Orbitz 2008 Annual Report Download - page 118

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ORBITZ WORLDWIDE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
16. Related Party Transactions (Continued)
required number of segments would result in a shortfall payment of $1.25 per segment below the required minimum. If we meet the minimum number of
segments, we are not required to make payments of any kind to Galileo or Worldspan. We believe the rates earned under the new agreement approximate market
rates.
A significant portion of our GDS services are provided through this agreement. For the year ended December 31, 2007, we received $111 million of
incentive payments for segments processed through Galileo and Worldspan, which accounted for more than 10% of our total net revenues. This amount includes
incentive payments received for GDS services provided under the new agreement with Travelport as we well as the former Galileo agreement and Worldspan
contract (see Note 9—Unfavorable Contracts).
Hotel Sourcing and Franchise Agreement
GTA is a wholly-owned subsidiary of Travelport and provided certain of our subsidiaries with hotel consulting services and access to hotels and destination
services pursuant to franchise agreements. As franchisees, we have the ability to make available for booking hotel rooms and destination services provided by
GTA at agreed-upon rates. When a customer books a hotel room that we have sourced through GTA, we record to net revenue the difference between what the
customer paid and the agreed-upon rate we paid to GTA. We also paid franchise fees to GTA, which we recorded as contra revenue. These franchise agreements
continued until December 31, 2007, when our new Master Supply and Services Agreement (the "GTA Agreement") became effective.
The GTA Agreement became effective on January 1, 2008. Under this agreement, we pay GTA a contract rate for hotel and destination services inventory it
makes available to us for booking on our websites. The contract rate exceeds the prices at which suppliers make their inventory available to GTA for distribution
and is based on a percentage of the rates GTA makes available to its other customers for such inventory. We are also subject to additional fees if we exceed
certain specified booking levels. The initial term of the GTA Agreement expires on December 31, 2010. Under this agreement, we are restricted from providing
access to hotels and destination services content to certain of GTA's clients until December 31, 2010.
Corporate Travel Agreement
We provide corporate travel management services to Travelport and its subsidiaries. We believe that these agreements have been executed on terms
comparable to those of unrelated third parties.
Agreements Involving Tecnovate
On July 5, 2007, we sold Tecnovate, an Indian Services Organization ("ISO"), to Travelport for $25 million. In connection with the sale, we entered into an
agreement to continue using the services of the ISO, which included call center and telesales, back office administrative, information technology and financial
services. The ISO charges us based on an hourly billing rate for the services provided to us.
The agreement included a termination clause in the event of certain changes in control. In December 2007, Travelport completed the sale of Tecnovate to an
affiliate of Blackstone, which qualified as a change in control under the termination clause. Prior to the sale, Travelport paid us an
111
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008