Orbitz 2009 Annual Report Download - page 19

We are in continuous dialogue with our major hotel suppliers about the nature and extent of their
participation in our various distribution channels. The significant reduction by any of our major suppliers in their
business with our companies for a sustained period of time or their complete withdrawal of doing business with
us could have a material adverse effect on our business, financial condition and results of operations.
In addition, we currently depend on one of Travelport’s businesses, Gulliver’s Travel Associates, or GTA,
for access to hotel inventory in certain international regions while we work to increase our own direct
relationships with hotel suppliers in these regions. If we are unable to successfully establish direct relationships
with hotel suppliers or to replace our access to hotel inventory currently provided by GTA in a timely manner
or on comparable terms, we may not be able to operate our business effectively, and our financial performance
may suffer.
Our arrangements with the airlines generally do not require the airlines to provide any specific quantity
of airline tickets or to make tickets available for any particular route or at any particular price. In addition,
certain of the airlines may terminate their agreements with us for any reason or no reason prior to the
scheduled expiration date upon thirty days’ prior notice. The significant reduction on the part of any of our
major suppliers of their participation in our system for a sustained period of time or their complete withdrawal
could have a material adverse effect on our business, financial condition and results of operations.
Our relationships with the airlines may be impacted by developments in the airline industry, such as
increasing consolidation or shifts in market share from full-service to low-cost carriers. In October 2008, Delta
Air Lines, Inc. merged with Northwest Airlines, Inc. to become the world’s largest airline, and there have been
reports about potential merger discussions among certain of the remaining major U.S. airlines. In addition, the
airline industry has experienced a shift in market share from full-service carriers to low-cost carriers that focus
primarily on discount fares to leisure destinations and we expect this trend to continue. Some low-cost carriers,
such as Southwest Airlines, have not historically distributed their tickets through us or other third-party
intermediaries. Because our GDS service agreement with Travelport limits our ability to modify our existing
agreements with the airlines or to enter into new, direct distribution arrangements, we may have limited
flexibility to respond to developments in the airline industry, and we may be forced to forgo new partnering
opportunities. See “We are dependent on Travelport for our GDS services” below. The limitations imposed by
the GDS service agreement may place us at a competitive disadvantage and could negatively impact our
business and results of operations.
Our business and financial performance could be negatively impacted by adverse tax events.
New sales, use, occupancy or other tax laws, statutes, rules, regulations or ordinances could be enacted at
any time. Those enactments could adversely affect our domestic and international business operations and our
business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could
be interpreted, changed, modified or applied adversely to us. These events could require us to pay additional
tax amounts on a prospective or retroactive basis, as well as require us to pay fees, penalties and/or interest for
past amounts deemed to be due. In addition, our revenue may decline because we could have to charge more
for our products and services.
New, changed, modified or newly interpreted or applied tax laws could also increase our compliance,
operating and other costs, as well as the costs of our products or services. Further, these events could decrease
the capital we have available to operate our business. Any or all of these events could adversely impact our
business and financial performance.
We and others in the online travel industry are currently subject to various lawsuits related to hotel
occupancy tax in numerous jurisdictions in the U.S., and other jurisdictions may be considering similar
lawsuits. An adverse ruling in the existing hotel occupancy tax cases could require us to pay tax retroactively
and prospectively, and possibly penalties, interest and/or fees. We have also been contacted by several
municipalities or other taxing bodies concerning our possible obligation with respect to local hotel occupancy
or related taxes, and certain municipalities have begun audit proceedings and some have issued assessments
against the Company. If the Company is found to be subject to the hotel occupancy tax ordinance by a taxing
authority and appeals the decision in court, certain jurisdictions may attempt to require us to provide financial
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