Priceline 2010 Annual Report Download - page 80

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Our Name Your Own Price® airline ticket service operates in a manner similar to our Name Your Own
Price® hotel room reservation service. To make an offer, a customer specifies: (1) the origin and destination of the
trip, (2) the dates on which the customer wishes to depart and return, (3) the price the customer is willing to pay, and
(4) the customer’s valid credit card to guarantee the offer. When making an offer, consumers must agree to:
x fly on any one of our participating airline partners;
x leave at any time of day between 6 a.m. and 10 p.m. on their desired dates of departure and return;
x purchase only round trip coach class tickets between the same two points of departure and return;
x accept at least one stop or connection;
x receive no frequent flier miles or upgrades; and
x accept tickets that cannot be refunded or changed.
If a customer’s offer is not accepted, but we believe the offer is reasonably close to a price that we would
be willing to accept, we will attempt to satisfy the customer by providing guidance to the customer indicating that
changing certain parameters of the offer would increase the chances of the offer being accepted. For example, in
some cases we disclose to the customer that agreeing to fly into an alternate airport would increase the chances of
his or her offer being accepted. In other cases, we inform the customer that increasing his or her offer by a certain
amount would increase the chances of it being accepted. We may also offer a customer the opportunity to purchase
a price-disclosed retail airline ticket.
Retail Airline Tickets. We also offer our customers in the United States the ability to purchase retail
airline tickets at disclosed prices and with disclosed itineraries. The airline sets the retail price paid by the consumer
and is the merchant of record for the transaction. These airline tickets do not have the restrictions associated with
our Name Your Own Price® service. For example, in addition to having fully disclosed itineraries, retail airline
tickets are generally changeable and cancellable for a fee. In June 2007, we eliminated booking fees we had
previously charged on the sale of published price retail airline tickets.
With respect to each of our airline, hotel and rental car services, we believe the combination of our Name
Your Own Price® model and the retail model allows us to provide a broad array of options to value-conscious
travelers, while providing us with diverse streams of revenue.
Vacation Packages. Our vacation package service allows consumers in the United States to purchase
packages consisting of airfare, hotel and rental car components. Consumers can select the exact hotel or resort that
they want to reserve, and then select either a retail airline ticket or an opaque airline ticket for the air component of
their package. In addition, customers can elect to add a rental car to their package. Vacation packages are sold at
disclosed prices, although consumers cannot determine the exact price of the individual components on our website.
Destination Services. We currently offer customers in the United States the opportunity to purchase
destination services such as parking, event tickets, ground transfers, tours and other services available at their travel
destinations. This service is offered to consumers as part of the process of booking an air, hotel, rental car and
vacation reservation, and also as a standalone service.
Cruises. We also offer price-disclosed cruise trips through World Travel Holdings, Inc. (“WTH”), an
agent representing major cruise lines. Our cruise service allows consumers in the United States to search for and
compare cruise pricing and availability information from 21 cruise lines, and to purchase cruises online or through a
call center by selecting from our published offerings and prices. We receive commissions from WTH on successful
cruise bookings.
Travel Insurance. We offer our air, hotel and vacation package customers in the United States an optional
travel insurance package that provides coverage for, among other things, trip cancellation, trip interruption, medical
expenses, emergency evacuation, and loss of baggage, property and travel documents. We also offer our rental car
customers in the United States the opportunity to purchase collision damage waiver insurance. The travel insurance
is arranged for by BerkelyCare, a division of Affinity Insurance Services, Inc. and underwritten by Stonebridge