Orbitz 2009 Annual Report Download - page 111

acquisition of Worldspan, the new agreement became effective for GDS services provided by Worldspan. This
agreement expires on December 31, 2014.
The new Travelport GDS service agreement is structured such that we earn incentive revenue for each
segment that is processed through Galileo or Worldspan. The agreement also required us to process 33 million
segments during 2007, 16 million segments through Worldspan and 17 million segments through Galileo. The
required number of segments processed in future years for Worldspan remains fixed at 16 million segments,
while the required number of segments for Galileo is subject to adjustment based upon the actual segments
processed in the preceding year. In 2008, we were required to process approximately 22 million segments
through Galileo. Our failure to process the required number of segments would result in a shortfall payment of
$1.25 per segment below the required minimum. If we meet the minimum number of segments, we are not
required to make payments of any kind to Galileo or Worldspan.
A significant portion of our GDS services are provided through this agreement. For the years ended
December 31, 2008 and December 31, 2007, we recognized $108 million and $111 million of incentive
revenue for segments processed through Galileo and Worldspan, respectively, which accounted for more than
10% of our total net revenues. For the year ended December 31, 2007, this amount includes incentive
payments received for GDS services provided under the new agreement with Travelport as we well as the
former Galileo agreement and Worldspan contract.
Hotel Sourcing and Franchise Agreement
GTA is a wholly-owned subsidiary of Travelport and provided certain of our subsidiaries with hotel
consulting services and access to hotels and destination services pursuant to franchise agreements. As
franchisees, we have the ability to make available for booking hotel rooms and destination services provided
by GTA at agreed-upon rates. When a customer books a hotel room that we have sourced through GTA, we
record to net revenue the difference between what the customer paid and the agreed-upon rate we paid to
GTA. We also paid franchise fees to GTA, which we recorded as contra revenue. These franchise agreements
continued until December 31, 2007, when our new Master Supply and Services Agreement (the “GTA
Agreement”) became effective.
Under the GTA Agreement, we pay GTA a contract rate for hotel and destination services inventory it
makes available to us for booking on our websites. The contract rate exceeds the prices at which suppliers
make their inventory available to GTA for distribution and is based on a percentage of the rates GTA makes
such inventory available to its other customers. We are also subject to additional fees if we exceed certain
specified booking levels. The initial term of the GTA Agreement expires on December 31, 2010. Under this
agreement, we are restricted from providing access to hotels and destination services content to certain of
GTA’s clients until December 31, 2010.
Corporate Travel Agreement
We provide corporate travel management services to Travelport and its subsidiaries. We believe that these
agreements have been executed on terms comparable to those of unrelated third parties.
Agreements Involving Tecnovate
On July 5, 2007, we sold Tecnovate, an Indian Services Organization (“ISO”), to Travelport for
$25 million. In connection with the sale, we entered into an agreement to continue using the services of the
ISO, which included call center and telesales, back office administrative, information technology and financial
services. The ISO charges us based on an hourly billing rate for the services provided to us.
The agreement included a termination clause in the event of certain changes in control. In December
2007, Travelport completed the sale of Tecnovate to an affiliate of Blackstone, which qualified as a change in
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)