Orbitz 2010 Annual Report Download - page 15

Our business and results of operations could be adversely affected if the financial condition of one or more
of our major suppliers, including airlines and car rental companies, deteriorates or restructures its
operations.
In the past several years, several major airlines have filed for bankruptcy protection, recently exited
bankruptcy or discussed publicly the risks of bankruptcy. In addition, the economic downturn has severely
impacted the automobile industry, including car rental companies. We depend on a relatively small number of
airlines for a significant portion of our net revenue. Our car net revenue is also generated from a relatively
small number of car rental companies. As a result of this dependence, our business and results of operations
could be adversely affected if the financial condition of one or more of the major airlines or car rental
companies were to deteriorate or in the event of supplier consolidation in either of these industries. Potential
bankruptcies and consolidation in our suppliers’ industries could result in capacity reductions and increased
prices, which may in turn have a negative impact on demand for travel products.
The travel industry is highly competitive, and we may not be able to effectively compete in the future.
We operate in the highly competitive travel industry. Our success depends, in large part, upon our ability
to compete effectively against numerous competitors, including other online travel companies, traditional
offline travel companies, suppliers, travel research companies, search engines and meta-search companies,
several of which have significantly greater financial, marketing, personnel and other resources than we have.
Factors affecting our competitive success include price, availability of travel products, ability to package travel
products across multiple suppliers, brand recognition, customer service and customer care, fees charged to
customers, ease of use, accessibility, reliability and innovation. If we are not able to compete effectively
against our competitors, our business and results of operations may be adversely affected.
Suppliers have increasingly focused on distributing their products through their own websites, which
typically do not charge customers a booking or service fee. In addition, search and meta-search sites have
grown in popularity and may drive more traffic directly to the websites of suppliers or competitors. In
response, during 2009, certain online travel companies, including us, reduced or eliminated booking fees on
retail airline tickets and hotel stays and removed hotel change and cancellation fees. Although we were able to
mitigate the resulting loss of revenue in 2009 by improving our operating and marketing efficiency, there is no
assurance that we will be able to continue to absorb the full impact of the elimination of fees in the future.
Our results of operations could be negatively affected if competitive dynamics in the industry caused us to
further reduce or eliminate the service fees we charge our customers. If we are unable to implement further
changes to our business in an effort to absorb the continuing impact of the reduction or elimination of these
fees or are unable to increase revenue from other sources, our business, financial condition and results of
operations would suffer.
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, have and continue to adversely affect our business,
financial condition and results of operations.
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 due to factors entirely
outside of our control. These factors, which contributed in part to the 15% decline in our net revenue in 2009
compared with 2008, include:
• general economic conditions, particularly the current economic downturn which has caused a decline in
travel volume;
• 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;
• natural disasters, such as hurricanes and earthquakes;
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