GLGi: The Future of Travel Distribution – An Examination of GDS, Recent Buyouts & the Changing Marketplace

1. GLGi: The Future of Travel Distribution – An Examination of GDS, Recent Buyouts & the Changing Marketplace Kathy Misunas Managing Partner, Essential Ideas GLG Institute

2. Biography • Kathy Misunas is currently a Managing Partner at Essential Ideas, a travel consultancy. Ms. Misunas has 25 years of experience in the travel and technology industries of which four years have been spent assisting young and old companies through advisory & board Directorship participation. Previously, she has served as the Chief Executive Officer at Sabre, a global distribution system and retail (brandwise.com) and publishing (Reed Travel Group, a division of Reed Elsevier plc and has lent broad expertise to the Essential Ideas. She is knowledgeable in global enterprise and experience in travel automation solutions. As part of her business-related activities, Ms. Misunas has co-authored a book titled “Multi-channel Distribution: The Essential Guide”, which details marketing and technology related to the various sectors of the travel industry. Her other interests include education programs and university lecturing, exploring the topic of the challenges of corporate governance, and supporting various programs like Junior Achievement in the NY City school district. She is a Director on many public & private corporate boards.

3. Table of Contents • Travel industry players • Suppliers • Intermediaries • Retailers • Travelers • How money changes hands – past versus present

4. Supplier Marketing Strategies • Multi-channel • Direct via phone, outlets, own Web site • Indirect via travel agents (online and traditional), general sales agents • Use of Intermediaries • GDS • Tour Wholesalers, Consolidators • Yield/Inventory Management Methodologies • All will continue to be employed, but to a different degree in each sector

5. GDS Market Dynamics • Market Share Breakdown • Bookings vs Revenues • Supplier sales vs Booking fees • Geographic Penetration Other Revenue Streams • Who ‘Powers’ vs Owns the Online Travel Agents

6. Impact of Supplier Marketing Strategies on GDS • Adjustments to corporate contracts – T&Cs and pricing • Will there be a switch away from traditional travel agent involvement - to what degree and to what effect? • Corporate • Leisure

7. Recent GDS Activity • Consolidation – pending regulatory approval of TravelPort + Worldspan • Galileo, Apollo, Worldspan Now there are three • Travelport + Worldspan will be largest in terms of revenues, bookings and worldwide user base • Amadeus is #2 in some categories i.e. total bookings • Sabre falls to last position for some metrics GDS Ownership Changes • TravelPort will go private and be acquired by Blackstone 2Q-3Q07 • Sabre Holdings private placement is pending final approval for 2Q07 close by Texas Pacific Group and SilverLake Partners • New airline contracts include declining booking fees for air, but GDS can recoup some reimbursement from TAs

8. Profits – where will they come from? • Each GDS is different as to their revenue mix and cost base • Sabre is a combination of traditional Travel Agent, online consumer, and airline outsourcing, but largely US dependent except for Asian and UK investments • Amadeus is heavily travel agent and airline outsourcing, with geographic breadth in Europe/Asia and Latin America • Travelport + Worldspan will have a good base of traditional and online as well as cost controls at Worldspan, but combined entity must be integrated to obtain results and should adopt many of Worldspan’s best practices. • Future profits will come from providing innovative, yet cost effective, solutions to the various sectors of the travel industry while maintaining booking fees at a reasonable level.

9. Success Indicators • Costs • Multiple systems, IT systems retooling, staff inefficiencies, incentives to travel agents • Revenue • Wall off booking fee reductions • Organizational/Structure • Overhead, organizations don’t match marketplace • Talent • Staffing is no longer client centric • Leadership/Staffing Issues • Customer Base • Insure travel agents are integral part of industry process • But, the most important may be meeting supplier needs in order to insure revenue in other sectors does not decline i.e. Hotel booking fees

10. Impact of Recent GDS Activity • Worldspan travel agents might switch to Sabre or Amadeus due to uncertainty of Travelport + Worldspan • Opportunity in US to convert those worthwhile from a volume standpoint Travelport + Worldspan systems issues are severe and must be addressed Revenues declining, although profits still good and businesses remain cash cows

11. Conclusions • Travelport + Worldspan has huge challenges to merge its operations and personnel, integrate systems and address its joint customer issues. Will probably take longer and cost more than projected. • Amadeus does not seem inclined to enter the US market in any meaningful way. It’s main opportunity is getting more efficiency from its matrix organization and its main challenge is its dependency on the airline sector for much of its revenue stream. • Bottom line – Sabre has opportunity to convert travel agents in the US and does not have the distraction or costs of system issues. It’s challenge is to improve the organizational effectiveness and operational efficiencies of the business, and to regain the #1 online position of Travelocity.

12. Future Possibilities to Consider • Sabre merges with Amadeus • Sabre buys other online capabilities – Sidestep, Kayak • Sabre changes traditional travel agent model with use of G2 Switchworks (already funded by TPG) capabilities • Travelport + Worldspan rationalizes its current 21 business units and sells/merges/spins some • Travelport + Worldspan acquires capabilities for what it considers its core business

13. About GLG Institute • Specialized, professional education from proven industry thought leaders and academic authorities • Hundreds of Education Seminars on any topic in any major market around the world • Over 600 Seminars a year • GLGi clients receive two seats to ALL Seminars in ALL practice areas • Puts the power of programming into the hands of the GLG community • GLGi’s new website www.glginstitute.com enables clients to: • Propose Seminar topics and locations • View and RSVP to scheduled and proposed Seminars • Manage a personalized “My Seminars” page • Forward details to a colleague or friend

14. Gerson Lehrman Group Contacts • Sam F. Jacobs • Director • Gerson Lehrman Group • 850 Third Avenue, 9th Floor • New York, NY 10022 • 212-984-3676 • sjacobs@glgroup.com • Christine Ruane • Senior Product Manager • Gerson Lehrman Group • 850 Third Avenue, 9th Floor • New York, NY 10022 • 212-984-8505 • cruane@glgroup.com

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