Orbitz 2008 Annual Report Download - page 12

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strive to offer suppliers access to our customer base in a manner that meets their strategic needs for distribution of their products and services. To reach these
objectives, the teams focus on relationship management, supplier-sponsored promotions and contract negotiations covering our retail, merchant and corporate
businesses.
The global hotel supply team is responsible for negotiating agreements that provide us access to the inventory of independent hotels, chains and hotel
management companies. As part of our strategy to grow our dynamic packaging and hotel businesses, we have significantly increased the number of hotel market
managers on our global hotel supply team, particularly in Europe and Asia Pacific. With these additional resources in place, we have signed a substantial number
of new direct hotel contracts, and we are beginning to realize the benefits of developing these relationships.
Global Distribution Systems
Global distribution systems ("GDSs") provide access to a comprehensive set of travel supplier content through a single source. Travel suppliers, such as
airlines and hotels, utilize GDSs to connect their inventory of products and services with travel providers, who in turn make these products and services available
to travelers for booking. Certain of our businesses utilize GDS services provided by Galileo, Worldspan and Amadeus. Under GDS service agreements, we
receive revenue in the form of an incentive payment for each segment that is processed through a GDS.
Galileo and Worldspan are subsidiaries of Travelport, and we have an agreement with Travelport that covers the GDS services provided by both Galileo and
Worldspan. The new agreement became effective in July 2007 with respect to GDS services provided by Galileo. In August 2007, upon the completion of
Travelport's acquisition of Worldspan, the new agreement became effective for GDS services provided by Worldspan. This agreement contains volume
requirements for the number of segments we must process and requires us to make shortfall payments if our utilization of GDS services falls below a minimum
threshold. As a result, 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 revenue. This
amount includes incentive payments received for GDS services provided under the new GDS service agreement with Travelport as well as the former Galileo
agreement and Worldspan contract (see Note 9—Unfavorable Contracts and Note 16—Related Party Transactions of the Notes to Consolidated Financial
Statements).
Operations and Technology
Systems Infrastructure and Web and Database Servers
We use SAVVIS colocation services in the U.S. to host our systems infrastructure and web and database servers for our Orbitz, CheapTickets, the Away
Network and Orbitz for Business brands as well as our ebookers brand in the U.K. and Ireland. The majority of our hardware and other equipment for operating
our business is located at the SAVVIS facility. SAVVIS provides data center management services as well as emergency hands-on support. In addition, we have
our own dedicated staff on-site at the facility. If SAVVIS was unable, for any reason, to support our primary web hosting facility, we have a secondary facility
through Verizon Business, which is also located in the U.S.
We use British Telecom services in the U.K. to host our systems infrastructure and web and database servers for the remaining countries in which our
ebookers brands operate and for HotelClub and RatesToGo. The arrangement with British Telecom is similar to the arrangement described above with SAAVIS.
Under a transition services agreement entered into at the time of our IPO, Travelport also provides us colocation services in its data centers located in the
U.S. and U.K. We are actively migrating from the Travelport data centers to the SAVVIS and British Telecom data centers. We
5
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008