NOTE 12: SEGMENT INFORMATION

Our reporting structure includes two reportable segments: Hotel and Non-Hotel. Our Non-Hotel segment consists of the aggregation of three operating segments: Experiences, Restaurants and Rentals. The nature of the services provided are summarized in “Note 3: Revenue Recognition” above.

Our operating segments are determined based on how our chief operating decision maker manages our business, regularly assesses information and evaluates performance for operating decision-making purposes, including allocation of resources. The chief operating decision maker for the Company is our CEO.

Adjusted EBITDA is our segment profit measure and a key measure used by our management and board of directors to understand and evaluate the operating performance of our business and on which internal budgets and forecasts are based and approved. In particular, the exclusion of certain expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. We define Adjusted EBITDA as net income (loss) plus: (1) provision for income taxes; (2) other income (expense), net; (3) depreciation of property and equipment, including amortization of internal use software and website development; (4) amortization of intangible assets; (5) stock-based compensation and other stock-settled obligations; (6) goodwill, long-lived asset and intangible asset impairments; and (7) non-recurring expenses and income.

The following tables present our segment information for the three months ended March 31, 2018 and 2017 and include a reconciliation of Adjusted EBITDA to Net Income. We record depreciation of property and equipment, including amortization of internal-use software and website development, amortization of intangible assets, stock-based compensation and other stock-settled obligations, other income (expense), net, other non-recurring expenses and income, net, and income taxes, which are excluded from segment operating performance, in corporate and unallocated. In addition, we do not report our assets, capital expenditures and related depreciation expense by segment as our chief operating decision maker does not use this information to evaluate operating segments. Accordingly, we do not regularly provide such information by segment to our chief operating decision maker. Intersegment revenue is not material and, in addition, already eliminated in the information by segment provided to our chief operating decision maker. Our consolidated general and administrative expenses, excluding stock-based compensation costs, are shared by all operating segments. Each operating segment receives an allocated charge based on the segment’s percentage of the Company’s total personnel costs.

	Three months ended March 31, 2018
	Hotel		Non-Hotel			Corporate and Unallocated			Total
	(in millions)
Revenue	$	299	$	79		$	-		$	378
Adjusted EBITDA (1)	88			(8	)		-			80
Depreciation							(20	)		(20	)
Amortization of intangible assets							(8	)		(8	)
Stock-based compensation							(29	)		(29	)
Operating income										23
Other expense, net										(2	)
Income before income taxes										21
Provision for income taxes										(16	)
Net income										5

	Three months ended March 31, 2017
	Hotel		Non-Hotel			Corporate and Unallocated			Total
	(in millions)
Revenue	$	314	$	58		$	-		$	372
Adjusted EBITDA (1)	88			(15	)		-			73
Depreciation							(19	)		(19	)
Amortization of intangible assets							(8	)		(8	)
Stock-based compensation							(19	)		(19	)
Operating income										27
Other expense, net										(2	)
Income before income taxes										25
Provision for income taxes										(12	)
Net income										13



(1)	Includes allocated general and administrative expenses in our Hotel segment of $20 million and $19 million; and in our Non-Hotel segment of $12 million and $9 million for the three months ended March 31, 2018 and 2017, respectively.