Orbitz 2008 Annual Report Download - page 15

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could consume a significant amount of financial resources or management time. It could also invalidate or impair our intellectual rights, or result in significant
damages or onerous license terms and restrictions for us. We may even lose our right to use certain intellectual property or business processes. These outcomes
could materially harm our business. See Item 1A, "Risk Factors," and Item 3, "Legal Proceedings."
At the time of our IPO, we entered into a Master License Agreement with Travelport, which gives Travelport licenses to use certain of our intellectual
property going forward, including:
•
our supplier link technology;
•
portions of ebookers' booking, search and dynamic packaging technologies;
•
certain of our products and online booking tools for corporate travel;
•
portions of our white label dynamic packaging technology; and
•
our extranet supplier connectivity function currently being developed as part of our global technology platform.
The Master License Agreement granted us the right to use a corporate online booking product that Travelport was developing at the time we entered into the
agreement. The development of this product is now complete, and we are negotiating a value added reseller license with Travelport for this product.
The Master License Agreement generally includes the right to create derivative works and other improvements. Other than the unrestricted use of our
supplier link technology, Travelport is generally prohibited from sublicensing these technologies to any third party for competitive use. However, Travelport and
its affiliates are not restricted from using the technologies to compete directly with us.
Information about Segments and Geographic Areas
We operate and manage our business as a single operating segment. For geographic related information, see Note 17—Segment Information of the Notes to
Consolidated Financial Statements.
Industry Conditions
General
The worldwide travel industry is a large and dynamic industry that has been characterized by rapid and significant change. According to PhoCusWright, an
independent travel, tourism and hospitality research firm, online gross bookings in the U.S., Europe and Asia Pacific regions totaled approximately $250 billion
in 2007. The emergence of the Internet as the most efficient way to book travel has revolutionized the way consumers research and purchase travel. According to
PhoCusWright, 28% of all travel gross bookings in the U.S., Europe and Asia Pacific regions were made online in 2006, while in 2007, 35% of all travel gross
bookings were made online in these same regions. The increased usage and availability of high speed Internet access, greater convenience, user-friendly features
and increased breath of product offerings are expected to continue to drive the growth in online travel bookings.
Competition
The general market for travel products and services is intensely competitive. In the online travel industry, new competitors face low barriers of entry and can
launch new websites at a relatively low cost. Numerous Internet companies greatly influence the competitive environment as well. Search and meta-search sites
are capable of sending customers to the websites of suppliers and our direct competitors. Search engines include websites such as AOL, Google, MSN and
Yahoo!, while meta-search sites primarily include Kayak, Farecast, SideStep and Yahoo!FareChase.
8
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008