Booking Holdings (BKNG) 10-K risk factor changes: FY2016 vs FY2015

Our financial results and prospects are [removed: significantly] [added: almost entirely] dependent upon the sale of travel services.

Travel, including accommodation (including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties), rental car and airline ticket reservations, is [added: significantly] dependent on discretionary spending levels.

For example, the [removed: recent] worldwide recession [added: that began in 2007] led to a weakening in the fundamental demand for our travel reservation services and an increase in the number of consumers who canceled existing travel reservations with us.

[removed: Further, during] [added: 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 such as priceline.com's Name Your Own Price® and Express Deals® services.

At times, we have experienced volatility in transaction growth [removed: rates and] [added: rates, increased] cancellation rates and weaker trends in hotel ADRs across many regions of the world, particularly in those [removed: European] countries that appear to be most affected by economic [removed: uncertainties.][added: uncertainties, which we believe are due at least in part to macro-economic conditions and concerns.]

[removed: In addition,] [added: For example,] although lower oil prices may lead to increased travel activity as consumers have more discretionary funds and airline fares decrease, recent declines in oil prices and stock market volatility may be indicative of broader macro-economic weakness, which in turn could negatively affect the travel industry and our business.

The uncertainty of macro-economic 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 [removed: operations.]

In addition, other unforeseen events beyond our control, such as [added: worldwide recession,] oil prices, terrorist attacks, unusual or extreme weather or natural disasters such as earthquakes, hurricanes, tsunamis, floods, droughts and volcanic eruptions, travel-related health concerns including pandemics and epidemics such as Ebola, Zika, Influenza H1N1, avian bird flu, SARS and MERS, political instability, regional hostilities, imposition of taxes or surcharges by regulatory [removed: authorities] [added: authorities, changes in trade] or [added: immigration policies or] travel-related accidents, can disrupt travel or otherwise result in declines in travel demand.

[added: For example, our business and operations were negatively impacted by] the [removed: terror] [added: terrorist] attacks in Paris in November [removed: 2015;] [added: 2015, Brussels in March 2016, Orlando in June 2016, Nice in July 2016, and Istanbul in July 2016 and January 2017; the coup attempt in Turkey in July 2016;] Hurricane Sandy, which disrupted travel in the northeastern United States in late 2012; a major earthquake, tsunami and nuclear emergency in Japan in 2011; severe flooding in Thailand in October 2011; and disruptive civil unrest in Thailand in [removed: 2010 and] 2014.

Also, [removed: in 2015] [added: since 2015,] regional hostilities in the Middle East [added: have] spurred an unprecedented flow of migrants from that region to [removed: Europe.][added: Europe and other areas.]

As countries respond to the [removed: European] migrant crisis, travel between countries [removed: in] [added: within] the European Union and to and from the region could be subject to increased restrictions or the closing of borders, which could negatively impact travel to, from or within the European Union and adversely affect our business and results of operations.

Future terrorist attacks, natural disasters, health [removed: concerns or] [added: concerns,] civil or political unrest [added: or other events out of our control such as the ones described above] could [removed: further] disrupt our business and operations and adversely affect our results of operations.

We compete [added: globally] with both online and traditional travel and restaurant reservation and related services.

The [removed: market] [added: markets] for the services we offer [removed: is] [added: are] intensely competitive, and 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, [added: Tencent,] Amazon and Facebook, have access to significantly greater and more diversified 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 [removed: market through its acquisition in 2011 of ITA Software, Inc.,] [added: market, including by establishing] a [removed: major] flight [removed: information software company, its hotel search] [added: meta-search product ("Google Flights")] and [removed: reservation booking] [added: a hotel meta-search] business [removed: ("Book on Google") and] [added: ("Hotel Ads") that are growing rapidly, as well as] its [removed: license of hotel-booking software from Room 77.][added: "Book on Google" reservation functionality.]

| • | online travel reservation services such as Expedia, Hotels.com, Hotwire, Orbitz, Travelocity, Wotif, Cheaptickets, ebookers, HotelClub, [removed: RatesToGo, CarRentals.com] [added: RatesToGo] and [removed: Venere,] [added: CarRentals.com,] which are owned by Expedia; [removed: laterooms, which is owned by Tui Travel;] Hotel Reservation Service (HRS) and hotel.de, which are owned by Hotel Reservation Service; and AutoEurope, Car Trawler, Ctrip (in which we hold a minority interest), eLong (in which Ctrip has acquired a significant minority ownership interest), [added: Meituan, ezTravel,] MakeMyTrip, [added: OYO Rooms, Yatra, Cleartrip, Traveloka,] Webjet, Rakuten, [removed: Jalan, Hotel Urbano] [added: Jalan (which is owned by Recruit), ViajaNet, Submarino Viagens, Despegar/Decolar] (in which [removed: we hold] [added: Expedia holds] a minority interest), [removed: ViajaNet, Submarino Viagens, Despegar/Decolar,] [added: Fliggy (operated by Alibaba),] 17u.com, HotelTonight, [removed: Bookit.com,] CheapOair, Mr. and Mrs. Smith and eDreams ODIGEO; |

| • | large online companies, including search, social networking and marketplace companies such as Google, Facebook, [removed: Alibaba] [added: Alibaba, Tencent, Amazon, Baidu] and Groupon; |

| • | traditional travel agencies, [added: travel management companies,] wholesalers and tour operators, many of which combine physical locations, telephone services and online services, such as Carlson Wagonlit, American Express, [added: BCD Travel, Concur,] Thomas [removed: Cook] [added: Cook, TUI, Hotelbeds] and [removed: Tui Travel,] [added: Tourico (which have agreed to merge) and Kuoni,] 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 websites to which they drive business, including [added: large hotel chains such as Marriott International, Hilton and Hyatt Hotels, as well as] joint efforts by travel service providers such as Room Key, an online hotel reservation service owned by several major hotel companies; |

| • | online travel search and price comparison services (generally referred to as "meta-search" services), such as TripAdvisor, trivago (in which Expedia holds a majority ownership interest), Qunar (which is controlled by Ctrip), [removed: Skyscanner, HotelsCombined] [added: Skyscanner (in which Ctrip holds a majority interest), Google Flights, Google Hotel Ads] and [removed: Traveloka;] [added: HotelsCombined;] |

| • | online restaurant reservation services, such as TripAdvisor's LaFourchette, Yelp's SeatMe, Zomato, Bookatable (which is owned by [removed: Michelin) and] [added: Michelin),] Quandoo (which is owned by [removed: Recruit);] [added: Recruit)] and [added: Resy (in which Airbnb holds a minority interest); and] |

| • | 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), BlaBlaCar, Didi [removed: Kuaidi] [added: Chuxing] and Ola. |

For example, TripAdvisor [removed: facilitates hotel reservations on its transaction websites Tingo and Jetsetter and, with respect to some accommodations,] allows consumers to make a reservation [added: at some accommodations] while staying on TripAdvisor through its "Instant Booking" [removed: offering.][added: offering, which includes participation by many of the leading global hotel chains, and facilitates hotel reservations on its transaction websites Tingo and Jetsetter.]

[removed: For example, while we expect to benefit from incremental business generated through "Instant Booking,"] [added: We have been participating in Instant Booking since 2015, however such] participation [added: may not result in substantial incremental bookings and] could cannibalize business that would otherwise come to us through other ad offerings on TripAdvisor, directly (including after a consumer first visits TripAdvisor) or through other channels, some of which may be more profitable to us than reservations generated through "Instant Booking." [removed: Other meta-search providers may also offer direct booking services with] [added: To the extent consumers book] travel [added: services through a] service [removed: providers, which may lead to more consumers booking] [added: such as Google's "Book on Google," a meta-search website or] directly with a travel service provider [removed: rather than] [added: after visiting a meta-search website or meta-search utility on a traditional search engine without using] an [removed: OTC.][added: 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 advertising or other customer acquisition costs to maintain or grow our reservation bookings and our business and results of operations could be adversely affected.]

For example, companies such as Airbnb and HomeAway (which is owned by Expedia) offer services providing vacation rental property owners, particularly individuals, an online place to list their accommodations where travelers can search and book such [removed: properties.][added: properties and compete directly with our vacation rental accommodation services.]

Airbnb may also seek to [added: further] compete [removed: directly] with us by offering hotel and other accommodations through their online and mobile platforms.

Travel service providers, including [removed: multi-national] hotel chains, rental car companies and airlines with which we conduct business, compete with us in online channels to drive consumers to their own websites in lieu of third-party distributors such as us.

Further, consolidation among travel service providers, such as Marriott International's acquisition of Starwood Hotels & Resorts, could result in lower rates of commission paid to OTCs, increased [removed: discounting,] [added: 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 [added: (including hotel chains)] in offering discounted prices to closed user groups or if we are unable to entice members of our competitors' closed user groups to use our services, our ability to grow and compete could be harmed.

As a [removed: result,] [added: result of these currency exchange rate changes,] our foreign currency denominated net assets, gross bookings, gross profit, operating expenses and net income have been negatively impacted as expressed in U.S. [removed: Dollars.][added: Dollars, although to a much lesser extent in 2016 than in 2015.]

For example, gross profit from our international [removed: businesses] [added: operations] grew [removed: year-over-year on a constant currency basis by approximately 28%] [added: 22.3%] for the year ended December 31, [added: 2016 compared to the year ended December 31,] 2015, but, [removed: as a result of] [added: without] the [added: negative] impact of changes in currency exchange rates, grew [added: year-over-year on a constant-currency basis] by [removed: 11.6% as reported in U.S. Dollars.][added: approximately 25%.]

[removed: Concern] [added: Recent macro-economic conditions, such as sovereign default risk of certain European Union countries with high levels of sovereign debt, concern] around devaluation or abandonment of the Euro common currency, [removed: or that sovereign default risk may become more widespread, has] [added: declining oil prices, Brexit, geopolitical tensions and differing central bank monetary policies, have] led to significant volatility in the exchange rate between the Euro, the British Pound Sterling, the U.S. Dollar and other currencies.

For example, the strengthening of the U.S. Dollar relative to the Euro in 2015 [removed: resulted in] [added: made] it [removed: becoming] more expensive for Europeans to travel to the United States, and dramatic depreciation of the Russian Ruble in 2014 and 2015 [removed: resulted in] [added: made] it [removed: becoming] more expensive for Russians to travel to Europe and most other non-Ruble destinations.

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 [added: 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.]

Volatility in foreign exchange rates and its impact on consumer behavior, which may differ across regions, [removed: makes] [added: 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 could adversely affect our ability to effectively manage our business and adversely affect our results of operations.

We face risks related to the growth rate and [added: the global] expansion of our [removed: international] business.

[removed: Our international operations include the Netherlands-based] accommodation reservation service [removed: Booking.com, the Asia-based accommodation reservation service] agoda.com, the U.K.-based rental car reservation service [removed: rentalcars.com] [added: Rentalcars.com] and, to a lesser extent, KAYAK's international meta-search services and OpenTable's international restaurant reservation business.

Other factors may also slow the growth rates of our international businesses, including, for example, worldwide [added: or regional] economic conditions, any strengthening of the U.S. Dollar versus the [removed: Euro] [added: 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.

Our strategy involves continued [removed: international] expansion in regions throughout the world.

Concerns persist about the outlook for the global economy in general, including uncertainty in the European Union and China.

Perceived or actual adverse economic conditions, including slow, slowing or negative economic growth, unemployment rates and weakening currencies and concerns over government responses such as higher taxes and reduced government spending, could impair consumer spending and adversely affect travel demand.

Further, uncertainty regarding the future of the European Union following the United Kingdom's vote to leave ("Brexit") and concerns regarding certain E.U. members with sovereign debt default risks could also negatively affect consumer spending and adversely affect travel demand.

These and other macro-economic uncertainties, such as sovereign default risk becoming more widespread, declining 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 currency exchange rates, stock markets and oil prices can also impact consumer travel behavior.

Since the United Kingdom's Brexit vote, global markets and foreign exchange rates have experienced increased volatility, including a sharp decline in the value of the British Pound Sterling as compared to the U.S. Dollar.

Upon leaving the European Union, among other things, the United Kingdom could lose access to the single European Union market and travel between the United Kingdom and European Union countries could be restricted.

We could face new regulatory costs and challenges if U.K. regulations and policies diverge from those of the European Union.

Since the timing and terms of the United Kingdom's exit from the European Union are unknown, we are unable to predict the effect Brexit will have on our business and results of operations.

The United Kingdom's decision to leave the European Union could result in other member countries also determining to leave, which could lead to added economic and political uncertainty and further devaluation or eventual abandonment of the Euro common currency, any of which could have a negative impact on travel and therefore our business and results of operations.

For the twelve months ended June 30, 2016, U.K. destination gross profit and U.K. source market gross bookings were 10% or less as a share of our business.

operations.

For example, we have experienced an increase in cancellation rates, which we expect to continue and which we believe is due in part to these macro-economic factors and a resulting lack of consumer confidence.

Increased cancellation rates negatively affect our advertising efficiency and our results of operations.

In the United States, the Trump administration has proposed or is considering various actions that could affect U.S. trade policy or practices, which in turn could adversely affect travel to or from the United States.

TripAdvisor and trivago, two leading meta-search companies, support their meta-search services with significant brand and performance advertising.

For example, Marriott International, Hilton, Hyatt Hotels, Intercontinental Hotel Group and Choice Hotels International have announced additional initiatives to encourage consumers to book accommodations directly through their websites, with increased discounting and incentives.

Throughout 2015, the U.S. Dollar strengthened significantly year-over-year relative to substantially all currencies in which we transact, most notably the Euro, Brazilian Real, British Pound Sterling, Russian Ruble and Australian Dollar.

In 2016, the U.S. Dollar continued to be stronger year-over-year relative to the British Pound Sterling, Russian Ruble and many other major currencies in which we transact.

Since the “Brexit” referendum in the United Kingdom in June 2016, the U.S. Dollar has strengthened significantly against the British Pound Sterling.

Potential tax law changes, such as a U.S. border adjustment tax on imported goods, could, if implemented, lead to additional foreign exchange rate volatility and potentially additional strengthening of the U.S. dollar.

If the U.S. dollar strengthens further, our foreign currency denominated net assets, gross bookings, gross profit, operating expenses and net income when expressed in U.S. dollars would be adversely affected.

Our international operations include the Netherlands-based accommodation reservation service Booking.com, the Asia-based

Our vacation rental accommodation business may also experience lower profit margins due to certain additional costs related to offering these accommodations on our websites.

In addition, as our vacation rental reservation business grows, we may incur increasing numbers of complaints related to non-existent properties or properties that are significantly different than as described in the listing, as well as claims of liability based on events occurring at such properties such as robbery, injury, death and other similar events.

Such complaints or claims could result in negative publicity and increased costs, which could adversely affect our business and results of operations.

Further, the regulatory environment related to vacation rentals is evolving and laws, regulations or property association rules could impose restrictions or burdens on vacation rental property owners that limit or negatively affect their ability to rent their properties.

Some jurisdictions have adopted or are considering statutes or ordinances that prohibit owners and managers from renting certain properties for fewer than a stated number of consecutive days or for more than an aggregate total number of days per year.

Such regulations could negatively impact the growth of our vacation rental reservation business.

single distribution channel.

In 2016, performance advertising efficiency declined compared to the prior year, mainly due to growth of paid traffic channels, lower ROIs and timing of booking versus travel resulting from accelerating gross bookings growth during the year.

Changes by Google in how it presents travel

Further, Google is the leading Internet search service and has leveraged its search popularity to promote its travel meta-search services.

As a result, our future success will depend on our ability to adapt to

The new General Data Protection Regulation is not expected to apply to us until May 2018.

In February 2016, E.U. and U.S. authorities announced that they had reached agreement on a new data transfer framework, called the E.U.-U.S. Privacy Shield, which was formally adopted by the European Commission on July 12, 2016.

The European Union and the United States are implementing the new framework, but it is expected to be subject to legal challenge.

Any system failure

Our future effective tax rates

If that intention changes and we decide to repatriate that cash to the United States, whether due to cash needs in the United States or otherwise, we would incur related U.S. income tax expense, and we would only make income tax payments when we repatriate the cash.

Many governments around the world, including the U.S. government and certain European governments, are operating at large financial deficits, resulting in high levels of sovereign debt in such countries.

Greece, Ireland, Portugal and certain other European Union countries with high levels of sovereign debt at times have had difficulty refinancing their debt.

Failure to reach political consensus regarding workable solutions to these issues has resulted in a high level of uncertainty regarding the future economic outlook.

This uncertainty, as well as concern over governmental austerity measures including higher taxes and reduced government spending, could impair consumer spending and adversely affect travel demand.

Greece, in particular, has recently faced and continues to face significant economic challenges, in large part due to its high levels of sovereign debt and difficulties re-financing that debt.

This may increase the likelihood that Greece, and in turn other countries, could exit the European Union, which could lead to added economic uncertainty and further devaluation or eventual abandonment of the Euro common currency.

We believe that these business trends are likely impacted by weak economic conditions and sovereign debt concerns.

Similarly, while China's economy experienced rapid growth over the past 20 years, growth of the Chinese economy slowed in 2015 and concerns about its future growth have had an adverse impact on financial markets, currency exchange rates and other economies.

For example, our business and operations were negatively impacted by

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TripAdvisor has begun supporting its meta-search service with offline advertising, and trivago, a leading meta-search service in Europe, has been aggressively advertising in the United States since 2013.

Instant Booking now includes participation from six out of the top 10 global hotel brands, including Marriott International, Hyatt Hotels and Best Western International.

We recently agreed to participate in "Instant Booking," and we do not yet know how this participation will affect our business.

For example, Google recently announced the discontinuation of its Hotel Finder meta-search service in favor of integrating hotels directly into search results and encouraging users to book hotel reservations directly through Google's "Book on Google" service, which it is now expanding from mobile phones to both desktops and tablets.

To the extent consumers book travel services through a service such as Google's "Book on Google," a meta-search website or directly with a travel service provider after visiting a meta-search website or meta-search utility on a traditional search 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 advertising or other customer acquisition costs to maintain or grow our reservation bookings and our business and results of operations could be adversely affected.

Our OpenTable restaurant reservation business competes or may in the future compete with other restaurant reservation providers, such as LaFourchette (which is owned by TripAdvisor), Yelp's SeatMe service, Zomato, Bookatable (which is owned by Michelin), and Quandoo (which is owned by Recruit).

Companies offering new rental car business models and car- and ride-sharing services such as Uber, Lyft, Gett, BlaBlaCar and Zipcar (which is owned by Avis) provide alternative options for consumers considering renting a car.

These companies extensively utilize mobile platforms and new technologies to drive demand for their services.

If any of these services are successful in attracting consumers who would otherwise use our rental car reservation services, our business and results of operations could be harmed.

Competition in U.S. online travel remains intense and online travel companies are creating new promotions and consumer value features in an effort to gain competitive advantages.

In particular, the competition to provide "opaque" accommodation reservation services to consumers, an area in which our priceline.com business has been a leader, has become more intense.

For example, Expedia makes opaque accommodation room reservations available through its Hotwire brand and on its principal website under the name "Expedia Unpublished Rates" and has, we believe, supported this initiative with steeper discounts through lower margins.

We believe these offerings, in particular "Expedia Unpublished Rates," have adversely impacted the market share and year-over-year growth rate for priceline.com's Name Your Own Price® opaque hotel reservation service, which has been experiencing a decline in room night reservations since 2011.

Competitors could also launch opaque rental car services, which could negatively impact priceline.com's opaque Name Your Own Price® rental car reservation service.

If Expedia or others are successful in growing their opaque reservation services, we may have less consumer demand for our opaque reservation services over time, and we would face more competition for access to the limited supply of discounted reservation rates.

We evaluate [removed: our results of operations] [added: certain operating and financial measures] on both an [removed: as reported] [added: as-reported] and [removed: constant currency] [added: constant-currency] basis.

We calculate constant currency by converting our [removed: current-period] [added: current-year period] financial results for transactions recorded in currencies other than U.S. Dollars using the [removed: prior-period] [added: corresponding prior-year period] monthly average exchange rates rather than the [removed: current-period] [added: current-year period] monthly average exchange rates.

We [removed: help people experience the world] [added: seek to achieve our mission] by providing consumers, travel service providers and restaurants with [removed: leading travel and restaurant] [added: worldwide leadership in online] reservation and related services.

[removed: We provide restaurants with reservation management services and consumers with the ability to make restaurant reservations at participating restaurants through OpenTable,] [added: | • | OpenTable -] a leading provider of [removed: online] restaurant [removed: reservations.][added: reservation and information services to consumers and restaurant reservation management services to restaurants. |]

We refer to our company and all of our subsidiaries and [removed: brands, including Booking.com, priceline.com, KAYAK, agoda.com, rentalcars.com, OpenTable and various smaller brands,] [added: brands] collectively as "The Priceline Group," the "Company," "we," "our" or "us."

Our business is driven primarily by international results, which consist of the results of Booking.com, agoda.com and [removed: rentalcars.com] [added: Rentalcars.com] and the [removed: results of the internationally-based websites] [added: international businesses] of KAYAK and OpenTable (in each case regardless of where the consumer resides, where the consumer is physically located while [removed: making a reservation] [added: using our services] or the location of the travel service provider or restaurant).

[removed: During the year ended December 31, 2015, our international business (the substantial majority of which is generated by Booking.com) represented approximately 88% of our gross] [added: Gross] bookings [removed: (an] [added: is an] operating and statistical metric [removed: referring to] [added: that captures] the total dollar value, generally inclusive of [removed: all] taxes and fees, of all travel services booked [added: through our OTC brands] by our customers, net of [removed: cancellations), approximately 86% of our consolidated gross profit] [added: cancellations,] and [removed: approximately 94% of our consolidated operating income.][added: is widely used in the travel business.]

See Note [removed: 17] [added: 16] to the Consolidated Financial Statements for more geographic information.

| • | Commissions earned from facilitating reservations of accommodations, rental cars, cruises and other travel [removed: services;] [added: services on an agency basis;] |

| • | Transaction gross profit [added: on a merchant basis] and customer processing fees from our accommodation, rental car, airline ticket and vacation package reservation services; |

| • | [removed: Beginning on May 21, 2013, advertising] [added: Advertising] revenues primarily earned by KAYAK from sending referrals to OTCs and travel service providers, as well as from advertising placements on KAYAK's websites and mobile apps; |

| • | Beginning on July 24, 2014, [removed: revenues recognized by OpenTable, which consist of] reservation revenues [removed: (reservation fees] paid by restaurants for diners seated through OpenTable's online reservation [removed: service),] [added: services,] subscription fees for restaurant reservation management services [added: provided by OpenTable] and other [added: OpenTable] revenues; and |

These year-over-year growth rates have generally [removed: decelerated in recent years.][added: decelerated.]

For example, for the year ended December 31, [removed: 2015,] [added: 2016,] our accommodation room night reservation growth was [removed: 25%, a deceleration from] [added: 29%, as compared to 25% in 2015,] 28% in 2014, 37% in 2013 and 40% in 2012.

Given the size of our [removed: hotel] [added: accommodation] reservation business, we expect that our year-over-year growth rates will [added: generally] continue to decelerate, though the rate of deceleration may [removed: fluctuate.][added: fluctuate and there may be periods of acceleration from time to time.]

Booking.com included over [removed: 850,000] [added: 1,115,000] properties on its website as of [removed: February 15,] [added: December 31,] 2016, which included [removed: approximately 390,000] [added: over 568,000] vacation rental properties (updated property counts are available on the Booking.com website), and compares to over [removed: 635,000] [added: 852,000] properties (including [removed: approximately 269,000] [added: over 390,000] vacation rental properties) [removed: a year ago.][added: as of December 31, 2015.]

As a result, properties that are contracted with Booking.com but temporarily do not have availability on Booking.com (for example properties that are closed during their off-peak season or for renovations) will remain [removed: included in Booking.com's property counts during these temporary periods.]

[removed: As our] [added: Our] international business represents the substantial majority of our financial results, [added: and] we expect our operating results and other financial metrics to continue to be largely driven by international performance.

[removed: Also, we] [added: We] intend to continue to invest in adding accommodations available for reservation on our websites, including hotels, bed and breakfasts, hostels and vacation rentals.

Many of the newer accommodations we add to our travel reservation services, especially in highly penetrated markets, may have fewer [removed: rooms, lower average daily rates ("ADRs")] [added: rooms] or higher credit risk and may appeal to a smaller subset of consumers (e.g., hostels and bed and [removed: breakfasts), and therefore may also negatively impact our margins.][added: breakfasts).]

[removed: For example, because] [added: Because] a vacation rental is [added: typically] either a single unit or a small collection of independent units, vacation rental [removed: properties] [added: accommodations] represent more limited booking [added: opportunities than non-vacation rental properties, which generally have more units to rent per property.]

Our [removed: non-hotel] [added: vacation rental] accommodations in general may be subject to increased seasonality due to local tourism seasons, weather or other factors.

As we increase our [removed: non-hotel] [added: vacation rental] accommodation business, these different [removed: market] characteristics could negatively impact our profit margins; and, to the extent these properties represent an increasing percentage of the properties added to our websites, we expect that our gross bookings growth rate and property growth rate will continue to diverge over time (since each such property has fewer booking opportunities).

As a result of the foregoing, as the percentage of [removed: non-hotel accommodations] [added: vacation rental properties] increases, we expect that the number of reservations per property will likely continue to decrease.

Concerns persist about the outlook for the global economy in general, including [removed: the European Union, with recent declines] [added: uncertainty] in [removed: broad Eurozone economic indicators raising fears about] the [removed: pace of economic growth] [added: European Union] and [removed: the risk of deflation.][added: China.]

At times, we have experienced volatility in transaction growth [removed: rates and] [added: rates, increased] cancellation rates and weaker trends in hotel ADRs across many regions of the world, particularly in those [removed: European] countries that appear to be most affected by economic [removed: uncertainties.][added: uncertainties, which we believe are due at least in part to macro-economic conditions and concerns.]

These and other macro-economic uncertainties, such as sovereign default risk becoming more widespread, declining oil [removed: prices and] [added: prices,] geopolitical [removed: tensions,] [added: tensions and differing central bank monetary policies,] have led to significant volatility in the exchange [removed: rate] [added: rates] between the [removed: Euro, the] U.S. Dollar and [added: the Euro, the British Pound Sterling and] other currencies.

As a [removed: result,] [added: result of these currency exchange rate changes,] our foreign currency denominated net assets, gross bookings, gross profit, operating expenses and net income have been negatively impacted as expressed in U.S. [removed: Dollars.][added: Dollars, although to a much lesser extent in 2016 than in 2015.]

[removed: Gross] [added: For example, gross] profit from our international operations grew [removed: year-over-year on a constant currency basis by approximately 28%] [added: 22.3%] for the year ended December 31, [removed: 2015] [added: 2016] compared to the year ended December 31, [removed: 2014,] [added: 2015,] but, [removed: as a result of] [added: without] the [added: negative] impact of changes in currency exchange rates, grew [removed: 11.6% for the year ended December 31, 2015, as reported in U.S. Dollars.][added: year-over-year on a constant-currency basis by approximately 25%.]

We generally enter into derivative instruments to minimize the impact of short-term currency fluctuations on [added: the translation of] our consolidated operating [removed: results.][added: results into U.S. Dollars.]

However, such derivative instruments are short term in nature and not designed to hedge against currency fluctuations that could impact [added: growth rates for] our gross bookings, revenues or gross profit (see Note 5 to the Consolidated Financial Statements for additional information on our derivative contracts).

We compete [added: globally] with both online and traditional [added: providers of] travel and restaurant reservation and related services.

The [removed: market] [added: markets] for the services we offer [removed: is] [added: are] intensely [removed: competitive, a trend we expect to continue,] [added: competitive] and current and new competitors can launch new services at a relatively low cost.

For more detail regarding the competitive trends and risks we face, see Part I Item 1 Business - [removed: "Competition" and] [added: "Competition",] Part I Item 1A Risk Factors - "Intense competition could reduce our market share and harm our financial performance." and "Consumer adoption and use of mobile devices [removed: create] [added: creates] new challenges and may enable device companies such as Apple to compete directly with us." [added: and "We may not be able to keep up with rapid technological changes."]

[removed: We] [added: For example, we] have experienced a significant shift of [added: both direct and indirect] business to mobile platforms and our advertising partners are also seeing a rapid shift of traffic to mobile platforms.

[removed: Advertising and distribution] opportunities may be more limited on mobile devices given their smaller screen sizes.

[removed: The] [added: In addition, the] gross profit earned on a mobile transaction may be less than a typical desktop transaction due to different consumer purchasing patterns.

[removed: In addition, we] [added: We] have observed an increase in promotional pricing to closed user groups (such as loyalty program participants or consumers with registered accounts), including through mobile apps.

We have established widely used and recognized e-commerce brands through [removed: aggressive] marketing and promotional campaigns.

Both our [removed: online] [added: performance] and [removed: offline] [added: brand] advertising [removed: expense has] [added: expenses have] increased significantly in recent years, a trend we expect to continue.

Our mission is to help people experience the world.

We operate six primary, independently managed brands:

| • | Booking.com - the world’s leading brand for booking online accommodation reservations, based on room nights booked. |

| • | priceline.com - a leading hotel, rental car, airline ticket and vacation package reservation service in the United States. |

| • | KAYAK - a leading meta-search service allowing consumers to easily search and compare travel itineraries and prices, including airline ticket, accommodation and rental car reservation information. |

| • | agoda.com - a leading accommodation reservation service catering primarily to consumers in the Asia-Pacific region. |

| • | Rentalcars.com - a leading worldwide rental car reservation service. |

During the year ended December 31, 2016, our international business (the substantial majority of which is generated by Booking.com) represented approximately 88% of our consolidated gross profit.

Our vacation rental accommodation business may also experience lower profit margins due to certain additional costs related to offering these accommodations on our websites.

As part of our strategy to increase the number and variety of accommodations available on Booking.com, Booking.com is increasingly processing transactions on a merchant basis where it facilitates payments on behalf of customers.

This allows Booking.com to process transactions for properties that do not accept credit cards and to increase its ability to offer flexible transaction terms to consumers, such as the form and timing of payment.

Although we will incur additional payment processing costs and chargebacks related to these transactions, which are recorded as sales and marketing expenses in our statement of operations and which will negatively impact our operating margins, we believe that adding these types of properties and service offerings will benefit our customers and our gross bookings, room night and earnings growth rates.

Perceived or actual adverse economic conditions, including slow, slowing or negative economic growth, unemployment rates and weakening currencies and concerns over government responses such as higher taxes and reduced government spending, could impair consumer spending and adversely affect travel demand.

Further, uncertainty regarding the future of the European Union following the United Kingdom’s vote to leave (“Brexit”) and concerns regarding certain E.U. members with sovereign debt default risks could also negatively affect consumer spending and adversely affect travel demand.

For more detail, see Part I Item 1A Risk Factors - "Declines or disruptions in the travel industry could adversely affect our business and financial performance."

Throughout 2015, the U.S. Dollar strengthened significantly year-over-year relative to substantially all currencies in which we transact, most notably the Euro, Brazilian Real, British Pound Sterling, Russian Ruble and Australian Dollar.

In 2016, the U.S. Dollar continued to be stronger year-over-year relative to the British Pound Sterling, Russian Ruble and many other major currencies in which we transact.

Since the "Brexit" referendum in the United Kingdom in June 2016, the U.S. Dollar has strengthened significantly against the British Pound Sterling.

For more information, see Part I Item 1A Risk Factors - "We are exposed to fluctuations in currency exchange rates."

Some of our current and potential competitors, such as Google, Apple, Alibaba, Amazon and Facebook, have access to significantly greater and more diversified 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, including by establishing a flight meta-search product (“Google Flights”) and a hotel meta-search business ("Hotel Ads") that are growing rapidly, as well as its "Book on Google" reservation functionality.

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.

Advertising and distribution

For example, Marriott International, Hilton, Hyatt Hotels, InterContinental Hotel Group and Choice Hotels International have launched additional initiatives to encourage consumers to book accommodations directly through their websites, with increased discounting and incentives.

In addition to providing retail travel reservation services, our priceline.com brand is a leading provider of discounted opaque travel reservation services in the United States through its Name Your Own Price® and Express Deals® offerings.

These discounted services are referred to as "opaque" because certain elements of the reservation, including the name of the travel service provider, are not made known to the traveler until after the reservation is made.

In general, we expect that over time our opaque services will continue to decrease in relative importance to our overall business due, we believe, to a variety of factors, including the growth rates of our retail businesses, competition, relative complexity, travel restrictions often required by the travel service provider, difficulty in offering these services on mobile devices, increased discounts available to consumers through closed user groups, and limited availability of discounted travel reservations from travel service providers, particularly during periods of high consumer demand.

We also invested approximately $296 million, $274 million and $257 million in brand advertising during 2016, 2015 and 2014, respectively, primarily related to costs associated with producing and airing television advertising, online video advertising (for example, on YouTube and Facebook) and online display advertising.

We have also experienced increasing cancellation rates, which we expect to continue and which negatively affects our advertising efficiency and results of operations.

We have observed a long-term trend of decreasing performance advertising returns on investment ("ROIs"), a trend we expect to continue, though the rate of decrease may fluctuate and there may be periods of stable or increasing ROIs from time to time.

Some countries have adopted or proposed legislation that could also affect business practices within the online travel industry.

However, we generally do not recognize revenue from these bookings until the travel occurs, which can be in a quarter other than when the reservation is booked.

The first quarter of the year is typically our lowest level of profitability and may experience volatility in earnings growth rates due to these seasonal timing factors.

As the relative growth rates for these businesses fluctuate, the quarterly distribution of our operating results may vary.

The timing of other holidays such as Chinese New Year, Carnival and Ramadan can also impact our quarterly year-over-year growth rates.

Conversely, in periods where our gross bookings growth rate accelerates, our operating margins are typically negatively impacted by relatively more variable advertising expense.

In addition, gross profit growth is typically less impacted by accelerating gross bookings growth in the near term as a portion of the revenue recognized from such gross bookings will occur in future quarters.

Because these events or concerns are largely unpredictable, they can dramatically and suddenly affect travel behavior by consumers, and therefore demand for our services, which can adversely affect our business and results of operations.

See Part I Item 1A Risk Factors - “Declines or disruptions in the travel industry could adversely affect our business and financial performance.”

Through our online travel companies ("OTCs"), we connect consumers wishing to make travel reservations with providers of travel services around the world.

We are the leader in the worldwide online accommodation reservation market based on room nights booked.

We offer consumers a broad array of accommodation reservations (including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties) through our Booking.com, priceline.com and agoda.com brands.

Our priceline.com brand also offers consumers reservations for rental cars, airline tickets, vacation packages and cruises.

We offer rental car reservations worldwide through rentalcars.com.

We also allow consumers to easily compare airline ticket, hotel reservation and rental car reservation information from hundreds of travel websites at once through KAYAK.

We launched our business in the United States in 1998 under the priceline.com brand and have since expanded our operations to include five other primary, independently operated brands: Booking.com, KAYAK, agoda.com, rentalcars.com and OpenTable.

Our principal goal is to help people experience the world by serving both consumers and our travel service provider and restaurant partners with worldwide leadership in online reservation and related services.

| | |

| --- | --- |

In September 2015, Booking.com changed the way it calculates property counts.

Booking.com previously excluded properties that were temporarily unavailable for booking.

We believe that continuously including them provides a more consistent and useful property count.

For example, 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 margins as these markets increase in size over time.

The approximately 390,000 vacation rental properties on Booking.com's website as of February 15, 2016 (updated property counts are available on the Booking.com's website) represent approximately 1.9 million instantly bookable and confirmable units within these properties.

opportunities than non-vacation rental properties, which generally have more units to rent per property.

In addition, many governments around the world, including the U.S. government and certain European governments, continue to operate at large financial deficits, resulting in high levels of sovereign debt in such countries.

Greece, Ireland, Portugal and certain other European Union countries with high levels of sovereign debt at times have had difficulty refinancing their debt.

Failure to reach political consensus regarding workable solutions to these issues has resulted in a high level of uncertainty regarding the future economic outlook.

This uncertainty, as well as concern over governmental austerity measures including higher taxes and reduced government spending, could impair consumer spending and adversely affect travel demand.

We believe that these business trends are likely impacted by weak economic conditions and sovereign debt concerns.

Similarly, while China's economy experienced rapid growth over the past 20 years, growth of the Chinese economy slowed in 2015 and concerns about its future growth have had an adverse impact on financial markets, currency exchange rates and other economies.

Disruptions in the economies of such countries could cause, contribute to or be indicative of deteriorating macro-economic conditions, which in turn could negatively affect travel to or from such countries or the travel industry in general and therefore have an adverse impact on our results of operations.

Greece, in particular, has recently faced and continues to face significant economic challenges, in large part due to its high levels of sovereign debt and difficulties refinancing that debt.

This may increase the likelihood that Greece, and in turn other countries, could exit the European Union, which could lead to added economic uncertainty and further devaluation or eventual abandonment of the Euro common currency.

In March 2015, the European Central Bank, in an effort to stimulate the European economy, launched a quantitative easing program to purchase public debt.

The U.S. Dollar significantly strengthened against the Euro during 2014, moving from an exchange rate of 1.38 U.S. Dollars per Euro as of January 1, 2014 to 1.21 U.S. Dollars per Euro as of December 31, 2014.

The U.S. Dollar strengthened further in 2015 to an exchange rate of 1.09 U.S. Dollars per Euro as of December 31, 2015.

The U.S. Dollar also strengthened significantly during this time frame as compared to many other currencies.

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.

For example, the strengthening of the U.S. Dollar relative to the Euro in 2015 resulted in it

becoming more expensive for Europeans to travel to the United States.

Similarly, dramatic depreciation of the Russian Ruble in 2014 and 2015 resulted in it becoming more expensive for Russians to travel to Europe and most other non-Ruble destinations.

In addition, although lower oil prices may lead to increased travel activity as consumers have more discretionary funds and airline fares decrease, recent declines in oil prices and stock market volatility may be indicative of broader macro-economic weakness, which in turn could negatively affect the travel industry and our business.

The uncertainty of macro-economic factors, the volatility in foreign exchange rates 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.

We currently, or may potentially in the future, compete with a variety of companies, including:

| • | online travel reservation services such as those owned by Expedia (including Travelocity and Orbitz), Ctrip (in which we hold a minority interest), Rakuten, eDreams ODIGEO and Jalan; |

| • | online accommodation search and/or reservation services, such as Airbnb and HomeAway (which is owned by Expedia), currently focused on vacation rental properties and other non-hotel accommodations, including individually owned properties; |

| • | large online companies, including search, social networking and marketplace companies such as Google, Facebook, Alibaba and Groupon; |

| • | traditional travel agencies, wholesalers and tour operators, such as Carlson Wagonlit, American Express, Thomas Cook and Tui Travel, as well as thousands of individual travel agencies around the world; |

We use [removed: foreign] [added: currency] exchange derivative contracts to manage short-term foreign currency risk.

We did not experience any material changes in interest rate exposures during the year ended December 31, [removed: 2015.][added: 2016.]

Based upon economic conditions and leading market indicators at December 31, [removed: 2015,] [added: 2016,] we do not foresee a significant adverse change in interest rates in the near future.

[removed: A] [added: As of December 31, 2016, a] hypothetical 100 basis point (1.0%) increase in interest rates would have resulted in a decrease in the fair values of our investments [removed: as of December 31, 2015 of] [added: in debt securities by] approximately [removed: $135.1] [added: $204] million.

As of December 31, [removed: 2015,] [added: 2016,] the outstanding aggregate principal amount of our debt was approximately [removed: $6.5] [added: $7.4] billion.

We estimate that the market value of such debt was approximately [removed: $7.0] [added: $8.4] billion as of December 31, [removed: 2015.][added: 2016.]

As a result, we face exposures to adverse movements in currency exchange rates as the operating results of our international operations are translated from local [removed: currency] [added: currencies] into U.S. Dollars upon consolidation.

If the U.S. Dollar weakens against the local [removed: currency,] [added: currencies,] the translation of these foreign-currency-denominated balances will result in increased net assets, gross bookings, gross profit, operating expenses, and net income.

As a [removed: result,] [added: result of these currency exchange rate changes,] our foreign currency denominated net assets, gross bookings, gross profit, operating expenses and net income have been negatively impacted as expressed in U.S. [removed: Dollars.][added: Dollars, although to a much lesser extent in 2016 than in 2015.]

[added: Our derivative contracts principally address foreign exchange] fluctuation risk for the [removed: Euro and] [added: Euro,] the British Pound Sterling [added: and certain other currencies] versus the U.S. Dollar.

As of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] there were no such outstanding derivative contracts.

Foreign exchange [added: gains of $3.4 million for the year ended December 31, 2016, foreign exchange] losses of $6.6 million for the year ended December 31, 2015 and foreign exchange gains of $13.7 million [removed: and $0.3 million] for the [removed: years] [added: year] ended December 31, 2014 [removed: and 2013, respectively,] were recorded in "Foreign currency transactions and other" in the Consolidated Statements of Operations.

This amount excludes our investment in Ctrip.com International Ltd. ("Ctrip") senior convertible notes, which are also subject to market price risk, which could potentially have a more significant impact on the change in fair value.

The fair

value of our Ctrip senior convertible notes will likely increase as the market price of Ctrip's American Depositary Shares ("ADSs") increase and decrease as the price of Ctrip's ADSs fall.

Throughout 2015, the U.S. Dollar strengthened significantly year-over-year relative to substantially all currencies in which we transact, most notably the Euro, Brazilian Real, British Pound Sterling, Russian Ruble and Australian Dollar.

In 2016, the U.S. Dollar continued to be stronger year-over-year relative to the British Pound Sterling, Russian Ruble and many other major currencies in which we transact.

Since the “Brexit” referendum in the United Kingdom in June 2016, the U.S. Dollar has strengthened significantly against the British Pound Sterling.

The U.S. Dollar significantly strengthened against the Euro during 2014, moving from an exchange rate of 1.38 U.S. Dollars per Euro as of January 1, 2014 to 1.21 U.S. Dollars per Euro as of December 31, 2014.

The U.S. Dollar has strengthened further in 2015 to an exchange rate of 1.09 U.S. Dollars per Euro as of December 31, 2015.

The U.S. Dollar also strengthened significantly during this time frame as compared to many other currencies.

Our derivative contracts principally address foreign exchange

We [removed: help people experience the world] [added: seek to achieve our mission] by providing consumers, travel service providers and restaurants with [removed: leading travel and restaurant] [added: worldwide leadership in online] reservation and related services.

We also allow consumers to easily compare [added: travel reservation information, such as] airline ticket, hotel reservation and rental car reservation [removed: information] [added: information,] from hundreds of travel websites at once through KAYAK.

[removed: We provide restaurants with reservation management services and consumers with the ability to make restaurant reservations at participating restaurants through OpenTable,] [added: | • | OpenTable -] a leading provider of [removed: online] restaurant [removed: reservations.][added: reservation and information services to consumers and restaurant reservation management services to restaurants. |]

Our business is driven primarily by international results, which consist of the results of Booking.com, agoda.com and [removed: rentalcars.com] [added: Rentalcars.com] and the [removed: results of the internationally-based websites] [added: international businesses] of KAYAK and OpenTable (in each case regardless of where the consumer resides, where the consumer is physically located while [removed: making a reservation] [added: using our services] or the location of the travel service provider or restaurant).

During the year ended December 31, [removed: 2015,] [added: 2016,] our international business (the substantial majority of which is generated by Booking.com) represented approximately 88% of our [removed: gross bookings (an operating and statistical metric referring to the total dollar value, generally inclusive of all taxes and fees, of all travel services booked by our customers, net of cancellations), approximately 86% of our] consolidated gross [removed: profit and approximately 94% of our consolidated operating income.][added: profit.]

See Note [removed: 17] [added: 16] to the Consolidated Financial Statements for more geographic information.

We refer to our company and all of our subsidiaries and [removed: brands, including Booking.com, priceline.com, KAYAK, agoda.com, rentalcars.com, OpenTable and various smaller brands,] [added: brands] collectively as "The Priceline Group," the "Company," "we," "our" or "us." [removed: We determined that our brands constitute our operating segments.]

We derive substantially all of our [added: revenues and] gross profit from the following sources:

| • | Commissions earned from facilitating reservations of accommodations, rental cars, cruises and other travel [removed: services;] [added: services on an agency basis;] |

| • | Transaction gross profit [added: on a merchant basis] and customer processing fees from our accommodation, rental car, airline ticket and vacation package reservation services; |

| • | [removed: Beginning on May 21, 2013, advertising] [added: Advertising] revenues primarily earned by KAYAK from sending referrals to [removed: OTCs] [added: online travel companies ("OTCs")] and travel service providers, as well as from advertising placements on KAYAK's websites and mobile apps; |

| • | Beginning on July 24, 2014, [removed: revenues recognized by OpenTable, which consist of] reservation revenues [removed: (reservation fees] paid by restaurants for diners seated through OpenTable's online reservation [removed: service),] [added: service,] subscription fees for restaurant reservation management services [added: provided by OpenTable] and other [added: OpenTable] revenues; and |

For the year ended December 31, [removed: 2015,] [added: 2016,] we had gross profit of approximately [removed: $8.6] [added: $10.3] billion comprised of "agency" gross profit, "merchant" gross profit, and [removed: "other"] [added: "advertising and other"] gross profit.

Agency gross profit is derived from travel-related transactions where we [removed: are not the merchant of record, and therefore] do not [removed: charge the customer's credit card, and where the prices of] [added: facilitate payments for] the travel services [removed: are determined by third parties.][added: provided.]

Agency gross profit, which represented the [removed: substantial] majority of our total gross profit in [removed: 2015,] [added: 2016,] consists primarily of: (1) travel [added: reservation] commissions; (2) [added: certain] GDS reservation booking fees [removed: related to certain travel services;] [added: and] (3) travel insurance [removed: fees; and (4) customer processing] fees.

Merchant gross profit is derived from services where we [removed: are the merchant of record and therefore charge the consumer's credit card] [added: facilitate payments] for the travel services provided, and consists of: (1) transaction gross profit representing the amount charged to a consumer, less the amount charged to us by travel service [removed: providers;] [added: providers, and travel reservation commissions in connection with our merchant retail and Express Deals® travel reservation services;] (2) [added: transaction revenues representing the price of Name Your Own Price® reservations charged to a] customer [removed: processing fees; and] [added: (with a corresponding travel service provider cost recorded in cost of revenues);] (3) ancillary fees, including damage excess waiver and travel insurance fees and [added: certain] GDS reservation booking fees [removed: related to certain travel services.][added: and (4) customer processing fees.]

Advertising and other revenues are derived primarily from (1) revenues earned by KAYAK for (a) sending referrals to OTCs and travel service providers and (b) advertising placements on KAYAK's websites and mobile apps; [removed: and] (2) revenues earned by OpenTable for (a) reservation fees paid by restaurants for diners seated through OpenTable's online reservation service and (b) subscription fees earned by OpenTable for restaurant reservation management [added: services; (3) revenues earned by priceline.com for advertising on its websites; and (4) revenues generated by Booking.com's BookingSuite branded accommodation marketing and business analytics] services.

We focus on relentless innovation and a commitment to serve both consumers and [added: our] travel service provider and restaurant partners with unmatched service and best-in-class digital technology.

[removed: As the] [added: The] online travel and dining categories continue to grow as consumer purchasing shifts from traditional [removed: off-line] [added: offline] channels to interactive online channels, including mobile [removed: channels, our strategy is to continue to participate broadly in this online growth by expanding our service offerings and markets.][added: channels.]

| • | Providing the best consumer experience. We believe that offering consumers an outstanding online experience is essential for our future success. To accomplish this, we focus on providing consumers with: [added: (a)] a variety of intuitive, easy-to-use online travel and restaurant reservation and search services; [added: (b)] a continually increasing number, location and variety of accommodations [added: and restaurants] available through our services: [added: (c)] informative and useful content, such as pictures, accommodation [added: and restaurant] details and reviews; and [added: (d)] excellent customer service. For example, Booking.com increasingly provides reservation services for accommodations other than hotels, such as vacation rentals. Booking.com included over [removed: 850,000] [added: 1,115,000] properties on its website as of [removed: February 15,] [added: December 31,] 2016, which included [added: over 568,000 vacation rental properties (updated property counts are available on the Booking.com website). Further, we endeavor to provide excellent customer service in a variety of ways, including through our call centers and websites, so that consumers can be confident that booking reservations through us will lead to a positive experience. We are constantly innovating in order to provide a best-in-class user experience with intuitive, easy-to-use websites and mobile apps to ensure that we are meeting the needs of online consumers while aiming to exceed their expectations.] |

| • | Partnering with travel service providers and restaurants. We aim to establish mutually beneficial relationships with travel service providers and restaurants around the world. We believe that travel service providers and restaurants [removed: can] benefit from participating in our services by increasing their distribution channels, demand and inventory utilization in an efficient and cost-effective manner. Travel service providers and restaurants benefit from our well-known brands and online marketing efforts, expertise in offering an excellent consumer experience through our websites and mobile apps and ability to offer their inventory in markets and to consumers that the travel service provider or restaurant may be unable or unlikely to reach. For example, an independent hotel may not have the means or expertise to market itself to international travelers, including in other languages, to build and operate effective desktop and mobile websites and online reservation services, or to engage in sophisticated online marketing techniques. Further, we are increasingly providing services, other than reservations booked through our websites and mobile apps, designed to help our partners grow their business. For example, Booking.com's BookingSuite services are designed to offer accommodation providers with affordable [removed: and effective] marketing and business analytics tools to help them attract [removed: guests] [added: customers] and [removed: increase] [added: more effectively manage] their [removed: profitability.] [added: properties.] Similarly, OpenTable is continuously working to improve its reservation management software services to help restaurants more effectively manage their reservations and more efficiently market their available tables to diners. |

| • | Maintaining multiple, independently managed brands. We employ a strategy of operating multiple, independently managed brands, which we believe allows us the opportunity to offer our reservation services in ways that appeal to different consumers while maintaining an entrepreneurial, competitive spirit among our brands. We intend to invest resources to support organic growth by all of our brands, whether through increased advertising, geographic expansion, technology innovation or increased access to accommodations, rental cars, restaurants or other services. [added: For example, we spend significant and increasing amounts on performance and brand advertising to acquire customers and establish and strengthen our brands.] We also believe that by operating independently managed brands, we encourage innovation and experimentation by our brands, which allows us to more quickly discern and adapt to changing consumer behaviors and market dynamics. Although our brands are independently operated, we intend to continue [added: efforts] to share best practices, access to [removed: services] [added: travel service provider offerings] and customers across our brands. We believe that by promoting our brands worldwide, sharing accommodation reservation availability and customer [removed: flow,] [added: demand,] and applying our industry experiences across brands and markets, we can more effectively expand our reservation services globally and maintain and grow our position as a leading provider of worldwide online travel and restaurant reservation and related services. |

| • | Investing in profitable and sustainable growth. [removed: Our strategy is] [added: We seek] to [removed: ensure that we] offer online services that meet the needs and [added: the] expectations of [removed: both consumers and] [added: consumers,] travel service providers and restaurants and that we believe [removed: are or] will [removed: be likely to] result in long-term profitability and growth. We intend to accomplish this through continuous investment and [removed: innovation in] [added: 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 through our websites and mobile [removed: applications.] [added: apps.] We also may pursue strategic transactions. For example, in 2013 we entered the meta-search business when we acquired KAYAK and in 2014 we entered the online restaurant reservation market when we acquired OpenTable. We regularly evaluate, and may pursue and consummate, other potential strategic acquisitions, partnerships, joint ventures or investments, whether to expand our businesses into complementary areas, expand our current businesses, acquire innovative technology or for other reasons. For example, [removed: in 2014 and 2015] we [removed: strengthened our] [added: have a] commercial [removed: partnership] [added: relationship] with, and [added: have] made significant financial investments in, Ctrip, a leading OTC operating primarily in China. |

As of [removed: February 15,] [added: December 31,] 2016, Booking.com offered accommodation reservation services for over [removed: 850,000] [added: 1,115,000] properties in over 220 countries and territories on its various websites and in [removed: 42] [added: over 40] languages, which includes [removed: approximately 390,000] [added: over 568,000] vacation rental properties (updated property counts are [removed: available on the Booking.com website).]

Priceline.com is a leader in the [removed: "opaque"] [added: discount] travel reservation [removed: business] [added: business, including] through its pioneering Name Your Own Price® and Express Deals® [removed: discount hotel, rental car and airline reservation services.][added: "opaque" offerings where certain elements of the service, including the identity of the travel service provider, are not disclosed to the consumer prior to making a reservation.]

KAYAK derives revenues from [removed: advertising placements on its websites and mobile apps and from] sending referrals to [added: OTCs and] travel service providers and [removed: OTCs.][added: from advertising placements on its websites and mobile apps.]

[removed: Rentalcars.com offers a] [added: Rentalcars.com, which operates] primarily [removed: merchant,] [added: under a merchant model, offers] online [removed: retail and opaque] rental car reservation [removed: service] [added: services] allowing consumers to make rental car reservations in approximately [removed: 46,000] [added: 49,000] locations throughout the world, with customer support provided in 40 languages.

Booking.com, priceline.com, KAYAK, agoda.com, [removed: rentalcars.com] [added: Rentalcars.com] and OpenTable have established widely used and recognized e-commerce brands through [removed: aggressive] marketing and [removed: promotion] [added: promotional] campaigns.

Both our [removed: online] [added: performance] advertising expense and [removed: offline] [added: brand] advertising expense have increased significantly in recent years, a trend we expect to continue.

During [removed: 2015,] [added: 2016,] our total [removed: online] [added: performance] advertising expense was approximately [removed: $2.8] [added: $3.5] billion, primarily related to the use of online search engines (primarily Google), meta-search and travel research services and affiliate marketing to generate traffic to our websites.

We also invested approximately [removed: $215] [added: $296] million in [removed: offline] [added: brand] advertising during [removed: that period.][added: 2016.]

We intend to continue a strategy of [removed: aggressively] promoting brand [removed: awareness, primarily] [added: awareness] through [added: both] online [removed: means although we also intend to increase our] [added: and] offline advertising efforts, including by expanding [removed: offline] [added: brand] campaigns into additional markets.

[removed: We] [added: In contrast, we] expense the substantial majority of our advertising activities as the expense is incurred, [removed: which] [added: which, in the case of performance advertising in particular,] is typically in the quarter in which [added: associated] reservations are [added: booked.]

[added: We expense the substantial majority of our advertising activities as the expense is incurred, which is typically in the quarter in which reservations are] booked, but recognize most of our gross profit when the consumer's travel or dining experience is completed.

As a result, [removed: online] [added: performance] advertising expense may not be recognized in the same period as the associated gross profit.

We compete [added: globally] with both online and traditional travel and restaurant reservation and related services.

Some of our current and potential competitors, such as Google, Apple, Alibaba, [added: Tencent,] Amazon and Facebook, have access to significantly greater and more diversified 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.

We currently, or [removed: potentially] may [added: potentially] in the future, compete with a variety of companies, including:

| • | online travel reservation services such as Expedia, Hotels.com, Hotwire, Orbitz, Travelocity, Wotif, Cheaptickets, ebookers, HotelClub, [removed: RatesToGo, CarRentals.com] [added: RatesToGo] and [removed: Venere,] [added: CarRentals.com,] which are owned by Expedia; [removed: laterooms, which is owned by Tui Travel;] Hotel Reservation Service (HRS) and hotel.de, which are owned by Hotel Reservation Service; and AutoEurope, [removed: Car Trawler,] [added: CarTrawler,] Ctrip (in which we hold a minority interest), eLong (in which Ctrip has acquired a significant minority ownership interest), [added: Meituan, ezTravel,] MakeMyTrip, [added: OYO Rooms, Yatra, Cleartrip, Traveloka,] Webjet, Rakuten, [removed: Jalan, Hotel Urbano] [added: Jalan (which is owned by Recruit), ViajaNet, Submarino Viagens, Despegar/Decolar] (in which [removed: we hold] [added: Expedia holds] a minority [added: ownership] interest), [removed: ViajaNet, Submarino Viagens, Despegar/Decolar,] [added: Fliggy (operated by Alibaba),] 17u.com, HotelTonight, [removed: Bookit.com,] CheapOair, Mr. and Mrs. Smith and eDreams ODIGEO; |

| • | large online companies, including search, social networking and marketplace companies such as Google, Facebook, [removed: Alibaba] [added: Alibaba, Tencent, Amazon, Baidu] and Groupon; |

Our mission is to help people experience the world.

We operate six primary, independently managed brands:

| • | Booking.com - the world’s leading brand for booking online accommodation reservations, based on room nights booked. |

| • | priceline.com - a leading hotel, rental car, airline ticket and vacation package reservation service in the United States. |

| • | KAYAK - a leading meta-search service allowing consumers to easily search and compare travel itineraries and prices, including airline ticket, accommodation and rental car reservation information. |

| • | agoda.com - a leading accommodation reservation service catering primarily to consumers in the Asia-Pacific region. |

| • | Rentalcars.com - a leading worldwide rental car reservation service. |

Our strategy is to continue to participate broadly in this online growth by expanding our service offerings and markets.

available on the Booking.com website).

Priceline.com operates under both a merchant and agency model.

For example, Google has entered various aspects of the online travel market, including by establishing a

flight meta-search product (“Google Flights”) and a hotel meta-search business ("Hotel Ads") that are growing rapidly, as well as its "Book on Google" reservation functionality.

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TripAdvisor and trivago, two leading meta-search companies, support their meta-search services with significant brand and performance advertising.

Further, Google is the leading Internet search service and has leveraged its search popularity to promote its travel meta-search services.

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

States and internationally, as well as a variety of administrative procedures, regulations, conventions and treaties.

However, we generally do not recognize revenue from these bookings until the travel occurs, which can be in a quarter other than when the reservation is booked.

The first quarter of the year is typically our lowest level of profitability and may experience volatility in earnings growth rates due to these seasonal timing factors.

As the relative growth rates for these businesses fluctuate, the quarterly distribution of our operating results may vary.

The timing of other holidays such as Chinese New Year, Carnival and Ramadan can also impact our quarterly year-over-year growth rates.

Conversely, in periods where our gross bookings growth rate accelerates, our operating margins are typically negatively impacted by relatively more variable advertising expense.

In addition, gross profit growth is typically less impacted by accelerating gross bookings growth in the near term as a portion of the revenue recognized from such gross bookings will occur in future quarters.

Through our online travel companies ("OTCs"), we connect consumers wishing to make travel reservations with providers of travel services around the world.

We are the leader in the worldwide online accommodation reservation market based on room nights booked.

We offer consumers a broad array of accommodation reservations (including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties) through our Booking.com, priceline.com and agoda.com brands.

Our priceline.com brand also offers consumers reservations for rental cars, airline tickets, vacation packages and cruises.

We offer rental car reservations worldwide through rentalcars.com.

We launched our business in the United States in 1998 under the priceline.com brand and have since expanded our operations to include five other primary, independently operated brands: Booking.com, KAYAK, agoda.com, rentalcars.com and OpenTable.

Our mission is to help people experience the world by serving both consumers and our travel service provider and restaurant partners with worldwide leadership in online reservation and related services.

We have aggregated our operating segments into one reportable segment.

See Note 2 to our Consolidated Financial Statements.

Revenues from KAYAK are net of intercompany revenues earned by KAYAK from other Priceline Group brands.

approximately 390,000 vacation rental properties (updated property counts are available on the Booking.com website).

Further, we endeavor to provide excellent customer service in a variety of ways, including through our call centers and websites, so that consumers can be confident that booking reservations through us will lead to a positive experience.

We are constantly innovating in order to provide a best-in-class user experience with intuitive, easy-to-use websites and mobile apps to ensure that we are meeting the needs of online consumers while aiming to exceed their expectations.

We also allow consumers to easily compare airline ticket, hotel reservation and rental car reservation information from hundreds of travel websites at once through

KAYAK.

We describe our Name Your Own Price® and Express Deals® discount travel services as "opaque" because certain elements of the service, including the identity of the travel service provider, are not disclosed to the consumer prior to making a reservation.

For example, building on its first offline advertising campaign, which it launched in the United States in 2013, Booking.com has begun offline advertising campaigns in other markets, including Australia, Canada, the United Kingdom, Germany, France, Brazil and Japan.

For example, Google has entered various aspects of the online travel market through its acquisition in 2011 of ITA Software, Inc., a major flight information software company, its hotel search and reservation booking business ("Book on Google") and its license of hotel-booking software from Room 77.

TripAdvisor has begun

supporting its meta-search service with offline advertising, and trivago, a leading meta-search service in Europe, has been aggressively advertising in the United States since 2013.

KAYAK depends on access to information related to travel service pricing, schedules, availability and other related information from OTCs and travel service providers.

To the extent OTCs or travel service providers do not provide such information to KAYAK, KAYAK's business and results of operations could be harmed.

Consumers may favor travel services offered by meta-search websites or search companies over OTCs, which could reduce traffic to our travel reservation websites, increase consumer awareness of our competitors' brands and websites and increase our advertising and other customer acquisition costs.

To the extent any such consumer behavior leads to growth in our KAYAK meta-search business, such growth may not result in sufficient increases in profits from our KAYAK meta-search business to offset any related decrease in profits experienced by our travel service reservation brands.

Instant Booking now includes participation from six out of the top 10 global hotel brands, including Marriott International, Hyatt Hotels and Best Western International.

We recently agreed to participate in "Instant Booking," and we do not yet know how this participation will affect our business.

For example, while we expect to benefit from incremental business generated through "Instant Booking," participation could cannibalize business that would otherwise come to us through other ad offerings on TripAdvisor, directly (including after a consumer first visits TripAdvisor) or through other channels, some of which may be more profitable to us than reservations generated through "Instant Booking." Other meta-search providers may also offer direct booking services with travel service providers, which may lead to more consumers booking directly with a travel service provider rather than an OTC.

For example, Google recently announced the discontinuation of its Hotel Finder meta-search service in favor of integrating hotels directly into search results and encouraging users to book hotel reservations directly through Google's "Book on Google" service, which it is now expanding from mobile phones to both desktops and tablets.

To the extent consumers book travel services through a service such as Google's "Book on Google," a meta-search website or directly with a travel service provider after visiting a meta-search website or meta-search utility on a traditional search 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 advertising or other customer acquisition costs to maintain or grow our reservation bookings and our business, gross bookings and results of operations could be adversely affected.

Further, 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 website.

If any of these services are successful in attracting consumers who would otherwise use our services, our business and results of operations would be harmed.

Our OpenTable restaurant reservation business competes or may in the future compete with other restaurant reservation providers, such as LaFourchette (which is owned by TripAdvisor), Yelp's SeatMe service, Zomato, Bookatable (which is owned by Michelin), and Quandoo (which is owned by Recruit).

Companies offering new rental car business models and car- and ride-sharing services such as Uber, Lyft, Gett, BlaBlaCar and Zipcar (which is owned by Avis) provide alternative options for consumers considering renting a car.

These companies extensively utilize mobile platforms and new technologies to drive demand for their services.

If any of these services are successful in attracting consumers who would otherwise use priceline.com's or rentalcars.com's rental car reservation services, our business and results of operations could be harmed.

Discounting may increase as competition authorities seek to allow increased pricing flexibility among providers of travel service reservations.

We may need to offer similar advantages to maintain or grow our reservation bookings, which could adversely impact our profitability.

Further, consolidation among travel service providers, such as Marriott International's acquisition of Starwood

Widespread adoption of mobile devices, such as the iPhone, Android-enabled smart phones and tablets such as the iPad, coupled with the improved web browsing functionality and development of thousands of useful "apps" available on these devices, is driving substantial online traffic and commerce to mobile platforms.

We have experienced a significant shift of business to mobile platforms and our advertising partners are also seeing a rapid shift of traffic to mobile platforms.

A description of material legal proceedings to which we are a party, and updates thereto, is included in Note 14 to our Consolidated Financial Statements included in Annual Report on Form 10-K for the year Ended December 31, 2016, and is incorporated into this Item 3 by reference thereto.

Competition Reviews

Certain business practices common to the online travel industry have become the subject of investigations by various national competition authorities ("NCAs"), particularly in Europe.

Investigations related to Booking.com's contractual parity arrangements with accommodation providers, sometimes also referred to as "most favored nation" or "MFN" provisions, were initiated by NCAs in France, Germany, Italy, Austria, Sweden, Ireland and Switzerland, and a number of other NCAs are also looking, or have looked, at these issues.

The investigations primarily relate to whether Booking.com's price parity provisions are anti-competitive because they require accommodation providers to provide Booking.com with room rates that are at least as low as those offered to other online travel companies ("OTCs") or through the accommodation provider's website.

On April 21, 2015, the French, Italian and Swedish NCAs, working in close cooperation with the European Commission, announced that they had accepted "commitments" offered by Booking.com to resolve and close the investigations in France, Italy and Sweden.

Under the commitments, Booking.com replaced its existing price parity agreements with accommodation providers with "narrow" price parity agreements.

Under a "narrow" price parity agreement, subject to certain exceptions, an accommodation provider is still required to offer the same or better rates on Booking.com as it offers to a consumer directly online, but it is no longer required to offer the same or better rates on Booking.com as it offers to other OTCs.

The commitments also allow an accommodation provider to, among other things, offer different terms and conditions (e.g., free WiFi) and availability to consumers that book with on-line travel companies that offer lower rates of commission or other benefits, offer lower rates to consumers that book through off-line channels and continue to discount through, among other things, accommodation loyalty programs, as long as those rates are not published or marketed online.

The commitments apply to accommodations in France, Italy and Sweden and were effective on July 1, 2015.

The foregoing description is a summary only and is qualified in its entirety by reference to the commitments published by the NCAs on April 21, 2015.

We are in ongoing discussions with various NCAs in other countries regarding their concerns.

On July 1, 2015, Booking.com voluntarily implemented the commitments given to the French, Italian and Swedish NCAs throughout the European Economic Area and Switzerland and is working with certain other European NCAs towards closing their investigations or inquiries.

In October 2015, the Irish NCA closed its investigation on the basis of commitments by Booking.com identical to those given to the French, Italian and Swedish NCAs.

In November 2015, the Swiss NCA closed its investigation, prohibiting any reintroduction of Booking.com's old "wide" parity agreements but permitting Booking.com to retain its existing "narrow" parity agreements with accommodations in Switzerland.

A number of additional NCAs in the European Economic Area have now closed their investigations following Booking.com's implementation of the commitments in their jurisdictions.

However, we are currently unable to predict the impact the implementation of these commitments throughout the European Economic Area and Switzerland will have on Booking.com's business or on the on-going investigations in other European countries, or on industry practice more generally.

On December 23, 2015, the German NCA issued a final decision prohibiting Booking.com's "narrow" price parity agreements with accommodations in Germany.

The German NCA did not issue a fine, but has reserved its position regarding an order for disgorgement of profits.

Booking.com intends to appeal the German NCA's decision.

An Italian hotel association has appealed the Italian NCA's decision to accept the commitments by Booking.com.

We are unable to predict how these appeals and the remaining investigations in other countries will ultimately be resolved.

Possible outcomes include requiring Booking.com to amend or remove its rate parity clause from its contracts with accommodation providers in those jurisdictions and/or the imposition of fines.

In August 2015, French legislation known as the "Macron Law" became effective.

Among other things, the Macron Law makes price parity agreements illegal, including the "narrow" price parity agreements agreed to by the French NCA in April 2015.

The law also requires that agreements between OTCs and hotels comply with a French agency contract form.

Similar legislation prohibiting "narrow" price parity agreements has been proposed in Italy and currently is awaiting action by the Italian Senate.

It is not yet clear whether the Macron Law or the proposed Italian legislation may affect our business in the long term in France and Italy, respectively.

Litigation Related to Travel Transaction Taxes

We and certain third-party online travel companies ("OTCs") are currently involved in approximately forty lawsuits, including certified and putative class actions, brought by or against U.S. states, cities and counties over issues involving the payment of travel transaction taxes (e.g., hotel occupancy taxes, excise taxes, sales taxes, etc.).

Generally, the complaints allege, among other things, that the OTCs violated each jurisdiction's respective relevant travel transaction tax ordinance with respect to the charge and remittance of amounts to cover taxes under each law.

We believe that the laws at issue generally do not apply to the services we provide, namely the facilitation of travel reservations, and, therefore, that we do not owe the taxes that are claimed to be owed.

However, we have been involved in this type of litigation for many years, and state and local jurisdictions where these issues have not been resolved could assert that we are subject to travel transaction taxes and could seek to collect such taxes, retroactively and/or prospectively.

From time to time, we have found it expedient to settle, and may in the future agree to settle, claims pending in these matters without conceding that the claims at issue are meritorious or that the claimed taxes are in fact due to be paid.

Litigation is subject to uncertainty and there could be adverse developments in these pending or future cases and proceedings.

An unfavorable outcome or settlement of pending litigation may encourage the commencement of additional litigation, audit proceedings or other regulatory inquiries and also could result in substantial liabilities for past and/or future bookings, including, among other things, interest, penalties, punitive damages and/or attorneys' fees and costs.

An adverse outcome in one or more of these unresolved proceedings could have an adverse effect on our results of operations or cash flow in any given operating period.

However, we believe that even if we were to suffer adverse determinations in the near term in more of the pending proceedings than currently anticipated, given results to date it would not have a material impact on our liquidity or financial condition.

Accrual for Travel Transaction Taxes

As a result of this litigation and other attempts by jurisdictions to levy similar taxes, we have established an accrual (including estimated interest and penalties) for the potential resolution of issues related to travel transaction taxes in the amount of approximately $27 million at December 31, 2015 compared to approximately $52 million at December 31, 2014.

Our legal expenses for these matters are expensed as incurred and are not reflected in the amount accrued.

10-K 1 [removed: pcln-20151231_10k.htm] [added: pcln-20161231_10k.htm] 10-K

For the fiscal year ended: December 31, [removed: 2015][added: 2016]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [removed: o]

The aggregate market value of common stock held by non-affiliates of The Priceline Group Inc. as of June 30, [removed: 2015] [added: 2016] was approximately [removed: $58.6] [added: $61.6] 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 The Priceline Group Inc. on June 30, [removed: 2015] [added: 2016] have been excluded because such persons may be deemed to be affiliates of The Priceline Group Inc. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

The number of outstanding shares of The Priceline Group Inc.’s common stock was [removed: 49,616,595] [added: 49,170,417] as of February [removed: 9, 2016.][added: 21, 2017.]

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 The Priceline Group Inc.'s definitive proxy statement relating to the annual meeting of stockholders to be held on June [removed: 2, 2016,] [added: 8, 2017,] to be filed with the Securities and Exchange Commission within 120 days after the end of The Priceline Group Inc.'s fiscal year ended December 31, [removed: 2015.][added: 2016.]

The Priceline Group Inc. Annual Report on Form 10-K for the Year Ended December 31, [removed: 2015] [added: 2016] Index

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| [Item [removed: 10.](#s2EB3153E48419D603AB51C3B19A3559D)] [added: 10.](#s3DABAA3CC7E6ABDEA2B8AC5C4D0203E5)] | [Directors, Executive Officers and Corporate [removed: Governance](#s2EB3153E48419D603AB51C3B19A3559D)] [added: Governance](#s3DABAA3CC7E6ABDEA2B8AC5C4D0203E5)] | [removed: [71](#s2EB3153E48419D603AB51C3B19A3559D)] [added: [62](#s3DABAA3CC7E6ABDEA2B8AC5C4D0203E5)] |

| [Item [removed: 11.](#sA3B77648A28F51D8050D1C3B19D5364D)] [added: 11.](#s6B3CFD24ED0CAB7254E1AC5C4D22584C)] | [Executive [removed: Compensation](#sA3B77648A28F51D8050D1C3B19D5364D)] [added: Compensation](#s6B3CFD24ED0CAB7254E1AC5C4D22584C)] | [removed: [71](#sA3B77648A28F51D8050D1C3B19D5364D)] [added: [62](#s6B3CFD24ED0CAB7254E1AC5C4D22584C)] |

| [Item [removed: 12.](#sDD2E532A021FA7CBF15D1C3B19F70A10)] [added: 12.](#s51FF40E7EE5583EE5E98AC5C4D54D00F)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#sDD2E532A021FA7CBF15D1C3B19F70A10)] [added: Matters](#s51FF40E7EE5583EE5E98AC5C4D54D00F)] | [removed: [71](#sDD2E532A021FA7CBF15D1C3B19F70A10)] [added: [62](#s51FF40E7EE5583EE5E98AC5C4D54D00F)] |

| [Item [removed: 13.](#s236E941F283014A1FA791C3B1A29B62B)] [added: 13.](#s0E2E99AAB4AAB1E4CBC1AC5C4D76C53E)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s236E941F283014A1FA791C3B1A29B62B)] [added: Independence](#s0E2E99AAB4AAB1E4CBC1AC5C4D76C53E)] | [removed: [71](#s236E941F283014A1FA791C3B1A29B62B)] [added: [62](#s0E2E99AAB4AAB1E4CBC1AC5C4D76C53E)] |

| [Item [removed: 14.](#s1879BF407F840B3ECCB91C3B1A4A1A8E)] [added: 14.](#s6857044D4B47270B059DAC5C4DA77CBE)] | [Principal Accountant Fees and [removed: Services](#s1879BF407F840B3ECCB91C3B1A4A1A8E)] [added: Services](#s6857044D4B47270B059DAC5C4DA77CBE)] | [removed: [71](#s1879BF407F840B3ECCB91C3B1A4A1A8E)] [added: [62](#s6857044D4B47270B059DAC5C4DA77CBE)] |

| [Item [removed: 15.](#sC7E0D47ECAB232F70D831C3B1A9D5621)] [added: 15.](#s4A5DEECB960AEAF1270FAC5C4DFB3118)] | [Exhibits and Financial Statement [removed: Schedules](#sC7E0D47ECAB232F70D831C3B1A9D5621)] [added: Schedules](#s4A5DEECB960AEAF1270FAC5C4DFB3118)] | [removed: [72](#sC7E0D47ECAB232F70D831C3B1A9D5621)] [added: [62](#s4A5DEECB960AEAF1270FAC5C4DFB3118)] |

| [Consolidated Financial [removed: Statements](#s47137B2549514E73F05A1C3B1AF13144)] [added: Statements](#s45FE927435E2289EDD27AC5C4E4E34B9)] | | [removed: [77](#s47137B2549514E73F05A1C3B1AF13144)] [added: [68](#s45FE927435E2289EDD27AC5C4E4E34B9)] |

These forward-looking statements 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, [added: our] actual results could differ materially from those expressed, implied or forecast in any such forward-looking statements.

[removed: Our actual results could differ materially from those described in the forward-looking statements for various reasons including the risks we face, which are more fully described in Part I, Item 1A, "Risk Factors."] 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.

| [PART I](#sC10F2FCD41295BEC79BAAC5C49E167FD) | | [1](#sC10F2FCD41295BEC79BAAC5C49E167FD) |

| [PART II](#s7D7BA8E78C8D9376C4D6AC5C4B0D2BA9) | | [30](#s7D7BA8E78C8D9376C4D6AC5C4B0D2BA9) |

| [PART IV](#sA782FC3998390F7BC178AC5C4DC9ECDF) | | [62](#sA782FC3998390F7BC178AC5C4DC9ECDF) |

| [Signatures](#s4C28067AF3CD0D883F98AC5C4E1CF95A) | | [66](#s4C28067AF3CD0D883F98AC5C4E1CF95A) |

| [PART I](#s6542ED99B0D2F69358851C3B16943B7A) | | [1](#s6542ED99B0D2F69358851C3B16943B7A) |

| [PART II](#s18BFB5D0A2F5D0A4D7FF1C3B17AF22E7) | | [35](#s18BFB5D0A2F5D0A4D7FF1C3B17AF22E7) |

| [PART IV](#s0721502111C23F0A07CF1C3B1A7C7AEE) | | [72](#s0721502111C23F0A07CF1C3B1A7C7AEE) |

| [Signatures](#s46DBF082AB3EE0FF10431C3B1ACF1006) | | [75](#s46DBF082AB3EE0FF10431C3B1ACF1006) |

Our corporate headquarters and the headquarters of our priceline.com business are located in Norwalk, Connecticut, United States of America, where we lease approximately [removed: 102,000] [added: 90,000] square feet of office space.

[removed: Our Booking.com business is headquartered in Amsterdam, Netherlands, where we] [added: We] lease approximately 258,000 square feet of office [removed: space;] [added: space in Amsterdam, Netherlands for the headquarters of] our [added: Booking.com business; our] agoda.com business has significant support operations in Bangkok, Thailand, where we lease approximately [removed: 95,000] [added: 140,000] square feet of office space; our KAYAK business is headquartered in Stamford, Connecticut, United States of America, where we lease approximately 18,000 square feet of office space; our OpenTable business is headquartered in San Francisco, California, United States of America, where we lease approximately [removed: 51,000] [added: 60,000] square feet of office space; and our [removed: rentalcars.com] [added: Rentalcars.com] business is headquartered in Manchester, England, where we lease approximately 45,000 square feet of office space.

We lease additional office space to support our operations in various locations around the world, including hosting and data center facilities in the United States, the United Kingdom, Switzerland, the Netherlands, Germany, [removed: Singapore and] [added: Singapore,] Hong Kong and [added: China and] sales and support facilities in numerous locations.

Other than the office building in the Netherlands that is currently under construction (see the section "Building Construction" within Note 14 to our Consolidated Financial Statements for more details, which is incorporated into this Item 2 by reference thereto), we do not own any real estate as of December 31, 2016.

We do not own any real estate as of December 31, 2015.

| [removed: 2014] [added: 2016] | | High | | | | Low | | |

As of February [removed: 10, 2016,] [added: 21, 2017,] there were approximately [removed: 213] [added: 203] stockholders of record of The Priceline Group Inc.'s common stock.

The following graph shows the total stockholder return through December 31, [removed: 2015] [added: 2016] of an investment of $100 in cash on December 31, [removed: 2010] [added: 2011] for The Priceline Group Inc. common stock and an investment of $100 in cash on December 31, [removed: 2010] [added: 2011] for (i) the NASDAQ Composite Index, (ii) the Standard and Poor's 500 Index and (iii) the Research Data Group ("RDG") Internet Composite Index.

[removed: ][added: ]

The following table sets forth information relating to repurchases of our equity securities during the three months ended December 31, [removed: 2015:][added: 2016:]

| (1) | Pursuant to a stock repurchase program announced on February [removed: 19, 2015,] [added: 17, 2016,] whereby the Company was authorized to repurchase up to $3,000,000,000 of its common stock. |

| First Quarter | | $ | 1,361.63 | | | $ | 954.02 | |

| Second Quarter | | 1,394.00 | | | | 1,148.06 | | |

| Third Quarter | | 1,481.78 | | | | 1,245.51 | | |

| Fourth Quarter | | 1,600.93 | | | | 1,422.19 | | |

| 2011 | | 100.00 | | | 100.00 | | | 100.00 | | | 100.00 | |

| 2012 | | 132.64 | | | 116.41 | | | 116.00 | | | 119.34 | |

| 2013 | | 248.53 | | | 165.47 | | | 153.58 | | | 195.83 | |

| 2014 | | 243.79 | | | 188.69 | | | 174.60 | | | 192.42 | |

| 2015 | | 272.59 | | | 200.32 | | | 177.01 | | | 264.96 | |

| 2016 | | 313.45 | | | 216.54 | | | 198.18 | | | 277.56 | |

| October 1, 2016 — | | 8,964 | | (1) | $ | 1,441.09 | | | 8,964 | | | $ | 2,389,097,571 | | | (1) |

| October 31, 2016 | | 342 | | (2) | $ | 1,474.99 | | | N/A | | | N/A | | | | |

| November 1, 2016 — | | 39,030 | | (1) | $ | 1,500.69 | | | 39,030 | | | $ | 2,330,525,514 | | | (1) |

| November 30, 2016 | | 2,237 | | (2) | $ | 1,545.39 | | | N/A | | | N/A | | | | |

| December 1, 2016 — | | 128,189 | | (1) | $ | 1,498.12 | | | 128,189 | | | $ | 2,138,483,581 | | | (1) |

| December 31, 2016 | | 2,394 | | (2) | $ | 1,484.35 | | | N/A | | | N/A | | | | |

| Total | | 181,156 | | | $ | 1,496.21 | | | 176,183 | | | $ | 2,138,483,581 | | | |

| First Quarter | | $ | 1,378.96 | | | $ | 1,103.90 | |

| Second Quarter | | 1,292.66 | | | | 1,087.26 | | |

| Third Quarter | | 1,329.90 | | | | 1,139.27 | | |

| Fourth Quarter | | 1,229.00 | | | | 1,017.28 | | |

| 2010 | | 100.00 | | | 100.00 | | | 100.00 | | | 100.00 | |

| 2011 | | 117.06 | | | 100.53 | | | 102.11 | | | 102.11 | |

| 2012 | | 155.27 | | | 116.92 | | | 118.45 | | | 122.23 | |

| 2013 | | 290.93 | | | 166.19 | | | 156.82 | | | 199.42 | |

| 2014 | | 285.37 | | | 188.78 | | | 178.29 | | | 195.42 | |

| 2015 | | 319.10 | | | 199.95 | | | 180.75 | | | 267.25 | |

| October 1, 2015 — | | 397,038 | | (1) | $ | 1,308.60 | | | 397,038 | | | $ | 229,261,810 | | | (1) |

| October 31, 2015 | | 335 | | (2) | $ | 1,352.60 | | | N/A | | | N/A | | | | |

| November 1, 2015 — | | 179,588 | | (1) | $ | 1,276.37 | | | 179,588 | | | $ | 41,029 | | | (1) |

| November 30, 2015 | | 1,863 | | (2) | $ | 1,325.08 | | | N/A | | | N/A | | | | |

| December 1, 2015 — | | — | | (1) | $ | — | | | — | | | $ | 41,029 | | | (1) |

| December 31, 2015 | | 1,188 | | (2) | $ | 1,289.16 | | | N/A | | | N/A | | | | |

| Total | | 580,012 | | | $ | 1,298.66 | | | 576,626 | | | $ | 41,029 | | | |

| | [removed: 2015] [added: 2016] | | | | [removed: 2014(3)(4)] [added: 2015] | | | | [removed: 2013(3)(4)] [added: 2014] | | | | [removed: 2012(3)(4)] [added: 2013] | | | | [removed: 2011(3)(4)] [added: 2012] | | |

| Total revenues | $ | [removed: 9,223,987] [added: 10,743,006] | | | $ | [removed: 8,441,971] [added: 9,223,987] | | | $ | [removed: 6,793,306] [added: 8,441,971] | | | $ | [removed: 5,260,956] [added: 6,793,306] | | | $ | [removed: 4,355,610] [added: 5,260,956] | |

| Cost of revenues | [removed: 632,180] [added: 428,314] | | | | [removed: 857,841] [added: 632,180] | | | | [removed: 1,077,420] [added: 857,841] | | | | [removed: 1,177,275] [added: 1,077,420] | | | | [removed: 1,275,730] [added: 1,177,275] | | |

| Gross profit | [removed: 8,591,807] [added: 10,314,692] | | | | [removed: 7,584,130] [added: 8,591,807] | | | | [removed: 5,715,886] [added: 7,584,130] | | | | [removed: 4,083,681] [added: 5,715,886] | | | | [removed: 3,079,880] [added: 4,083,681] | | |

| Total operating [removed: expenses] [added: expenses(1)] | [removed: 5,332,900] [added: 7,408,379] | | | | [removed: 4,510,818] [added: 5,332,900] | | | | [removed: 3,303,472] [added: 4,510,818] | | | | [removed: 2,253,888] [added: 3,303,472] | | | | [removed: 1,680,958] [added: 2,253,888] | | |

| Operating [removed: income] [added: income(1)] | [removed: 3,258,907] [added: 2,906,313] | | | | [removed: 3,073,312] [added: 3,258,907] | | | | [removed: 2,412,414] [added: 3,073,312] | | | | [removed: 1,829,793] [added: 2,412,414] | | | | [removed: 1,398,922] [added: 1,829,793] | | |

| Total other expense | [removed: 130,587] [added: 193,075] | | | | [removed: 83,864] [added: 130,587] | | | | [removed: 115,877] [added: 83,864] | | | | [removed: 67,924] [added: 115,877] | | | | [removed: 31,128] [added: 67,924] | | |

| Income tax expense | [removed: 576,960] [added: 578,251] | | | | [removed: 567,695] [added: 576,960] | | | | [removed: 403,739] [added: 567,695] | | | | [removed: 337,832] [added: 403,739] | | | | [removed: 308,663] [added: 337,832] | | |

| Net [removed: income] [added: income(1)] | [removed: 2,551,360] [added: 2,134,987] | | | | [removed: 2,421,753] [added: 2,551,360] | | | | [removed: 1,892,798] [added: 2,421,753] | | | | [removed: 1,424,037] [added: 1,892,798] | | | | [removed: 1,059,131] [added: 1,424,037] | | |

| Net income attributable to noncontrolling [removed: interests(1)] [added: interests(2)] | — | | | | — | | | | [removed: 135] [added: —] | | | | [removed: 4,471] [added: 135] | | | | [removed: 2,760] [added: 4,471] | | |

| Net income applicable to common [removed: stockholders] [added: stockholders(1)] | [removed: 2,551,360] [added: 2,134,987] | | | | [removed: 2,421,753] [added: 2,551,360] | | | | [removed: 1,892,663] [added: 2,421,753] | | | | [removed: 1,419,566] [added: 1,892,663] | | | | [removed: 1,056,371] [added: 1,419,566] | | |

| Net income applicable to common stockholders per basic common share [added: (1)] | [removed: 50.09] [added: 43.14] | | | | [removed: 46.30] [added: 50.09] | | | | [removed: 37.17] [added: 46.30] | | | | [removed: 28.48] [added: 37.17] | | | | [removed: 21.27] [added: 28.48] | | |

| Net income applicable to common stockholders per diluted [added: common] share [added: (1)] | [removed: 49.45] [added: 42.65] | | | | [removed: 45.67] [added: 49.45] | | | | [removed: 36.11] [added: 45.67] | | | | [removed: 27.66] [added: 36.11] | | | | [removed: 20.63] [added: 27.66] | | |

| Total [removed: assets(3)(4)] [added: assets] | [removed: 17,420,575] [added: 19,838,973] | | | | [removed: 14,770,977] [added: 17,420,575] | | | | [removed: 10,428,543] [added: 14,770,977] | | | | [removed: 6,547,771] [added: 10,428,543] | | | | [removed: 3,964,165] [added: 6,547,771] | | |

| Long-term obligations, redeemable noncontrolling [removed: interests(2)(3)(4)] [added: interests(3)] | [removed: 7,185,796] [added: 8,127,895] | | | | [removed: 4,862,730] [added: 7,185,796] | | | | [removed: 2,289,039] [added: 4,862,730] | | | | [removed: 1,710,194] [added: 2,289,039] | | | | [removed: 784,417] [added: 1,710,194] | | |

| Total [removed: liabilities(3)(4)] [added: liabilities] | [removed: 8,625,106] [added: 9,990,293] | | | | [removed: 6,203,954] [added: 8,625,106] | | | | [removed: 3,510,281] [added: 6,203,954] | | | | [removed: 2,435,854] [added: 3,510,281] | | | | [removed: 1,185,465] [added: 2,435,854] | | |

| Total stockholders' equity | [removed: 8,795,469] [added: 9,820,142] | | | | [removed: 8,566,694] [added: 8,795,469] | | | | [removed: 6,909,729] [added: 8,566,694] | | | | [removed: 3,896,975] [added: 6,909,729] | | | | [removed: 2,574,295] [added: 3,896,975] | | |

| [removed: (1)] [added: (2)] | Redeemable noncontrolling interests relates to the Company's purchase of [removed: rentalcars.com] [added: Rentalcars.com] in May 2010. In April [removed: 2011, in connection with the exercise of certain call and put options in March 2011, the redeemable noncontrolling interests in rentalcars.com were reduced from 24.4% to 19.0%. In April] 2012, in connection with the exercise of certain call and put options in March 2012, the redeemable noncontrolling interests in [removed: rentalcars.com] [added: Rentalcars.com] were reduced from 19.0% to 12.7%. In April 2013, in connection with the exercise of certain call and put options in March 2013, the Company purchased the remaining outstanding shares underlying the redeemable noncontrolling interests. |

| [removed: (2)] [added: (3)] | Includes convertible debt which is classified as a current liability from 2011 through [removed: 2014.] [added: 2014 and 2016.] |

| (1) | tIncludes a non-cash charge related to an impairment of OpenTable goodwill of $940.7 million, which is not tax deductible, for the year ended December 31, 2016 (see Note 9 to the Consolidated Financial Statements). The goodwill impairment charge reduced the 2016 basic and diluted net income per share by $19.01 and $18.79, respectively. |

See Note 2 to the Consolidated Financial Statements for further information on the adjustments resulting from the adoption of new accounting standards in the fourth quarter of 2015.

| | |

| --- | --- |

| (3) | Includes adjustments to current and noncurrent deferred taxes as a result of the early adoption of the accounting update issued by the Financial Accounting Standards Board (“FASB”) in November 2015, which requires companies to classify all deferred tax assets and liabilities as noncurrent on the balance sheet. The adoption of this accounting update in the fourth quarter of 2015 resulted in decreases of $143.7 million, $1.5 million and $1.2 million at December 31, 2014, 2013 and 2012, respectively, and an increase of $0.6 million at December 31, 2011, in both total assets and total liabilities. |

The impact of these adjustments to long-term obligations resulted in decreases of $142.4 million, $1.4 million, $0.4 million at December 31, 2014, 2013 and 2012, respectively, and an increase of $3.3 million at December 31, 2011.

See Note 2 to the Consolidated Financial Statements for further information on this new accounting update.

| (4) | Includes reclassifications related to unamortized debt issuance costs as a result of the early adoption of the accounting update issued by FASB in April 2015, which requires debt issuance costs to be presented in the balance sheets as a direct deduction from the related debt liability rather than as an asset. The adoption of this accounting update in the fourth quarter of 2015 resulted in decreases of $25.9 million, $14.5 million, $20.8 million and $7.1 million at December 31, 2014, 2013, 2012 and 2011, respectively, in total assets, long-term obligations and total liabilities. See Note 2 to the Consolidated Financial Statements for further information on this new accounting update. |

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 as of December 31, [removed: 2015] [added: 2016] and [removed: 2014;] [added: 2015;] Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Stockholders' Equity and Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013;] [added: 2014;] Notes to the Consolidated Financial Statements; and Report of Independent Registered Public Accounting Firm.

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, [removed: 2015.][added: 2016.]

Based on our evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2015.][added: 2016.]

No change in our internal control over financial reporting (as such term is defined in Exchange Act Rule 13a-15(f)) occurred during the three months ended December 31, [removed: 2015] [added: 2016] that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We have audited the internal control over financial reporting of The Priceline Group Inc. and subsidiaries (the "Company") as of December 31, [removed: 2015,] [added: 2016,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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 [added: the accompanying] "Management's Report on Internal Control Over Financial Reporting" appearing in Item 9A.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2015,] [added: 2016,] based on the criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements as of and for the year ended December 31, [removed: 2015] [added: 2016] of the Company and our report dated February [removed: 16, 2016] [added: 27, 2017] expressed an unqualified opinion on those financial statements.

February 27, 2017

February 16, 2016

None.

Under Section 13(r) of the Securities Exchange Act of 1934, as amended, an issuer is required to disclose in its annual or quarterly reports whether it or any of its affiliates knowingly engaged in certain activities, transactions or dealings related to the Government of Iran or with individuals or entities designated pursuant to certain Executive Orders, even if such activities, transactions or dealings were in compliance with U.S. law.

As part of its efforts to assess and understand the Iranian hotel market, in December 2015, representatives (who are not U.S. persons) of Booking.com, a subsidiary of the Company organized under the laws of The Netherlands, held exploratory, introductory meetings with a number of hotels in Iran, two of which identified themselves during the meetings as owned or controlled by the Government of Iran.

These meetings, including the meetings with the two hotels owned or controlled by the Government of Iran, were conducted in compliance with U.S. law.

There were no gross revenues or net profits associated with these activities for the fiscal year ended December 31, 2015.

Booking.com, through non-U.S. person representatives, intends to continue these business activities and may enter into transactions with hotels in Iran as authorized under U.S. law.

Information required by Part III Item 10 will be included in our Proxy Statement relating to our [removed: 2016] [added: 2017] 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, [removed: 2015,] [added: 2016,] and is incorporated herein by reference.

Information required by Part III Item 11 will be included in our Proxy Statement relating to our [removed: 2016] [added: 2017] 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, [removed: 2015,] [added: 2016,] and is incorporated herein by reference.

Information required by Part III Item 12 will be included in our Proxy Statement relating to our [removed: 2016] [added: 2017] 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, [removed: 2015,] [added: 2016,] and is incorporated herein by reference.

Information required by Part III Item 13 will be included in our Proxy Statement relating to our [removed: 2016] [added: 2017] 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, [removed: 2015,] [added: 2016,] and is incorporated herein by reference.

Information required by Part III Item 14 will be included in our Proxy Statement relating to our [removed: 2016] [added: 2017] 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, [removed: 2015] [added: 2016] and is incorporated herein by reference.

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 as of December 31, [removed: 2015] [added: 2016] and [removed: 2014;] [added: 2015;] Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Stockholders' Equity and Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013;] [added: 2014;] Notes to the Consolidated Financial Statements; and Report of Independent Registered Public Accounting Firm.

| [removed: 3.1(b)] [added: 3.1(a)] | Restated Certificate of Incorporation of the Registrant. |

| [removed: 3.2(c)] [added: 3.2(b)] | Amended and Restated By-Laws of the Registrant. |

| [removed: 4.2(d)] [added: 4.2(c)] | Specimen Certificate for Registrant's Common Stock. |

| [removed: 4.3(e)] [added: 4.3(d)] | Indenture, dated as of March 12, 2012, between the Registrant and American Stock Transfer & Trust Company, LLC as Trustee. |

| [removed: 4.4(f)] [added: 4.4(e)] | Indenture, dated as of June 4, 2013, between the Registrant and American Stock Transfer & Trust Company, LLC as Trustee. |

| [removed: 4.5(g)] [added: 4.5(f)] | Indenture, dated as of August 20, 2014, between the Registrant and American Stock Transfer & Trust Company, LLC as Trustee. |

| [removed: 4.6(h)] [added: 4.6(g)] | Indenture for the 2.375% Senior Notes due 2024, 1.800% Senior Notes due 2027, 3.650% Senior Notes due [removed: 2025 and] [added: 2025,] 2.15% Senior Notes due [removed: 2022,] [added: 2022 and 3.600% Senior Notes due 2026,] between the Registrant and Deutsche Bank Trust Company Americas, as Trustee. |

| [removed: 4.7(i)] [added: 4.7(h)] | Form of 2.375% Senior Note due 2024. |

| [removed: 4.8(j)] [added: 4.8(i)] | Officers' Certificate, dated September 23, 2014, for the 2.375% Senior Notes due 2024. |

| [removed: 4.9(k)] [added: 4.9(j)] | Form of 1.800% Senior Note due 2027. |

| [removed: 4.10(l)] [added: 4.10(k)] | Officers' Certificate, dated March 3, 2015, for the 1.800% Senior Notes due 2027. |

| [removed: 4.11(m)] [added: 4.11(l)] | Form of 3.650% Senior Note due 2025. |

| [removed: 4.12(n)] [added: 4.12(m)] | Officers' Certificate, dated March 13, 2015, for the 3.650% Senior Notes due 2025. |

| [removed: 4.13(h)] [added: 4.13(g)] | Form of 2.15% Senior Note due 2022. |

| [removed: 4.14(h)] [added: 4.14(g)] | Officers' Certificate, dated November 25, 2015, for the 2.15% Senior Notes due 2022. |

| 10.4(r)+ | [removed: 2013] [added: 2014] Form of Performance Share Unit Agreement under the 1999 Omnibus Plan. |

| 10.5(s)+ | [removed: 2014] [added: 2015] Form of Performance Share Unit Agreement under the 1999 Omnibus Plan. |

| 10.6(t)+ | [removed: 2015] [added: 2016] Form of Performance Share Unit Agreement under the 1999 Omnibus Plan. |

| [removed: 10.10+] [added: 10.10(x)+] | Amended and Restated Rocket Travel, Inc. 2012 Stock Incentive Plan. |

| [removed: 10.11+] [added: 10.11(x)+] | The Priceline Group Inc. Amended and Restated Annual Bonus Plan. |

| [removed: 10.12(r)+] [added: 10.12(y)+] | Form of Non-Competition and Non-Solicitation Agreement. |

| [removed: 10.13(x)+] [added: 10.13(z)+] | Transition Agreement dated November 7, 2013 by and between the Registrant and Jeffery H. Boyd. |

| [removed: 10.15(t)+] [added: 10.14(t)+] | Second Amended and Restated Employment Agreement dated March 5, 2015 by and between the Registrant, Booking.com Holding B.V. and Darren R. Huston. |

| [removed: 10.16(x)+] [added: 10.15(z)+] | Amended and Restated Non-Competition and Non-Solicitation Agreement dated November 7, 2013 by and between the Registrant and Darren R. Huston. |

| [removed: 10.17(y)+] [added: 10.16(aa)+] | Indemnification Agreement, dated September 12, 2011 by and between the Registrant and Darren R. Huston. |

| [removed: 10.18(z)+] [added: 10.17(bb)+] | Letter agreement, dated October 19, 2005 by and between the Registrant and Daniel J. Finnegan. |

| [removed: 10.19(aa)+] [added: 10.18(cc)+] | Letter amendment, dated December 16, 2008, to letter agreement, dated October 19, 2005 by and between the Registrant and Daniel J. Finnegan. |

| [removed: 10.20(bb)+] [added: 10.19(dd)+] | Second Amended and Restated Employment Agreement, dated April 21, [removed: 2015,] [added: 2015] by and between the Registrant and Peter J. Millones. |

| [removed: 10.21(cc)+] [added: 10.20(ee)+] | [added: Amended and Restated] Employment contract, dated [removed: February] [added: May] 19, [removed: 2015,] [added: 2016] by and between Booking.com Holding B.V. and Gillian Tans. |

| [removed: 10.22(dd)] [added: 10.27(hh)] | Credit Agreement, dated as of June 19, 2015, among the Registrant, the lenders from time to time party thereto, and Bank of America, N.A. as Administrative Agent. |

| 31.1 | Certification of [removed: Darren R. Huston,] [added: Glenn D. Fogel,] pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |

| [removed: 32.1(ee)] [added: 32.1(ii)] | Certification of [removed: Darren R. Huston,] [added: 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). |

| [removed: 32.2(ee)] [added: 32.2(ii)] | Certification of Daniel J. Finnegan, 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). |

| 101 | The following financial statements from the Company's Annual Report on Form 10‑K for the year ended December 31, [removed: 2015] [added: 2016] formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Changes in Stockholders' Equity, (v) Consolidated Statements of Cash Flows, and [removed: (v)] [added: (vi)] Notes to Consolidated Financial Statements. |

| (a) | Previously filed as an exhibit to the Current Report on Form 8-K filed on [removed: June 13,] [added: July 18,] 2014 (File No. 0-25581). |

| [removed: (b)] [added: (a)] | Previously filed as an exhibit to the Current Report on Form 8-K filed on July 18, 2014 (File No. 0-25581). |

| [removed: (c)] [added: (b)] | Previously filed as an exhibit to the Current Report on Form 8-K filed on November 9, 2015 (File No. 1-36691). |

| [removed: (d)] [added: (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). |

| [removed: (e)] [added: (d)] | Previously filed as an exhibit to the Current Report on Form 8-K filed on March 12, 2012 (File No. 0-25581). |

| 4.15(n) | Form of 3.600% Senior Note due 2026. |

| 4.16(n) | Officers' Certificate, dated May 23, 2016, for the 3.600% Senior Notes due 2026. |

| 10.21(ff)+ | Separation Letter, dated April 27, 2016 by and between the Registrant and Darren R. Huston. |

| 10.22(ee)+ | Employment Letter Agreement, dated May 19, 2016 by and between the Registrant and Jeffery H. Boyd. |

| 10.23(gg)+ | Employment Agreement, dated December 15, 2016 by and between the Registrant and Glenn D. Fogel. |

| 10.24(gg)+ | Non-Competition and Non-Solicitation Agreement, dated December 15, 2016 by and between the Registrant and Glenn D. Fogel. |

| 10.25(gg)+ | Employee Confidentiality and Assignment Agreement, dated December 15, 2016 by and between the Registrant and Glenn D. Fogel. |

| 10.26(gg)+ | Letter Agreement, dated December 15, 2016 by and between the Registrant and Jeffery H. Boyd. |

| (ee) | Previously filed as an exhibit to the Current Report on Form 8-K filed on May 20, 2016 (File No. 1-36691). |

| (ff) | Previously filed as an exhibit to the Current Report on Form 8-K filed on April 28, 2016 (File No. 1-36691). |

| (gg) | Previously filed as an exhibit to the Current Report on Form 8-K filed on December 16, 2016 (File No. 1-36691). |

| | By: | /s/ Glenn D. Fogel | |

| | | Name: | Glenn D. Fogel |

Fogel, Daniel J.

| Glenn D. Fogel | | | | |

| /s/ Lynn M. Vojvodich | | Director | | February 27, 2017 |

| Consolidated Balance Sheets as of December 31, 2016 and 2015 | [70](#s65E31E3852E1C36920D3AC5C3C743A2F) |

February 27, 2017

| | | 2016 | | | | 2015 | | |

| Cash and cash equivalents | | $ | 2,081,075 | | | $ | 1,477,265 | |

| Goodwill | | 2,396,906 | | | | 3,375,000 | | |

| Convertible debt | | 967,734 | | | | — | | |

| Retained earnings | | 11,326,852 | | | | 9,191,865 | | |

| Performance advertising | | 3,479,287 | | | | 2,738,218 | | | | 2,334,453 | | |

| Brand advertising | | 295,698 | | | | 273,704 | | | | 257,077 | | |

| Impairment of goodwill | | 940,700 | | | | — | | | | — | | |

| Impairment of cost-method investments | | (63,208 | | ) | | — | | | | — | | |

| Net income | — | | | — | | | | — | | | — | | | | — | | | | 2,134,987 | | | | — | | | | 2,134,987 | | |

| Foreign currency translation adjustment, net of tax charge of $34,268 | — | | | — | | | | — | | | — | | | | — | | | | — | | | | (93,984 | | ) | | (93,984 | | ) |

| Repurchase of common stock | — | | | — | | | | (763 | ) | | (1,028,524 | | ) | | — | | | | — | | | | — | | | | (1,028,524 | | ) |

| Balance, December 31, 2016 | 62,379 | | | $ | 485 | | | (13,191 | ) | | $ | (6,855,164 | ) | | $ | 5,482,653 | | | $ | 11,326,852 | | | $ | (134,684 | ) | | $ | 9,820,142 | |

| Impairment of goodwill | | 940,700 | | | | — | | | | — | | |

| Impairment of cost-method investments | | 63,208 | | | | — | | | | — | | |

| Acquisition of land use rights | | (48,494 | | ) | | — | | | | — | | |

| Net cash used in investing activities | | (3,333,295 | | ) | | (3,894,527 | | ) | | (2,357,891 | | ) |

| Net increase (decrease) in cash, cash equivalents and restricted cash | | 603,936 | | | | (1,671,423 | | ) | | 1,849,024 | | |

| Cash, cash equivalents and restricted cash, beginning of period | | 1,478,071 | | | | 3,149,494 | | | | 1,300,470 | | |

| Cash, cash equivalents and restricted cash, end of period | | $ | 2,082,007 | | | $ | 1,478,071 | | | $ | 3,149,494 | |

Reclassifications — Certain amounts from prior periods have been reclassified to conform to the current year presentation.

Cash equivalents are recognized based on settlement date.

| 2.1(a) | Agreement and Plan of Merger, dated as of June 12, 2014, by and among OpenTable, Inc., the Registrant and Rhombus, Inc. |

| 10.14(t)+ | Transition Agreement dated March 5, 2015 by and between priceline.com LLC and Chris Soder. |

| | | | |

| --- | --- | --- | --- |

| | | | |

| | By: | /s/ Darren R. Huston | |

| | | Name: | Darren R. Huston |

Huston, Daniel J.

| | | | | |

| Darren R. Huston | | (Principal Executive Officer) | | |

| /s/ Howard W. Barker, Jr. | | Director | | February 17, 2016 |

| Howard W. Barker, Jr. | | | | |

| | | Director | | |

February 16, 2016

| Accumulated earnings | | 9,191,865 | | | | 6,640,505 | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| Advertising — Online | 2,797,237 | | | | 2,360,221 | | | | 1,798,645 | | |

| Advertising — Offline | 214,685 | | | | 231,309 | | | | 127,459 | | |

| Less: net income attributable to noncontrolling interests | — | | | | — | | | | 135 | | |

| Less: Comprehensive loss attributable to redeemable noncontrolling interests | | — | | | | — | | | | (10,279 | | ) |

| Comprehensive income attributable to common stockholders | | $ | 3,056,114 | | | $ | 2,077,122 | | | $ | 2,001,068 | |

| Balance, December 31, 2012 | 58,056 | | | $ | 450 | | | (8,185 | ) | | $ | (1,060,607 | ) | | $ | 2,612,197 | | | $ | 2,368,611 | | | $ | (23,676 | ) | | $ | 3,896,975 | |

| Net income applicable to common stockholders | — | | | — | | | | — | | | — | | | | — | | | | 1,892,663 | | | | — | | | | 1,892,663 | | |

| Redeemable noncontrolling interests fair value adjustments | — | | | — | | | | — | | | — | | | | — | | | | (42,522 | | ) | | — | | | | (42,522 | | ) |

| Repurchase of common stock | — | | | — | | | | (1,030 | ) | | (883,515 | | ) | | — | | | | — | | | | — | | | | (883,515 | | ) |

| Issuance of senior convertible notes | | | | | | | | | | | | | | | 93,402 | | | | | | | | | | | | 93,402 | | |

| Common stock issued in an acquisition | 1,522 | | | 12 | | | | | | | | | | | 1,281,122 | | | | | | | | | | | | 1,281,134 | | |

| Vested stock options assumed in an acquisition | | | | | | | | | | | | | | | 264,423 | | | | | | | | | | | | 264,423 | | |

| Conversion of debt | 972 | | | 8 | | | | — | | | — | | | | 1,224 | | | | — | | | | — | | | | 1,232 | | |

| Settlement of conversion spread hedges | — | | | — | | | | (42 | ) | | (43,085 | | ) | | 43,104 | | | | — | | | | — | | | | 19 | | |

| Reclassification adjustment for convertible debt in mezzanine | — | | | — | | | | — | | | — | | | | 329 | | | | — | | | | — | | | | 329 | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | 2015 | | | | 2014 See Note 2 | | | | 2013 See Note 2 | | |

| Net income | $ | 2,551,360 | | | $ | 2,421,753 | | | $ | 1,892,798 | |

| | | | | | | | | | | | |

| Net cash used in investing activities | (3,894,518 | | ) | | (2,348,544 | | ) | | (2,162,267 | | ) |