2017 TRAVEL AND TOURISM TRENDS & INSIGHTS

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1 2017 TRAVEL AND TOURISM TRENDS & INSIGHTS

2 NAJ TRENDS AND INSIGHTS FOR MACRO ECONOMIC FACTORS 2. TOUR AND TRAVEL INDUSTRY TRENDS AND FORECASTS 1. RECEPTIVE OPERATOR TRENDS 2. PRODUCT DEVELOPMENT TRENDS 2

3 MACRO ECONOMIC FACTORS FORCES WE CAN T CONTROL

4 EXCHANGE RATES HAVE CLIMBED BACK Key Currency Exchange Rates 2017 Currency Equivalency in US August 31,2016 Equivalency in US$ August 31, 2017 Year-over-Year Change Euro ( ) $1.12 $ % British pound ( ) $1.33 $1.33 ± 0% Brazilian real (R$) $0.31 $ % Mexican peso ( ) $0.05 $ % Canadian loonie (C$) $0.76 $ % Japanese Yen ( ) $ $ % Chinese Yuan RMB ( $0.15 $0.15 ± 0% Indian Rupee ( ) $0.015 $ % Note: Rates are from mid-day, August 31 Source: Xe.com 4

5 = SELLERS MARKET FOR HOTELS THROUGH 2017 OVERDEVELOPED IN

6 TOUR AND TRAVEL INDUSTRY TRENDS AND FORECASTS INSIGHTS THAT AFFECT OUR DAY-TO-DAY BUSINESS

7 2017 FORECAST & NTTO* VS. INBOUND Major Variances highlighted Country/Market & Rank* NTTO Forecast 1. UK 1% 1-2% 2. Japan 0% 0% 3. China 15% 10% plus 4. Germany 1% 1-3% 5. South Korea 8% 6.5% 6. Brazil 6% 4 % 7. France 1% 1.5% 8. Australia 3% 3.5% 9. India 9% 8% 10. Italy 1% 2% 11. Argentina 8% 8% 12. Colombia 2% 3% 13. Spain 2% 2% 14. Netherlands 1% 1-2% 15. Venezuela 4% 8-10% * Rank based on 2014 figures Forecast; 2015 full-year figures not yet available NAJ Forecast *National Travel Tourism Office 7

8 BED BANKS SOLD TO PRIVATE EQUITY FIRMS 8

9 RTO S ARE CONSOLIDATING AND FRAGMENTING AT THE SAME TIME 9

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11 EXAMPLE OF FRAGMENTATION 11

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13 RTO S DILEMMA: FOCUS ON HOTELS OR SERVICE? 13

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16 AVERAGE CANCELLATION RATES Booking.com 39.4% Expedia 23.0% Hotel Website 20.0% Receptive Operators 6.3%* RTO SUMMIT 2017 North American Journeys Source: Murai Research Ave. based on six hotels 16

17 OTAs RTOs Lead Time/Days Average Commission Rate 35-40%* 20-30% Length of Stay/Nights 1.8 nights 2.9 nights % of reservations that are incremental 5%** 90% *OTA commission to appear in first screen of search **% of non-page 1 searches that book RTO SUMMIT 2017 North American Journeys 17

18 ATTRIBUTE OTAs RTOs Likelihood of Guest Sharing Contact Data (1-10 scale) 2 7 Automation Fairly Seamless Larger RTO s offer XML into existing CRS system: Extranet with allotments allow hotels to yield with better control Key Advantages Fill need periods Superior user experience North American Journeys RTO SUMMIT 2017 Build early base to grow ADR sooner Replace group business if falling short. Identify future trends and ability to Yield up RTO s are more selective at finding audiences that will like independent hotel 18

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20 WHAT S DRIVING TRAVELERS TODAY? PRODUCT DEVELOPMENT TRENDS

21 LOW COST INTERNATIONAL CARRIERS ENTERING THE MARKET Carrier U.S. Destinations added through 2017 Miami, Newark, Pittsburgh, San Francisco, Montreal, Toronto U.S. Destinations planned for 2018 Cincinnati, Cleveland, Dallas, Detroit, St. Louis Boston, Hartford, Las Vegas, Los Angeles, Newark, Newburgh, New York (JFK), Orlando, Providence, Began expanding service (and occasionally paring back) in 2014 with service to Los Angeles, San Francisco, Vancouver, Las Vegas Austin, Chicago O Hare, Denver, Seattle Future open to question. Company entered insolvency Aug. 15, Bidders had until Sept. 15 to make offer 21

22 EMERGING P.I.T. Partially Independent Traveler 22

23 THE SHRINKING LEISURE GROUP 23

24 SELF-DRIVING BECOMING POPULAR FOR CHINESE VISITORS TO USA 24

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28 Demand For U.S. National Parks Will Grow 28

29 TESTOSTERONE TOURISM COMES TO LAS VEGAS 29

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32 FOOD WILL BE IMPORTANT IN DESTINATION CHOICE 32

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36 KEY TAKEAWAYS 1. EXCHANGE RATE IMPACT WILL BE FELT IN RECEPTIVE OPERATORS DIVERSIFYING 3. DINING/FOOD BECOMING TOURISM DRIVER 4. EMERGING APPS WILL MAKE OPERATORS MORE CREATIVE AND USEFUL 36

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38 How it Works 38

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40 COMPETITION MAKES STRANGE BEDFELLOWS 40

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43 THE NEW TOUR OPERATORLAND AND OTHER TOURISM TECHNOLOGY THAT CAN MAKE LIFE EASIER

44 15 YEARS TAKE THE TOUR Let's Play 44

45 Inbound Receptive Operators Travel Trade Media 6.8 5% WHO IS USING IT International Operators % T. Agents - 1.9% Operators % T. Agents % 45

46 How Users Find It 38.8% On Site Training or trade show 17.5% 23.8% Other: 6.3% 13.8% 46

47 rackable Exposure to the Trade Attraction Portal Tracking Website 47

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55 International Operators 49.7% Domestic Tour Operators 29.7 Travel Agents Outside USA 12.4 Inbound Receptive Operators 6.8 Travel Trade Media 5.0 Travel Agents within USA

56 Travel trade show or trade event 38.8% Search Engine 23.8% Referred by a Colleague in my Office sent by NAJ 13.8 Other

57 International Tour Operators International Travel Agents Domestic Tour Operators Domestic Travel Agents Inbound Receptive Operators Travel Trade Media 57

58 OTAs vs RTOs ATTRIBUTES OTAs RTOs Ave. Booking Lead Time 3.8 weeks 3.6 months Ave. Cancellation Rate 40.2% (Booking) 28.3% (Expedia) 7.8% Ave. Margin (range) 25-35% 35-42% Ave Length of Stay 1.8 nights 2.9 nights Key Advantage Key Disadvantage RTO SUMMIT 2017 North American Journeys Reliable Bookings Reliable short Term bookings Build foundation from which to raise ADR earlier Often includes 58