August 2008 Thomas Weisel Partners Commonwealth Business Travel Group

1 Executive Summary  The demand picture is bad and not getting better in the short term  Supply outlook is mixed with hotels building & airlines cutting  Travelers are still moving online & GDS going through ownership changes

Demand Outlook

3  Demand has softened and estimates look aggressive 1.Year-to-date demand -0.3% & June -2.1%. Estimate for %???? On track for -1% and each point of demand = $1.1bn in revenue Air capacity cuts could hit demand by up to 10mn annual room nights, or another point Traling 12-Month Occupancy & Change in Room Night Demand Sources: Smith Travel Research Lodging Industry Demand Picture

4  Pricing power may be the next to go 1.Rates up 4% so far this year and 3% in June. Not Sustainable!!! See cuts at annualized occupancy rate of <62%. Peaked at 64%, at 63% now Get there in 3 months at current rate of decline Estimates call for >4% growth in 2008, but we see back half at low single digits and possibly negative in 4Q Each point of rate = $1.1bn in revenue Traling 12-Month ADR & Change Sources: Smith Travel Research Lodging Industry Demand Picture

5  Even with downturn, still financially sound 1.Estimates: Revenue $ bn, Operating Profit $25-28bn Unlike airlines, still profitable with >$4bn in net income Break-even occupancy ~50% have never seen it that low Industry Revenue & Operating Profit ($ in billions) Sources: Smith Travel Research and Thomas Weisel Partners LLC estimates Lodging Industry Demand Picture

6  Airlines struggling with weak demand too 1.Demand down -0.3% year-to-date & -3.3% in April Data for May-June suggests trend has gotten worse Traling 12-Month Load & Change in Passenger Enplanements Sources: Smith Travel Research Airline Industry Demand Picture

7  Offsetting weaker demand with fewer flights 1.Number of domestic flights cut 2.3% in 1Q 2008 Load stabilizing at ~80% with recent capacity cuts 2.Aggressive pricing could be a demand-side issue New fees could cost travelers billions Fully loaded prices up >12% in 2Q 2008 (according to Expedia) Change in Available Seat Miles Sources: Bureau of Transportation Statistics Airline Industry Demand Picture

8  Massive restructuring coming 1.Demand is an issue, but real problem is cost structure Fuel cost has spiked +69% year-to-date, up from 30% of rev in 2006 to >40% Profit of $5.8bn in 2007, but 2009 losses of $7-13bn on spike in jet fuel 2.Cut flights and boost prices Plan to cut capacity by 15-20%, boost prices by 20%+ (with all of the new fees) Hard to assess ripple effect

Supply Outlook

10 Net New Hotel Rooms (in 000s) Sources: PricewaterhouseCoopers, Smith Travel Research and Thomas Weisel Partners Hotel Industry Supply  Hotel construction near historical peak Supply growth forecast at 2.4% in 2008 and 2009 Look for ,000 new rooms in 2008 and ,000 in 2009 Construction by tier: Midscale w/o F&B 30%, Upscale 25%, Upper Upscale 11%

11  There is >$75bn in announced gaming development Amounts to 30-35% increase in gaming capacity, 5-year CAGR of >5% Building concentrated in Vegas & Macau Not all will get built, but still a massive increase Announced Project Budgets ($ in billions) Sources: Company reports and Thomas Weisel Partners LLC estimates Gaming Industry Supply

12 Airline Industry Supply  Cutting flights in bid to stay viable Major announced cuts totaling >15% of domestic capacity Cuts weighted to 4Q 2008 and beyond Change in Available Seat Miles Sources: Air Transportation Association

Distribution Landscape

14 eTravel Penetration Rate Sources: Phocuswright, eyefortravel and Thomas Weisel Partners LLC estimates eTravel Evolving  Online travel $ bn industry, growing 2-3x industry pace Market: US $ bn, Europe $75-80bn, Asia Pac $30bn Global penetration 30-35%: US 50-55%, Europe 35-40%, Asia Pac 15% Corporate travel: managed 35-40% Forecast 5-yr CAGR of 20% with penetration ramping to 60% by 2012

15 Travel Industry Revenue Comparisons ($ in billions) Sources: Bureau of Transportation Statistics, Smith Travel Research, Auto Rental News, Cruise Line Industry Association & Company Reports GDS Landscape  Look for further consolidation to survive airline squeeze 1.Still fat: Revenue $8-8.5bn, EBITDA $1.5-2bn Fees down 30% since 2003 in two rounds: 2003 $4.39 to $3.85, 2006 $3.85 to $3.10. Deals expire mid-2011 Who suffered? GDSs cut agency incentives by ~$500mn, with most from smaller offline agents 2.Look for more changes in next two years Blackstone owns Travelport (Galileo + Worldspan). Texas Pacific owns Sabre, BC Partners/Cenven own Amadeus Private equity strategy: Consolidate, cut costs and sell or IPO. Sabre + Amadeus??? Clock ticking: Airline deals expire mid-2011 $8.3bn