WELCOME TO SPRINGFIELD HEARTLAND CONFERENCE 2007!

2. WELCOME TO SPRINGFIELD HEARTLAND CONFERENCE 2007!

3. “The secret to success is to find out where the people are going, and get there first.”-- Mark Twain

4. Presentation Sources • Jerry Henry, Henry Enterprises, LLC • Corporate Director of Research, Herschend Family Entertainment Corporation • James V Cammisa, Jr. • Travel Industry Indicators

5. How did the Travel Industry do in 2006? • Domestic Trip Volume – Up 1.5% • Business Travel was strong • Leisure Travel was flat as were major leisure travel destinations (Orlando, Las Vegas, Hawaii) • Hotel Occupancy – Up 0.9% through October • Supply Growth was up only slightly by 0.5% • ADR was up 7.0%, RevPAR was up 7.9% • Domestic Air Enplanements were down 1.9% • Shrinkage in capacity (-2.9%) and higher airfares (10.2%) were the likely cause • 2006 was a year where the industry regained its pricing power to make up for a less than robust year in demand

6. What about 2007? • The Economy appears poised for a “soft landing” • GDP is estimated to be up 2.6% compared to 3.3% in 2006 • Business Indicators are all generally positive with Economic Growth estimated at 1.4% • The Midwest will lag behind at 0.6% • In the Consumer Sector • Consumer Income Growth will rise an estimated 2.8%, down slightly from 3.0% in 2006 • Consumer Spending will also rise an estimated 2.8% compared to 3.1% in 2006 • Inflation will be lower at 2.5% • Consumer Confidence remains positive

7. What about the Travel Industry in 2007? • Domestic Trip Volume should increase by 1.7% • Travel Spending should increase by 6.0% • Business Travel (trip volume between 2 & 2.5%) will outpace Leisure Travel (trip volume between 1 & 1.5%) • Spending for Business Travel should increase by 7.5% with Leisure Travel increasing by between 5 & 5.5% • Occupancy should increase a modest 0.4% • Room Demand should increase by 1.7% • Supply Growth should increase by 1.3% • Domestic Airline Enplanements will show modest growth at 1.8% with airfares increasing between 3 & 5%

8. What could Affect 2007 Predictions? • Terrorism Incidents or Geopolitical Shocks • A Recession instead of a “soft landing” • Escalation of Gas Prices

9. What do You do to be Sure Your Business Performs Better than Projections? Stay on top of trends and changes in the marketplace

10. The 5 Cs of the New Travel Marketplace • Connection with friends, family and people like us – in an entertaining way. • Convenience is critical. It must be fast and easy. • Cost is King. People expect luxury at bargain prices. • Comfort, a driving force of boomers. People want their travel experiences to be a notch above everyday life. • Control over their lives and their travel. Travelers do not want to be dependent upon others to have a good time.

11. Connection • When asked to rate the three most important personal goals over the next 3 – 5 years, people rated “spending more time with the family” behind only “becoming more physically fit,” “paying off debt,” and “eating healthier.” • Families reconnect through travel.

12. Convenience • 20% of all meals today are consumed in the car • Disposable income is up in large part because of women working • But women working means less time to shop, cook, or recreate

13. Cost is King • It’s not that consumers are cheap, they just don’t want to overpay • They are knowledgeable users of competitive information and know the fair market value

14. Comfort • People will pay more for quality and luxury • With less free time, people feel the need to treat themselves • Amenities, comfort, and ambiance are more important than money

15. Control • Consumers want to control their experience • Travelers are looking for independent travel where they don’t have to be at a certain place at a certain time • As one example, overnight bus tours are struggling

16. Trends that will Affect all Businesses • Aging of America • Different Generational Cohorts • Power of the Purse • Cutting through the Clutter • The Evolution of Marketing • Impact of the Internet • Customer-Made • Viral Marketing and the Erosion of Trust • Diversity

17. Aging of America • The 55+ age segment will grow at a rate six times faster than the population under 55 • Number of people over the age of 65 • In 1980, one in ten people • In 2000, one in five people

18. Aging of America • Service levels will need to increase as older visitors have higher expectations • Marketing will also need to change • Images used • Featured “hot buttons” • Even the font size

19. Different Generational Cohorts • The values we learn as kids will stay with us for life • Members of each generation are linked through shared life experiences • In 10 years, the Senior generation will be gone and the oldest Boomers will be 70 • The generations driving the economy will be Gen X and Millennials

20. Different Generational Cohorts • Seniors • 55 million • Born 1925 – 1945 • Age: 62 – 82 years • Hard work, self sacrifice, teamwork, conformity, authority, “One for all, all for one” • Boomers • Born 1946 – 1964 • 76 million • Age: 43 – 61 years • Individuality, entitlement, spenders, control-freaks, nostalgic, “It’s all about me”

21. Different Generational Cohorts • Gen X • 46 million • Born 1965 – 1978 • Age: 29 – 42 years • Diversity, uncertainty, tech-savvy, balance in life, family-focused

22. Different Generational Cohorts

23. Power of the Purse • Women • Buy 83% of all products sold in this country • Make 70% of all leisure travel decisions! • If you are not targeting women and listening to your female customers, you are not serious about increasing sales • You can’t reach women the same way as you reach men – they’re DIFFERENT

24. Power of the Purse Men search for a “good solution” Women look for the “perfect answer.” Mission Go to the Gap, buy a pair of pants. Men go directly to the store, find a pair of pants that fit and are reasonably priced, buy them and leave. Time: 6 minutes Cost: $33

25. Power of the Purse Women look for the perfect answer, so she not only needs a pair of pants, but a new pair of heels that would match and also go with the cute new outfit she bought last month. While at the mall, she visits most of the other stores and shops for a few things she had been thinking about. Time: 3 hrs. 26 min. Cost: $876

26. Power of the Purse • Women are “people-powered.” If you want your marketing message to resonate with them, show people in your ads. • Women exchange information through storytelling. Ask her where she bought her scarf and be prepared to listen for 30 minutes. Your marketing message must include people and tell a compelling story. • Women control the success or failure of most consumer products and services. Accept it or die.

27. Cutting Through the Clutter • Consumers are putting up “firewalls” to avoid advertising • Your marketing message must be • Relevant • Compelling • Differentiated • Businesses must determine what is most important to their guests, differentiate themselves along these characteristics, and market those differences to their target markets

28. The Evolution of Marketing • Marketing productivity is declining (more TV stations, radio stations, the Internet, etc.) and is compounded by the consumer resistance to marketing • Word of mouth – from a trusted source – is more powerful than ever

29. Impact of the Internet • More than two-thirds of all travelers have Internet access and 78% of those plan at least part of their trips online • 64% of online travelers, and 43% of travelers overall, make reservations or book online • 32% of all lodging purchases were made online in 2005 • Not only do you need a very good presence on the Internet, you need to provide access to it for your customers

30. Customer-Made • The era of Mass Production has yielded to Mass Customization • “One size fits all” doesn’t work anymore • Individuals express a strong interest in the ability to self-customize products and services and 37% are willing to pay as much as 20% more to do so • Don’t treat people equally, treat them appropriately • Bed & Breakfast establishments may be in a unique position to capitalize on this trend

31. Viral Marketing & The Erosion of Trust • Only 25% of Americans believe what they hear on the evening news and less than 5% believe what they see in travel advertisements • We do trust recommendations of a friend or family member (88%) • Companies are tapping raving fans and converting them to “buzz agents” by providing them their own blog • Again, bed & breakfast establishments can capitalize on this trend

32. Diversity • The days of the Caucasian majority are numbered • By 2050, Caucasians will represent less than 50% of the U.S. population • In the next 25 years • White +8.0% to 217 million • Black +33.1% to 50 million • Hispanic +86.8% to 37 million • Asian +110.9% to 15 million

33. Diversity • Diversity is also present in the average family household • Less than 24% of all U.S. households have a husband, wife, and a child under the age of 18. • The rest are made up of single parents, unmarried couples, divorced or never married individuals, and older married couples with children no longer living at home • Diverse customers require diverse product offerings and marketing messages

34. Things to Remember • The customer is “queen” • Consumers will pay for quality, but still want a bargain • “Word of Mouth” is an ever better form of advertising • An aging marketplace will change the visitor • Remember generational differences in product development and marketing • Diversity must also be considered in product development and marketing • Allow your customers to be involved (customer-made) in shaping their travel experience

35. Questions?