1. Henry H. Harteveldt Principal Analyst Forrester Research Travelers’ Use Of The Web To Book Hotel Rooms

2. 30.7 million US households will buy travel online in 2004 Base: US online leisure travelers

3. Lodging will capture $10.7 billion in online leisure bookings in 2004 Base: US leisure Bookers

4. Hotel Bookers are increasingly motivated by their families, and less so by their careers

5. As a result, we travel to reconnect with family and friends -- not to escape them “Which of the following types of leisure trips did you take in the past 12 months?” Base: US online leisure travelers (multiple responses accepted)

6. “Of the personal trips you have taken in the past 12 months, how many involved each of the following?” Base: US online leisure travelers (multiple responses accepted) People who buy online are more likely to stay at hotels than the average traveler

7. Hotel Bookers are wealthier compared to three years ago Base: US online hotel Bookers Source: Forrester’s Consumer Technographics 2000 and 2003 North America Travel online studies

8. Hotel guests vacillate between price and brand Base: US hotel guests (multiple responses accepted)

9. In fact, one in four hotel Bookers are “mercenary travelers” Base: US hotel Bookers

10. What we mean by “mercenary travelers” Leisure travelers who agree that price is more important than from whom they buy travel, have no brand loyalty, and do not belong to a hotel loyalty program

11. Mercenary travelers are a great source of incremental traffic and revenue  They’re not your core customer  They travel regularly  With every trip, their business is up for grabs Base: US leisure travel Bookers

12. Mercenary travelers’ demographics Age Married College graduates % Employed full-time Avid leisure travelers # Leisure trips/year % Take 5+ leisure trips/year Annual leisure travel spending # travel emails receive/week Took at least one incremental trip Pure leisure travelers (no business travel) All Mercenary Bookers 43 74% 28% 63% 34% 4.3 40% $2,967 2.9 37% 67% Base: US leisure hotel Bookers

13. Hotel guests increasingly trust the Net as the channel to use for the best deals Base: US online hotel guests (multiple responses accepted)

14. Hotel guests rely on multiple channels to book Base: US online hotel guests (multiple responses accepted) “Which, if any, of the following have you used to buy travel in the past 12 months?”

15. The large availability of sites with discount rates contributes to consumers’ Web usage

16. Third-party merchant-rate programs fulfill a role Base: April 2003 Forrester survey of 13 global hotel chains

17. Hotels respond to third-party merchant programs  62% of chains now offer advance- purchase discounted rates to compete with merchant-rate programs  Chains allocate plenty of inventory to these initiatives

18. As a result, on the Internet, shopping across sales outlets abounds  47% of US hotel Bookers who buy on a hotel chain’s site also buy from Web agencies  18% use a consolidator site, like priceline.com  The sword cuts both ways: 35% of hotel Bookers that use Web agencies also buy on a chain’s site Base: US hotel Bookers

19. Summary  The Internet will generate more than 12% of hotels’ room sales in 2004  Consumers like price, but don’t ignore brand/quality  The Web has cemented itself in travelers’ minds as the “go to” channel for discount rates and deals  The battle for travelers’ business on the Internet remains wide open

20. Henry H. Harteveldt +1 415/848-1303 hharteveldt@forrester.com www.forrester.com Thank you Entire contents © 2003 Forrester Research, Inc. All rights reserved. Forrester is a trademark of Forrester Research, Inc. All other trademarks are the property of their respective companies. All information provided by Forrester Research, Inc. is proprietary to Forrester and is protected by US and international copyright law and conventions. Except as set forth herein, direct or indirect reproduction of the information provided herein, in whole or in part, by any means, is prohibited without the express written consent of Forrester. Any slides that are delivered as part of a speech by Forrester employees may be shared only with those attending the speech. Forrester shall not be liable for any damages incurred by or arising as a result of reliance upon Forrester's information.