2002 Marketing Initiatives January 2002. Table of Contents u 2002 Marketing Plan/2001 Plan Review u...

2002Marketing Initiatives

January 2002

2002Marketing Initiatives

January 2002

Table of ContentsTable of Contents 2002 Marketing Plan/2001 Plan Review

Economic and Industry Forecast Consumer and Technology Trends Consumer Marketing Advertising and Marketing Services Worldwide Sales and Intermediary

Marketing Voice Reservations Electronic Distribution Systems Brand Management

2002 Marketing Plan/2001 Plan Review Economic and Industry Forecast Consumer and Technology Trends Consumer Marketing Advertising and Marketing Services Worldwide Sales and Intermediary

Marketing Voice Reservations Electronic Distribution Systems Brand Management

Economic Forecast for 2002Economic Forecast for 2002

Economic and industry forecasts assume no major terrorist acts on U.S. soil

Economy growing at 1.0% but is much stronger in the second half of 2002 Q1 -0.3% Q2 +0.2% Q3 +1.4% Q4 +2.7%

Consumer spending growing at 1.5% Inflation growing at 1.7% Unemployment rate at 6.1% Source: Blue Chip Economic Indicators (January 10, 2002)

Economic and industry forecasts assume no major terrorist acts on U.S. soil

Economy growing at 1.0% but is much stronger in the second half of 2002 Q1 -0.3% Q2 +0.2% Q3 +1.4% Q4 +2.7%

Consumer spending growing at 1.5% Inflation growing at 1.7% Unemployment rate at 6.1% Source: Blue Chip Economic Indicators (January 10, 2002)

4.2% 3.2% 2.4%

1.4%0.0%

2.0%

4.0%

6.0%

1999 2000e 2001p 2002

3.3% 3.7%

-2.4%0.6%

-5.0%

0.0%

5.0%

1999 2000e 2001p 2002

Industry Forecast for 2002Industry Forecast for 2002

Supply Demand

Source: Smith Travel ResearchSource: Smith Travel Research

Industry Forecast for 2002Industry Forecast for 2002

Industry RevPar expected to decline 0.2% Midscale w/o F&B chain RevPar growth of 0.4% Midscale with F&B RevPar to decline 0.3% Upscale segment to show a RevPar decline of 1.6% Slightly stronger growth in leisure travel demand Second half of year to be stronger with positive

RevPar gains for the industry

Industry RevPar expected to decline 0.2% Midscale w/o F&B chain RevPar growth of 0.4% Midscale with F&B RevPar to decline 0.3% Upscale segment to show a RevPar decline of 1.6% Slightly stronger growth in leisure travel demand Second half of year to be stronger with positive

RevPar gains for the industry

Source: Smith Travel Research, Price Waterhouse Coopers, and

Market Information & Research estimates

Source: Smith Travel Research, Price Waterhouse Coopers, and

Market Information & Research estimates

Competitive Marketing ActivityCompetitive Marketing ActivityBest Western

Consumer communication of 16 new brand standards and “best rate” offers

Cendant Introduction of loyalty program, new “get going rates” and a

new CRM capability via Trilegiant subsidiaryHilton

Aggressive “double dipping” promotions for Hampton with points and airline miles

Marriott New rate offers for all brands and new advertising campaigns

Six Continents Holiday Inn planning communication efforts to celebrate the

50th anniversary of the brand in 2002 and continued promotion of two-for-one offer

Best Western Consumer communication of 16 new brand standards and

“best rate” offersCendant

Introduction of loyalty program, new “get going rates” and a new CRM capability via Trilegiant subsidiary

Hilton Aggressive “double dipping” promotions for Hampton with

points and airline milesMarriott

New rate offers for all brands and new advertising campaigns Six Continents

Holiday Inn planning communication efforts to celebrate the 50th anniversary of the brand in 2002 and continued promotion of two-for-one offer

Consumer Trends 2002Consumer Trends 2002

Consumer confidence is shaky but starting to improve

Increased concern for safety and security Travelers more willing to drive to business

and leisure destinations Upscale business travelers trading down due

to uncertain environment Increased use of travel packages

Consumer confidence is shaky but starting to improve

Increased concern for safety and security Travelers more willing to drive to business

and leisure destinations Upscale business travelers trading down due

to uncertain environment Increased use of travel packages

Source: Yesawich, Pepperdine and BrownSource: Yesawich, Pepperdine and Brown

Consumer Trends 2002Consumer Trends 2002

Consumer expectations are higher across all product categories

Consumers are getting bombarded with more advertising messages than ever before

Growth in the 50+ segment for business and leisure travel in domestic and inbound international

Consumer expectations are higher across all product categories

Consumers are getting bombarded with more advertising messages than ever before

Growth in the 50+ segment for business and leisure travel in domestic and inbound international

Source: Yesawich, Pepperdine and BrownSource: Yesawich, Pepperdine and Brown

Technology Trends 2002Technology Trends 2002

Almost 40 million U.S. households research travel online, and nearly 19 million booked travel online during 2001

Continued strong growth in bookings via the Internet ($16.7B forecasted in 2001 and $21.6B forecasted in 2002)

Primary reasons to go online are ease, speed, and convenience.

Barriers to booking travel online are security concerns and privacy considerations

Almost 40 million U.S. households research travel online, and nearly 19 million booked travel online during 2001

Continued strong growth in bookings via the Internet ($16.7B forecasted in 2001 and $21.6B forecasted in 2002)

Primary reasons to go online are ease, speed, and convenience.

Barriers to booking travel online are security concerns and privacy considerations

Source: Forrester ResearchSource: Forrester Research

ConclusionsConclusions Little/no economic growth early in 2002 but

modest growth in second half of year Increase in lodging demand by summer Increased pressure on rates due to increased

discounting in the industry Competitive promotional activity to stimulate

demand will increase Breaking through the clutter to reach consumers

will be more difficult Increased need to leverage changing distribution

channels - voice, electronic, hotel direct

Little/no economic growth early in 2002 but modest growth in second half of year

Increase in lodging demand by summer Increased pressure on rates due to increased

discounting in the industry Competitive promotional activity to stimulate

demand will increase Breaking through the clutter to reach consumers

will be more difficult Increased need to leverage changing distribution

channels - voice, electronic, hotel direct

Protect and grow existing leisure market share Increase our share of mix from business travelers Continue to create breakthrough advertising Develop strong regional/local programs and promotions Enhance brand identity Simplify the selling process Improve minimum brand standards and business delivery Globalize key marketing programs Optimize distribution channels Improve CHI/licensee communication


Focus on Doing a Few Things Exceptionally Well

Focus on Doing a Few Things Exceptionally Well

Consumer MarketingConsumer Marketing

Mission StatementMission Statement

We serve our franchisees and brands by attracting, retaining, and increasing Choice’s revenue from key business and leisure consumer segments.

We serve our franchisees and brands by attracting, retaining, and increasing Choice’s revenue from key business and leisure consumer segments.

Consumer Marketing SegmentsConsumer Marketing Segments

Leisure Travelers Families Mature market Couples/singles

Business travelers Road Warriors Frequent Flyers Infrequent travelers

Leisure Travelers Families Mature market Couples/singles

Business travelers Road Warriors Frequent Flyers Infrequent travelers

Leisure TravelersLeisure Travelers

Summer Promotion - FamiliesSummer Promotion - Families

2001 Review2001 Review Summer promotion achieved goal of helping

Choice RevPar outperform midscale competition and the industry Choice RevPar -1.8%, midscale competition -2.7%

and industry -5.4%

Promotion partner MasterCard gained nearly 3 points in market share during the summer

Record public relations with over $5 million in awareness value achieved

Slower start to promotion than anticipated due to central booking restriction and timing issues

Summer promotion achieved goal of helping Choice RevPar outperform midscale competition and the industry Choice RevPar -1.8%, midscale competition -2.7%

and industry -5.4%

Promotion partner MasterCard gained nearly 3 points in market share during the summer

Record public relations with over $5 million in awareness value achieved

Slower start to promotion than anticipated due to central booking restriction and timing issues

2002 Plan2002 Plan Implement enhanced gas card promotion with MasterCard

partner to bolster June-August RevPar performance and outperform competition Offer primarily targets family travelers due to timing

(tentatively scheduled for June 15-August 15th) but is appealing to all consumer segments

Increasing the value of the gas card to $10 for 2002 promotion

Will make offer more appealing, particularly to non-loyal Choice travelers

Currently working with MasterCard to increase funding beyond $2 million

Implement enhanced gas card promotion with MasterCard partner to bolster June-August RevPar performance and outperform competition Offer primarily targets family travelers due to timing

(tentatively scheduled for June 15-August 15th) but is appealing to all consumer segments

Increasing the value of the gas card to $10 for 2002 promotion

Will make offer more appealing, particularly to non-loyal Choice travelers

Currently working with MasterCard to increase funding beyond $2 million

2002 Plan2002 Plan Offer promotion from outset to all guests who stay two

nights (or book two rooms for one night) regardless of booking channel

Working to reduce the number of gas card companies participating

Current discussions are with BP/Amoco and Exxon/Mobil

Leverage last year’s effort to secure even stronger public relations effort for the promotion

Aggressively promote offer via national advertising, and electronic and voice channels

Offer promotion from outset to all guests who stay two nights (or book two rooms for one night) regardless of booking channel

Working to reduce the number of gas card companies participating

Current discussions are with BP/Amoco and Exxon/Mobil

Leverage last year’s effort to secure even stronger public relations effort for the promotion

Aggressively promote offer via national advertising, and electronic and voice channels

2002 Plan2002 Plan

Possible $10 Gas Card Funding (June 15 - August 15) :Total Cost $3,300,000 Card Production 300,000 (300,000 Cards)Card Cost 3,000,000

Funding $3,300,000Master Card 2,000,000Breakage 400,000Marketing Fund 900,000

Marketing Fund cost will be reduced if MasterCard contributes more than $2 million

Offer will be promoted as “while supplies last” to cap liability

Possible $10 Gas Card Funding (June 15 - August 15) :Total Cost $3,300,000 Card Production 300,000 (300,000 Cards)Card Cost 3,000,000

Funding $3,300,000Master Card 2,000,000Breakage 400,000Marketing Fund 900,000

Marketing Fund cost will be reduced if MasterCard contributes more than $2 million

Offer will be promoted as “while supplies last” to cap liability


“Home for the Holidays” Promotion

“Home for the Holidays” Promotion

“Home for the Holidays” Promotion2001 Review

“Home for the Holidays” Promotion2001 Review

Value offer is appealing to all leisure market segments

Over 1,800 U.S hotels are currently enrolled in the “Home for the Holidays” - double the number participating a year ago

November and December 2001 gross revenue is over $11 million vs. $1.4 million through LHOME in all of 2000 (ADR is $58)

Over $1 million in revenue has been generated in November and December via choicehotels.com

Value offer is appealing to all leisure market segments

Over 1,800 U.S hotels are currently enrolled in the “Home for the Holidays” - double the number participating a year ago

November and December 2001 gross revenue is over $11 million vs. $1.4 million through LHOME in all of 2000 (ADR is $58)

Over $1 million in revenue has been generated in November and December via choicehotels.com

“Home for the Holidays” Promotion2002 Plan

“Home for the Holidays” Promotion2002 Plan

Implement an enhanced national “Home for the Holidays” promotion

Promotion timing of October 2002 - February 2003

Promote a “value” offer and strive to have all hotels participate

Promote the offer using national advertising dollars as well as co-op funds

Continue to offer via all distribution channels

Implement an enhanced national “Home for the Holidays” promotion

Promotion timing of October 2002 - February 2003

Promote a “value” offer and strive to have all hotels participate

Promote the offer using national advertising dollars as well as co-op funds

Continue to offer via all distribution channels


Mature Market Mature Market

2001 Review2001 Review Rate plan criteria set as of Nov. 1, 2000

SSC - mandatory 10% for 50+ travelers SSV - inventory controlled “Sixty Plus Rate”

offering 20%-30% discount (about 5% of hotels are utilizing a discount above 20%)

Criteria endorsed by IOC in 2000 and 2001

New criteria has shifted use of these rates by our consumers and decreased denials

Rate plan criteria set as of Nov. 1, 2000 SSC - mandatory 10% for 50+ travelers SSV - inventory controlled “Sixty Plus Rate”

offering 20%-30% discount (about 5% of hotels are utilizing a discount above 20%)

Criteria endorsed by IOC in 2000 and 2001

New criteria has shifted use of these rates by our consumers and decreased denials

2001 Review2001 Review Successfully shifted substantial business to the lower

discount SSC rate plan Program revenue was up 20% in 2001 Average rate on SSC rate plan is down slightly to

$74.34 SSV revenue has decreased significantly for the year -

down 38% ADR on SSV is up over 10% to $59.87

Overall revenue for two rate plans is down 15% vs. 9% for Choice 2001 overall

Successfully shifted substantial business to the lower discount SSC rate plan Program revenue was up 20% in 2001 Average rate on SSC rate plan is down slightly to

$74.34 SSV revenue has decreased significantly for the year -

down 38% ADR on SSV is up over 10% to $59.87

Overall revenue for two rate plans is down 15% vs. 9% for Choice 2001 overall

2001 Review2001 Review

Overall decrease in SSV attributed to two things:

moving consumers to higher rate programs, such as SSC, SCR, AAA

selling less to the most “rate sensitive” customers

Very rate sensitive customers typically offer low brand loyalty and less profit potential

Overall, we are making better sales

Overall decrease in SSV attributed to two things:

moving consumers to higher rate programs, such as SSC, SCR, AAA

selling less to the most “rate sensitive” customers

Very rate sensitive customers typically offer low brand loyalty and less profit potential

Overall, we are making better sales

2001 Review/2002 Plan2001 Review/2002 Plan

2000 (000) 2001 (000) 2002 Plan (000)

SSC $82,888 $99,474 $107,432

SSV $127,217 $79,140 $85,471

Total $210,105 $178,614 $192,903

2000 (000) 2001 (000) 2002 Plan (000)

SSC $82,888 $99,474 $107,432

SSV $127,217 $79,140 $85,471

Total $210,105 $178,614 $192,903

2002 Plan2002 Plan

Implement new AARP agreement that makes SSO (15% discount; inventory controlled) available only to AARP members Planning to launch February 1st, 2002 Allows Choice to market to AARP’s membership base

of over 34 million Choice to be included on AARP web site and on

collateral material to members Allows hotels to use the AARP logo in their advertising

and collateral materials

Implement new AARP agreement that makes SSO (15% discount; inventory controlled) available only to AARP members Planning to launch February 1st, 2002 Allows Choice to market to AARP’s membership base

of over 34 million Choice to be included on AARP web site and on

collateral material to members Allows hotels to use the AARP logo in their advertising

and collateral materials

2002 Plan2002 Plan More aggressively market to mature adults in 2002

Print advertising campaign in major southern newspapers aimed at snowbirds who are day-tripping and traveling home (first quarter 2002)

Mature market is a key audience in the “home for the holidays” promotion that will be implemented nationally in fall/winter 2002

Communicate rate plans via direct mail campaigns to mature market audience in 2002

Communicate directly with Choice Privileges members that they now are eligible for points when they book under any mature market rate plan

Work with travel agents, AAA, and other intermediaries to promote Choice brands to this audience

More aggressively market to mature adults in 2002 Print advertising campaign in major southern newspapers

aimed at snowbirds who are day-tripping and traveling home (first quarter 2002)

Mature market is a key audience in the “home for the holidays” promotion that will be implemented nationally in fall/winter 2002

Communicate rate plans via direct mail campaigns to mature market audience in 2002

Communicate directly with Choice Privileges members that they now are eligible for points when they book under any mature market rate plan

Work with travel agents, AAA, and other intermediaries to promote Choice brands to this audience

Business TravelersBusiness Travelers

Road Warriors and Frequent Flyers

Road Warriors and Frequent Flyers

Choice Privileges: 2001 ReviewChoice Privileges: 2001 Review

Introduced a new, more cost-effective award structure for Choice Privileges in 2001

Changed the name of the program to Choice Privileges to better reflect the family of brands available to the member

Introduced airline miles with American Airlines in August and U.S. Airways in September

Introduced a new, more cost-effective award structure for Choice Privileges in 2001

Changed the name of the program to Choice Privileges to better reflect the family of brands available to the member

Introduced airline miles with American Airlines in August and U.S. Airways in September


2000 (000) 2001 (000) Change

Members 899 1,220 +36%

Room nights 2,693 3,625 +35%

Revenue $176,319 $235,232 +33%

CP as % of 5.9% 7.9% +34% Revenue

2000 (000) 2001 (000) Change

Members 899 1,220 +36%

Room nights 2,693 3,625 +35%

Revenue $176,319 $235,232 +33%

CP as % of 5.9% 7.9% +34% Revenue


Actual (000) Plan (000) % of Plan

Members 1,220 1,259 97%

Room nights 3,625 3,938 92%

Revenue $235,232 $267,544 88%

CP as % of 7.9% N/A Revenue

Actual (000) Plan (000) % of Plan

Members 1,220 1,259 97%

Room nights 3,625 3,938 92%

Revenue $235,232 $267,544 88%

CP as % of 7.9% N/A Revenue

2001 Review/2002 Plan2001 Review/2002 Plan2000 (000) 2001 (000) 2002 (000)

Members 899 1,220 1,471

Room nights 2,693 3,625 3,962

CP Revenue $176,319 $235,232 $261,137

Airlines N/A 2,769 $37,428

CP/Airline $176,319 $238,001 $298,565

CP/Airline 5.9% 7.9% 9.5% as a % of

Revenue

2000 (000) 2001 (000) 2002 (000)

Members 899 1,220 1,471

Room nights 2,693 3,625 3,962

CP Revenue $176,319 $235,232 $261,137

Airlines N/A 2,769 $37,428

CP/Airline $176,319 $238,001 $298,565

CP/Airline 5.9% 7.9% 9.5% as a % of

Revenue

2002 Plan2002 Plan Introduce at least 4 more airlines into program

Target Delta, Northwest, United, America West and Air Canada

Enhance Choice Privileges and grow frequency program (CP and airline) revenue Promote airline partnerships with triple miles in the

spring and possibly another mileage offer in fall 2002 Develop business case to introduce elite levels Enhance CP web site to include point balance look-up,

award redemption and member stay history Increase frequency of direct to consumer promotional

efforts using new ECRM software

Introduce at least 4 more airlines into program Target Delta, Northwest, United, America West and

Air Canada Enhance Choice Privileges and grow frequency program

(CP and airline) revenue Promote airline partnerships with triple miles in the

spring and possibly another mileage offer in fall 2002 Develop business case to introduce elite levels Enhance CP web site to include point balance look-up,

award redemption and member stay history Increase frequency of direct to consumer promotional

efforts using new ECRM software

Assistance From IOCAssistance From IOC Help us in getting hotels to sign-up frequent flyers for

Choice Privileges Ensure that Choice Privileges members receive the

benefits they expect Encourage co-ops to advertise national promotions on

a local basis Put up the collateral material that is sent for each

national promotion (continue success of “Thanks for Traveling” effort)

Timely, constructive feedback on national promotions (what is working, what needs to be improved)

Help us in getting hotels to sign-up frequent flyers for Choice Privileges

Ensure that Choice Privileges members receive the benefits they expect

Encourage co-ops to advertise national promotions on a local basis

Put up the collateral material that is sent for each national promotion (continue success of “Thanks for Traveling” effort)

Timely, constructive feedback on national promotions (what is working, what needs to be improved)

Enterprise Customer Relationship Management

(ECRM)

Enterprise Customer Relationship Management

(ECRM)

What is ECRM?What is ECRM?

Building Relationships with Customers

Personalizing Communication and Offers

Delivering Right Product to Right Customer at Right Time Via Right Channel

Building Loyalty

Building Relationships with Customers

Personalizing Communication and Offers

Delivering Right Product to Right Customer at Right Time Via Right Channel

Building Loyalty

Why is ECRM Important?Why is ECRM Important?

Natural Extension of Traditional Advertising

“Customization” Works Economically

Only Way to Execute Certain Programs

Natural Extension of Traditional Advertising

“Customization” Works Economically

Only Way to Execute Certain Programs

We Must Lead The Evolution, Not Follow

We Must Lead The Evolution, Not Follow

Long Lead Time to Learn Customers Habits

Requires Testing and Refinement

Programs Require Development Time Both at Choice and at Properties

Long Lead Time to Learn Customers Habits

Requires Testing and Refinement

Programs Require Development Time Both at Choice and at Properties

Information Is Only Effective If It Can Be Used EffectivelyInformation Is Only Effective If It Can Be Used Effectively

Need System to Analyze Customer Data

Need System to “Efficiently” Communicate

Need System to Analyze Customer Data

Need System to “Efficiently” Communicate

Our Choice - UnicaOur Choice - Unica

Compatibility with Our Systems

Positive References

Compatibility with Our Systems

Positive References

ECRM SoftwareECRM Software

Models Customers to Determine Life Time Value, Likelihood to Respond

Creates/Maintains Templates, Whole Campaigns Automates One-time and Ongoing Campaigns on

Schedule Tracks and Calculates Responders and Non-

Responders Creates Multi-wave Campaigns to Treat, Re-Treat

Responders, Non-Responders Creates Ongoing Campaigns Triggered by Customer

Behavior, etc. Evaluates Success of Each Campaign

Models Customers to Determine Life Time Value, Likelihood to Respond

Creates/Maintains Templates, Whole Campaigns Automates One-time and Ongoing Campaigns on

Schedule Tracks and Calculates Responders and Non-

Responders Creates Multi-wave Campaigns to Treat, Re-Treat

Responders, Non-Responders Creates Ongoing Campaigns Triggered by Customer

Behavior, etc. Evaluates Success of Each Campaign

How We Plan To Use The System

How We Plan To Use The System

Cost Efficiencies

Business Building

Cost Efficiencies

Business Building

Cost EfficienciesCost Efficiencies

Using Email- Choice Privileges Statements- Guest Satisfaction Questionnaires- Promotion Offers- Acknowledgements

Moving Reservations to Internet

Using Email- Choice Privileges Statements- Guest Satisfaction Questionnaires- Promotion Offers- Acknowledgements

Moving Reservations to Internet

Business BuildingBusiness Building

Understand Value of Each Customer Proactively Communicate with Customers

- Special Offers

- Special Promotions

- Unsold Inventory

- Cross Use

- Off Peak

- Special Occasions

Understand Value of Each Customer Proactively Communicate with Customers

- Special Offers

- Special Promotions

- Unsold Inventory

- Cross Use

- Off Peak

- Special Occasions

Choice ECRM VisionChoice ECRM Vision

Customer Touch Points

Hotel 800# GDS* Internet Guest Relations

Sales Force Direct Mail Fax PDA In-room Internet

Data Data Data Integration CampaignIdentity Warehouse Data AnalysisManagement

Profile& Response Data

CampaignInformation

Profile & StayInformation

Real TimePersonalization

Implementation Short-termImplementation Short-term

Choice Privileges Activation, Reactivation

Guest Satisfaction Research

Collect Email Addresses, Permission, Profiles

Choice Privileges Activation, Reactivation

Guest Satisfaction Research

Collect Email Addresses, Permission, Profiles

Implementation Long-termImplementation Long-term

National Marketing Campaigns

Regional Campaigns

Individual Hotel Campaigns

National Marketing Campaigns

Regional Campaigns

Individual Hotel Campaigns

How Hotels Can HelpHow Hotels Can Help

Sign-up Air Travelers for Choice Privileges

Collect Email Addresses

Provide Ideas for Using ECRM for Regional Campaigns

Sign-up Air Travelers for Choice Privileges

Collect Email Addresses

Provide Ideas for Using ECRM for Regional Campaigns

Intermediary Marketing & Worldwide Sales

Intermediary Marketing & Worldwide Sales

Mission StatementMission Statement

We serve our franchisees and brands by maintaining existing revenue streams & growing rooms revenue from major Intermediary Market segments through tightly focused programs and promotions to build market share.

We serve our franchisees and brands by maintaining existing revenue streams & growing rooms revenue from major Intermediary Market segments through tightly focused programs and promotions to build market share.

INTERMEDIARY MARKET SEGMENTS

Business Travel Corporate Travel Agents: Megas/Consortias/Regional

Leisure Tour Operators/Wholesalers Motor Clubs/Membership Clubs Travel Agencies

Government Military Federal/State Government Cost reimbursable contractors

Sports High School Collegiate Semi Professional

GSA’s General sales agents in

developing & emerging markets.

The Process

PROGRAM DEVELOPMENT

•Multi Brand

•Sales Channel

•Segment Focus

PLANNING

Internal Input

•Market Segment Mix

•Geographic Source

•Sales Channel

Client Input

•Current/Past Performance

•Potential Analysis

•Telemarketing Research

FIELD SALES

•Geographic/ Segment Specialists

•Key Client Management

•Group Desks

ACCOUNTABILITY

•Monthly

By :

•Market Segment •Brand

•Region

•Sales Person

•Clients

ThePlan

SalesTools

2001 REVIEW

Market Segment Plan Actual Cost Cost PerDollar

Generated

Comments

Business- Corporate- Mega Agencies- Consortia

$460M $428M $2.4M $0.005 - Negatively impacted byrecession & pull back oncorporate travel followingSeptember 11.

Leisure- Operators- Wholesaler

------------------------------------------- Associations/Membership

Clubs- AAA - Quest- Quixtar - Encore

$105M

-------------$214M

$126M

--------------$220M

$1.6M

------------$554K

$0.01

--------------$0.03

- Strong finish at year end for2002 contracting (44%).

------------------------------------------- Increased exposure to AA A

via sales blitzes &promotional activity.

Government- Federal- State- CRC’s

$38M $41M $137K $0.03 - Impacted positively in 4th

quarter by increased focus,increased demand

- Last room availability.

Sports- Youth- High School- Collegiate

$2.4M $3.7 $138K $0.05 - Launch of 1-800 numberfocused at this segment &website development.

GSA’s (General Sales Agents) $4.3M $7.1M $355K $0.05 - Currently have GSA’soperating in 10 developing& emerging markets.

2001 REVIEW

Market Segment 2000Actual

Plan Actual Cost Cost PerDollar

Generated

Comments


$409M $460M $428M $2.4M $0.005 - Negatively impacted byrecession & pull back oncorporate travel followingSeptember 11.

Leisure- Operators- Wholesaler

---------------------------------- Associations/ Membership Clubs- AAA - Quest- Quixtar - Encore

$98M

----------$201M

$105M

----------$214M

$126M

----------$220M

$1.6M

---------$554K

$0.01

--------------$0.03

- Strong finish at year end for2002 contracting (44%).

------------------------------------------ Increased exposure to AA A

via sales blitzes &promotional activity.


$36M $38M $41M $137K $0.03 - Impacted positively in 4th

quarter by increased focus,increased demand

- Last room availability.


N/A $2.4M $2.96M $138K $0.05 - Launch of 1-800 numberfocused at this segment &website development.

GSA’s (General SalesAgents)

N/A $4.3M $7.1M $355K $0.05 - Currently have GSA’soperating in 10 developing& emerging markets.

2002 PLAN & ROI

SEGMENT 2001 ACTUAL 2002REVENUE

PLAN

COST COST PERDOLLAR

GENERATED


$428M $457M $2.4M $0.005

Leisure- Operators- Wholesaler-------------------------------------- Associations/Membership

Clubs- AAA - Quest- Amoco - Quixtar- All State - Encore

$126M

--------------------$220M

$133M

--------------------$229M

$1.6M

---------------------$554K

$0.01

--------------------$0.002


$41M $43.74M $137K $0.003


$2.96M $5.2M $220K $0.04

GSA’s (General Sales Agents) $7.1M $19M $950K $0.05

SEGMENT STRATEGIES2002

SEGMENT STRATEGIES2002

Business Travel Increase hotel participation in RFP Express &

mega/consortia agents from 24% to 40%. Aggressive sign up of corporate clients into

Choice Privileges. Focus “national sales” on the top corporate travel

buyers in the mid-scale/economy segment. Establish advisory board for feedback from

corporate travel agency market.

Business Travel Increase hotel participation in RFP Express &

mega/consortia agents from 24% to 40%. Aggressive sign up of corporate clients into

Choice Privileges. Focus “national sales” on the top corporate travel

buyers in the mid-scale/economy segment. Establish advisory board for feedback from

corporate travel agency market.

Leisure Continue key client relationship with AAA &

expand into other motor clubs. Continue the implementation of incentive based

marketing programs to associations and membership clubs whose membership profiles fit our brands.

Establish a centralized direct billing program targeted at international tour operators.

Leisure Continue key client relationship with AAA &

expand into other motor clubs. Continue the implementation of incentive based

marketing programs to associations and membership clubs whose membership profiles fit our brands.

Establish a centralized direct billing program targeted at international tour operators.

Government Continue FEMA approval for all relevant hotels.

(2001: 84% 2002: 92%) Promote last room availability for per diem rates. Build extensive government travel database for

electronic messaging, direct mail & telemarketing activity.

Government Continue FEMA approval for all relevant hotels.

(2001: 84% 2002: 92%) Promote last room availability for per diem rates. Build extensive government travel database for

electronic messaging, direct mail & telemarketing activity.

Sports Implement customized web site for sports related travel. Develop partnerships & alliances with appropriate sports

bodies. Capitalize on national sales efforts to establish & grow market

share.

GSA Development of GSA network globally to 17. Train, Train, Train. Hold global GSA meeting.

Sports Implement customized web site for sports related travel. Develop partnerships & alliances with appropriate sports

bodies. Capitalize on national sales efforts to establish & grow market

share.

GSA Development of GSA network globally to 17. Train, Train, Train. Hold global GSA meeting.

National Sales: What We Do Very Well

Manage key client relationships with 486 clients representing $800Min sales to Choice.

Grow share of business from these clients. Develop preferred relationships for Choice.

What We Don’t Do Well

Individual hotel sales. Address “fire fighting” needs. “Sell” ourselves internally.

What We’re Working On

Tactical sales blitzes. (Gov’t., AAA, & Corporate) Lead referral system. Internal communications team.

Assistance from IOC Support the campaign for participation levels in:

RFP Express FEMA approvals GSA payments

Assist us to achieve fast (24 hrs.)/quality hotel response to requests for rates & spaces for groups, meetings, & RFP’s.

Assist our conversion initiative into option D (optimal rate)

Assistance from IOC Support the campaign for participation levels in:

RFP Express FEMA approvals GSA payments

Assist us to achieve fast (24 hrs.)/quality hotel response to requests for rates & spaces for groups, meetings, & RFP’s.

Assist our conversion initiative into option D (optimal rate)

Advertising & Marketing Services

Advertising & Marketing Services

National & Co-op Advertising

Directories

Creative Services

National & Co-op Advertising

Directories

Creative Services

Mission StatementMission Statement Ensure that our campaign consistently:

supports the Marketing Initiatives and builds a brand image while delivering a retail message

translates to the local, regional and international levels

reaches our target audience segments through an effective and efficient media buy

follows all brand identity standards meets quality standards, deadlines, and

budgets

Ensure that our campaign consistently: supports the Marketing Initiatives and builds a

brand image while delivering a retail message translates to the local, regional and

international levels reaches our target audience segments through

an effective and efficient media buy follows all brand identity standards meets quality standards, deadlines, and

budgets

2001 Review2001 Review Selected new advertising agency Launched new campaign

The Power of Being There. Go®

Launched new co-op advertising program Developed reimaging and identity manual Responded to market changes and field input

Gas Card Promotion Triple Miles Thanks for Traveling

Launched new directory format for 2002

Selected new advertising agency Launched new campaign

The Power of Being There. Go®

Launched new co-op advertising program Developed reimaging and identity manual Responded to market changes and field input

Gas Card Promotion Triple Miles Thanks for Traveling

Launched new directory format for 2002

Key 2002 Advertising & Marketing Services Initiatives

Key 2002 Advertising & Marketing Services Initiatives

Increase preference and consideration of our brands

Increase preference and consideration of our brands

Consistent implementation of multi-branded campaign The Power of Being There. Go®

Advertising Collateral Sales promotion Web site

Drive campaign to co-op and local levels Support programs and promotions at national,

regional and local level

Consistent implementation of multi-branded campaign The Power of Being There. Go®

Advertising Collateral Sales promotion Web site

Drive campaign to co-op and local levels Support programs and promotions at national,

regional and local level

Improve brand identity and image

Improve brand identity and image

Generate awareness of brand re-imaging Reimaging campaign Ongoing efforts

Use new identity in all advertising, collateral and electronic vehicles

Expand contents of brand identity manuals Move to electronic formats during 2002

Generate awareness of brand re-imaging Reimaging campaign Ongoing efforts

Use new identity in all advertising, collateral and electronic vehicles

Expand contents of brand identity manuals Move to electronic formats during 2002

Increase awareness of key programs and promotionsIncrease awareness of key programs and promotions

Match promotional offer to environment and season Summer -- leisure Fall -- business, holiday Winter/spring -- business, seniors

Match promotional offer to environment and season Summer -- leisure Fall -- business, holiday Winter/spring -- business, seniors

Improve Co-op Advertising program

Improve Co-op Advertising program

Simplify process and improve structure RVPs in field to work directly with Co-op Chairs

and coordinate with Choice Co-op Ad Team New Co-op Ad Kit

Manual soon to be online Ad templates, photo options, and promotional tie-in

Financial process improvements underway Offer state co-op web pages Promote benefits of program to non-members

to increase hotel participation

Simplify process and improve structure RVPs in field to work directly with Co-op Chairs

and coordinate with Choice Co-op Ad Team New Co-op Ad Kit

Manual soon to be online Ad templates, photo options, and promotional tie-in

Financial process improvements underway Offer state co-op web pages Promote benefits of program to non-members

to increase hotel participation

Enhance directories and online capabilities

Enhance directories and online capabilities

All new 2002 T&V Directory Plans for 2003 and beyond

4-color property photo Beta test and launch online solicitation process CD version for distribution in-room, at trade

show, to Choice Privileges members, etc. Electronic directory Reduce distribution costs

All new 2002 T&V Directory Plans for 2003 and beyond

4-color property photo Beta test and launch online solicitation process CD version for distribution in-room, at trade

show, to Choice Privileges members, etc. Electronic directory Reduce distribution costs

Drive business to our hotelsDrive business to our hotels

Communication Image, awareness, consistency

Value and relevance Programs, promotions, message, timing

Regional and local programs Co-op Advertising Yellow Pages AAA Official Appointment

Communication Image, awareness, consistency

Value and relevance Programs, promotions, message, timing

Regional and local programs Co-op Advertising Yellow Pages AAA Official Appointment

Assistance From IOCAssistance From IOC Staff available for regional meetings:

Consistency and campaign/identity adherence Expanded reach through Co-op Advertising Get wired… the immediacy of online resources

Constructive/ “big picture” input on Needs in the local marketplace, i.e., POP,

implementation issues, etc. Communication and information

Staff available for regional meetings: Consistency and campaign/identity adherence Expanded reach through Co-op Advertising Get wired… the immediacy of online resources

Constructive/ “big picture” input on Needs in the local marketplace, i.e., POP,

implementation issues, etc. Communication and information

Electronic DistributionElectronic Distribution

Mission StatementContinue to aggressively position Choice Hotels International as the leader in all aspects of electronic commerce through automation of internal processes as well as effective and creative management and promotion of our hotels through each channel.

Mission StatementContinue to aggressively position Choice Hotels International as the leader in all aspects of electronic commerce through automation of internal processes as well as effective and creative management and promotion of our hotels through each channel.

2001 Review / 2002 Projections2001 Review / 2002 ProjectionsChannel 2000 2001 2002

ForecastGDS – Travel AgentSABRE, AMADEUS, Galileo andWorldspan (Traditional Travel AgentChannel)

$460 M $385 M(16 % Down))

$355 M(8% Down)

GDS – Consumer DirectGDS Web Sites (i.e. Travelocity)

$25 M $53 M(110 % Up)

$84 M(60% Up)

Pegasus / WorldResConsumer Travel Web Sites (i.e.Expedia)

$49 M $78 M(56% Up)

$102 M(35% Up)

ChoiceHotels.comChoice’s proprietary web site

$96 M $137 M(42% Up)

$184 M(35% Up)

TotalElectronic Distribution

$630 M $652 M(3% Up)

$727 M(11% Up)

Channel 2000 2001 2002Forecast

GDS – Travel AgentSABRE, AMADEUS, Galileo andWorldspan (Traditional Travel AgentChannel)

$460 M $385 M(16 % Down))

$355 M(8% Down)

GDS – Consumer DirectGDS Web Sites (i.e. Travelocity)

$25 M $53 M(110 % Up)

$84 M(60% Up)

Pegasus / WorldResConsumer Travel Web Sites (i.e.Expedia)

$49 M $78 M(56% Up)

$102 M(35% Up)

ChoiceHotels.comChoice’s proprietary web site

$96 M $137 M(42% Up)

$184 M(35% Up)

TotalElectronic Distribution

$630 M $652 M(3% Up)

$727 M(11% Up)

2002 Distribution Forecast

7%

6%

26%

40%

47%

14%

ChoiceHotels.com

VoicePegasus / WorldRes

Consumer Direct

Travel Agents

GDS

2001 Distribution

6%

4%

28%

38%

52%

10%

ChoiceHotels.com


Consumer Direct

Travel Agents

GDS

Distribution ChannelsDistribution Channels

Voice & Electronic DistributionCombined

Voice & Electronic DistributionCombined


Voice Network $863 M $710 M $642 M

Electronic Distribution $630 M $652 M $727 M

Total ReservationsRevenue Production $1.49 B $1.36 B $1.36 B


Voice Network $863 M $710 M $642 M

Electronic Distribution $630 M $652 M $727 M

Total ReservationsRevenue Production $1.49 B $1.36 B $1.36 B

2001 Highlights2001 Highlights

Enhanced Bulk Data Transfers with Galileo and SABRE Implemented an electronic queue process in GDS Electronic Hot Deals on ChoiceHotels.com FIT Rate availability on Travel Agent City Electronic Brochures for 83% of US hotels participating… …

1,000 new brochures received in 2001

Enhanced Bulk Data Transfers with Galileo and SABRE Implemented an electronic queue process in GDS Electronic Hot Deals on ChoiceHotels.com FIT Rate availability on Travel Agent City Electronic Brochures for 83% of US hotels participating… …

1,000 new brochures received in 2001

2001 Highlights Continued2001 Highlights Continued

Photographs of most hotels now available ChoiceHotels.com and Internet Distribution sites

Successful implementation of LGDS supporting regional co-ops

Increased use of imbedded Client IDs and jump pages Implemented online advertising plan (e.g. Travelocity.com,

Travelhero.com, Virtuallythere.com.)

Photographs of most hotels now available ChoiceHotels.com and Internet Distribution sites

Successful implementation of LGDS supporting regional co-ops

Increased use of imbedded Client IDs and jump pages Implemented online advertising plan (e.g. Travelocity.com,

Travelhero.com, Virtuallythere.com.)

2002 Initiatives2002 Initiatives Improve and expand hotel content

Simplify cryptic travel agent info with consumer-friendly content through Worldspan and AMADEUS.

Implement automated content management processes and procedures

Achieve 100% participation in Electronic Brochure program and online photo distribution

Quarterly online customer surveys provide feedback on relevant use issues

Improve and expand hotel content Simplify cryptic travel agent info with consumer-

friendly content through Worldspan and AMADEUS. Implement automated content management processes

and procedures Achieve 100% participation in Electronic Brochure

program and online photo distribution Quarterly online customer surveys provide feedback

on relevant use issues

2002 Initiatives Continued2002 Initiatives Continued

Enhanced automation of GDS rate loading Review and modify load and representation

process for Negotiated Rates Evaluate enhanced automation opportunities

with RFP Express Develop and implement customized rate offers

by channel

Enhanced automation of GDS rate loading Review and modify load and representation

process for Negotiated Rates Evaluate enhanced automation opportunities

with RFP Express Develop and implement customized rate offers

by channel

2002 Initiatives Continued2002 Initiatives Continued Redirect traffic and reservations to ChoiceHotels.com

Implement online media plan and strategy to maximize exposure and traffic to ChoiceHotels.com

Improve online tracking Improve and customize jump pages to ChoiceHotels.com Allow distribution of GDS negotiated rates on ChoiceHotels.com Expand XML connections with wholesalers, agencies and

affiliates Enhance ChoiceHotels.com position/placement on primary search

engines Activate state entry pages on ChoiceHotels.com for local and

regional use

Redirect traffic and reservations to ChoiceHotels.com Implement online media plan and strategy to maximize exposure

and traffic to ChoiceHotels.com Improve online tracking Improve and customize jump pages to ChoiceHotels.com Allow distribution of GDS negotiated rates on ChoiceHotels.com Expand XML connections with wholesalers, agencies and

affiliates Enhance ChoiceHotels.com position/placement on primary search

engines Activate state entry pages on ChoiceHotels.com for local and

regional use

2002 Initiatives Continued2002 Initiatives Continued

Establish process to protect electronic use of Choice related domain names and marks. Establish and administer global policy Consistent communication with licensees, field and

other related parties Implement software to administer new policy and

identify proper use of critical brand identifiers.

Establish process to protect electronic use of Choice related domain names and marks. Establish and administer global policy Consistent communication with licensees, field and

other related parties Implement software to administer new policy and

identify proper use of critical brand identifiers.

2002 Initiatives Continued2002 Initiatives Continued ChoiceHotels.com redesign

Work group to prioritize results of external research and oversee RFP development and vendor review

Implement trip routing and advanced mapping (multi-plotting)

Review regional site needs and opportunities Enhance and leverage Electronic Hot Deals Bring Choice’s entire web presence into campaign creating

a consistent message on all consumer and travel industry touch points

ChoiceHotels.com redesign Work group to prioritize results of external research and

oversee RFP development and vendor review Implement trip routing and advanced mapping (multi-

plotting) Review regional site needs and opportunities Enhance and leverage Electronic Hot Deals Bring Choice’s entire web presence into campaign creating

a consistent message on all consumer and travel industry touch points

Assistance from IOCAssistance from IOC Advise hotels that review and updates of their hotel data

should be a priority for optimal representation Promote the on-going value of Electronic Brochures Review and update hotel photographs especially, Sleep,

Quality and Comfort Suites as they complete re-imaging Promote consistency in on-property selling strategies both

locally and through Choice Promote ChoiceHotels.com in all local marketing /

collateral Support the Domain Name Use policy and procedures

upon introduction

Advise hotels that review and updates of their hotel data should be a priority for optimal representation

Promote the on-going value of Electronic Brochures Review and update hotel photographs especially, Sleep,

Quality and Comfort Suites as they complete re-imaging Promote consistency in on-property selling strategies both

locally and through Choice Promote ChoiceHotels.com in all local marketing /

collateral Support the Domain Name Use policy and procedures

upon introduction

Voice Reservations NetworkVoice Reservations Network

Mission StatementTo provide a cost-effective, customer service oriented, global voice reservations process that optimizes technology and customer retention sales techniques for selling advance reservations at Choice branded hotels.

Mission StatementTo provide a cost-effective, customer service oriented, global voice reservations process that optimizes technology and customer retention sales techniques for selling advance reservations at Choice branded hotels.


Reservations was split into an Electronic division (consisting of GDS, Internet distribution) and a Voice division in January 2001 to better focus on channels of distribution

Choice aggressively reduced costs to maintain competitive reservations fees and focus on core business of serving customers

Consolidation of 7 North American Call Centers into 2 was completed in November 2001

The North American Call Center Network was managed to the call volume and capacity required

Reservations was split into an Electronic division (consisting of GDS, Internet distribution) and a Voice division in January 2001 to better focus on channels of distribution

Choice aggressively reduced costs to maintain competitive reservations fees and focus on core business of serving customers

Consolidation of 7 North American Call Centers into 2 was completed in November 2001

The North American Call Center Network was managed to the call volume and capacity required

2001 Review Continued2001 Review Continued Consolidation resulted in no decline in service levels for 2001

Seamless transition: no impact to Customer Relations, Group Sales or the Choice Privilege Membership Service Center during transition

Sales conversion improved Cost Savings of over $2.5 million

Reduced overhead and labor costs by utilizing most cost effective call center locations

Training efforts can be more focused, increasing conversion Reductions in call volume means additional cost savings in labor,

telecom and overhead Continued cost savings from a more rapid implementation of new

technologies (less facilities = lower cost and faster deployment

Consolidation resulted in no decline in service levels for 2001 Seamless transition: no impact to Customer Relations, Group

Sales or the Choice Privilege Membership Service Center during transition

Sales conversion improved Cost Savings of over $2.5 million

Reduced overhead and labor costs by utilizing most cost effective call center locations

Training efforts can be more focused, increasing conversion Reductions in call volume means additional cost savings in labor,

telecom and overhead Continued cost savings from a more rapid implementation of new

technologies (less facilities = lower cost and faster deployment

Performance ReviewPerformance Review

2000 2001Target

2001Achieved

Average Speed of Answer(in seconds)

12.6 15 10.4

Abandonment 3.3% 3.0% 3.0%

Conversion 32.8% 32.8% 33.3%

Average Talk Time(in seconds)

178.7 180 182.5

Calls Handled 17.3 M 15.6 M 13.7 M

2000 2001Target

2001Achieved

Average Speed of Answer(in seconds)

12.6 15 10.4

Abandonment 3.3% 3.0% 3.0%

Conversion 32.8% 32.8% 33.3%

Average Talk Time(in seconds)

178.7 180 182.5

Calls Handled 17.3 M 15.6 M 13.7 M

2002 Distribution Forecast

7%

6%

26%

40%

47%

14%

ChoiceHotels.com


Consumer Direct

Travel Agents

GDS

2001 Distribution

6%

4%

28%

38%

52%

10%

ChoiceHotels.com


Consumer Direct

Travel Agents

GDS

Distribution ChannelsDistribution Channels

2002 Plan2002 Plan

Choice branded product will be sold in a non-brand centric (all brands) process based on the migration of the corporate advertising to use 1-800-4-CHOICE

Brand selling (when brand 800 # called) will follow the brand search process until guest initiates a cross sell opportunity

A more sales-oriented, customer focused selling approach will be used to improve sales conversion rate while improving quality of service (33.3% conversion in 2001)

Improve property database information content and inventory Implement new call routing technology to better distribute calls and

improve network performance

Choice branded product will be sold in a non-brand centric (all brands) process based on the migration of the corporate advertising to use 1-800-4-CHOICE

Brand selling (when brand 800 # called) will follow the brand search process until guest initiates a cross sell opportunity

A more sales-oriented, customer focused selling approach will be used to improve sales conversion rate while improving quality of service (33.3% conversion in 2001)

Improve property database information content and inventory Implement new call routing technology to better distribute calls and

improve network performance

2002 Plan Continued2002 Plan Continued

Introduction of electronic voice response system (IVR) for Choice Privilege MSC (providing 24/7 automated access to member account information)

Implement a work at home sales agent network in Minot and Grand Junction

Improve customer relations process to incorporate best practice policies and procedures for both consumer and licensee

The voice Call Center network will aggressively work to control costs by improving staff work flow efficiencies and improve calls per paid hour ratios

Introduction of electronic voice response system (IVR) for Choice Privilege MSC (providing 24/7 automated access to member account information)

Implement a work at home sales agent network in Minot and Grand Junction

Improve customer relations process to incorporate best practice policies and procedures for both consumer and licensee

The voice Call Center network will aggressively work to control costs by improving staff work flow efficiencies and improve calls per paid hour ratios

IOC AssistanceIOC Assistance Provide leadership role in the use of Optimal Rate

(formerly known as Option “D”) inventory rate control Provide a leadership role in the use and promotion of

SED to all Choice property GM’s Offer suggestions to improve customer relations

practices and help promote quick responses at the property level

Continually analyze and review rate and information content for both your and your regional hotels to improve consumer and reservation agent sales opportunities

Provide leadership role in the use of Optimal Rate (formerly known as Option “D”) inventory rate control

Provide a leadership role in the use and promotion of SED to all Choice property GM’s

Offer suggestions to improve customer relations practices and help promote quick responses at the property level

Continually analyze and review rate and information content for both your and your regional hotels to improve consumer and reservation agent sales opportunities



In Summary…In Summary…

Consumer 4%

New Hotels3%PR

2%

Corp Alloc.12%

Sales/ Inter.10%

Advertising/ Directory

57%

Brands5%

Surplus/ Payback

7%

Consumer 4%

New Hotels3%PR

2%

Corp Alloc.12%

Sales/ Inter.10%


57%

Brands5%

Surplus/ Payback

7%

20012001 20022002

Total Projected Revenue: $54.7 millionTotal Projected Revenue: $54.7 million Total Forecasted Revenue: $57.4 millionTotal Forecasted Revenue: $57.4 million

Marketing Fund AllocationMarketing Fund Allocation

Consumer 4%

New Hotels3%

PR2%

Corp Alloc.10%

Sales/ Inter.7%


66%

Brands4%

Surplus/ Payback

4%

Consumer 4%

New Hotels3%

PR2%

Corp Alloc.10%

Sales/ Inter.7%


66%

Brands4%

Surplus/ Payback

4%

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