Orbitz 2008 Annual Report Download - page 18

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Item 1A. Risk Factors.
Our revenue is derived from the travel industry and a prolonged substantial decrease in travel volume, particularly air travel, as well as other industry trends,
could adversely affect us.
Our revenue is derived from the worldwide travel industry. As a result, our revenue is directly related to the overall level of travel activity, particularly air
travel volume, and is therefore significantly impacted by declines in or disruptions to travel in the U.S., Europe and the Asia Pacific region, which are our key
regions, due to factors entirely outside of our control. These factors include:
•
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, such as the avian flu and SARS;
•
natural disasters, such as hurricanes and earthquakes;
•
general economic conditions, particularly to the extent that adverse economic conditions cause a decline in travel volume;
•
the financial condition of travel 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 to regulations governing the airline and travel industry;
•
fuel price escalation;
•
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 air travel, for these or any other reasons, it would have an adverse impact on our
business, financial condition and results of operations.
We rely on the value of our brands, and the costs of maintaining and enhancing our brand awareness are increasing.
We believe that satisfying our customers and maintaining and expanding our brands, including Orbitz, CheapTickets, ebookers, Orbitz for Business,
HotelClub, RatesToGo and the Away Network, are important aspects of our efforts to attract and expand our customer and advertiser base. As our competitors
spend increasingly more on marketing and advertising, we are required to spend more in order to maintain and enhance our brand recognition. In addition, we
have spent considerable money and resources to date on the establishment and maintenance of our brands, and we will continue to spend money on, and devote
resources to, advertising and marketing, as well as other brand building efforts, to preserve and enhance consumer awareness of our brands. We may not be able
to successfully maintain or enhance consumer awareness of our brands, and, even if we are successful in our branding efforts, such efforts may not be
cost-effective. If we are unable to maintain or enhance consumer awareness of our brands and generate demand in a cost-effective manner, it would have a
material adverse effect on our business, financial condition and results of operations.
11
Source: Orbitz Worldwide, In, 10-K/A, August 28, 2008