Orbitz 2013 Annual Report Download - page 38

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38
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.
Advertising and media. Advertising and media net revenue increased $1.0 million or 2% on both a reported and constant
currency basis, for the year ended December 31, 2013 compared with the year ended December 31, 2012. The increase of $1.0
million was driven by $4.6 million of higher display advertising, largely offset by a $3.6 million decrease due to the shutdown
of the Away Network in the first quarter of 2013.
Advertising and media net revenue increased $3.5 million or 6% for the year ended December 31, 2012 compared with
the year ended December 31, 2011. Excluding the impact of foreign currency fluctuations, advertising and media net revenue
increased $3.8 million. The increase was driven by higher display advertising.
Other. Other net revenue is composed primarily of net revenue from travel insurance, car bookings, cruise bookings, and
attraction and services bookings. Other net revenue decreased $1.8 million or 2% for the year ended December 31, 2013
compared with the year ended December 31, 2012. Excluding the impact of foreign currency fluctuations, other net revenue
decreased $2.3 million. The decrease was largely driven by lower attractions and services revenue and to a lesser extent, lower
cruise revenue.
Other net revenue decreased $13.3 million or 11% for the year ended December 31, 2012 compared with the year ended
December 31, 2011. Excluding the impact of foreign currency fluctuations, other net revenue decreased $11.5 million. The
decrease was driven by lower insurance net revenue due primarily to a new Department of Transportation regulation that went
into effect in January 2012 that no longer allows travel insurance options to be pre-selected. This regulatory change resulted in
a reduced attachment rate for insurance products.
Costs and Expenses
Cost of Revenue
Our cost of revenue is composed of costs to operate our customer service call centers, credit card processing fees and
other costs, which include customer refunds and charge-backs, hosting costs and connectivity and other processing costs.
Years Ended
December 31, Increase/
(Decrease) Years Ended
December 31, Increase/
(Decrease)
2013 2012 $ % 2012 2011 $ %
Cost of revenue: (in thousands) (in thousands)
Customer service costs $ 58,324 $ 58,316 $ 8 — % $ 58,316 $ 53,812 $ 4,504 8%
Credit card processing fees 61,421 47,946 13,475 28 % 47,946 46,519 1,427 3%
Other 34,658 41,578 (6,920) (17)% 41,578 39,059 2,519 6%
Total cost of revenue $ 154,403 $ 147,840 $ 6,563 4 % $ 147,840 $ 139,390 $ 8,450 6%
Cost of revenue increased $6.6 million on both a reported and constant currency basis for the year ended December 31,
2013 compared with the year ended December 31, 2012. The increase in cost of revenue was due primarily to a $13.5 million
increase in credit card processing fees driven by higher global hotel volume, partially offset by lower customer refunds and
fraud expense of $4.8 million due to efficiencies at the Company's customer service call centers and lower connectivity and
processing costs of $2.3 million.
Cost of revenue increased $8.5 million (a $10.2 million increase excluding the impact of foreign currency fluctuations)
for the year ended December 31, 2012 compared with the year ended December 31, 2011, due primarily to a $4.5 million
increase in customer service costs largely driven by the growth in our private label distribution channel, a $1.4 million increase
in credit card processing fees due primarily to the volume growth at ebookers, a $0.8 million increase in connectivity and
processing costs, a $0.5 million increase in customer refunds and charge-backs, and an increase in hotel occupancy taxes.