Orbitz 2011 Annual Report Download - page 40

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foreign currency fluctuations) primarily due to a decline in hotel net revenue for HotelClub driven by lower average net
revenue per transaction and lower transaction volume. The lower average net revenue per transaction was primarily driven by a
shift in the geographic mix of HotelClub's bookings away from European destinations and towards markets where average
booking values are lower and where we earn lower margins. A change in our estimate of the redemption rate for points earned
under the loyalty program at HotelClub also contributed to the lower net revenue per transaction. The decline at HotelClub was
partially offset by an increase in hotel net revenue at ebookers resulting primarily from higher transaction volume.
Vacation package. Net revenue from vacation package bookings increased $5.5 million, or 5%, for the year ended
December 31, 2011 compared with the same period in 2010. Excluding the impact of foreign currency fluctuations, net
revenue from vacation package bookings increased $3.6 million. Domestic vacation package net revenue decreased by $11.5
million primarily driven by lower transaction volume resulting in part from higher average air fares and higher
ADRs. International vacation package net revenue increased $15.1 million (excluding the impact of foreign currency
fluctuations) due to higher transaction volume for ebookers driven by new product offerings and marketing efforts, particularly
related to beach destinations.
Net revenue from vacation package bookings decreased $1.9 million, or 2%, for the year ended December 31, 2010
compared with the same period in 2009. Excluding the impact of foreign currency fluctuations, vacation package net revenue
decreased by $0.2 million. The decrease in net revenue from vacation package bookings, excluding the impact of foreign
currency fluctuations, was $1.7 million. Lower transaction volume due in part to higher average package prices drove an
$8.1 million decrease in domestic vacation package net revenue. This decline was partially offset by a $1.2 million increase in
domestic vacation package net revenue due to higher average net revenue per transaction, as a result of higher average air fares,
higher ADRs and fewer promotional coupons issued by us, partially offset by lower hotel breakage revenue. International net
revenue from vacation packages (excluding the impact of foreign currency fluctuations) increased $5.2 million primarily due to
higher transaction volume.
Advertising and media. Advertising and media net revenue increased $5.2 million, or 11%, for the year ended December
31, 2011 compared with the same period in 2010. The increase was primarily driven by higher display advertising, partially
offset by a decline in net revenue from membership discount programs that we discontinued on our domestic leisure websites
effective March 31, 2010.
Advertising and media net revenue decreased $10.2 million, or 17%, for the year ended December 31, 2010 compared
with the same period in 2009. This decrease was primarily due to a $13.1 million decline in net revenue from membership
discount programs that we discontinued on our domestic leisure websites effective March 31, 2010. This decrease was offset in
part by additional advertising and media revenue driven by our ongoing efforts to monetize our websites globally.
Other. Other net revenue is comprised primarily of net revenue from car bookings, cruise bookings, destination services,
travel insurance and hosting services. Other net revenue increased $2.2 million, or 2%, for the year ended December 31, 2011
compared with the same period in 2010 due to the impact of foreign currency fluctuations. Higher car net revenue and travel
insurance revenue was largely offset by lower hosting revenue. Car net revenue increased mainly due to higher breakage
revenue at ebookers, and travel insurance revenue increased primarily due to higher air fares and attachment rates and the shift
to a new travel insurance provider at ebookers, which resulted in higher economics and an improved product offering. The
increase in travel insurance revenue was partially offset by a change in estimate related to the timing of our recognition of this
revenue in the first quarter of 2010, which resulted in 13 months of revenue recognized in 2010 compared with 12 months in
2011. Prior to 2010, we had recorded travel insurance revenue one month in arrears, upon receipt of payment, as we did not
have sufficient reporting from our travel insurance supplier to conclude that the price was fixed or determinable prior to that
time. In the first quarter of 2010, however, our travel insurance supplier implemented more timely reporting and, as a result, we
were able to recognize travel insurance revenue on an accrual basis rather than one month in arrears. In addition, hosting
revenue declined $3.1 million to $2.1 million primarily due to the full year impact of the termination of one of our airline
hosting agreements in 2010 and the termination of our remaining airline hosting agreement effective July 30, 2011. We do not
currently expect to generate net revenue from hosting services going forward.
In April 2011, the Department of Transportation issued a new regulation, which was effective beginning in January 2012,
that no longer allows for the travel insurance option to be pre-selected which will likely reduce the attachment rate. Although
we expect to recapture a portion of this revenue, the net revenue we earn from travel insurance sold on our domestic websites
could be reduced by approximately $8 million in 2012 as compared with amounts earned in 2011.
Other net revenue increased $6.8 million, or 6%, for the year ended December 31, 2010 compared with the same period
in 2009. The increase in other net revenue was primarily driven by higher global travel insurance revenue and higher car net
revenue for our domestic leisure brands. Travel insurance revenue increased primarily due to a change in estimate related to the