasted cash flows of OpenTable and KAYAK, reflecting a longer assumed recovery period to 2019 levels of profitability, mainly due to the continued material adverse impact of the COVID-19 pandemic, including its impact on the flight vertical at KAYAK, and the lowered outlook for monetization opportunities in restaurant reservation services.
The estimated fair value of OpenTable and KAYAK was determined using a combination of standard valuation techniques, including an income approach (discounted cash flows) and a market approach (applying comparable company multiples).
110


The income approach estimates fair value utilizing long-term growth rates and discount rates applied to the cash flow projections. The income approach, applied as of September 30, 2020, reflected a reduction in the forecasted cash flows of OpenTable and KAYAK and a longer assumed recovery period to 2019 levels of profitability, driven primarily by a lowered outlook for monetization opportunities in restaurant reservation services and slower than previously expected recovery trends for airline travel, which is a key vertical for KAYAK. For the interim goodwill impairment test at March 31, 2020, the Company expected a recovery to 2019 levels of financial performance occurring in 2023 for OpenTable and KAYAK. Based on the Company's evaluation of all relevant information available as of September 30, 2020 for the annual goodwill impairment test, the Company expected that OpenTable and KAYAK would not return to the 2019 level of profitability within the next five years, and that it was uncertain whether the shape of the recovery would ultimately match the Company’s expectations. An increase or decrease of 1 percentage point to the profitability growth rates used in the cash flow projections would result in an increase or decrease of approximately $100 million to the estimated fair value of OpenTable and KAYAK as of September 30, 2020. The discount rate is determined based on the reporting unit’s estimated weighted- average cost of capital and adjusted to reflect the risks inherent in its cash flows, which requires significant judgments. The discount rate used for the annual goodwill impairment test as of September 30, 2020 is higher than the discount rate used for the interim goodwill impairment test as of March 31, 2020. If the discount rate used in the income approach increases or decreases by 0.5%, the impact to the estimated fair value of OpenTable and KAYAK, at September 30, 2020, ranges from a decrease of approximately $65 million to an increase of approximately $70 million.
The estimation of fair value reflects numerous assumptions that are subject to various risks and uncertainties, including key assumptions regarding OpenTable and KAYAK’s expected growth rates and operating margin, expected length and severity of the impact from the COVID-19 pandemic, the shape and timing of the subsequent recovery and the competitive environment, as well as other key assumptions with respect to matters outside of the Company's control, such as discount rates and market comparables. It requires significant judgments and estimates and actual results could be materially different than the judgments and estimates used to estimate fair value. Future events and changing market conditions may lead the Company to re-evaluate the assumptions reflected in the current forecast disclosed above, particularly the assumptions related to the length and severity of the COVID-19 pandemic and the shape and timing of the subsequent recovery, which may result in a need to recognize an additional goodwill impairment charge that could have a material adverse effect on the Company's results of operations.
No additional impairment indicators were identified as of December 31, 2020.goodwill.

Intangible Assets and Other Long-lived Assets

The Company's intangible assets at December 31, 2020 and 2019 consist of the following (in millions):
December 31, 2020December 31, 2019  December 31, 2023December 31, 2022 
Gross Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Amortization Period
Trade namesTrade names$1,812 $(911)$901 $1,806 $(812)$994 3 - 20 years
Supply and distribution agreementsSupply and distribution agreements1,402 (759)643 1,386 (658)728 3 - 20 years
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Amortization
Period
Supply and distribution
agreements
$1,136 $(552)$584 $1,100 $(472)$628 3 - 20 years
Other intangible assets
Technology174 (144)30 170 (129)41 2 - 7 years
Internet domain names44 (37)40 (32)5 - 20 years
Trade names1,824 (633)1,191 1,811 (534)1,277 4 -20 years
Other intangible assets
Other intangible assetsOther intangible assets(2)(2)Up to 15 years330 (261)(261)69 69 330 330 (223)(223)107 107 Up to 20 yearsUp to 20 years
Total intangible assetsTotal intangible assets$3,180 $(1,368)$1,812 $3,123 $(1,169)$1,954  
 
Intangible assets are amortized on a straight-line basis.  Amortization expense for intangible assets was $167$222 million, $175$224 million, and $178$162 million for the years ended December 31, 2020, 20192023, 2022, and 2018,2021, respectively.

111


The estimated future annual amortization expense for the Company's intangible assets for the next five years and thereafterat December 31, 2023 is expected to be as follows (in millions):
2024$222 
2025214 
2026180 
2027170 
2028169 
Thereafter658 
$1,613 
96


2021$163 
2022160 
2023158 
2024157 
2025152 
Thereafter1,022 
 $1,812 
12.    DEBT

The Company reviews long-lived assets, including intangible assets and operating lease assets, whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The assessment of possible impairment is based upon the ability to recover the carrying value of the assets from the estimated undiscounted future net cash flows, before interest and taxes, of the related asset group. Due to the significant and negative financial impact of the COVID-19 pandemic (see Note 2), at March 31, 2020, the Company performed the recoverability test of its long-lived assets and concluded that there was no impairment. At September 30, 2020, for OpenTable and KAYAK, the Company performed the recoverability test of its long-lived assets due to additional impairment indicators and concluded that there was no impairment. At December 31, 2020, no additional impairment indicators were identified for the Company's long-lived assets.
12.DEBT

Revolving Credit Facility

In August 2019,May 2023, the Company entered into a $2.0 billion five-year unsecured revolving credit facility with a group of lenders. Borrowings under theThe revolving credit facility will bear interest, atextends a revolving line of credit of up to $2 billion to the Company’s option, at a rate per annum equal to either (i) the London Inter-bank Offer Rate, or if such London Inter-bank Offer Rate is no longer available, the agreed alternate rate of interest ("LIBOR") (but no less than 0%) for the interest period in effect for such borrowing plus an applicable margin ranging from 0.875% to 1.50%; or (ii) for U.S. Dollar-denominated loans only, the sum of (x) the greatest of (a) JPMorgan Chase Bank, N.A.'s prime lending rate, (b) the U.S. federal funds rate plus 0.50%Company and (c) LIBOR (but no less than 0%) for an interest period of one month plus 1.00%, plus (y) an applicable margin ranging from 0% to 0.50%. Undrawn balances available under the revolving credit facility are subject to commitment fees at the applicable rate ranging from 0.07% to 0.20%.

The revolving credit facility provides for the issuance of up to $80 million of letters of credit, as well as borrowings of up to $100 million of borrowings on same-day notice, referred to as swingline loans. Other than the swingline loans, which are available only in U.S. Dollars, borrowingsthe revolving loans and the letters of credit under the revolving credit facility may be madeare available in U.S. Dollars, Euros, British Pounds Sterling, and any other foreign currency agreed to by the administrative agent and each of the lenders. The proceeds of loans made under the facility can be used for working capital and general corporate purposes, including acquisitions, share repurchases and debt repayments. At December 31, 2020 and 2019, there were0 borrowings outstanding and $4 million and $5 million of letters of credit issued under this revolving credit facility, respectively.

Upon entering into this revolving credit facility, the Company terminated its prior $2.0 billion five-year revolving credit facility entered into in June 2015. During the six months ended June 30, 2019, the Company made short-term borrowings under the prior revolving credit facility totaling $400 million with a weighted-average interest rate of 3.5%, which were repaid prior to June 30, 2019.

The current revolving credit facility contains a maximum leverage ratio covenant, compliance with which is a condition to the Company's ability to borrow thereunder. In April 2020, the Company amendedborrow.

Borrowings under the revolving credit facility pursuantwill bear interest at a rate determined by reference to which the maximum leverage ratio covenant was suspended through and including the three months ending March 31, 2021, and was replaced with a $4.5 billion minimum liquidity covenantbenchmark rates plus an applicable spread (ranging from 0% to 1.375%) based on unrestricted cash, cash equivalents, short-term investments and unused capacitythe Company's leverage or credit rating at the time of the borrowing. Undrawn balances available under this revolving credit facility. In October 2020, the Company further amended the revolving credit facility are subject to extendcommitment fees at the suspension of the maximum leverage ratio covenant and the related replacement with the minimum liquidity covenant through and including the three months ending March 31, 2022 and increase the permitted maximum leverage ratio from and including the three months ending June 30, 2022 through and including the three months ending March 31, 2023. The Company agreed not to declare or make any cash distribution and not to repurchase any of its shares (with certain exceptions including in connection with tax withholding related to shares issued to employees) unless (i) priorapplicable rate determined by reference to the delivery of financial statements for the three months ending June 30, 2022, it has at least $6.0 billion of liquidity onCompany's leverage or credit rating.
112


a pro forma basis, based on unrestricted cash, cash equivalents, short-term investments and unused capacity underUpon entering into this new revolving credit facility, and (ii) after the delivery of financial statements for the three months ending June 30, 2022, it is in compliance on a pro forma basis with the maximum leverage ratio covenant then in effect. Such restriction ends upon delivery of financial statements required for the three months ending June 30, 2023, or the Company hasterminated the ability to terminate this restriction earlier if it demonstrates compliance with$2 billion five-year revolving credit facility entered into in August 2019. At December 31, 2023 there were no borrowings outstanding and $18 million of letters of credit issued under the original maximum leverage ratio covenant in thenew revolving credit facility. Beginning withAt December 31, 2022, there were no borrowings outstanding and $14 million of letters of credit issued under the three months ending June 30, 2022, the minimum liquidity covenant will cease to apply and the maximum leverage ratio covenant, as increased, will again be in effect. prior revolving credit facility.

Outstanding Debt
 
Outstanding debt at December 31, 2020 consists of the following (in millions):
December 31, 2020Outstanding
Principal
Amount
Unamortized Debt
Discount and Debt
Issuance Cost
Carrying
Value
Current Liabilities:
0.9% Convertible Senior Notes due September 2021$1,000 $(15)$985 
Long-term debt:
0.8% (€1 Billion) Senior Notes due March 2022$1,223 $(1)$1,222 
2.15% (€750 Million) Senior Notes due November 2022919 (4)915 
2.75% Senior Notes due March 2023500 (1)499 
2.375% (€1 Billion) Senior Notes due September 20241,223 (7)1,216 
3.65% Senior Notes due March 2025500 (2)498 
4.1% Senior Notes due April 20251,000 (5)995 
0.75% Convertible Senior Notes due May 2025863 (128)735 
3.6% Senior Notes due June 20261,000 (4)996 
1.8% (€1 Billion) Senior Notes due March 20271,223 (2)1,221 
4.5% Senior Notes due April 2027750 (5)745 
3.55% Senior Notes due March 2028500 (2)498 
4.625% Senior Notes due April 20301,500 (11)1,489 
Total long-term debt$11,201 $(172)$11,029 
December 31, 2023December 31, 2022
Outstanding
 Principal 
Amount
Carrying
 Value (1)
Outstanding
 Principal 
Amount
Carrying
 Value (1)
2.75% Senior Notes due March 2023 (2)
$— $— $500 $500 
2.375% (€1 Billion) Senior Notes due September 2024 (3)
1,105 1,104 1,067 1,064 
3.65% Senior Notes due March 2025500 499 500 499 
0.1% (€950 Million) Senior Notes due March 20251,050 1,048 1,014 1,011 
0.75% Convertible Senior Notes due May 2025 (3)
862 857 863 854 
3.6% Senior Notes due June 20261,000 998 1,000 997 
4.0% (€750 Million) Senior Notes due November 2026828 825 800 797 
1.8% (€1 Billion) Senior Notes due March 20271,105 1,103 1,067 1,065 
3.55% Senior Notes due March 2028500 499 500 498 
0.5% (€750 Million) Senior Notes due March 2028828 825 800 797 
3.625% (€500 Million) Senior Notes due November 2028552 549 — — 
4.25% (€750 Million) Senior Notes due May 2029828 823 800 794 
4.625% Senior Notes due April 20301,500 1,492 1,500 1,491 
4.5% (€1 Billion) Senior Notes due November 20311,105 1,098 1,067 1,060 
4.125% (€1.25 Billion) Senior Notes due May 20331,381 1,367 — — 
4.75% (€1 Billion) Senior Notes due November 20341,105 1,097 1,067 1,058 
Total outstanding debt$14,249 $14,184 $12,545 $12,485 
Short-term debt1,967 1,961 500 500 
Long-term debt$12,282 $12,223 $12,045 $11,985 
(1)    The carrying values differ from the outstanding principal amounts due to unamortized debt discounts and debt issuance costs of $65 million and $60 million as of December 31, 2023 and 2022, respectively.
(2)    Included in "Short-term debt" in the Consolidated Balance Sheet as of December 31, 2022.
(3)    Included in "Short-term debt" in the Consolidated Balance Sheet as of December 31, 2023.

Outstanding debt at December 31, 2019 consists of the following (in millions):
December 31, 2019Outstanding
Principal
Amount
Unamortized Debt
Discount and Debt
Issuance Cost
Carrying
Value
Current Liabilities:
0.35% Convertible Senior Notes due June 2020$1,000 $(12)$988 
Long-term debt:
0.9% Convertible Senior Notes due September 2021$1,000 $(39)$961 
0.8% (€1 Billion) Senior Notes due March 20221,123 (3)1,120 
2.15% (€750 Million) Senior Notes due November 2022842 (3)839 
2.75% Senior Notes due March 2023500 (2)498 
2.375% (€1 Billion) Senior Notes due September 20241,123 (9)1,114 
3.65% Senior Notes due March 2025500 (2)498 
3.6% Senior Notes due June 20261,000 (5)995 
1.8% (€1 Billion) Senior Notes due March 20271,123 (5)1,118 
3.55% Senior Notes due March 2028500 (3)497 
Total long-term debt$7,711 $(71)$7,640 
11397


Based on the closing price of the Company's common stock for the prescribed measurement periods for the three months ended December 31, 2020 and 2019, as applicable, the contingent conversion thresholds on the 2021 Notes (as defined below) and the May 2025 Notes (as defined below) were not exceeded; and therefore, the notes were not convertible at the option of the holders.

Fair Value of Debt

At December 31, 20202023 and 2019,2022, the estimated fair value of the outstanding debt was approximately $14.0$15.2 billion and $9.8$12.4 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 6)2). Fair value wasThe fair values were estimated based upon actual trades at the end of the reporting period or the most recent trade available as well as the Company's stock price at the end of the reporting period. The estimated fair value of the Company's debt in excess of the outstanding principal amount at December 31, 2020 primarily relates to the Senior Notes and the Convertible Senior Notes issued in April 2020. The estimated fair value of the Company's debt in excess of the outstanding principal amount at December 31, 20192023 primarily relates to the conversion premium on the convertible senior notes.

Convertible Senior Notes

Ifnotes due in May 2025. As of December 31, 2022, the note holders exercise their option to convert, the Company delivers cash to repay theoutstanding principal amount of the notes and delivers shares of common stock or cash, at its option, to satisfy the conversion value in excess of the principal amount.  If the Company's convertible debt is redeemed or converted prior to maturity, a gain or loss on extinguishment is recognized. The gain or loss is the difference betweenexceeds the fair value of debt mainly due to the debt component immediately prior to extinguishment and its carrying value. To estimate the fair value of the debt atincrease in interest rates partially offset by the conversion date,premium on the Company estimates the borrowing rate, considering the credit rating and similar debt of comparable corporate issuers without the conversion feature.convertible senior notes due in May 2025.

Description of Convertible Senior Notes

In April 2020, the Company issued $863 million aggregate principal amount of Convertible Senior Notesconvertible senior notes due in May 1, 2025 with an interest rate of 0.75% (the "May 2025 Notes"). The Company paid $19 million in debt issuance costs during the year ended December 31, 2020 related to this offering.the issuance. The May 2025 Notes are convertible, subject to certain conditions, into the Company's common stock at a conversion price of $1,886.44 per share. The May 2025 Notes are convertible, at the option of the holder, prior to November 1, 2024, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 130% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the May 2025 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the May 2025 Notes in an aggregate value ranging from $0 to $235 million depending upon the date of the transaction and the then current stock price of the Company. Starting on November 1, 2024, holders will have the right to convert all or any portion of the May 2025 Notes, regardless of the Company's stock price. The May 2025 Notes may not be redeemed by the Company prior to maturity. The holders may require the Company to repurchase the May 2025 Notes for cash in certain circumstances. Interest on the May 2025 Notes is payable on May 1 and November 1 of each year. If the note holders exercise their option to convert, the Company delivers cash to repay the principal amount of the notes and delivers shares of common stock or cash, at its option, to satisfy the conversion value in excess of the principal amount. Based on the closing sales prices of the Company's common stock for the prescribed measurement periods, the May 2025 Notes were convertible at the option of the holder starting the second calendar quarter of 2023 and continue to be convertible during the first calendar quarter of 2024. The May 2025 Notes are classified as "Short-term debt" in the Consolidated Balance Sheet as of December 31, 2023 and "Long-term debt" in the Consolidated Balance Sheet as of December 31, 2022. At December 31, 2020,2023 and 2022, the if-convertedestimated fair value of the May 2025 Notes exceeded the aggregate principal amount by $97 million. The proceeds from the issuance of the Convertible Senior Notes can be used for general corporate purposes, which may include repayment of debt, including the repayment, at maturity or upon conversion prior thereto, of the Company’s outstanding Convertible Senior Notes.was $1.6 billion and $1.2 billion, respectively, and was considered a "Level 2" fair value measurement (see Note 2).

In August 2014, the Company issued $1.0$1 billion aggregate principal amount of Convertible Senior Notesconvertible senior notes due September 15, 2021 with an interest rate of 0.9% (the "2021 Notes"). The Company paid $11 million in debt issuance costs during the year ended December 31, 2014, related to this offering. The"September 2021 Notes are convertible, subject to certain conditions, into the Company's common stock at a conversion price of $2,055.50 per share. The 2021 Notes are convertible, at the option of the holder, prior to September 15, 2021, upon the occurrence of specific events, including but not limited to a change in control, or if the closing sales price of the Company's common stock for at least 20 trading days in the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is more than 150% of the conversion price in effect for the notes on the last trading day of the immediately preceding quarter. In the event that all or substantially all of the Company's common stock is acquired on or prior to the maturity of the 2021 Notes in a transaction in which the consideration paid to holders of the Company's common stock consists of all or substantially all cash, the Company would be required to make additional payments in the form of additional shares of common stock to the holders of the 2021 Notes in an aggregate value ranging from $0 to $375 million depending upon the date of the transaction and the then current stock price of the Company. Starting on June 15, 2021, holders will have the right to convert all or any portion of the 2021
114


Notes, regardless of the Company's stock price. The 2021 Notes may not be redeemed by the Company prior to maturity.  The holders may require the Company to repurchase the 2021 Notes for cash in certain circumstances.  Interest on the 2021 Notes is payable on March 15 and September 15 of each year. At December 31, 2020, the if-converted value of the 2021 Notes exceeded the aggregate principal amount by $17 million.

In May 2013, the Company issued $1.0 billion aggregate principal amount of Convertible Senior Notes due June 15, 2020, with an interest rate of 0.35% (the "2020 Notes"). In June 2020,September 2021, in connection with the maturity of the outstanding 2020 Notes,these notes, the Company paid $1.0$1 billion to satisfy the aggregate principal amount due and paid an additional $245$86 million in satisfaction of the conversion valuepremium in excess of the principal amount.

In March 2012, the Company issued in a private placement $1.0 billion aggregate principal amount of Convertible Senior Notes due March 15, 2018, with an interest rate of 1.0% (the "2018 Notes"). In March 2018, in connection with the maturity of the remaining outstanding 2018 Notes, the Company paid $714 millionPrior to satisfy the aggregate principal amount due and paid an additional $773 million in satisfaction of the conversion value in excess of the principal amount.

Cash-settledJanuary 1, 2022, cash-settled convertible debt, such as the Company's convertible senior notes, iswere separated into debt and equity components at issuance and each component iswas assigned a value. The value assigned to the debt component iswas the estimated fair value, at the issuance date, of a similar bond without the conversion feature. The difference between the bond cash proceeds and this estimated fair value, representing the value assigned to the equity component, iswas recorded as a debt discount. Debt discount iswas amortized using the effective interest rate method over the period from the origination date through the stated maturity date. The Company estimated the borrowing rates at debt origination to be 4.10% for the May 2025 Notes, 3.18% for the 2021 Notes and 3.13% for the 2020 Notes, considering its credit rating and similar debt of the Company or comparable corporate issuers without the conversion feature. The yield to maturity was estimated at an at-market coupon priced at par.
Debt discount after tax of $100 million ($130 million before tax) related to the May 2025 Notes $83 million ($143 million before tax) related to the 2021 Notes and $92 million ($154 million before tax) related to the 2020 Notes less financingdebt issuance costs allocated to the equity component of the respective convertible notes was recorded in "Additionaladditional paid-in capital"capital in the balance sheet at debt origination.

On January 1, 2022, the Company adopted the new accounting standards update relating to convertible instruments (see Note 2). The following table summarizesadoption of the new accounting standards update resulted in a decrease of $26 million in "Interest expense" and an increase in "Income before income taxes" in the Consolidated Statement of Operations for the year ended December 31, 2022. For the year ended December 31, 2021, interest expenses and weighted-average effective interest ratesexpense related to the convertible senior notes (in millions, except for interest rates). The remaining period forconsisted primarily of the amortization of debt discount and debt issuance costs isof $43 million. For the period until the stated maturity date for the respective debt.

For the Year Ended December 31,
202020192018
Coupon interest expense$15 $12 14 
Amortization of debt discount and debt issuance costs54 50 52 
Total interest expenses$69 $62 $66 
Weighted-average effective interest rate3.5 %3.2 %3.2 %

Other Long-term Debt

In April 2020, the Company issued Senior Notes due April 13, 2025 with an interest rate of 4.10% for an aggregate principal amount of $1.0 billion, Senior Notes due April 13, 2027 with an interest rate of 4.50% for an aggregate principal amount of $750 million and Senior Notes due April 13, 2030 with an interest rate of 4.625% for an aggregate principal amount of $1.5 billion. The Company paid $19 million in debt issuance costs during the yearyears ended December 31, 20202023, 2022, and 2021, the weighted-average effective interest rate related to issuance of thesethe convertible senior notes. The proceeds from the issuance of the Senior Notes can be used for general corporate purposes, which may include repayment of debt, including the repayment, at maturity or upon conversion prior thereto, of the Company’s outstanding Convertible Senior Notes.notes was 1.2%, 1.2%, and 3.8%, respectively.

11598


Other long-term debt, including the Senior Notes issued in April 2020, had a total carrying value of $10.3 billion and $6.7 billion at December 31, 2020 and 2019, respectively. Debt discount and debt issuance costs are amortized using the effective interest rate method over the period from the origination date through the stated maturity date. 

The following table summarizes the information related to other long-term debtsenior notes outstanding at December 31, 2020:

2023:
Other Long-term DebtSenior NotesDate of Issuance
Effective Interest Rate(1)
Timing of Interest Payments
0.8% Senior Notes due March 2022March 20170.94 %Annually in March
2.15% Senior Notes due November 2022November 20152.27 %Annually in November
2.75% Senior Notes due March 2023August 20172.88 %Semi-annually in March and September
2.375% Senior Notes due September 2024September 20142.54 %Annually in September
3.65% Senior Notes due March 2025March 20153.76 %Semi-annually in March and September
4.1%0.1% Senior Notes due AprilMarch 2025April 2020March 20214.220.30 %Semi-annuallyAnnually in April and OctoberMarch
3.6% Senior Notes due June 2026May 20163.70 %Semi-annually in June and December
4.0% Senior Notes due November 2026November 20224.08 %Annually in November
1.8% Senior Notes due March 2027March 20151.86 %Annually in March
4.5% Senior Notes due April 2027April 20204.63 %Semi-annually in April and October
3.55% Senior Notes due March 2028August 20173.63 %Semi-annually in March and September
0.5% Senior Notes due March 2028March 20210.63 %Annually in March
3.625% Senior Notes due November 2028May 20233.74 %Annually in November
4.25% Senior Notes due May 2029November 20224.35 %Annually in May
4.625% Senior Notes due April 2030April 20204.72 %Semi-annually in April and October
4.5% Senior Notes due November 2031November 20224.57 %Annually in November
4.125% Senior Notes due May 2033May 20234.26 %Annually in May
4.75% Senior Notes due November 2034November 20224.81 %Annually in November
(1)    Represents the coupon interest rate adjusted for deferred debt issuance costs, premiums or discounts existing at the origination of the debt.

The following table summarizesproceeds from the issuance of the senior notes issued in May 2023 are available for general corporate purposes, including to repurchase shares of the Company's common stock.

A portion of the proceeds from the senior notes issued in November 2022 (the "November 2022 Notes") was used to repay $500 million on the maturity of the Senior Notes due March 2023 and $778 million on the maturity of the Senior Notes due November 2022. In addition, the Company paid the applicable accrued and unpaid interest expensesrelating to these senior notes. The remaining proceeds from the issuance of the November 2022 notes are available to be used for general corporate purposes.

In March 2022, the Company repaid $1.1 billion on the maturity of Senior Notes due March 2022. In addition, the Company paid the applicable accrued and unpaid interest relating to these senior notes.

In April 2021, the Company used the proceeds from the issuance of the senior notes issued in March 2021 to pay $1.1 billion and $868 million to redeem the April 2025 Notes and the April 2027 Notes, respectively. In addition, the Company paid the applicable accrued and unpaid interest relating to these senior notes. The Company recorded a loss, before tax, of $242 million in the Consolidated Statement of Operations for the year ended December 31, 2021, on the early extinguishment of these senior notes (see Note 6).

Interest expense related to other long-termsenior notes consists primarily of coupon interest expense of $409 million, $241 million, and $257 million for the years ended December 31, 2023, 2022, and 2021, respectively. Debt discount and debt (in millions):
For the Year Ended December 31,
202020192018
Coupon interest expense$264$160$163
Amortization of debt discount and debt issuance costs967
Total interest expenses$273$166$170
issuance costs are amortized using the effective interest rate method over the period from the origination date through the stated maturity date. "Interest expense" in the Consolidated Statements of Operations also includes interest expense related to the Company's cash management activities (with related income recorded in "Other income (expense), net" in the Consolidated Statements of Operations).

Historically, the aggregate principal value of the Euro-denominated Senior Notes maturing in March 2022, November 2022, September 2024 and March 2027 (collectively the "Euro-denominated debt") and accrued interest thereon had been designated as a hedgeEach of the Company's net investmentsenior notes are unsecured and rank equally in a Euro functional currency subsidiary. Beginning inright of payment with all of the second quarter of 2019, theCompany's other senior unsecured notes.

The Company has only designateddesignates certain portions of the aggregatedaggregate principal value of the Euro-denominated debt as a hedge.hedge of the foreign currency exposure of the net investment in certain Euro functional currency subsidiaries. For the years ended December 31, 20202023 and 2019,2022, the carrying value of the portion of Euro-denominated debt, designated as a net investment hedge, ranged from $1.8$3.1 billion to $3.2$8.4 billion and from $2.4$4.2 billion to $4.3$6.2 billion, respectively. The foreign currency transaction gains or losses on the Euro-denominated debt that is designated as a hedging instrument for accounting purposes are recorded in "Accumulated other comprehensive loss" in the Consolidated Balance Sheets. The foreign currency transaction
99


gains or losses on the Euro-denominated debt that is not designated as a hedging instrument are recognized in "Other income (expense), net" in the Consolidated Statements of Operations.

13.    TREASURY STOCK AND DIVIDENDS
 
At December 31, 2019,2022, the Company had a total remaining authorization of $11.5$3.9 billion related to repurchase its common stock under a program authorized by the Company's Board of Directors ("the Board") in 2019 to repurchase up to $15.0$15 billion of the Company's common stock. In the first quarter of 2023, the Board authorized an additional program to repurchase up to $20 billion of the Company's common stock. At December 31, 2020,2023, the Company had a total remaining authorization of $10.4$13.7 billion to repurchase its common stock. The Company has 0t repurchased any shares since March 2020 under this authorization and does not intendexpects to initiate anycomplete the share repurchases under thisthe remaining authorization until it has better visibility intoby the shape and timingend of a recovery from2026, assuming no major downturn in the COVID-19 pandemic. See Note 12 for a description of the impact of the October 2020 credit facility amendment on the Company's ability to repurchase shares.travel market. Additionally, the Board of Directors has given the Company the general authorization to repurchase shares of its common stock withheld to satisfy employee withholding tax obligations related to stock-based compensation.

116


The following table summarizes the Company's stock repurchase activities during the years ended December 31, 2020, 20192023, 2022, and 20182021 (in millions, except for shares, which are reflected in thousands):
202020192018
SharesAmountSharesAmountSharesAmount
Year Ended December 31,Year Ended December 31,
2023202320222021
SharesSharesAmountSharesAmountSharesAmount
Authorized stock repurchase programsAuthorized stock repurchase programs601 $1,122 4,358 $8,002 3,020 $5,850 
General authorization for shares withheld on stock award vestingGeneral authorization for shares withheld on stock award vesting84 142 87 151 80 162 
TotalTotal685 $1,264 4,445 $8,153 3,100 $6,012 
Shares repurchased in December and settled in following January$19 $40 43 $74 

Stock repurchases of $40 million in December 2023 were settled in January 2024. Stock repurchases of $70 million in December 2022 were settled in January 2023. For the years ended December 31, 2020, 20192023, 2022, and 2018,2021, the Company remitted employee withholding taxes of $141$194 million, $151$165 million, and $163 million, respectively, to the tax authorities, which is different from the aggregate cost of the shares withheld for taxes for each year due to the timing in remitting the taxes. The cash remitted to the tax authorities is included in financing activities in the Consolidated Statements of Cash Flows.

AtEffective January 1, 2023, the Inflation Reduction Act of 2022 has mandated a 1% excise tax on share repurchases. Excise tax obligations that result from the Company's share repurchases are accounted for as a cost of the treasury stock transaction. As of December 31, 2020, there were 22,446,897shares2023, the Company recorded an estimated excise tax liability of $96 million for stock repurchases during the Company's common stock heldyear ended December 31, 2023, which is included in treasury."Accrued expenses and other current liabilities" in the Consolidated Balance Sheet.

On January 25, 2024, the Board adopted a dividend policy pursuant to which the Company intends to pay quarterly cash dividends on its common stock. Declaration of dividends pursuant to the policy will be subject to the Board’s consideration of, among other things, the Company's financial performance, cash flows, capital needs, and liquidity. Pursuant to the dividend policy, on February 16, 2024 the Board declared a quarterly cash dividend of $8.75 per share of common stock, payable on March 28, 2024 to stockholders of record as of the close of business on March 8, 2024.
100


14.    CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)LOSS BY COMPONENT
 
The table below presents the changes in the balances of accumulated other comprehensive income (loss)loss ("AOCI") by component for the years ended December 31, 2018, 20192021, 2022, and 20202023 (in millions):
Foreign currency translation adjustments, net of tax
Net unrealized gains (losses) on available-for-sale securities, net of tax (1)
Total AOCI, net of tax
Foreign currency translation
Net investment
hedges (2)
Total, net of taxBefore taxTax (expense) benefitTotal, net of tax
Before tax
Tax benefit (expense)(3)
Before taxTax benefit (expense)
Balance, December 31, 2017$210 $$(290)$65 $(15)$343 $(90)$253 $238 
Other Comprehensive Income (Loss) ("OCI") before
reclassifications
(319)41 217 (53)(114)(201)(199)(313)
OCI for the period(319)41 217 (53)(114)(201)(199)(313)
Amounts reclassified to retained earnings (1)
0 (299)58 (241)(241)
Balance, December 31, 2018$(109)$41 $(73)$12 $(129)$(157)$(30)$(187)$(316)
OCI before reclassifications(77)13 71 (17)(10)161 (37)124 114 
Amounts reclassified to
  net income (4)
0 (11)22 11 11 
OCI for the period(77)13 71 (17)(10)150 (15)135 125 
Balance, December 31, 2019$(186)$54 $(2)$(5)$(139)$(7)$(45)$(52)$(191)
OCI before reclassifications197 (7)(182)42 50 (1)55 
Amounts reclassified to
  net income (4)
14 18 18 
OCI for the period197 (7)(182)42 50 10 13 23 73 
Balance, December 31, 2020$11 $47 $(184)$37 $(89)$$(32)$(29)$(118)
Foreign currency translation adjustments
Unrealized losses on cash flow hedges (1)
Net unrealized gains (losses) on available-for-sale securitiesTotal AOCI, net of tax
Foreign currency translation
Net investment
hedges (2)
Total, net of taxBefore taxTaxTotal, net of taxBefore taxTaxTotal, net of tax
Before tax
Tax (3)
Before taxTax
Balance, December 31, 2020$11 $47 $(184)$37 $(89)$— $— $ $$(32)$(29)$(118)
Other comprehensive (loss) income ("OCI") before reclassifications(287)20 275 (65)(57)(15)(11)265 (62)203 135 
Amounts reclassified to net income (4) (5)
— — — —  15 (4)11 (265)93 (172)(161)
OCI for the period(287)20 275 (65)(57)— —  — 31 31 (26)
Balance, December 31, 2021$(276)$67 $91 $(28)$(146)$— $— $ $$(1)$2 $(144)
OCI for the period(303)26 219 (53)(111)— —  (16)(12)(123)
Balance, December 31, 2022$(579)$93 $310 $(81)$(257)$— $— $ $(13)$$(10)$(267)
OCI for the period42 (139)33 (63)— —  (2)7 (56)
Balance, December 31, 2023$(537)$94 $171 $(48)$(320)$— $— $— $(4)$1 $(3)$(323)
(1)    Relates to the Upon the adoption of the accounting update on financial instruments on January 1, 2018, the Company reclassified net unrealized gains, net of tax, of $241 million ($299 million before tax) related to marketable equity securities from AOCI to retained earnings. Changesreverse treasury lock agreements entered in fair value of marketable equity securities subsequent to January 1, 2018 are recognizedMarch 2021 that were designated as cash flow hedges and settled in net income rather than "Accumulated other comprehensive loss" in the Consolidated Balance SheetsApril 2021 (see Note 2)6).
117


(2)Net investment hedges balance net of tax, at December 31, 20202023 and earlier dates presented above, includes accumulated net losses from fair value adjustments of $35 million ($53 million before tax) associated with previously settled derivatives that were designated as net investment hedges. The remaining balances relate to foreign currency transaction gains (losses) and related tax benefits (expenses) associated with the Company's Euro-denominated debt that is designated as a hedge againstof the impactforeign currency exposure of currency fluctuations on the net assets of ainvestment in certain Euro functional currency subsidiarysubsidiaries (see Notes 2 and 12).
(3)The tax benefits relate to foreign currency translation adjustments to the Company's one-time deemed repatriation tax liability recorded at December 31, 2017 and foreign earnings for periods after December 31, 2017 that are subject to U.S. federal and state income tax, resulting from the enactment of the Tax Act.
(4)The reclassified net gains (losses) on available-for-sale securities, before tax, are included in "Other income (expense), net" and the reclassified tax (expenses) benefits are included in "Income tax expense" in the Consolidated StatementsStatement of Operations. The cost of marketable debt securities sold is determined using a first-in and first-out method. For the year ended December 31, 2020,2021, the reclassified tax expenses include a tax expense of $15$31 million, related to the maturityredemption in May 2020 of the Company's investment of $250 million in Trip.com Group convertible senior notes (see Note 5). For the year ended December 31, 2019, the reclassified tax expenses include a tax expense of $21 million related to the maturity in August 20192021 of the Company's investment of $500 million in Trip.com Group convertible senior notes.
(5)    For the year ended December 31, 2021, amounts reclassified to net income includes a gain of $203 million ($265 million before tax) related to the Company's investment in Grab, which was reclassified from available-for-sale debt securities to equity securities with readily determinable fair values (see Note 5).

101


15.    INCOME TAXES
 
InternationalThe composition of pre-tax income was $2.6 billion, $5.7 billion and $4.8 billion(loss) for the years ended December 31, 2020, 20192023, 2022, and 2018, respectively. U.S. pre-tax loss was $2.0 billion for the year ended December 31, 2020, and U.S. pre-tax income was $213 million and $47 million for the years ended December 31, 2019 and 2018, respectively.2021 is as follows (in millions):
Year Ended December 31,
 202320222021
International$6,119 $4,717 $1,937 
U.S.(638)(794)(472)
Total$5,481 $3,923 $1,465 

Provision for Income Taxes

The composition of income tax expense (benefit) for the yearyears ended December 31, 20202023, 2022, and 2021 is as follows (in millions):
Year Ended December 31,
 202320222021
Current income tax expense (benefit):
International$1,371 $1,145 $665 
U.S. Federal291 (8)68 
U.S. State(15)12 
Current income tax expense (benefit):1,670 1,122 745 
Deferred income tax (benefit) expense:
International(47)(61)(103)
U.S. Federal(411)(172)(323)
U.S. State(20)(24)(19)
Deferred income tax (benefit) expense(478)(257)(445)
Income tax expense$1,192 $865 $300 
 
 CurrentDeferredTotal
International$320 $(62)$258 
U.S. Federal(9)296 287 
U.S. State(16)(21)(37)
Total$295 $213 $508 
The income tax expense (benefit) for the year ended December 31, 2019 is as follows (in millions):
 CurrentDeferredTotal
International$915 $(12)$903 
U.S. Federal22 166 188 
U.S. State34 (32)
Total$971 $122 $1,093 
The income tax expense (benefit) for the year ended December 31, 2018 is as follows (in millions):
 CurrentDeferredTotal
International$887 $(3)$884 
U.S. Federal45 (107)(62)
U.S. State55 (40)15 
Total$987 $(150)$837 

Income tax liabilities of $174 million$1 billion and $158$880 million are included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets at December 31, 20202023 and 2019,2022, respectively. In the first quarter of 2020, the Company made a prepayment of the Netherlands income taxes of 660 million Euros ($717 million) to earn prepayment discounts. The Company requested a refund of this amount from the Dutch tax authorities and it was received in April 2020.
118



U.S. Tax Reform

In December 2017, the Tax Act was enacted into law in the United States. The Tax Act made significant changes to U.S. federal tax law, including a reduction in the U.S. federal statutory tax rate from 35% to 21%, effective January 1, 2018. The Tax Act imposed a one-time deemed repatriation tax on accumulated unremitted international earnings, to be paid over eight years.

In 2018,2023, the Company recorded an income tax benefit of $46 million to adjust its provisional income tax expense that was recorded during the year ended December 31, 2017 relating to the federal one-time deemed repatriation liability, as well as U.S. state income taxes and international withholding taxes associated with the mandatory deemed repatriation. In addition, the Company recorded an income tax benefit of $2 million in 2018 to adjust the remeasurement of its U.S. deferred tax assets and liabilities due to the reduction of the U.S. federal statutory tax rate that resulted from the Tax Act.

In 2019, as a result of additional technical guidance issued by U.S. federal and state tax authorities with respect to the Tax Act, the Company recorded an income tax benefit of $17 million to adjust its income tax expense that was recorded during the year ended December 31, 2017 relating to the federal one-time deemed repatriation liability, as well as U.S. state income taxes associated with the mandatory deemed repatriation.

In 2020, the Company recorded an income tax benefit of $8 million to adjustadjusted its income tax expense that was recorded during the year ended December 31, 2017 relating to the federal one-time deemed repatriation liability. This benefit was primarily due to additionalexpense resulted from the closing of the 2017 and 2018 U.S federal income tax credits. The Company utilized $108 million of deferred tax assets related to U.S. federal NOLs and $115 million of other tax credit carryforwards to reduce its transition tax liability as of December 31, 2020.

audits. Under the Tax Act, the Company's future cash generated by the Company's international operations can generally be repatriated without further U.S. federal income tax, but will be subject to U.S. state income taxes and international withholding taxes, which have been accrued by the Company.

The Tax Act also introduced in 2018 a tax on 50% of GILTI, which is income determined to be in excess of a specified routine rate of return, and a base erosion and anti-abuse tax ("BEAT") aimed at preventing the erosion of the U.S. tax base. The Company has adopted an accounting policy to treat taxes on GILTI as period costs.

Deferred Income Taxes

The Company utilized $309 million of its U.S. NOLs to reduce its U.S. federal tax liability for the deemed repatriation tax. After utilization of available NOLs, at December 31, 2020,2023, the Company had U.S. federal NOLs of $179$353 million, the majority of which do not have an expiration date, and U.S. state NOLs of $457$259 million, which mainly begin to expire in years ending December 31, 2032 and forward. In addition, at December 31, 2020,2023, the Company had $488$970 million of non-U.S. NOLs, the majority of which do not have an expiration date, and $14$45 million of U.S. research tax credit and foreign tax credit carryforwards available to reduce future tax liabilities and the majority of both do not have an expiration date.liabilities.

102


The utilization of these NOLs allowances and credits is dependent upon the Company's ability to generate sufficient future taxable income and the tax laws in the jurisdictions where the losses were generated. The Company periodically evaluates the likelihood of the realization of deferred tax assets, and reduces the carrying amount of these deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. The Company considers many factors when assessing the likelihood of future realization of the deferred tax assets, including its recent cumulative earnings experience by taxing jurisdiction, expectations of future income, tax planning strategies, the carryforward periods available for tax reporting purposes and other relevant factors.
119



The tax effects of temporary differences that give rise to significant portions of deferred tax assets and liabilities at December 31, 20202023 and 20192022 are as follows (in millions):
 20202019
Deferred tax assets/(liabilities):  
Net operating loss carryforward — U.S.$67 $37 
Net operating loss carryforward — International81 15 
Accrued expenses47 35 
Stock-based compensation and other stock based payments40 49 
Foreign currency translation adjustment29 36 
Tax credits14 
Euro-denominated debt77 
Operating lease liabilities43 38 
Property and equipment11 31 
Subtotal - deferred tax assets404 255 
Discount on convertible notes(29)(10)
Intangible assets and other(119)(133)
Euro-denominated debt(14)
State income tax on accumulated unremitted international earnings(5)(8)
Unrealized gains on investments(550)(191)
Operating lease assets(38)(35)
Installment sale liability(263)(284)
Other(14)(11)
Subtotal - deferred tax liabilities(1,018)(686)
Valuation allowance on deferred tax assets(58)(45)
Net deferred tax liabilities (1)
$(672)$(476)
December 31,
 20232022
Deferred tax assets:  
Net operating loss carryforward — U.S.$89 $95 
Net operating loss carryforward — International200 176 
Accrued expenses70 74 
Stock-based compensation and other stock-based payments47 36 
Unrealized losses on investments83 — 
Foreign currency translation adjustments66 83 
Tax credits39 35 
Operating lease liabilities20 29 
Property and equipment195 126 
Other16 
Total deferred tax assets825 661 
Valuation allowance on deferred tax assets(114)(120)
Deferred tax assets, net711 541 
Deferred tax liabilities:
Intangible assets and other(140)(174)
Euro-denominated debt(11)(84)
State income tax on accumulated unremitted international earnings(6)(8)
Unrealized gains on investments— (202)
Operating lease assets(19)(26)
Installment sale liability(118)(119)
Deferred tax liabilities(294)(613)
Net deferred tax assets (liabilities) (1)
$417 $(72)
(1)    Includes deferred tax assets of $455$675 million and $400$613 million at December 31, 20202023 and 2019,2022, respectively, reportedincluded in "Other assets, net" in the Consolidated Balance Sheets.
During the year ended December 31, 2019, the Company recorded a deferred tax asset of $335 million, which is included in "Other Assets, net" in the Consolidated Balance Sheet, and a deferred tax liability of $325 million, both related to an internal legal entity reorganization.

The valuation allowance on deferred tax assets of $58 million at December 31, 2020 includes $18 million related to international operations and $40 million primarily related to certain U.S. federal NOLs, research credits and Connecticut NOLs.  The valuation allowance on deferred tax assets of $45 million at December 31, 20192023 includes $30 million related to international operations and $15$84 million primarily related to U.S. research credits, capital loss carryforwardscertain unrealized losses on equity securities. The valuation allowance on deferred tax assets at December 31, 2022 includes $29 million related to international operations and $91 million primarily related to certain unrealized losses on equity securities and Connecticut NOLs. The decrease in the valuation allowance is primarily related to deferred tax assets generated from certain unrealized losses on equity securities and Connecticut NOLs.

The Company does not intend to indefinitely reinvest its international earnings that were subject to U.S. taxation pursuant to the mandatory deemed repatriation or subject to U.S. taxation as GILTI.

Reconciliation of U.S. Federal Statutory Income Tax Rate to Effective Income Tax Rate

A significant portion of the Company's taxable earnings is generated in the Netherlands. According to Dutch corporate income tax law, income generated from qualifying innovative activities is taxed at a rate of 7%9% ("Innovation Box Tax") for periods beginning on or after January 1, 2021 rather than the Dutch statutory rate of 25%. Previously, the Innovation Box Tax rate was 7%. Effective January 1, 2022, the Netherlands corporate income tax rate increased from 25% to 25.8%. A portion of
103


Booking.com's earnings during the years ended December 31, 2020, 20192023, 2022, and 20182021 qualified for Innovation Box Tax treatment, which had a significant beneficial impact on the Company's effective tax rate for those years.
 
120


The effective income tax rate of the Company is different from the amount computed using the expected U.S. statutory federal rate of 21% for the years ended December 31, 2020, 20192023, 2022, and 20182021 as a result of the following items (in millions):
Year Ended December 31,Year Ended December 31,
202020192018 202320222021
Income tax expense at U.S. federal statutory rateIncome tax expense at U.S. federal statutory rate$119 $1,251 $1,015 
Adjustment due to:Adjustment due to:   Adjustment due to:  
Foreign rate differentialForeign rate differential55 210 210 
Innovation Box Tax benefitInnovation Box Tax benefit(79)(443)(435)
Goodwill impairment228 
Stock-based compensation
Stock-based compensation
Stock-based compensationStock-based compensation32 23 12 
Federal GILTIFederal GILTI73 36 35 
State income tax (benefit) expense(31)
State income tax benefit
Valuation allowanceValuation allowance36 (3)
Uncertain tax positionsUncertain tax positions64 11 (4)
Tax Act - Remeasurement of deferred tax balances(2)
Tax Act - U.S. transition tax benefit and other transition impacts(8)(17)(46)
Fines and penalties
Other
Other
OtherOther19 12 54 
Income tax expenseIncome tax expense$508 $1,093 $837 
 
Uncertain Tax Positions

The following is a reconciliation of the total beginning and ending amount of unrecognized tax benefits (in millions): 
Year Ended December 31,Year Ended December 31,
202020192018 202320222021
Unrecognized tax benefit — January 1Unrecognized tax benefit — January 1$56 $45 $32 
Gross increases — tax positions in current periodGross increases — tax positions in current period
Gross increases — tax positions in prior periodsGross increases — tax positions in prior periods48 11 19 
Gross decreases — tax positions in prior periodsGross decreases — tax positions in prior periods(11)(3)(3)
Reduction due to lapse in statute of limitationsReduction due to lapse in statute of limitations(2)
Reduction due to settlements during the current periodReduction due to settlements during the current period(11)(2)
Unrecognized tax benefit — December 31Unrecognized tax benefit — December 31$84 $56 $45 
 
The increasedecrease in unrecognized tax benefits, is principally relatedas well as gross interest and penalties, primarily relates to Booking.com’sthe settlement by Booking.com of certain French tax disputesmatters (see Note 16), the. The majority of which isunrecognized tax benefits are included as a partial reduction to the French tax payment recorded in “Other Assets, net”"Other assets, net" and "Other long-term liabilities" in the Consolidated Balance Sheets for the years endedSheet as of December 31, 2020 and 2019.2023. The remaining unrecognized tax benefits are primarily included in "Other long-term liabilities" and "Deferred income taxes" in the Consolidated Balance Sheets for the years ended December 31, 2020 and 2019. Theamount of unrecognized tax benefits, if recognized, that would affect the effective tax rate. The Company does not expect further significant changes inrate are $47 million as of December 31, 2023. It is reasonably possible that the amountbalance of gross unrecognized tax benefits duringcould change over the next twelve12 months. As of December 31, 20202023 and 2019,2022, total gross interest and penalties accrued was $31$7 million and $10$43 million, respectively. See Note 16 for more information regarding tax contingencies.

The Company's major taxing jurisdictions include: the Netherlands, United States, Singapore, and United Kingdom. The statutes of limitations that remain open related to these major tax jurisdictions are: the Company's Netherlands returns for 20142018 and forward, U.S. federal returns for 20172020 and forward, Singapore returns from 20172018 and forward, and U.K. returns for 20172020 and forward. The Company’s 2017 and 2018 U.S. federal income tax returns are currently under audit by the Internal Revenue Service. See Note 16 for more information regarding tax contingencies.

121104


16.    COMMITMENTS AND CONTINGENCIES

Competition and Consumer Protection Reviews

At times, online platforms, including onlineOnline travel platforms have been the subject of investigations or inquiries by various national competition authorities ("NCAs") or other governmental authorities regarding competition law matters, consumer protection issues, or other areas of concern. The Company is orand has been involved in many such investigations. For example, the Company has been and continues to beis involved in investigations related to whether Booking.com's contractual parity arrangements with accommodation providers sometimes also referred to as "most favored nation" or "MFN" provisions, are anti-competitive because they require accommodation providerspartners to provide Booking.com with room rates, conditions, orand availability that are at least as favorable as those offered to other OTCs or throughby the accommodation provider's website.partner itself. To resolve and close certain of the parity-related investigations, the Company has from time to time made commitments to the investigating authorities regarding future business practices or activities. For example, Booking.com has made commitments to several NCAs, includingactivities, such as agreeing to narrow the scope of its parity clauses, in order to resolve parity-related investigations.clauses. These investigations can also resulthave resulted in fines and the Company recordedcould incur additional fines and/or be restricted in certain of its business practices in the future.
In October 2022, the Comisión Nacional de los Mercados y la Competencia in Spain (the "CNMC") opened an investigation into whether certain practices by Booking.com may produce adverse effects for hotels and other OTCs. In January 2024, the CNMC notified Booking.com of its draft decision to impose a liabilityfine of $23486 million duringEuros and to restrict certain business practices such as those relating to parity provisions and criteria that Booking.com can use to determine how to rank hotels in its display to customers. The amount of the draft fine is based on Booking.com’s historical revenues and it is possible the final amount may be increased when the decision is finalized, which is expected by July 2024. Booking.com does not agree with the rationale stated in the draft decision and certain of the restrictions sought to be imposed, and is continuing to engage with the CNMC prior to the decision being finalized. If the draft decision were to become final, Booking.com plans to challenge aspects of the fine, decision, and/or restrictions. Although the Company disagrees with the rationale stated in the draft decision, the Company accrued a loss of 486 million Euros ($530 million) related to it, which is included in "General and administrative" expenses in the Consolidated Statement of Operations for the year ended December 31, 2020 for potential fines associated with its contractual parity arrangements.2023. The related liability is included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet as of December 31, 2023. In addition, in September 2017, the Swiss Price Surveillance Office opened an investigation into the level of commissions of Booking.com in Switzerland and the investigation is ongoing. If there is an adverse outcome and Booking.com is unsuccessful in any appeal, Booking.com couldmay be required to reducemake other commitments, such as reducing its commissions in Switzerland. Some authorities are reviewingIn July 2023, the online hotel booking sector more generally through market inquiriesPolish Office of Competition and Consumer Protection opened an investigation into Booking.com's identification of private and professional hosts and its messaging in relation to obligations owed to consumers. If any of the Company cannot predictinvestigations were to find that Booking.com practices violated the outcome of such inquiries or any resulting impactrespective laws, Booking.com may face significant fines, restrictions on its business results of operations, cash flows practices, and/or financial condition.be required to make other commitments.

The Company is and has been involved in investigations or inquiries by NCAs or other governmental authorities are continuing to review the activities of online platforms, including through the use ofinvolving consumer protection powers. For example,matters, including in the United Kingdom's NCA (the CompetitionKingdom and Markets Authority,the European Union. The Company has previously made certain voluntary commitments to competition authorities to resolve investigations or CMA) conducted a consumer protection law investigation into the clarity, accuracy and presentation of information on hotel booking sites.  In connection with this investigation, in 2019 Booking.com, agoda and KAYAK, along with a number of other OTCs, voluntarily agreed to certain commitments with the CMA, which resolved the CMA's investigation without a finding by the CMA of an infringement or an admission of wrongdoing by the OTCs involved. Among other things, the commitments provided to the CMAinquiries that have included showing prices inclusive of all mandatory taxes and charges, providing information about the effect of money earned on search result rankings on or before the search results page and making certain adjustments to how discounts and statements concerning popularity or availability are shown to consumers. The CMA has stated that it expects all participants in the online travel market to adhere to the same standards, regardless of whether they formally signed the commitments. As a result of additional inquiries from other NCAs in the European Union, Booking.com has made similar commitments with the Consumer Protection Cooperation Network that became applicable in the European Union in June 2020. In the future, it is possible othernew jurisdictions could engage Booking.comthe Company in discussions to implement similar changes to its business in those countries. The Company is unable to predict what, if any, effect any future similar commitments will have on its business, industry practices or online commerce more generally. To the extent that any other investigations or inquiries result in additional commitments, fines, damages or other remedies, the Company's business, financial condition, and results of operations could be harmed.

The Company is involved in multiple litigations in Israel claiming that it has violated Israeli consumer protection and competition laws. For example, one such lawsuit alleges that the Company violated Israeli consumer protection laws by failing to properly display Israeli local taxes in the total prices shown to Israeli residents on its platform. Another lawsuit claims that the Company's parity contractual terms with partners violate Israeli competition laws because they are anti-competitive. A third lawsuit claims Israeli consumer protection laws prohibit the Company from facilitating non-refundable bookings to Israeli residents. Each of the plaintiffs in these matters is requesting certification of a class and the Company is defending against class certification. If the court were to grant class certification for any of these matters and if the plaintiffs were successful on the merits of the claims, the Company could be required to pay damages. However, it is not reasonably possible to estimate the amount of such damages because the likelihood of class certification and the success of the merits of these cases are both too speculative at this stage in the litigation and also because a reasonable assessment of the size of any potential class is not possible at this time.

Although Booking.com has not been sued, a German hotel association has threatened Booking.com with a class action lawsuit on behalf of a group of German hotels that alleges that the hotels overpaid commissions to Booking.com because of wide parity terms in the contracts between the hotels and Booking.com between 2006 and 2015. Booking.com is pursuing court proceedings in the Netherlands to declare that the Netherlands is the proper forum for this matter. If the hotel association follows through and files the lawsuit, the class were to be certified and there were to be an adverse outcome, the Company could be required to pay damages. Although the Company believes the claim to be without merit and intends to defend against the claim, if the hotel association were successful in any litigation and the Company were required to pay damages, the amount
122


could be significant. The Company cannot reasonably estimate an amount of potential loss because there are several unknown variables at this early stage, including that the plaintiff has not yet filed a lawsuit.

The Company is unable to predict how any current or future investigations or litigation may be resolved or the long-term impact of any such resolution on its business. For example, competition and consumer-law-related investigations, legislation, or issues have and could in the future result in private litigation and the Company is currently involved in such litigation. More immediate results could include, among other things, the imposition of fines, payment of damages, commitments to change certain business practices, or reputational damage, any of which could harm the Company's business, results of operations, brands, or competitive position.

Tax Matters

FrenchBetween December 2018 and August 2021, the Italian tax authorities conducted audits of Booking.comissued assessments on Booking.com's Italian subsidiary totaling approximately 251 million Euros ($277 million) for the years 2003 through 2012 andtax years 2013 through 20152018, asserting that its transfer pricing policies were inadequate. The Company believes Booking.com has been and currently are conducting an auditcontinues to be in compliance with Italian tax law. In September 2020, the Italian tax authorities approved the opening of a mutual agreement procedure ("MAP") between Italy and the Netherlands for the years 2016 through 2018. In December 2015,2013 tax year and the FrenchItalian tax authorities issued Booking.comsubsequently approved the inclusion of
105


the tax years 2014 through 2018 in the MAP. Based on the Company's expectation that the Italian assessments for unpaid income2013 through 2018, and value added taxes ("VAT") related to taxany transfer pricing assessments received for subsequent open years, 2006will be settled through 2012 for approximately 356the MAP process, and after considering potential resolution amounts, 33 million Euros ($40336 million), have been reflected in net unrecognized tax benefits, the majority of which represents penalties and interest. The assessments assert that Booking.com had a permanent establishment in France. In December 2019, the French tax authorities issued an additional assessment of 70 million Euros ($86 million), including interest and penalties, for the 2013 year asserting that Booking.com had taxable income attributableis recorded to a permanent establishment in France. The French tax authorities also have issued assessments totaling 39 million Euros ($48 million), including interest and penalties, for certain tax years between 2011 and 2015 on Booking.com's French subsidiary asserting that the subsidiary did not receive sufficient compensation for the services it rendered to Booking.com in the Netherlands. As a result of a formal demand from the French tax authorities for payment of the amounts assessed against Booking.com for the years 2006 through 2012, in January 2019, the Company paid the assessments of approximately 356 million Euros ($403 million) in order to preserve its right to contest those assessments in court. The payment, which is included in "Other assets, net" in the Consolidated Balance SheetsSheet at December 31, 2020 and 2019, does2023. This unrecognized tax benefit is partially offset by a deferred income tax benefit of 15 million Euros ($17 million). As of December 31, 2023, the Company made prepayments of 74 million Euros ($82 million) to the Italian tax authorities to forestall collection enforcement pending the appeal phase of the case. The payments do not constitute an admission that the Company owes the taxes and will be refunded (with interest) to the Company to the extent that the Company prevails. In December 2019 and October 2020, the Company initiated court proceedings with respect to certain of the assessments. Although the Company believes that Booking.com has been, and continues to be, in compliance with French tax law, and the Company is contesting the assessments, during the three months ended September 30, 2020, the Company contacted the French tax authorities regarding the potential to achieve resolution of the matter through a settlement. After assessing several potential outcomes and potential settlement amounts and terms, an unrecognized tax benefit in the amount of 50 million Euros ($61 million) has been recorded during the year ended December 31, 2020, of which the majority has been included as a partial reduction to the tax payment recorded in “Other Assets, net” in the Consolidated Balance Sheet at December 31, 2020. In December 2020, the French Administrative Court (Conseil d’Etat) delivered a decision in the "ValueClick" case that could have an impact on the outcome in the Company's case. After considering the potential impact of the new decision on the potential outcomes for the Booking.com assessments, the Company currently estimates that the reasonably possible loss related to VAT is approximately 20 million Euros ($24 million). Additional assessments could result when the French tax authorities complete the outstanding audits.

Italian authoritiesThe payments are reviewing Booking.com's activities for the years 2011 through 2019. They are reviewing whether Booking.com has a permanent establishment in Italy, Booking.com's transfer pricing policies in Italy, and for the years 2013 through 2019, whether Booking.com is subject to VAT. The Company is cooperating with the investigation but intends to contest any allegation that Booking.com has a permanent establishment in Italy or that its transfer pricing policies are inappropriate. In December 2018 and 2019, the Italian tax authorities issued assessments on Booking.com's Italian subsidiary for approximately 48 million Euros ($58 million) for the 2013 tax year and 58 million Euros ($71 million) for the 2014 tax year, respectively, asserting that its transfer pricing policies were inadequate. The Company believes that Booking.com has been, and continues to be, in compliance with Italian tax law. The Company paid 10 million Euros ($11 million) in December 2019 as a partial prepayment of the 2013 assessment to avoid any collection enforcement from the Italian tax authorities pending the appeal phase of this case. The payment, which is included in "Other assets, net" in the Consolidated Balance Sheets at December 31, 20202023 and 2019, does not constitute an admission thatDecember 31, 2022.

In June 2021, the Company owes the taxes and will be refunded (with interest) to the Company to the extent the Company prevails. In September 2020,investigative arm of the Italian tax authorities approvedissued a Tax Audit Report recommending that a formal tax assessment of 154 million Euros ($170 million), plus interest and penalties, be made on Booking.com BV for value-added taxes ("VAT") related to commissions charged to certain Italian accommodation providers from 2013 to 2019. In connection with the opening of a Mutual Agreement Procedure (“MAP”) between ItalyTax Audit Report, the Genoa Public Prosecutor requested certain Booking.com tax information and related data. The Company is cooperating with regard to that request. While the NetherlandsCompany continues to believe that Booking.com has been compliant with applicable VAT laws, in July 2023, the Company entered into an agreement with the Italian tax authorities and paid approximately 93 million Euros ($103 million) to settle the issues raised in the Tax Audit Report for the periods 2013 tax year and the Company expects to request that the 2014 tax year be added to the MAP. Based on the possibility of the 2013 and 2014 Italian assessments being settled through the MAP process, and, after considering potential resolution amounts, a net unrecognized tax benefit amount of 4 million Euros ($5 million) has been recorded during the year ended December 31, 2020, of which the majority has been included as a partial reduction to the tax payment recorded in "Other Assets, net" in the Consolidated Balance Sheet at December 31, 2020. It is unclear what further actions, if any, the Italian authorities will take. Such actions could include closing the investigation, assessing Booking.com additional taxes and/or imposing interest, fines and penalties.2022.

123


In addition, TurkishDecember 2022, the Company entered into an agreement with the French tax authorities have asserted that Booking.com has a permanent establishment in Turkeyto settle all the income and have issued tax
VAT assessments for the years 20122006 through 2018 that were issued to Booking.com for a total amount of approximately 766
153 million Turkish LiraEuros ($103163 million), which includes interest and penalties through. The settlement amount was reflected in unrecognized tax benefits as of December 31, 2020. The Company believes that Booking.com has been, and continues to be, in compliance with Turkish tax law, and the Company is contesting these assessments. The Company has not recorded a liability in connection with these assessments.2022.

As a result of an internal review of tax policies and positions at one of the Company's smaller subsidiaries in 2018, the Company identified two issues related to the application of certain non-income-based tax laws to that subsidiary's business. At December 31, 2020 and 2019, the Company had accrued $59 million and $67 million, respectively, related to these travel transaction taxes, based on the Company's estimate of the probable travel transaction tax owed for the prior periods, including interest and penalties, as applicable. The related expenses are included in "General and administrative" expense in the Consolidated Statements of Operations. The Company currently estimates that the reasonably possible loss related to these matters in excess of the amount accrued is approximately $25 million. To the extent the Company determines that the probable taxes owed related to these matters exceed what has already been accrued or new issues are identified, the Company may need to accrue additional amounts, which could adversely affect the Company’s business, results of operations, financial condition and cash flows.

During the second quarter of 2019, the Company identified the nonpayment in prior periods of a wage-related tax under Netherlands' law on compensation paid to certain highly-compensated former employees in the year of their separation from employment with Booking.com.  The Company has informed the Dutch tax authorities of the nonpayment and, to correct this immaterial error, has paid an amount of $61 million based on the Company's estimate of the probable tax owed for prior tax years, including interest.  This expense is recorded in "Personnel" expenses in the Consolidated Statement of Operations for the year ended December 31, 2019.

From time to time, the Company isalso involved in other tax-related audits, investigations, or proceedings, which could relateand litigation relating to income taxes, value-added taxes, sales taxes, employment taxes, etc. For example, the Company is subject to legal proceedings in the United States related to travel transaction taxes (e.g., hotel occupancy taxes), withholding taxes, sales taxes, etc.).

and other taxes. Any taxes or other assessments in excess of the Company's current tax provisions, whether in connection with the foregoing or otherwise (includingincluding the resolution of any tax proceedings),proceedings or litigation, could have a materiallymaterial adverse impact on the Company's results of operations, cash flows, and financial condition. In some cases, assessments may be significantly in excess of the Company's tax provisions, particularly in instances where the Company does not agree with the tax authority's assessment of how the tax laws may apply to the Company's business.

Other Matters

Beginning in 2014, Booking.com B.V. received several letters from the Netherlands Pension Fund for the Travel Industry (Reiswerk) (“BPF”("BPF") claiming that Booking.com isit was required to participate in the mandatory pension scheme of the BPF with retroactive effect to 1999, which has a higher contribution rate than the pension scheme in which Booking.comit is currently participating. BPF instituted legal proceedings against Booking.com and in 2016 the District Court of Amsterdam rejected all of BPF’sBPF's claims. BPF appealed the decision to the Court of Appeal, and, in May 2019, the Court of Appeal also rejected all of BPF’sBPF's claims, in each case by ruling that Booking.com doesBooking did not meet the definition of a travel intermediary for purposes of the mandatory pension scheme. BPF hasthen appealed to the Netherlands Supreme Court. In October 2020, the Dutch Advocate General issued an opinion toApril 2021, the Supreme Court stating thatoverturned the Dutch Advocate General believes the decision of the Court of Appeal to be incorrect based on her interpretation of the pension scheme requirements. The Company has submitted to the Supreme Court a response to the Advocate General's opinion. While the Company continues to believe that Booking.com is in compliance with its pension obligations and that the Dutch Supreme Court should uphold the ruling of the Court of Appeal, based on the significant influence the Dutch Advocate General’s opinion typically has on the Supreme Court, the Company has reevaluated the probability of a loss and believes it is probable that it has incurred a loss related to this matter. The Company expects the Dutch Supreme Court to rule in the first quarter of 2021. In the event the Supreme Court overturns theprevious decision of the Court of Appeal and remandsheld that Booking.com B.V. met the case todefinition of a lower court,travel intermediary for the purposes of the mandatory pension scheme. The Supreme Court ruled only on the qualification of Booking as a travel intermediary for the purposes of the mandatory pension scheme and did not rule on the various other defenses brought forward by the Company intendsagainst BPF's claims. The Supreme Court referred the matter to pursue a numberanother Court of Appeal to assess the other defenses brought forward by the Company. In January 2024, that Court of Appeal ruled that Booking.com B.V. is required to participate in any subsequent proceedings and may ultimately prevail in whole or in part.the mandatory pension scheme of the BPF with retroactive effect to 1999. The Company is not able to reasonably estimateconsidering an appeal of the decision on various grounds, such as whether the court applied the proper legal criteria in assessing whether Booking.com B.V. falls within the scope of the mandatory pension scheme, and whether the statute of limitations may further reduce the retroactive period. Although the Company disagrees with the decision, it accrued a loss or a range of loss because253 million Euros ($276 million), included in "Personnel" expenses in the litigationConsolidated Statement of Operations for the year ended December 31, 2023. The related liability is ongoingincluded in "Accrued expenses and there are significant factual and legal questions yet to be determined. As a result,other current liabilities" in the Consolidated Balance Sheet as of December 31, 2020,2023. Even in the event the Company has not recordedpursues an appeal, on a liability in connection with a potential adverse outcomego-forward basis, Booking.com B.V. expects to this litigation. However, if Booking.com were to ultimately lose and all of BPF’s claims were to be accepted (including with retroactive effect to 1999), the Company estimates that as of December 31, 2020, the maximum loss, not including any potential interest or penalties, would be approximately $290 million. Such estimated potential loss increases as Booking.com continues not to contributebegin paying pension premiums to the BPF and depends on Booking.com's applicable employee compensation after December 31, 2020.scheme or to increase contributions to employees under its existing pension scheme.
124



From time to time, the Company notifies the competent data protection authority, such as the Dutch data protection authority in accordance with its obligations under the E.U. General Data Protection Regulation, of certain incidental and accidental personal data security incidents. Although the Company believes it has fulfilled its data protection regulatory obligations, shouldShould, for example, the Dutch data protection authority decide these incidents were the result of inadequate technical and organizational security measures or practices, it could decide to impose a fine. While the Company believes that any fine imposed on it would be immaterial, the Company estimates that if a fine were imposed, it could range from a de minimis amount to 20 million Euros ($24 million) per incident, depending on the Dutch data protection authority’s evaluation of the facts and circumstances associated with the incident after investigation.

The Company accrues for certain legal contingencies where it is probable that a loss has been incurred and the amount can be reasonably estimated. Such accrued amounts are not material to the Company's balance sheets and provisions recorded have not been material to the Company's results of operations or cash flows.
106


From time to time, theThe Company has been, is currently, and expects to continue to be, subject to legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of third-party intellectual property rights. Such claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources, divert management's attention from the Company's business objectives and adversely affect the Company's business, reputation, results of operations, financial condition, and cash flows.
Building Construction

In September 2016,The Company accrues for certain legal contingencies where it is probable that a loss has been incurred and the Company signed a turnkey agreement to construct an office building for Booking.com's future headquarters in the Netherlands for 270 million Euros ($331 million). Upon signing this agreement, the Company paid 43 million Euros ($48 million) for the acquired land-use rights, which was included in "Operating lease assets" in the Consolidated Balance Sheets. In addition, since signing the turnkey agreement the Company has made several progress payments principally relatedamount can be reasonably estimated. Such accrued amounts are not material to the construction of the building, which are included in "PropertyCompany's balance sheets and equipment, net" in the Consolidated Balance Sheets. As of December 31, 2020, the Company had a remaining obligation of 56 million Euros ($68 million) relatedprovisions recorded have not been material to the turnkey agreement. The Company's contractual obligation was reduced by 9 million Euros ($11 million) during 2020. The remaining obligation will be paid through 2022, when the Company anticipates construction will be complete.

In addition to the turnkey agreement, the Company has a remaining obligation at December 31, 2020 to pay 70 million Euros ($86 million) over the remaining initial termresults of the acquired land lease, which expires in 2065. The Company has made and will continue to make additional capital expenditures to fit out and furnish the office space. At December 31, 2020, the Company had 29 million Euros ($35 million) of outstanding commitments to vendors to fit out and furnish the office space.

Lease obligations

See Note 10 for information about the Company's lease obligations.operations or cash flows.

Other Contractual Obligations and CommitmentsContingencies

In 2018, the Company entered into an agreement to sign a future lease related to approximately 222,000 square feet of office space in the city of Manchester in the United Kingdom for the future headquarters of Rentalcars.com. The Company's obligation to execute the lease is conditional upon the lessor completing certain activities, which are expected to be completed in 2021. If these activities are completed, the lease will commence for a term of approximately 13 years and the Company will have a lease obligation of approximately 65 million British Pounds Sterling ($88 million), excluding lease incentives. The Company will also make capital expenditures to fit out and furnish the office space.
The Company had $134$533 million and $155$452 million of standby letters of credit orand bank guarantees issued on behalf of the Company as of December 31, 20202023 and 2019,2022, respectively, in addition toincluding those issued under the revolving credit facility,facility. These are obtained primarily related to payment guarantees to third-party payment processors.for regulatory purposes. See Note 12 for information related to letters of credit issued under the revolving credit facility.

125


17.    BENEFIT PLANS
Booking.com offers partner liability insurance that provides protection to certain accommodation partners ("home partners") in instances where a reservation has been made via Booking.com. The Company maintainspartner liability insurance may provide those home partners (both owners and property managers) coverage up to $1 million equivalent per occurrence, subject to limitations and exclusions, against third-party lawsuits claims for bodily injury, or third party personal property damage that occurred during a defined contribution 401(k) savings plan (the "Plan") coveringstay booked through Booking.com. Booking.com retains certain U.S. employees. In connection with acquisitions, effective at the date of such acquisitions, the Company assumed defined contribution plans covering the U.S. employees of the acquiredfinancial risks related to this insurance offering, which is underwritten by third party insurance companies. The Company also maintains certain other defined contribution plans outside of the United States for which it provides contributions for participating employees.  The Company's matching contributions during the years ended December 31, 2020, 2019 and 2018 were $33 million, $26 million and $22 million, respectively.

18.17.    GEOGRAPHIC INFORMATION

The Company's international revenue informationfrom its businesses outside of the U.S. consists of the informationresults of Booking.com, agodaAgoda, and Rentalcars.com in their entirety and the informationresults of the international businesses of KAYAK and OpenTable.OpenTable businesses located outside of the U.S. This classification is independent of where the consumer resides, where the consumer is physically located while using the Company's services, or the location of the travel service provider or restaurant. For example, a reservation made through Booking.com (which is domiciled in the Netherlands) at a hotel in New York by a consumer in the United States is part of the results of the Company's international results.businesses outside of the U.S. The Company's geographic information on revenues is as follows (in millions): 
United
 States
InternationalTotal
Company
For the year ended:
The Netherlands
Other
December 31, 2020$783 $5,264 $749 $6,796 
December 31, 20191,537 11,686 1,843 15,066 
December 31, 20181,536 11,348 1,643 14,527 
United
 States
Outside of the U.S.Total
Company
For the year ended:
The Netherlands
Other
December 31, 2023$2,327 $17,014 $2,024 $21,365 
December 31, 20222,205 13,428 1,457 17,090 
December 31, 20211,434 8,678 846 10,958 

The following table presents information on the Company's property and equipment (excluding capitalized software) and operating lease assets based on location of the assets at December 31, 20202023 and 20192022 (in millions):
United
 States
InternationalTotal
Company
The NetherlandsUnited KingdomOther
    
December 31, 2020$186 $499 $85 $278 $1,048 
December 31, 2019216 484 137 327 1,164 
United
 States
Outside of the U.S.Total
Company
The NetherlandsUnited KingdomOther
December 31, 2023$127 $476 $209 $229 $1,041 
December 31, 2022143 445 125 213 926 

107

19
.    
18.    ACQUISITIONS

In April 2018,December 2021, the Company paid $139 million,acquired all of the outstanding stock of Getaroom, a business-to-business distributor of hotel rooms, in a cash transaction for $1.3 billion ($1.2 billion, net of cash acquired, and issued shares of the Company's common stock in the amount of $110 million in connection with the acquisition of FareHarbor, a leading provider of business-to-business activities distribution services. In respect to the shares issued, as shown in the supplemental disclosure in the Consolidated Statement of Cash Flows, $59 million relates to purchase price consideration and $51 million relates to shares restricted for trading purposes until the required post-acquisition services are completed by certain employees.

In November 2018, the Company paid $134 million, net of cash acquired, to complete the acquisition of HotelsCombined, a hotel meta-search company.acquired).

The Company's Consolidated Financial Statements includefollowing table summarizes the accountsallocation of these businesses starting at their respective acquisition dates. Revenuesthe consideration transferred for the Getaroom acquisition.
(in millions)
Current assets (1)
$174 
Identifiable intangible assets (2)
437 
Goodwill (3)
982 
Other non-current assets11 
Current liabilities(199)
Deferred income taxes(65)
Other non-current liabilities (4)
(44)
Total consideration$1,296 
(1)    Includes cash and earningsrestricted cash acquired of these businesses since their respective acquisition dates$116 million.
(2)    Acquired definite-lived intangible assets consist of supply and distribution agreements with an estimated value of $311 million and weighted-average useful life of 10 years, technology assets with an estimated value of $118 million and weighted-average useful life of 4 years, trade names with an estimated value of $5 million and weighted-average useful life of 3 years and other intangible assets with an estimated value of $3 million and weighted-average useful life of 5 years.
(3)    Goodwill, which is not tax deductible, reflects the synergies expected from combining the technology and expertise of Getaroom and Priceline.
(4)    Includes liabilities of $39 million principally related to travel transaction taxes.

The allocation of the consideration transferred was completed and, compared to the preliminary allocation, resulted in a decrease to goodwill of $38 million, a decrease to deferred tax liabilities of $27 million, and increase to intangible assets of $14 million, and a net decrease to other assets and liabilities of $3 million.

Supplemental pro forma results of operations haveinformation has not been presented separately as such financial information isthe results of Getaroom are not material to the Company's results of operations.

In 2019, the Company paid $37 million of contingent consideration for a business acquired in 2015. The contingent payment was dependent on the achievement of certain performance factors.

126


20.    RESTRUCTURING AND OTHER EXIT COSTS

In response to the reduction in the Company's business volumes as a result of the impact of the COVID-19 pandemic (see Note 2), during the year ended December 31, 2020, the Company took actions at all of its brands to reduce the size of its workforce across more than 60 countries to optimize efficiency and reduce costs. As part of these actions, the Company engaged in the process of consulting with its employees, works councils, employee representatives and other relevant organizations related to the reductions in force in certain countries (including the Netherlands and the United Kingdom), which have substantially concluded as of December 31, 2020. These consultations resulted in the Company executing either voluntary leaver schemes or involuntary reductions in force, or, in some countries, a combination of the two. The Company completed the vast majority of announcements to affected employees by December 2020. In January 2021, the Company approved and communicated the final portion of workforce reductions in the Netherlands.

During the year ended December 31, 2020, the Company recorded expenses of $149 million for the restructuring actions, which are included in “Restructuring and other exit costs” in the Consolidated Statement of Operations. These expenses are primarily cash-based and consist of employee severance and other termination benefits, and other costs. Noncash restructuring expenses recorded during the year ended December 31, 2020 were $7 million. At December 31, 2020, restructuring liabilities of $37 million are included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet.

In addition to the restructuring expenses recorded during the year ended December 31, 2020 and included in “Restructuring and other exit costs” in the Consolidated Statement of Operations, the Company estimates that it will record additional restructuring expenses of approximately $40 million, related to employee severance and other termination benefits, leases and contract terminations, in early 2021. This estimate may change as the Company finalizes the execution of its cost reduction plans, including restructuring actions in the Netherlands and France. The Company’s evaluation of various alternative courses of action related to certain other leases and contract terminations and modifications is still in progress and the Company may incur additional costs resulting from such actions.

21.    GOVERNMENT GRANTS AND OTHER ASSISTANCE

Certain governments have passed or are considering modifying legislation to help businesses during the COVID-19 pandemic through loans, wage subsidies, tax relief or other financial aid, and some of these governments have extended or are considering extending these programs. The Company has participated in several of these programs, including the Netherlands' wage subsidy program and the United Kingdom's job retention scheme. In addition, in certain countries, such as Singapore and China, the Company also participated in programs where the government assistance is in the form of wage subsidies and reductions in wage-related employer taxes paid by the Company. During the year ended December 31, 2020, the Company recognized government grants and other assistance benefits of $127 million. The government grants and other assistance is recorded principally as a reduction of "Personnel" expense in the Consolidated Statement of Operations. At December 31, 2020, the Company has received $99 million and recorded a receivable of $28 million, which is included in “Other current assets” in the Consolidated Balance Sheet, for payments expected to be received for the programs where it has met the qualifying requirements and it is probable that payment will be received. This receivable is expected to be received in 2021. In addition, certain governments have extended support for the travel and tourism industry through special programs whereby discounts are extended to travelers through travel service providers or through travel agents for reservations facilitated by them. The Company has participated in Japan's Go To Travel program and Thailand's We Travel Together program.

127


22.    19.    OTHER INCOME (EXPENSE), NET

The components of other income (expense), net included the following (in millions):

Year Ended December 31,
202020192018
Interest and dividend income$54 $152 $187 
Net gains (losses) on marketable equity securities (1)
1,811 745 (367)
Impairment of investment (1)
(100)
Foreign currency transaction losses(207)(31)(53)
Other(4)13 (4)
Other income (expense), net$1,554 $879 $(237)
Year Ended December 31,
202320222021
Interest and dividend income$1,020 $219 $16 
Net losses on equity securities (1)
(131)(963)(569)
Foreign currency transaction (losses) gains (2)
(348)(43)111 
Loss on early extinguishment of debt (3)
— — (242)
Other (4)
(1)(13)
Other income (expense), net$543 $(788)$(697)
(1)    See Note 5 for additional information related to the net gains (losses)losses on marketable equity securities and impairmentNote 6 for additional information related to impairments of investment.an investment in equity securities.
(2)    Foreign currency transaction (losses) gains include losses of $163 million and gains of $46 million and $135 million for the years ended December 31, 2023, 2022, and 2021, respectively, related to Euro-denominated debt and accrued interest that were not designated as net investment hedges (see Note 12).
(3)    See Note 12 for additional information related to the loss on early extinguishment of debt.
(4)    The amount for the year ended December 31, 2021 includes losses on reverse treasury lock agreements which were designated as cash flow hedges (see Note 6).

128108


20.    OTHER

Other Operating Expenses

During the year ended December 31, 2022, the Company entered into a sale and leaseback transaction related to Booking.com's headquarters building and recognized a gain of $240 million on the transaction, which was recorded in "Other operating expenses" in the Consolidated Statement of Operations for the year ended December 31, 2022 (see Note 10).

During the year ended December 31, 2022, the Company transferred certain customer service operations of Booking.com to Majorel Group Luxembourg S.A. resulting in a loss of $41 million included in "Other operating expenses" in the Consolidated Statement of Operations for the year ended December 31, 2022.

Government Grants and Other Assistance

During the year ended December 31, 2020 and the three months ended March 31, 2021, the Company participated in various government aid programs to help businesses during the COVID-19 pandemic and recognized, in the aggregate, government grants and other assistance benefits of $131 million, principally recorded as a reduction of "Personnel" expenses in the Consolidated Statements of Operations for the respective periods. In June 2021, in light of the improving booking trends in certain countries, the Company announced its intention to voluntarily return assistance received through various government aid programs and completed the repayments by December 31, 2021. For the year ended December 31, 2021 the Company recorded expenses of $137 million in the Consolidated Statement of Operations, principally in "Personnel" expenses, to reflect the voluntary repayment of such assistance. The Company repaid $107 million during the year ended December 31, 2021.

Terminated Acquisition

In November 2021, the Company entered into an agreement to acquire global flight booking provider Etraveli Group. The completion of the acquisition was subject to certain closing conditions, including regulatory approvals. In September 2023, the European Commission announced its decision to prohibit the acquisition and consequently a termination fee of 85 million Euros ($90 million) was paid by the Company in October 2023 and is recorded in "General and administrative" expenses in the Consolidated Statement of Operations for the year ended December 31, 2023.

Consolidated Statements of Cash Flows: Additional Information

Restricted cash and cash equivalents are restricted through legal contracts or regulations. The following table reconciles cash and cash equivalents and restricted cash and cash equivalents reported in the Consolidated Balance Sheets to the total amount shown in the Consolidated Statements of Cash Flows (in millions):
December 31,
20232022
As included in the Consolidated Balance Sheets:
Cash and cash equivalents$12,107 $12,221 
Restricted cash and cash equivalents (1)
28 30 
Total cash and cash equivalents and restricted cash and cash equivalents as shown in the Consolidated Statements of Cash Flows$12,135 $12,251 
(1)    Included in "Other current assets" in the Consolidated Balance Sheets and principally consist of amounts relating to the Company's travel-related insurance business.

Noncash investing activity related to additions to property and equipment, including stock-based compensation and accrued liabilities, was $50 million, $48 million, and $51 million for the years ended December 31, 2023, 2022, and 2021, respectively. See Note 13 for additional information on noncash financing activity related to the excise tax on share repurchases.
109



Benefit Plans

The Company maintains a defined contribution 401(k) savings plan covering certain U.S. employees. The Company also participates in certain defined contribution plans outside of the United States for which it provides contributions for eligible employees. The Company's contributions during the years ended December 31, 2023, 2022, and 2021 were $55 million, $40 million, and $32 million, respectively. In addition, "Personnel" expenses in the Consolidated Statement of Operations for the year ended December 31, 2023 includes an accrual of $276 million related to the Netherlands pension fund matter (see Note 16).

Accrued expenses and other current liabilities

Included in "Accrued expenses and other current liabilities" in the Consolidated Balance Sheets at December 31, 2023 and 2022 are accrued liabilities of $587 million and $526 million, respectively, related to marketing expenses and $634 million and $518 million, respectively, related to personnel expenses. In addition, "Accrued expenses and other current liabilities" in the Consolidated Balance Sheet at December 31, 2023 includes an accrual of $276 million related to the Netherlands pension fund matter (see Note 16).

21.    SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The Company has reclassified certain indirect taxes, primarily digital services taxes, between "General and administrative" expenses and "Sales and other expenses". See Note 2 for additional information. These reclassifications did not affect the previously reported quarterly Revenue, Operating income (loss), Income (loss) before income taxes, or Net income (loss) in the Unaudited Consolidated Statements of Operations. The following table presents the impact of the reclassifications by quarter on "Sales and other expenses" and "General and administrative" expenses in the Unaudited Consolidated Statements of Operations (in millions):
Quarter endedYear ended
March 31,June 30,September 30,December 31,December 31,
2023
Sales and other expenses (Prior presentation)$542 $666 $723 $597 $2,528 
Reclassifications28 51 84 53 216 
Sales and other expenses (New presentation)$570 $717 $807 $650 $2,744 
General and administrative (Prior presentation)$289 $304 $387 $791 $1,771 
Reclassifications(28)(51)(84)(53)(216)
General and administrative (New presentation)$261 $253 $303 $738 $1,555 
2022
Sales and other expenses (Prior presentation)$339 $465 $540 $474 $1,818 
Reclassifications24 38 69 37 168 
Sales and other expenses (New presentation)$363 $503 $609 $511 $1,986 
General and administrative (Prior presentation)$158 $207 $262 $307 $934 
Reclassifications(24)(38)(69)(37)(168)
General and administrative (New presentation)$134 $169 $193 $270 $766 
110


Booking Holdings Inc.
Schedule I - Condensed Financial Information of Parent (Booking Holdings Inc.)
CONDENSED BALANCE SHEETS
(In millions)

 December 31,
 20232022
ASSETS
Current assets:
Cash and cash equivalents$1,752 $4,110 
Receivables from subsidiaries106 23 
Other current assets22 17 
Total current assets1,880 4,150 
Loans receivable from subsidiaries1,119 1,116 
Investment in subsidiaries10,294 11,651 
Other assets29 12 
Total assets$13,322 $16,929 
LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY
Current liabilities:
Payables to subsidiaries$19 $10 
Accrued expenses and other current liabilities336 207 
Short-term debt1,961 500 
Total current liabilities2,316 717 
Loans payable to subsidiaries1,404 1,290 
Other long-term liabilities123 155 
Long-term debt12,223 11,985 
Total liabilities16,066 14,147 
Commitments and contingencies
Total stockholders' (deficit) equity(2,744)2,782 
Total liabilities and stockholders' (deficit) equity$13,322 $16,929 
See Notes to Condensed Financial Statements.
















111


Booking Holdings Inc.
Schedule I - Condensed Financial Information of Parent (Booking Holdings Inc.)
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In millions)
Year Ended December 31,
202320222021
Revenues$— $— $— 
Operating expenses299 225 201 
Operating loss(299)(225)(201)
Interest expense(495)(284)(319)
Other income (expense), net— 116 (121)
Equity in earnings (losses) of subsidiaries, net of tax5,074 3,442 1,743 
Income before income taxes4,280 3,049 1,102 
Income tax benefit(9)(9)(63)
Net income$4,289 $3,058 $1,165 
Other comprehensive loss, net of tax:
Foreign currency translation adjustments(63)(111)(57)
Net unrealized gains (losses) on available-for-sale securities(12)31 
Total other comprehensive loss, net of tax(56)(123)(26)
Comprehensive income$4,233 $2,935 $1,139 

See Notes to Condensed Financial Statements.







112


Booking Holdings Inc.
Schedule I - Condensed Financial Information of Parent (Booking Holdings Inc.)
CONDENSED STATEMENTS OF CASH FLOWS
(In millions)

 Year Ended December 31,
 202320222021
OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities$6,464 $3,695 $(250)
INVESTING ACTIVITIES:
Proceeds from internal transfers of subsidiaries— 174 522 
Acquisitions— — (1,296)
Dividends received107 3,087 72 
Other investing activities(128)(102)(88)
Net cash (used in) provided by investing activities(21)3,159 (790)
FINANCING ACTIVITIES:
Proceeds from the issuance of long-term debt1,893 3,621 2,015 
Payments on maturity and redemption of debt(500)(1,880)(3,068)
Payments for repurchase of common stock(10,377)(6,621)(163)
Proceeds from exercise of stock options134 
Other financing activities49 47 (115)
Net cash used in financing activities(8,801)(4,826)(1,326)
Net (decrease) increase in cash and cash equivalents(2,358)2,028 (2,366)
Total cash and cash equivalents, beginning of period4,110 2,082 4,448 
Total cash and cash equivalents, end of period$1,752 $4,110 $2,082 
See Notes to Condensed Financial Statements.










113



Booking Holdings Inc.
Schedule I - Condensed Financial Information of Parent (Booking Holdings Inc.)
NOTES TO CONDENSED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION
These condensed parent company-only financial statements of Booking Holdings Inc. (the "Parent"), are prepared on a "parent company-only" basis and have been derived from and should be read in conjunction with the consolidated financial statements and related notes of Booking Holdings Inc. and subsidiaries included in Part IV, Item 15 of this Annual Report on Form 10-K (the "Consolidated Financial Statements"). Under a parent company-only presentation, investments in the parent's subsidiaries are accounted for under the equity method of accounting. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.

2. DEBT
See Note 12 to the Consolidated Financial Statements for additional information on the 2023 revolving credit facility and information on the Parent's outstanding debt.

3. DIVIDENDS FROM SUBSIDIARIES
Cash dividends paid to the Parent by the subsidiaries were $7.3 billion, $7.3 billion, and $339 million for the years ended December 31, 2023, 2022, and 2021, respectively, and are classified within "Net cash provided by (used in) operating activities" or "Net cash (used in) provided by investing activities," as appropriate, in the Condensed Statements of Cash Flows.

4. GUARANTEES
The Parent had $389 million and $363 million of guarantees issued on behalf of the Parent's subsidiaries as of December 31, 2023 and 2022, respectively, which are primarily related to arrangements with payment processors and networks.

5. OTHER
In the Condensed Statement of Cash Flows for the year ended December 31, 2021, "Acquisitions" within the investing activities section include a loan of $500 million to a subsidiary in relation to an acquisition.
114