OUTLOOK FOR

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OUTLOOK FOR U.S. TRAVEL AND TOURISM
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• Get your facts first, then you can distort them
  as you please.
• Mark Twain

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Where Are We Now?2005
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(No Transcript)
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Travel Performance 2005

• Domestic travel up 6
• Leisure travel up 9 business/ convention
  travel down slightly
• Continued growth in air and hotel volume
• Group meeting room-nights up but transient
  business room-nights down
• International travel to U.S. exceeding
  expectations
• in Terms of person-stays

Source DK Shifflet Associates/Travel
Industry Association of America
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Gas Prices Peak in Early September 2005
Jan 04
Oct 05
July 04
Jan 05
July 05
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Air Traffic is Back
Millions of Passengers Enplanements
-
Source Air Transport Association
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U.S. Hotel Performance, 2001-2005p
Change over Prior Year
Source Smith Travel Research
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RV Trends

• 7 million U.S. households own RVs
• RV retail sales down slightly in 2005 but
  forecasted to be second best year for RV sales in
  27 years
• RV rentals by Americans up 22 in 2005 according
  to Cruise America

Source RVIA
Source Recreation Vehicle Industry Association
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Cruise Trends

• 5.5 increase in passengers on CLIA member cruise
  lines in 2005
• North American passengers up 9.4
• 11 million passengers expected this year
• Average length of cruise was 7.33 days versus
  7.09 days last year
• Growing number of cruise-ship theme voyages for a
  broad range of special interests

Source RVIA
Source Recreation Vehicle Industry Association
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Estimated Attendance at theAll U.S. Theme
Parks1999-2005p

Source PricewaterhouseCoopers
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Commercial Casino Gaming Revenues up 7 Percent in
2004
Billions
Source Christiansen Capital Advisors and State
Gaming Regulatory Agencies
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Tour Operator Trends, 2005/2003

• FIT Offerings up 26 17 of overall sales volume
  up 42 since 2003
• 56 of tours sold in 2005 were customized, up
  from 49 in 2003
• 46 of customer base are Seniors (60)
• 33 Boomers (39 59)
• 6 young adults (21 28)
• 15 students (under 21)
• 23 book 45 days or less in advance, up from 8
  in 2003

Source National Tour Association
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Tour Types with Greatest Growth Among NTA
Operators
Percent of NTA Operators Offering
Source National Tour Association
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Tour Types with Greatest Declines Among NTA
Operators
Percent of NTA Operators Offering
Source National Tour Association
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International Visitation To The U.S. Approaches
2000 Levels in 2005
Arrivals in Millions
Source Office of Travel and Tourism Industries
(OTTI) One or more nights
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International Visitor Arrivals to the U.S.

• 2005p Change Change
• (In Millions) 2005/2004 2005/2000
• Canada 15.0 8 2
• Mexico 12.7 6 23
• Overseas 21.7 7 -17
• Europe 10.3 8 -10
• Asia 6.7 7 -17
• Latin America 2.4 6 -33

Source Global Insight Forecast Office of Travel
and Tourism Industries
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Why Not Even Greater Growth?

• The U.S. is on sale! Euro, Yen and Canadian
  dollar have all appreciated considerably.
• One obvious problem our deteriorating image
  around the world.

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Several Studies

• Validate magnitude of problem and how it is
  affecting the credibility and usage of U.S.
  brands
• 20 of Europeans and Canadians say they are
  consciously avoiding U.S. brands
• Those products seen as quintessentially American
  are avoided even more
• 55 of Japanese, 36 of Germans and 32 of French
  say less likely to visit U.S.
• 57 of Japanese, 42 of French and 38 of UK
  avoid flying U.S. air carriers

Source GMI World Poll, The Pew Center for
People The Press
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Visitation and Image

• Positive Negative
• The United States
• Visited the U.S. Before 54 46
• Have Not Visited the U.S. 38 62
• The American People
• Visited the U.S. Before 72 28
• Have Not Visited the U.S. 61 39
• Quality of Life in America
• Visited the U.S. Before 68 32
• Have Not Visited the U.S. 48 52

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Travel Expenditures Up Nearly 8 Percent in 2005
Billions
p preliminary f forecast
International traveler spending on U.S. carriers
made outside the U.S. not included Source TIA
OTTI
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Where are We Going?
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The Shifting Travel Landscape

• Business Indicators Vacillating ??? GDP, Dow,
  Unemployment, Consumer Confidence, National mood
  shift
• International Issues Currencies, USA Image
  Abroad, Biometric Passports Visa Hassles, War,
  Disease, Terror, Hurricanes
• Product/Marketing Issues Online Distribution,
  Internet Connections, Teleconferencing, Flat
  Screens, Bed Systems

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Consumer Confidence At A Two-Year Low
Source The Conference Board
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TIAs Traveler Sentiment Index Remains Weak
Seasonally Adjusted, 1st Quarter 2000
100 Source TIAs Traveler Sentiment Index
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AFFORDABILITY INDEX (U.S. Average, 2000 100 for
Perceived Affordability of Travel )
U.S. Average, 2000100 Source TIAs Traveler
Sentiment Index
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FINANCIAL INDEX (U.S. Average, 2000 100 for
Ability to Take Pleasure/Vacation Trip Based on
Personal Finances
U.S. Average, 2000100 Source TIAs Traveler
Sentiment Index
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Energy Woes

• Worst is over for gasoline prices should fall
  back to around 2.50/gallon by year-end
• But, home heating will cost Americans about
  one-third more this winter on average than last
  winter, assuming typical weather. A colder-than
  normal winter could lift energy costs nearly 50
  percent.

Source Global Insight, Energy Information
Administration
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Consumer Spending Growth to Slow Significantly in
4th Quarter, 2005
Percent Change
Source Global Insight
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Wanning CEO Confidence

• CEO confidence fell to its lowest level in four
  years in the third quarter and will likely remain
  subdued for rest of 2005
• Noticeable less optimistic about short-term
  outlook one-third expect economic conditions to
  worsen in next 6 months

Source The Conference Board
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Economic Trends

• GDP growth in fourth quarter will slow to 2.8
  but economy will pick up steam in first quarter
  2006 on post-hurricane bounce
• Underlying trend, however, for slower economic
  growth in 2006 and 2007

Source Global Insight
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U.S. Economic Growth to Slow

• 2004 2005p 2006f
• Real GDP 4.2 3.5 3.3
• Payroll Employment 1.1 1.6 1.5
• Unemployment Rate 5.5 5.1 4.9
• Real Disposable
• Income 3.4 1.6 3.8
• Consumer Prices 2.7 3.5 2.7
• Total Consumption 3.9 3.4 2.8

Source Global Insight
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2005 Hurricane Season Impact Study
Provided By Donna Larsen
Lisa Araj, Ph.D. DataPath Systems
Cunningham Research
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Expected Leisure Travel Changes in 2006
16. Now thinking about all your travel plans,
compared to last year, please indicate the
statement that best describes your future travel
plans. Base All Travelers
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Impact of 2005 Hurricane Season Gas Prices On
Auto Travel
Among those planning to decrease travel ..."is
this primarily due to the price of gasoline?"
16. Now thinking about all your travel plans,
compared to last year, please indicate the
statement that best describes your future travel
plans. Base All Travelers
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Impact of 2005 Hurricane Season Gas Prices On
Long Haul Auto Travel
Among those who had planned a trip Do you still
plan on taking the long-haul driving vacation?
17. Prior to the 2005 hurricane season, were you
planning on taking a long-haul driving vacation
in the next 12 months? Base All Travelers
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Trip Planning and Contingency Plans for Travel
to the South/Southeastern Region
Among those who had planned a trip who have
decided to
Travelers who had planned or were in the
process of planning a leisure trip to the
South/Southeastern Region
9. For travel in the next 12 months, had you
planned or were you in the process of planning a
leisure trip to any of the following states prior
to the onset of the 2005 hurricane season? Base
All Travelers
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Ways to Significantly Increase Interest in Region
8. Which of the following might significantly
increase your interest in visiting the region?
Base Those previously interested in travel to
any state in the Region
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For More Information Please Contact

• Donna Larsen
• Partner
• DataPath Systems
• 867-660-4600
• Donna_at_DataPathSystems.net

Lisa Araj, Ph.D. Vice President Cunningham
Research 866-876-5472 Lisa_at_CunninghamResearch.com

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U.S. Leisure Travel Outlook

• Leisure travel intentions have weakened
• Expect slower growth in remaining months of 2005
  and first quarter of 2006
• Up 4 in 2005 2 in 2006
• Growth in travel spending will also slow

Source Travel Industry Association of America
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Estimated Attendance at theAll U.S. Theme
Parks1999-2009
1999-2004 CAGR 0.9
2005-2009 CAGR 1.8
Source PricewaterhouseCoopers
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Nationwide Interest in Theme Park Travel
-5 points from 2004
Source YPBR/ Yankelovich National Leisure
Monitor
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Nationwide Interest in Theme Park Travel
SOURCE YPBR/ Yankelovich National Leisure
Monitor
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U.S. Business Travel Outlook

• Domestic business travel also likely to be
  constrained in short-term
• Weak CEO confidence, much slower growth in
  corporate profits and rising travel costs
• Up 1 in 2005 1 2 in 2006

Source Travel Industry Association of America
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Outlook for Air Travel

• Not out of the woods yet
• Mainland carriers
• -2 in domestic passengers
• 6.5 in international passengers
• -1.5 in domestic available seat miles
• 8 in international available seat miles
• Load factors will remain at record levels
• Fares will rise

Source Air Transport Association
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U.S. Hotel Performance, 2003-2006
Change over Prior Year
Source Smith Travel Research
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International Visits Expected to Surpass 2000
Level Next Year
Arrivals in Millions
Source Office of Travel and Tourism Industries
(OTTI)
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Travel Expenditures Will Continue to Rise
Billions
p preliminary f forecast
Source TIA OTTI
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How We Sell and Distribute Travel Changed Forever
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Travel is Top Online Category

• Online sales now exceed 100 billion expected to
  reach 316 billion by 2010 (Forrester Research)
• Travel 45 65 billion (JupiterResearch,
  eMarketer, PhocusWright)
• 27 of U.S. leisure/unmanaged business travel
  booked online in 2004 35 by 2006 (PhocusWright)
  
• Internet is information source used by majority
  of Americans planning vacations (51) and
  majority of business travelers (54) (YPBR)

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Online Travel Planning and Booking Continue to
Rise
Millions
Source Travel Industry Association of America
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Online Trip Planning Activities, 2005
Millions of U.S. Online Travelers
Source Travel Industry Association of America
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Travel Products/Services Purchased Online, 2005
Millions of U.S. Online Travelers
Source Travel Industry Association of America
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Technology Trends

• Mobile Technologies
• On-Demand Devices
• TIVO
• Podcasts
• Weblogs
• Mobile Search

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Marketing Revolution

• Ad spending in U.S. up 7.6 in 2004, online ad
  spending up 28.8 (eMarketer)
• E-commerce still only 3 4 of all multi-channel
  retail sales
• 84 of online adults use search engines (Pew
  Internet American Life Project)
• Search the most popular online ad format (40),
  followed by banners and classified (IAB and PwC)

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Imagination is more important than knowledge
Because everything we know, first had to be
imagined. (Albert Einstein)
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