Orbitz 2012 Annual Report Download - page 37

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37
Domestic air net revenue decreased $1.1 million for the year ended December 31, 2012 as compared with the year ended
December 31, 2011. The decrease was due primarily to lower transaction volume and the absence in 2012 of the incremental
incentive revenue earned per segment processed through Travelport GDSs from December 22, 2010 through June 1, 2011. The
lower domestic transaction volume for the year ended December 31, 2012 was driven primarily by lower U.S. OTC channel
volume and changes we made with respect to certain revenue management strategies. The lower volume was partially offset by
higher net revenue per airline ticket, primarily resulting from these revenue management strategies, and the recognition of $2.6
million due to a reduction in our unfavorable contract liability resulting from the negotiation of a new agreement with one of
our airline suppliers (see Note 8 - Unfavorable Contracts of the Notes to Consolidated Financial Statements). International air
net revenue decreased by $2.5 million for the year ended December 31, 2012 as compared with the year ended December 31,
2011. Excluding the impact of foreign currency fluctuations, international air net revenue increased $1.7 million. The increase
in international air net revenue was due primarily to higher transaction volume.
Net revenue from air bookings decreased $9.4 million, or 3%, for the year ended December 31, 2011 compared with the
same period in 2010. Excluding the impact of foreign currency fluctuations, net revenue from air bookings decreased $14.7
million. Domestically, air net revenue decreased $20.3 million for the year ended December 31, 2011 compared with the same
period in 2010, driven by a $27.2 million decrease due to lower transaction volume. In addition, the termination of the Charter
Associate Agreement between American Airlines and us effective December 21, 2010 resulted in the recognition of $5.6
million in revenue in the fourth quarter of 2010 (see Note 8 - Unfavorable Contracts of the Notes to Consolidated Financial
Statements). These decreases were partially offset by a $12.5 million increase due to higher average net revenue per airline
ticket. The lower domestic transaction volume was primarily driven by a decline in transactions for our domestic leisure brands
due to actions taken by certain airlines to limit the forward distribution of their fares on meta-search sites such as Kayak, higher
air fares, a fare structure change implemented by a major airline and, to a lesser extent, due to American Airlines content not
being offered on Orbitz.com and Orbitz for Business websites from December 22, 2010 through June 1, 2011. We were able to
replace much of the American Airlines ticket volume through substitution for other airlines offered on our websites. The higher
average net revenue per airline ticket was due to a shift in supplier mix towards airlines from which we earn higher
commissions, including those with variable commission structures, and also reflects an increase in the incentive revenue earned
per segment processed through Travelport GDSs from December 22, 2010 through June 1, 2011 (see “Letter Agreement”
section of Note 15 - Related Party Transactions of the Notes to Consolidated Financial Statements). Internationally, air net
revenue increased $10.9 million for the year ended December 31, 2011 compared with the same period in 2010. Excluding the
impact of foreign currency fluctuations, international air net revenue increased $5.6 million. This increase was primarily due to
higher transaction volume, which was driven in part by marketing efforts at ebookers.
Hotel. Net revenue from hotel bookings increased $16.1 million or 8% for the year ended December 31, 2012 compared
with the year ended December 31, 2011. Excluding the impact of foreign currency fluctuations, net revenue from hotel
bookings increased $17.5 million for the year ended December 31, 2012. Domestic hotel net revenue increased $18.4 million as
compared with the prior year. The increase was due primarily to higher volume and higher net revenue per room night.
International hotel net revenue decreased $2.3 million for the year ended December 31, 2012 as compared with the year ended
December 31, 2011. Excluding the impact of foreign currency fluctuations, international hotel net revenue decreased $0.9
million. The decrease was due to lower stayed room nights at HotelClub, partially offset by growth in stayed room nights at
ebookers and higher net revenue per room night.
Net revenue from hotel bookings increased $5.8 million or 3% for the year ended December 31, 2011 compared with
same period in 2010. Excluding the impact of foreign currency fluctuations, net revenue from hotel bookings decreased $1.4
million. Domestic hotel net revenue increased $1.7 million primarily due to higher ADRs, partially offset by lower transaction
volume. International hotel net revenue increased $4.1 million. Excluding the impact of foreign currency fluctuations,
international hotel net revenue decreased $3.1 million. The decrease was due primarily to lower transaction volume for
HotelClub and lower breakage at ebookers. These decreases were partially offset by higher transaction volume for ebookers,
which was driven by the benefits of the global platform, including user-interface improvements and mobile capabilities, as well
as a return on its strategic marketing investments, and by an increase in ADRs.
Vacation package. For the year ended December 31, 2012 net revenue from vacation package bookings increased $9.4
million or 8% as compared with the year ended December 31, 2011. Excluding the impact of foreign currency fluctuations, net
revenue from vacation package bookings increased $11.4 million for the year ended December 31, 2012, as compared with the
year ended December 31, 2011. Domestic vacation package net revenue increased $4.3 million for the year ended
December 31, 2012 as compared with the year ended December 31, 2011, driven primarily by higher transaction volume,
partially offset by a shift in package mix to lower margin packages. International vacation package net revenue increased $5.1
million for the year ended December 31, 2012 as compared with the year ended December 31, 2011. Excluding the impact of
foreign currency fluctuations, international vacation package net revenue increased $7.1 million. The increase was due to
higher net revenue per package and higher transaction volume.