NOTE 18 — Segment Information

We have four reportable segments: Core OTA, trivago, HomeAway and Egencia. Our Core OTA segment, which consists of the aggregation of operating segments, provides a full range of travel and advertising services to our worldwide customers through a variety of brands including: Expedia.com and Hotels.com in the United States and localized Expedia and Hotels.com websites throughout the world, Expedia Partner Solutions, Orbitz, Travelocity, Wotif Group, ebookers, CheapTickets, Hotwire.com, CarRentals.com, Classic Vacations and SilverRail Technologies, Inc. Our trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its hotel metasearch websites. Our HomeAway segment operates an online marketplace for the alternative accommodations industry. Our Egencia segment provides managed travel services to corporate customers worldwide.

We determined our operating segments based on how our chief operating decision makers manage our business, make operating decisions and evaluate operating performance. Our primary operating metric is adjusted EBITDA. Adjusted EBITDA for our Core OTA and Egencia segments includes allocations of certain expenses, primarily cost of revenue and facilities. Our Core OTA segment includes the total costs of our global supply organizations and Core OTA and HomeAway include the realized foreign currency gains or losses related to the forward contracts hedging a component of our net merchant lodging revenue. We base the allocations primarily on transaction volumes and other usage metrics. We do not allocate certain shared expenses such as accounting, human resources, information technology and legal to our reportable segments. We include these expenses in Corporate and Eliminations. Our allocation methodology is periodically evaluated and may change. During the first quarter of 2018, we updated our allocations methodology for certain technology costs. While the impact of the update was not significant, we recast historical information presented to be on a comparable basis.

Our segment disclosure includes intersegment revenues, which primarily consist of advertising and media services provided by our trivago segment to our Core OTA segment. These intersegment transactions are recorded by each segment at amounts that approximate fair value as if the transactions were between third parties, and therefore, impact segment performance. However, the revenue and corresponding expense are eliminated in consolidation. The elimination of such intersegment transactions is included within Corporate and Eliminations in the table below. In addition, when HomeAway properties are booked through our Core OTA websites and vice versa, the segments split the third-party revenue for management and segment reporting purposes with the majority of the third-party revenue residing with the website marketing the property or room.

Corporate and Eliminations also includes unallocated corporate functions and expenses. In addition, we record amortization of intangible assets and any related impairment, as well as stock-based compensation expense, restructuring and related reorganization charges, legal reserves, occupancy tax and other, and other items excluded from segment operating performance in Corporate and Eliminations. Such amounts are detailed in our segment reconciliation below.

The following tables present our segment information for 2018, 2017 and 2016. As a significant portion of our property and equipment is not allocated to our operating segments and depreciation is not included in our segment measure, we do not report the assets by segment as it would not be meaningful. We do not regularly provide such information to our chief operating decision makers.



	Year ended December 31, 2018
	Core OTA			trivago			HomeAway			Egencia			Corporate & Eliminations			Total
	(In millions)
Third-party revenue	$	8,760		$	691		$	1,171		$	601		$	—		$	11,223
Intersegment revenue	—			393			—			—			(393		)	—
Revenue	$	8,760		$	1,084		$	1,171		$	601		$	(393	)	$	11,223
Adjusted EBITDA	$	2,305		$	16		$	288		$	107		$	(746	)	$	1,970
Depreciation	(344		)	(15		)	(66		)	(47		)	(204		)	(676		)
Amortization of intangible assets	—			—			—			—			(283		)	(283		)
Impairment of goodwill	—			—			—			—			(86		)	(86		)
Impairment of intangible assets	—			—			—			—			(42		)	(42		)
Stock-based compensation	—			—			—			—			(203		)	(203		)
Legal reserves, occupancy tax and other	—			—			—			—			59			59
Restructuring and related reorganization charges	—			—			—			—			—			—
Realized (gain) loss on revenue hedges	(24		)	—			(1		)	—			—			(25		)
Operating income (loss)	$	1,937		$	1		$	221		$	60		$	(1,505	)	714
Other expense, net																(229		)
Income before income taxes																485
Provision for income taxes																(87		)
Net income																398
Net loss attributable to non-controlling interests																8
Net income attributable to Expedia Group, Inc.																$	406



	Year ended December 31, 2017
	Core OTA			trivago			HomeAway			Egencia			Corporate & Eliminations			Total
	(In millions)
Third-party revenue	$	7,881		$	752		$	906		$	521		$	—		$	10,060
Intersegment revenue	—			414			—			—			(414		)	—
Revenue	$	7,881		$	1,166		$	906		$	521		$	(414	)	$	10,060
Adjusted EBITDA	$	2,057		$	5		$	202		$	95		$	(646	)	$	1,713
Depreciation	(310		)	(9		)	(40		)	(41		)	(214		)	(614		)
Amortization of intangible assets	—			—			—			—			(275		)	(275		)
Stock-based compensation	—			—			—			—			(149		)	(149		)
Legal reserves, occupancy tax and other	—			—			—			—			(25		)	(25		)
Restructuring and related reorganization charges	—			—			—			—			(17		)	(17		)
Realized (gain) loss on revenue hedges	(8		)	—			—			—			—			(8		)
Operating income (loss)	$	1,739		$	(4	)	$	162		$	54		$	(1,326	)	625
Other expense, net																(208		)
Income before income taxes																417
Provision for income taxes																(45		)
Net income																372
Net loss attributable to non-controlling interests																6
Net income attributable to Expedia Group, Inc.																$	378



	Year ended December 31, 2016
	Core OTA			trivago			HomeAway			Egencia			Corporate & Eliminations			Total
	(In millions)
Third-party revenue	$	7,084		$	539		$	689		$	462		$	—		$	8,774
Intersegment revenue	—			297			—			—			(297		)	—
Revenue	$	7,084		$	836		$	689		$	462		$	(297	)	$	8,774
Adjusted EBITDA	$	1,956		$	35		$	175		$	81		$	(631	)	$	1,616
Depreciation	(256		)	(7		)	(18		)	(31		)	(165		)	(477		)
Amortization of intangible assets	—			—			—			—			(317		)	(317		)
Impairment of intangible assets	—			—			—			—			(35		)	(35		)
Stock-based compensation	—			—			—			—			(242		)	(242		)
Legal reserves, occupancy tax and other	—			—			—			—			(27		)	(27		)
Restructuring and related reorganization charges, excluding stock-based compensation	—			—			—			—			(43		)	(43		)
Realized (gain) loss on revenue hedges	(13		)	—			—			—			—			(13		)
Operating income (loss)	$	1,687		$	28		$	157		$	50		$	(1,460	)	462
Other income, net																(185		)
Income before income taxes																277
Provision for income taxes																(16		)
Net income																261
Net loss attributable to non-controlling interests																21
Net income attributable to Expedia Group, Inc.																$	282

Revenue by Business Model and Service Type

The following table presents revenue by business model and service type for the years ended December 31, 2018, 2017 and 2016:



	Year Ended December 31,
	2018		2017 ⁽¹⁾		2016 ⁽¹⁾
	(In millions)
Business Model
Merchant	$	5,950	$	5,394	$	4,853
Agency	3,010		2,687		2,425
Advertising and media	1,092		1,073		807
HomeAway	1,171		906		689
Total revenue	$	11,223	$	10,060	$	8,774
Service Type
Lodging	$	7,712	$	6,851	$	6,021
Air	881		784		778
Advertising and media	1,092		1,073		807
Other⁽²⁾	1,538		1,352		1,168
Total revenue	$	11,223	$	10,060	$	8,774

___________________________________


(1)	As disclosed in NOTE 2 — Significant Accounting Policies, results for 2018 are presented under the new revenue recognition accounting guidance, which we adopted using the modified retrospective method. Therefore, 2017 and 2016 results have not been adjusted and continued to be reported under the accounting standards in effect for those periods.


(2)	Other includes car rental, insurance, destination services, cruise and fee revenue related to our corporate travel business, among other revenue streams, none of which are individually material.

Our Core OTA segment generates revenue from the merchant, agency and advertising and media business models as well as all service types. trivago segment revenue is primarily generated through advertising and media. All HomeAway revenue is included within the lodging service type. Our Egencia segment generates revenue from similar business models and service types to Core OTA applied to the corporate traveler with the majority being agency revenue.

Geographic Information

The following table presents revenue by geographic area, the United States and all other countries, based on the geographic location of our websites or points of sale with the exception of trivago, which has all been allocated to Germany, the location of its corporate headquarters, for the years ended December 31, 2018, 2017 and 2016. No sales to an individual country other than the United States accounted for more than 10% of revenue for the presented years.



	Year Ended December 31,
	2018		2017		2016
	(In millions)
Revenue
United States	$	6,202	$	5,542	$	5,043
All other countries	5,021		4,518		3,731
	$	11,223	$	10,060	$	8,774

The following table presents property and equipment, net for the United States and all other countries, as of December 31, 2018 and 2017:



	As of December 31,
	2018		2017
	(In millions)
Property and equipment, net
United States	$	1,571	$	1,331
All other countries	306		244
	$	1,877	$	1,575