Orbitz 2011 Annual Report Download - page 19

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19
conditions do not continue to improve, or worsen, our results of operations and financial condition could be materially
adversely impacted. Additional factors that affect our revenue include:
• general economic conditions;
• global security issues, political instability, acts or threats of terrorism, hostilities or war and other political issues that
could adversely affect travel volume in our key regions;
• epidemics or pandemics;
• natural disasters, such as hurricanes, volcanic eruptions and earthquakes;
• the financial condition of suppliers, including the airline and hotel industry, and the impact of their financial
condition on the cost and availability of air travel and hotel rooms;
• changes in airline distribution policies;
• changes to regulations governing the airline and travel industry;
• fuel prices;
• work stoppages or labor unrest at any of the major airlines or airports;
• increased airport security that could reduce the convenience of air travel;
• travelers' perceptions of the occurrence of travel related accidents or the scope, severity and timing of the other
factors described above; and
• changes in occupancy and room rates achieved by hotels.
If there is a prolonged substantial decrease in travel volumes, particularly for air travel and hotel stays, for these or any
other reasons, it would have an adverse impact on our business, financial condition and results of operations.
Our business and results of operations could be adversely affected if one or more of our major suppliers, including airlines
and car rental companies, suffers a deterioration in its financial condition or it restructures its operations.
In the past several years, several major airlines have filed for bankruptcy protection, recently exited bankruptcy,
discussed publicly the risks of bankruptcy or have merged with other airlines. In addition, the economic downturn severely
impacted the automobile industry, including car rental companies. We depend on a relatively small number of airlines for a
significant portion of our net revenue. Our car net revenue is also generated from a relatively small number of car rental
companies. As a result of this dependence, our business and results of operations could be adversely affected if the financial
condition of one or more of the major airlines or car rental companies were to deteriorate or in the event of supplier
consolidation in either of these industries. For example, a consolidation of one or more of the major airlines, such as the merger
of United Air Lines, Inc. and Continental Airlines, Inc. and the merger of Southwest Airlines Co. (“Southwest”) and AirTran
Airways, could result in further capacity reductions, a reduction in the number of airline tickets available for booking on our
website and increased air fares, which may have a negative impact on demand for travel products.
The travel industry is highly competitive, and we may not be able to effectively compete in the future.
We operate in the highly competitive travel industry. Our success depends, in large part, upon our ability to compete
effectively against numerous competitors, including other online travel companies, traditional offline travel companies,
suppliers, travel research companies, search engines and meta-search companies, several of which have significantly greater
financial, marketing, personnel and other resources than we have. Factors affecting our competitive success include price,
availability of travel products, ability to package travel products across multiple suppliers, brand recognition, customer service
and customer care, fees charged to customers, ease of use, accessibility, reliability and innovation. If we are not able to compete
effectively against our competitors, our business and results of operations may be adversely affected.
Suppliers have increasingly focused on distributing their products through their own websites. Some airlines, such as
Southwest, have historically only distributed their tickets through their own websites and do not use third-party distributors.
Delta Air Lines, Inc. in recent years eliminated sales of airline tickets through several third-party distributors, limited forward
distribution of their fares to meta-search providers, such as Kayak, and limited the extent to which certain fare classes may be
used in the construction of multi-carrier itineraries, all in an attempt to drive customers to book directly on its website.
Suppliers may offer advantages for customers to book directly, such as member-only fares, bonus miles or loyalty points, which
could make their offerings more attractive to customers. Certain online travel companies, including us, reduced or eliminated
domestic booking fees on retail airline tickets and hotel stays and removed certain change and cancellation fees. Our results of