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Segment Information
 9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
Segment Information
Note 13 – Segment Information
We have four reportable segments: Core OTA, trivago, Vrbo (previously referred to as our “HomeAway” segment) 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 Vrbo 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, and our Core OTA segment includes the total costs of our global supply organizations and Core OTA and Vrbo 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.
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 Vrbo 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 as well as Bodybuilding.com subsequent to our acquisition on July 26, 2019. 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 the three and nine months ended September 30, 2019 and 2018. 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.
 
 
Three months ended September 30, 2019
 
Core OTA
 
trivago
 
Vrbo
 
Egencia
 
Corporate &
Eliminations
 
Total
 
(In millions)
Third-party revenue
$
2,732

 
$
190

 
$
467

 
$
145

 
$
24

 
$
3,558

Intersegment revenue
—

 
89

 
—

 
—

 
(89
)
 
—

Revenue
$
2,732

 
$
279

 
$
467

 
$
145

 
$
(65
)
 
$
3,558

Adjusted EBITDA
$
865

 
$
12

 
$
215

 
$
19

 
$
(199
)
 
$
912

Depreciation
(95
)
 
(3
)
 
(26
)
 
(12
)
 
(42
)
 
(178
)
Amortization of intangible assets
—

 
—

 
—

 
—

 
(50
)
 
(50
)
Stock-based compensation
—

 
—

 
—

 
—

 
(60
)
 
(60
)
Legal reserves, occupancy tax and other
—

 
—

 
—

 
—

 
(11
)
 
(11
)
Restructuring and related reorganization charges
—

 
—

 
—

 
—

 
(2
)
 
(2
)
Realized (gain) loss on revenue hedges
(1
)
 
—

 
(1
)
 
—

 
—

 
(2
)
Operating income (loss)
$
769

 
$
9

 
$
188

 
$
7

 
$
(364
)
 
609

Other expense, net
 
 
 
 
 
 
 
 
 
 
(48
)
Income before income taxes
 
 
 
 
 
 
 
 
 
 
561

Provision for income taxes
 
 
 
 
 
 
 
 
 
 
(154
)
Net income
 
 
 
 
 
 
 
 
 
 
407

Net loss attributable to non-controlling interests
 
 
 
 
 
 
 
2

Net income attributable to Expedia Group, Inc.
 
 
 
 
 
 
 
$
409


 
Three months ended September 30, 2018
 
Core OTA
 
trivago
 
Vrbo
 
Egencia
 
Corporate &
Eliminations
 
Total
 
(In millions)
Third-party revenue
$
2,527

 
$
200

 
$
410

 
$
139

 
$
—

 
$
3,276

Intersegment revenue
—

 
95

 
—

 
—

 
(95
)
 
—

Revenue
$
2,527

 
$
295

 
$
410

 
$
139

 
$
(95
)
 
$
3,276

Adjusted EBITDA
$
837

 
$
31

 
$
209

 
$
19

 
$
(184
)
 
$
912

Depreciation
(88
)
 
(4
)
 
(17
)
 
(12
)
 
(50
)
 
(171
)
Amortization of intangible assets
—

 
—

 
—

 
—

 
(71
)
 
(71
)
Stock-based compensation
—

 
—

 
—

 
—

 
(54
)
 
(54
)
Legal reserves, occupancy tax and other
—

 
—

 
—

 
—

 
78

 
78

Realized (gain) loss on revenue hedges
(21
)
 
—

 
(1
)
 
—

 
—

 
(22
)
Operating income (loss)
$
728

 
$
27

 
$
191

 
$
7

 
$
(281
)
 
672

Other expense, net
 
 
 
 
 
 
 
 
 
 
(60
)
Income before income taxes
 
 
 
 
 
 
 
 
 
 
612

Provision for income taxes
 
 
 
 
 
 
 
 
 
 
(81
)
Net income
 
 
 
 
 
 
 
 
 
 
531

Net income attributable to non-controlling interests
 
 
 
 
 
 
 
(6
)
Net income attributable to Expedia Group, Inc.
 
 
 
 
 
 
 
$
525



 
Nine months ended September 30, 2019
 
Core OTA
 
trivago
 
Vrbo
 
Egencia
 
Corporate &
Eliminations
 
Total
 
(In millions)
Third-party revenue
$
7,249

 
$
505

 
$
1,081

 
$
461

 
$
24

 
$
9,320

Intersegment revenue
—

 
262

 
—

 
—

 
(262
)
 
—

Revenue
$
7,249

 
$
767

 
$
1,081

 
$
461

 
$
(238
)
 
$
9,320

Adjusted EBITDA
$
1,832

 
$
56

 
$
259

 
$
85

 
$
(576
)
 
$
1,656

Depreciation
(281
)
 
(9
)
 
(73
)
 
(38
)
 
(129
)
 
(530
)
Amortization of intangible assets
—

 
—

 
—

 
—

 
(154
)
 
(154
)
Stock-based compensation
—

 
—

 
—

 
—

 
(175
)
 
(175
)
Legal reserves, occupancy tax and other
—

 
—

 
—

 
—

 
(25
)
 
(25
)
Restructuring and related reorganization charges
—

 
—

 
—

 
—

 
(16
)
 
(16
)
Realized (gain) loss on revenue hedges
(12
)
 
—

 
(1
)
 
—

 
—

 
(13
)
Operating income (loss)
$
1,539

 
$
47

 
$
185

 
$
47

 
$
(1,075
)
 
743

Other expense, net
 
 
 
 
 
 
 
 
 
 
(88
)
Income before income taxes
 
 
 
 
 
 
 
 
 
 
655

Provision for income taxes
 
 
 
 
 
 
 
 
 
 
(161
)
Net income
 
 
 
 
 
 
 
 
 
 
494

Net income attributable to non-controlling interests
 
 
 
 
 
 
 
(5
)
Net income attributable to Expedia Group, Inc.
 
 
 
 
 
 
 
$
489


 
Nine months ended September 30, 2018
 
Core OTA
 
trivago
 
Vrbo
 
Egencia
 
Corporate &
Eliminations
 
Total
 
(In millions)
Third-party revenue
$
6,706

 
$
571

 
$
941

 
$
446

 
$
—

 
$
8,664

Intersegment revenue
—

 
323

 
—

 
—

 
(323
)
 
—

Revenue
$
6,706

 
$
894

 
$
941

 
$
446

 
$
(323
)
 
$
8,664

Adjusted EBITDA
$
1,721

 
$
(17
)
 
$
266

 
$
76

 
$
(547
)
 
$
1,499

Depreciation
(256
)
 
(11
)
 
(46
)
 
(35
)
 
(159
)
 
(507
)
Amortization of intangible assets
—

 
—

 
—

 
—

 
(215
)
 
(215
)
Impairment of goodwill
—

 
—

 
—

 
—

 
(61
)
 
(61
)
Stock-based compensation
—

 
—

 
—

 
—

 
(154
)
 
(154
)
Legal reserves, occupancy tax and other
—

 
—

 
—

 
—

 
74

 
74

Realized (gain) loss on revenue hedges
(17
)
 
—

 
(1
)
 
—

 
—

 
(18
)
Operating income (loss)
$
1,448

 
$
(28
)
 
$
219

 
$
41

 
$
(1,062
)
 
618

Other expense, net
 
 
 
 
 
 
 
 
 
 
(189
)
Income before income taxes
 
 
 
 
 
 
 
 
 
 
429

Provision for income taxes
 
 
 
 
 
 
 
 
 
 
(56
)
Net income
 
 
 
 
 
 
 
 
 
 
373

Net loss attributable to non-controlling interests
 
 
 
 
 
 
 
16

Net income attributable to Expedia Group, Inc.
 
 
 
 
 
 
 
$
389



Revenue by Business Model and Service Type
The following table presents revenue by business model and service type:
 
Three months ended September 30,
 
Nine months ended September 30,
 
2019
 
2018
 
2019
 
2018
 
(in millions)
Business Model:
 
 
 
 
 
 
 
Merchant
$
1,863

 
$
1,688

 
$
4,935

 
$
4,554

Agency
917

 
876

 
2,444

 
2,311

Advertising and media
311

 
302

 
860

 
858

Vrbo
467

 
410

 
1,081

 
941

Total revenue
$
3,558

 
$
3,276

 
$
9,320

 
$
8,664

Service Type:
 
 
 
 
 
 
 
Lodging
$
2,599

 
$
2,347

 
$
6,555

 
$
5,951

Air
202

 
209

 
678

 
674

Advertising and media
311

 
302

 
860

 
858

Other(1)
446

 
418

 
1,227

 
1,181

Total revenue
$
3,558

 
$
3,276

 
$
9,320

 
$
8,664


(1)
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. Other also includes product revenue of $24 million during the three and nine months ended September 30, 2019 related to our acquisition of Bodybuilding.com.

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 generated through advertising and media. All Vrbo 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.