Research Published on The Financial Edition

INDUSTRY UPDATE SUMMARY MARCH 2010
TRAVELSTATS, March 2010 show abstract
We finally closed the books on what turned out to be the worst year on record in travel. Domestic sales fell. While we are beginning to see signs of recovery as the economy rebounds, we expect a relatively modest uptick in travel. We project growth with air, car rental and cruise sales up. However, we expect a down year in lodging. Online travel remains a bright spot with OTA bookings expected to be up.

PHOCUSWRIGHT'S TRAVEL AND FINANCE OUTLOOK 2010
PRESENTATION, March 2010 show abstract
This Online Event takes an in-depth look at the financial performance of the travel industry. PhoCusWright analyst Jake Fuller presents an updated outlook for 2010 and reviews key trends impacting the bottom line of travel companies and industry segments.

To access the recorded Webinar, please go to slide 2 of the PowerPoint presentation to access the links.

AIR CONTINUES TO BE A KEY SOURCE OF OTA GROWTH
FINANCIAL FLASH, February 2010 show abstract
The OTAs showed dramatic acceleration in 4Q bookings growth, driven in no small part by a sharp uptick in airline bookings. We will have a lot more on that topic in our 3/3/10 webinar Travel and Finance Outlook, but our January data provides evidence that the trend has continued into 1Q10 as well.

4Q09 PREVIEW: SEEING CONTINUED STRENGTH IN ONLINE TRAVEL
FINANCIAL QUARTERLY OUTLOOK, February 2010 show abstract
While online travel agency volume growth in 4Q09 is expected to be down from the previous quarter, year-over-year gross bookings should be up, and OTAs will see greater inventory access and rising hotel average daily rates in 2010.

MORE GOOD NEWS ON THE OCCUPANCY TAX FRONT
FINANCIAL FLASH, February 2010 show abstract
Following several losses in occupancy tax cases last year, we have seen three wins since December. The tax risk has weighed on leading hotel merchant Expedia, but the favorable developments suggest there may be much less risk than initially feared. In the latest and most meaningful development, a ruling against the online travel agencies (OTAs) in Anaheim, Calif. was overturned on appeal.

INDUSTRY UPDATE SUMMARY JANUARY 2010
TRAVELSTATS, January 2010 show abstract
We have finally closed the books on what turned out to be the worst year on record for travel. Domestic sales fell. While we are beginning to see signs of recovery as the economy rebounds, we expect a relatively modest uptick in travel. We project growth in 2010, with air, car rental and cruise sales up. However, we expect a down year in lodging. Capacity cuts and firming demand should yield pricing increases for airlines and car rental companies, but continued supply growth should yield lower occupancy and further rate declines in lodging. Online travel remains a bright spot, with OTA bookings expected to be up.

TAKING ANOTHER CRACK AT TRAVELPORT VALUATION
FINANCIAL FLASH, January 2010 show abstract
We have taken a couple of cracks at understanding how Travelport’s planned IPO values the company. We are again fine-tuning our thoughts based on a bit more detailed information around the company’s capital structure. The planned IPO would value the equity of Travelport at $3.3-4.0 billion and after factoring in debt and a stake in Orbitz, the total implied value of the enterprise would be $5.9-6.6 billion. That is a bit higher than our last cut, in which we got to a total value of $5.4-6.1 billion. The change reflects a higher net debt figure and adjustment for Travelport’s Orbitz stake.

MORE ON TRAVELPORT...
FINANCIAL FLASH, January 2010 show abstract
With a bit more information now on the details of the planned Travelport IPO, we have fine-tuned our thoughts on valuation. Based on the sale of a 50-60% equity stake, the implied valuation of Travelport would be $5.4-6.1 billion, which compares to the $5.7 billion that it cost to put the business together.

OUR THOUGHTS ON THE TRAVELPORT IPO
FINANCIAL FLASH, January 2010 show abstract
After months of speculation, it is official…Travelport has filed for an IPO. From what we can see, the deal would put a total value on the business within 5% of its initial purchase price, despite a substantial erosion in profitability in the downturn and the potential for a hit in the 2011 airline contract renewals. The ability to achieve that valuation will likely be critical as Sabre explores a potential IPO.

SEEING UPWARD MOVEMENT IN FORWARD HOTEL RATE CURVE
FINANCIAL FLASH, January 2010 show abstract
While the hotel pricing environment remains very difficult and likely will be throughout 2010, we are seeing signs that trends are improving and exceeding low expectations.

THE BIG PICTURE: A LAST LOOK BACK...AND THEN AHEAD
FINANCIAL SPOTLIGHT, January 2010 show abstract
Although 2009 was one of the travel industry’s worst years on record, 2010 should bring modest gains in air, car rental and cruise. Lodging will continue to suffer, but online travel agencies are expected to see a sharp rise in bookings.

GDS IPOS IN THE NEWS AGAIN
FINANCIAL FLASH, December 2009 show abstract
There has been press for months about global distribution system (GDS) plans for early-2010 initial public offerings. We have argued that IPOs could be a catalyst for consolidation among the four main OTAs (Expedia, Orbitz, Priceline and Travelocity).

INDUSTRY UPDATE SUMMARY DECEMBER 2009
TRAVELSTATS, December 2009 show abstract
There are signs of a very moderate recovery. Online travel has gained share throughout the downturn, though some segments have fared better than others. While flight demand remains weak, airlines are benefiting from reduced capacity. Hotels continue to suffer from the imbalance between supply and demand.

GDSS AND THE PUBLIC MARKET: CAN A GDS IPO WORK?
FINANCIAL SPOTLIGHT, December 2009 show abstract
The word on the street is that two of the major global distribution systems have IPO plans. Will this work? Why now? And what market forces could put it into play? This article examines the dynamics of the IPO push and discusses what impediments stand in its way.

PHOCUSWRIGHT ONLINE TOWN HALL CONFERENCE REVIEW AND OUTLOOK WITH PHILIP WOLF
PRESENTATION, December 2009 show abstract
Whether you attended The PhoCusWright Conference this year or not, do not miss the opportunity to hear Philip Wolf's interpretation of the big event!

To access the recorded Webinar, please go to slide 2 of the PowerPoint presentation to access the links.

INDUSTRY UPDATE SUMMARY OCTOBER 2009
TRAVELSTATS, November 2009 show abstract
Travel industry pricing remains under pressure, with airfares and room rates down considerably in 3Q09. But the picture’s not all grim – leisure demand has increased in the last several months and corporate demand is showing signs of firming up in the next quarter.

ANALYST BRIEFING: TRAVEL & FINANCE OUTLOOK FOR IMPROVEMENT
PRESENTATION, November 2009 show abstract
We all know what the first half of 2009 was like for travel. But what is in store for the rest of the year? There are certainly signs of improvement – but can we prove it? PhoCusWright’s financial analyst Jake Fuller reviews actual third quarter financial results for leading travel companies and projects their impact on full year earnings.

To access the recorded Webinar, please go to slide 2 of the PowerPoint presentation to access the links.

EXCEPTIONAL RESULTS FROM PRICELINE
FINANCIAL FLASH, November 2009 show abstract
Priceline reported yet another exceptionally strong quarter. As with Expedia and Orbitz, we saw accelerating transaction volume and marketing efficiency.

ORBITZ RESULTS A MIXED BAG
FINANCIAL FLASH, November 2009 show abstract
Orbitz reported 3Q 2009 operating results yesterday. The key themes in the quarter: 1) Transaction volume continued to accelerate,2) Marketing spend was down sharply, and 3) incremental fee cuts undermined revenue margin. We saw the same themes in results for Expedia as well, but Expedia had a more significant pick-up in volume and took a smaller hit on revenue margin. The difference between the two was business mix

EXPE 3Q EXCEED EXPECTATIONS
FINANCIAL FLASH, November 2009 show abstract
Even with widespread anticipation that Expedia would benefit from accelerating transaction volume and low advertising costs, the company was still able to deliver results that significantly exceeded expectations. Despite the exceptional performance, stock investors had a modest reaction with some concern over a revenue margin shortfall. Nevertheless, our forward estimates are up and we see the building momentum as confirmation of our view that Expedia is very well positioned in this early stage of economic recovery.

CHOICE PULL-OUT NOT AN IMMEDIATE FINANCIAL RISK TO EXPEDIA
FINANCIAL FLASH, October 2009 show abstract
A contract dispute between Expedia and hotel franchisor Choice Hotels has led to Choice’s inventory being pulled from Expedia-branded sites. While this dispute has gotten a lot of press and points to a very real long-term issue, Choice is a small contributor to Expedia from a financial standpoint and we see little risk that the issue could have a noticeable financial impact. In past supplier disputes Expedia has been able to shift demand to sustain bookings and we expect the same here.

E-TRAVEL 3Q09 PREVIEW: OTAS HOLD THIER OWN
FINANCIAL QUARTERLY OUTLOOK, October 2009 show abstract
We go into the 3Q09 reporting season with high expectations for U.S. online travel agencies, looking for the first increase in global bookings since 3Q08. While that growth is likely to be in the low single-digit range, it compares to an expected high-teens decline in overall travel industry sales.

OTAS AND THE BUSINESS CYCLE: EXPLORING THE IMPACT OF THE ECONOMY
FINANCIAL SPOTLIGHT, October 2009 show abstract
OTAs are holding their own in this tricky economic climate, and their current trends look remarkably similar to those that permeated the post-9/11 market. Is OTA performance countercyclical? This article examines the dynamics of the 2001-2003 downturn and the current recession to answer this question.

OTAS WIN OUT WITH FIRMING LEISURE HOTEL RATES
FINANCIAL FLASH, October 2009 show abstract
Our survey work suggests that hotel room rates may finally be bottoming out, yet we continue to hear relatively downbeat commentary from the major chains about trends in 4Q09 and 1Q10. What is causing that divergence? Our surveys are capturing what appears to be firming in leisure pricing trends, but the chains are heavily weighted to large group and corporate performance. Given the annual negotiating cycle for managed corporate travel programs and the long booking cycle for large groups, it makes sense that rate recovery will come a lot slower in those segments.

OTAS CONTINUE TO SHOW ACCELERATING TRANSACTION VOLUME INTO 3Q09
FINANCIAL FLASH, September 2009 show abstract
This trend confirms our view that recovery in leisure travel demand and share gains should enable OTAs to outperform the travel sector.

M&A ENVIRONMENT: AN ARGUMENT AGAINST CONSOLIDATION
FINANCIAL SPOTLIGHT, September 2009 show abstract
Despite widespread speculation about possible mergers and acquisitions within the online travel industry, plus on-again/off-again rumors about search engines buying an online travel agency, this paper makes plain why such consolidation is unlikely.

ANALYST BRIEFING: TRAVEL & FINANCE OUTLOOK 2009-2010
PRESENTATION, August 2009 show abstract
Jake Fuller, PhoCusWright's senior research analyst, finance and analytics, explains the implications of the latest travel agency earnings, identifies signs of recovery (or not), and projects the industry outlook for the next 12 months.

To access the recorded Webinar, please go to slide 2 of the PowerPoint presentation to access the links.

INDUSTRY UPDATE SUMMARY JULY 2009
TRAVELSTATS, July 2009 show abstract
OTA volume is performing well in July, while corporate demand remains stuck in a rut as buyers opt for lower-priced leisure rooms and tickets.

ONLINE TRAVEL PREVIEW: EXPECTING A STRONG PERFORMANCE 2Q09
FINANCIAL SPOTLIGHT, July 2009 show abstract
Despite the difficult economic climate for travel overall, online travel agencies should be a relative bright spot in 2Q09, thanks partly to a summer rise in domestic leisure travel, channel shift and the elimination of booking fees in March.

2Q TRENDS: HAS DISCOUNTING WORKED? NOT REALLY, BUT LONG-TERM OUTLOOK NOT SO BAD
FINANCIAL FLASH, July 2009 show abstract
Travel demand remains weak;Discounting has not really worked; There are some emerging positives; The long-term outlook is actually not so bad.

Monthly Publication
A topical feature article will be featured each month. Themes will include:

Travel distribution economics (booking fees, GDS-Airline deals, commission structures and more)
Trends in capital markets (M&A, funding and investments, IPO outlook, valuation implications)
Industry pricing outlook (airline and hotel pricing analysis and forecasts)
Financial analysis (profit margins, cash flows, balance sheets)

Monthly Data Feed
An aggregation of travel industry metrics in one convenient place, overlaid with analyst commentary on relevance and projections that put you ahead of the curve.

Key demand factors include: air traffic, airfares, hotel room nights, average daily rates and online travel site traffic.

Key supply side factors include: air capacity, airline load, hotel construction as well as proprietary surveys tracking trends in room rates and providing cross-channel price comparisons.

Quarterly Publication
A quarterly review of financial results, trends and projections for publicly traded online travel agencies. Topics will include competitive dynamics, top-line analysis, profitability and how recent performance impacts the outlook for the coming quarter and year.