What distribution technologies

should you invest in to make

your company more
profitable?

Michael W. McCormick
Senior Vice President,
Travel Distribution Services
Cendant Corporation

11 November 2003
Eye For Travel Conference, London
 What distribution technologies
should you invest in to make
your company more
profitable?

Who is Cendant?
Review of market challenges
What are we investing in?
How can this help you?
Real Travel
Estate Hospitality Travel Vehicle
Financial

Distribution Services Services

Affiliate
 Cendant Consolidated 2003 Outlook*
Cendant continues to be profitable and have
excellent financial results despite the economy
and travel sector challenges.

Projected Revenues $17.7 – 18.5

Billion
Projected Adjusted EBITDA $3.3 – 3.5
Billion
Projected Earnings Per Share $1.35 - $1.37
Free Cash Flow $2.0 Billion
* Based on the Company’s guidance published on Nov. 13th, 2002 and updated Earnings Per Share
guidance published on April 21st , 2003.
 Cendant Travel Distribution Services

Retail
Travel Agency Corporate
Hospitality & Airline Services Travel
Services Services
Leisure Services

Services

Leisure
Agency & Corporate Subscribers Travel Suppliers
Consumers

Shared Services : Finance, Strategic Planning, IT, Human Resources

 Customer-Focused Brands

Travel Corporations Hotel, Car Airlines Consumer

Agencies Rental & Retail
Leisure
Suppliers
 Hospitality & Leisure Group
Mission & Brands

Our mission is to optimize distribution strategies for hospitality,

car rental and leisure companies.
Our customers want vast distribution reach via a coordinated
relationship, which we will deliver with passion and commitment.

 Galileo (Global distribution)

 WizCom (Hotel distribution technology)
 Trust International (Hotel distribution products and services)
 THOR (Travel agency support services, Supplier marketing)
 Neat Group (Packaging)
 Cendant Travel Distribution (Cheaptickets.com, Lodging.com,
Cendant Travel/Travelers Advantage, Galileo)
 Wright Express (Payment processing)
 Alliance with Perot Systems (Commission processing)
 Industry Perspective:
Hospitality Information Technology
“Capital Crunch”

 The hotel industry spent almost US$8.0 Billion on

Information Technology in the late 1990s
 US$4.6 Billion of that amount was spent on PMS
and CRS alone
 Yet, productivity saw only small gains vs. other
industries
Unit of measure
“We’d like to reduce
Information Technology our IT spend even
further, but we’ve
Funding Dilemma invested too much in
the projects we kicked
off in ’99, ’00, and ’01
Investment

to pull the plug

Strategic today.”
30
Commodity
15
30
“The goal would be to
increase new
Upgrade investment, but this
could only happen if
Maintenance

70 85 70 we can reduce our

maintenance portion of
the spend, because the
License &
total IT budget is not
Maintenance going to grow.”

Total 2000 2003 2004

Budget Goal
* Footnote
Source: Source
 Industry Perspective:
 Rapid growth of third-party online
distribution against the backdrop of lackluster
travel industry creates distribution power
shift…
 Emergence of the “merchant model”
changes the pricing model forever…
 To retain market share and fill rooms at the
best rates, you need a broad distribution
strategy to reach customers coming through
all possible direct and indirect channels…
Customer Leisure Corporate
Segments Travellers Travellers

Customer Leisure On-line On-line Direct Corporate Travel

Tour Hotel own
Travel Travel Hotel By phone Booking Management
Entry Points Agencies
Operators
Agencies Merchants
Web Site
Or walk-in Tool Companies

? ? ? ? Increase
Add-on
? ?
Sales

Chain Level
Call Centre/CRS

Hotel
Property /
PMS
Customer Leisure Corporate
Segments Travellers Travellers

Customer Leisure On-line On-line Direct Corporate Travel

Tour Hotel own
Travel Travel Hotel By phone Booking Management
Entry Points Operators
Agencies Agencies Merchants
Web Site
Or walk-in Tool Companies

Chain Level
Call Centre/CRS

Hotel
Property /
PMS
 End to End Solutions

Agencies

Leisure Online
Suppliers
Traveler Global
Distribution
Connectivity
Systems Systems
√
 Hotels

Traditional √
 Car Rental

√ Rentals
 Vacation
Business
Traveler √
 Rail

Corporate √
 Tours

√
 Cruises

√
 Airlines

Aggregates Volume……………………Expands Reach

 Technology Enhancements:
Connectivity Systems

JumpStart is a collaborative effort between Galileo,

TRUST, and WizCom.

JumpStart provides Online Agencies and Tour Operators

with access to the most comprehensive WEB BASED
distribution system of Hotel, Car and Airline inventory via:

ONE simple and cost effective relationship.

 One Stop Shopping
Online
Agency Car Air

Hotels
XML Technology Switch / CRS

Tour
Operator

Switch CRS
bd06925_

Tour
Operator

Images Content
55,000 hotels
34 car rental companies
450 airlines

Lower Cost…….…Improved Efficiency

 Technology Enhancements:
Reservation Systems

Voyager CRS 3.0 Release

‘Before we chose the Voyager CRS we looked at every reservation system on
the market and felt the Voyager CRS was the best provider from both a
technology and service standpoint. And that choice has proven to be right.

With the Voyager Web-based reservation software, which we also use for our
in-house call centers, we are able to provide faster and more accurate
information to our customers.

The Voyager technologies help us to better streamline operations, improve

guest satisfaction, and drive revenue.’

Yohei Chishaki
Director International Strategic Markets, New Otani Hotels
 Technology Enhancements:
Reservation Systems

Voyager CRS 3.0 Release

‘Apart from the superior technology standards of the Voyager CRS I value
the opportunity to address my business needs, provide feedback and
prioritise the technology enhancements.

I have direct influence on the added functionalities to the Voyager CRS.

It is very uncommon to have a vendor who considers you part of their

company, who allows clients to offer insight and knowledge without
having to provide funding for the developments. It is much appreciated.’

Salika Glattkowski
Regional Director Sales & Marketing, Kempinski Hotels and Resorts
 Technology Enhancements:
GDS

Galileo Inside Shopper

 Connecting Online with Offline Intelligence
 Direct, Real-time Connection to CRS
 71 Top Hotel Brands
 More than 13,175 Properties Worldwide
 Measurable CRM Impact
 Average Chain Realized 10.4% Increase in YOY Sales!

Stimulates Demand
 Technology Enhancements:
Distribution

Neat Dynamic Packaging

 Personalized Consumer packages
– Hotel, Air and Car
 For Online Agencies, Traditional Agencies, Supplier Websites
 Supplier friendly technology
–Opaque Component Pricing
–Rules Based Applications
–Low Distribution Costs (GDS fee restructured)
 Agency Merchant Model without the risks
 New Electronic Settlement among all participants

Drives Incremental Revenues

 Neat Distribution Control System

NeatSource TM
NeatOnline TM

CRS Travel Components

Requests

Airline e-Travel
R R sites
U U e-Traveler
L L
E
S
E
S
NeatAgent TM

Hotel Dynamic Processing Requests

Travel Components
Traveler
Traditional
travel agents
Car Rental
What distribution technologies
should you invest in to make your
company more profitable?