Holiday Inn presentation - Holiday Inn

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					     Holiday Inn
            Mark A. Snyder
Senior Vice President, Holiday Inn Brand
  August 1, 1952 –                  A vision borne of harsh reality…
  the first Holiday
  Inn hotel opens
  in Memphis, TN.

  1960- first
  Holiday Inn
  outside of the
  United States –
  Montreal, CA.

  By 1962 there
  are over 400
  Holiday Inns…

  By the early 70s
  – there are over
  1000 Holiday
  1500 Holiday
  Inn – Avignon,

HolidayInn-Analyst-07Dec04-MS-qal                                      -1-
                  Our values: yesterday and today

       • Family: It’s our founding principle
       • Integrity: Reliable, straightforward value
       • Tradition: More shared moments than any other hotel
       • Modesty: Down-to-earth atmosphere
       • Community: Always there for you
       • Balance: Stuff for work and play
       • Self-reliance: We supply you with what you need

HolidayInn-Analyst-07Dec04-MS-qal                              -2-
                 Who Cares? Everyday Heroes do
                                                Target -- Everyday Heroes:
                                                 • Share our traditional values.
                                                 • Grounded, confident, not shallow
                                                 • Outgoing and sociable
                                                 • Hard working, conscientious, but don’t live to work
                                                 • Value quality time with family
                                                 • Strong sense of community
                                                 • Good neighbors, giving volunteers, longtime friends

                                                What they want in a hotel:
                                                 •   Familiar, casual, down-to-earth
                                                 •   With a little “life”
                                                 •   Where they can work or unwind, their way
                                                 •   NOT trendy, overly indulgent, or overly basic

              What Matters most, really matters. And, Holiday Inn understands that.
         When you’re away from the support of home and office, Holiday Inn is the place that lets you
         reconnect to what really matters most. We give you a casual atmosphere where you can be
         yourself, share in good times with others, and unwind in whatever way you choose. An environment
         that lets you do what you need to do -- on your own terms.
HolidayInn-Analyst-07Dec04-MS-qal                                                                           -3-
       Holiday Inn guests household income compares
         favorably to the industry and US averages:

                                                                   Household College Avg. nights
             Brand                  Male                     Age    Income education for business

     Holiday Inn                    66%                  44.6       $81.522     26%      64%

     Industry                       57%                  46.2       $77,738     25%      59%

     US average                     49%                  35.3       $41,994     24%      n.a.

Source: IHG, D.K. Shifflet & Assoc., LTD, US Census Bureau
HolidayInn-Analyst-07Dec04-MS-qal                                                               -4-
                                                  The Sweet Spot

                                              Holiday Inn                The Everyday Hero
                                    Accepts me for me                    Family
                                    Casual, comfortable                  Tradition
                                    Has a little buzz,
                                    something going on                   Integrity
                                    Is rooted in tradition               Modesty
                                    Is familiar
                                    Encourages people to
                                    come together                        Balance
                                    Lets me unwind however
                                    I choose                             Self-Reliance

                                           Lets me reconnect to what really matters most
                                            Lets me reconnect to what really matters most

HolidayInn-Analyst-07Dec04-MS-qal                                                            -5-
HolidayInn-Analyst-07Dec04-MS-qal   -6-
HolidayInn-Analyst-07Dec04-MS-qal   -7-
        Why Everyday Heroes choose Holiday Inn
 Comfortable, unpretentious rooms

                                                       Everywhere they want and need to be

                                                       Full Service Food and Beverage

                                    Useful Amenities

                       HSIA and WiFI

HolidayInn-Analyst-07Dec04-MS-qal                                                            -8-
                 So where do Everyday Heroes
                    stay when they are not
                   staying at a Holiday Inn?

HolidayInn-Analyst-07Dec04-MS-qal              -9-
              Holiday Inn is well positioned against both
                   the business and leisure traveler

                                                    Business and leisure roomnights and mix by competitor, 2004

                                                    12%                                                                            7%

                                                                                                                                   6%                            Best
                   Share of Total Business Nights

                                                    10%                               Marriott

                                                                                                   Share of Total Leisure Nights
                                                    8%                             Holiday Inn                                                        Holiday Inn
                                                    6%                                                                                                          Comfort
                                                                   Best             Hilton                                         3%
                                                                  Western                                                                    Hilton          Ramada
                                                    4%                        Hampton Inn                                                             Hampton
                                                                                                                                   2%                         Motel 6
                                                                   Comfort       Sheraton                                                            Sheraton
                                                    2%            Ramada            Courtyard                                      1%                             Quality Inn
                                                                                                                                                          La Quinta
                                                                     La Quinta                                                                 Courtyard
                                                    0%                                                                             0%
                                                      35%   45%    55%       65%    75%      85%                                        0%   20%       40%      60%   80%   100%
                                                                  Business Mix                                                                         Leisure Mix

Source: D.K. Shifflet & Assoc., LTD
               Source: D.K. Shifflet & Assoc., LTD
HolidayInn-Analyst-07Dec04-MS-qal                                                                                                                                                  -10-
       When not at                                    When not at
       Holiday Inn,                                     Marriott,
    Holiday Inn guests                               Marriott guests
         stay at…                                      stay at…
 Marriott                                     42%   Holiday Inn    50%
 Best Western                                 35%   Courtyard      42%
 Holiday Inn Express 35%                            Hilton         42%
 Comfort Inn                                  34%   Sheraton       29%
 Ramada                                       31%   Hampton Inn    28%
 Hilton                                       29%   Best Western   28%
Source: Millward Brown Brand Dynamics Study
HolidayInn-Analyst-07Dec04-MS-qal                                        -11-
                             Merrian-Webster’s Definition
                                    of an Expert…

   A person with skill or
  specialized knowledge;

HolidayInn-Analyst-07Dec04-MS-qal                           -12-
HolidayInn-Analyst-07Dec04-MS-qal   -13-
                                    “Stocks have reached what
                                     looks like a permanently
                                          high plateau.”

                                    Irving Fisher, professor of economics at
                                        Yale University, October 17, 1929

HolidayInn-Analyst-07Dec04-MS-qal                                              -14-
                    “We don’t like their sound.
                     Groups of guitars are on
                         their way out.”

             Decca Recording Company Executive,
                   turning down the Beatles, 1962

HolidayInn-Analyst-07Dec04-MS-qal                   -15-
                  “Bill Clinton will lose to any
                    Republican that doesn’t
                         drool on stage.”

                                    The Wall Street Journal, 1995

HolidayInn-Analyst-07Dec04-MS-qal                                   -16-
                                    The Experts Speak about
                                          Holiday Inn

        • “Holiday Inn is a dying brand with little
          relevance to the traveling consumer today...”

        • “Holiday Inn is woefully behind its
          competitors on a variety of fronts – with little
          hope of catching up...”

        • “As boomers head into retirement – so will
          Holiday Inn...”

HolidayInn-Analyst-07Dec04-MS-qal                             -17-
                                    The Experts Speak…

               “Marriott has a higher
             RevPAR than Holiday Inn...”

HolidayInn-Analyst-07Dec04-MS-qal                        -18-
                                    Proving that sometimes –
                                      the experts are right
                   Holiday Inn has a lower RevPAR than Marriott or Courtyard

                                                  2003 Year-End RevPAR
                                                   (1 Year Comparables)


                                    Holiday Inn          Marriott         Courtyard

Source: STR; US RevPAR
HolidayInn-Analyst-07Dec04-MS-qal                                                     -19-
                            What the Experts don’t say…

HolidayInn-Analyst-07Dec04-MS-qal                         -20-
                                              2003 Rooms Sold
                                  Based on year- end data released by Marriott
                               International, Holiday Inn sold more rooms in 2003
                                           than Marriott or Courtyard

                                                    2003 Rooms Sold
                                                  (1 Year Comparables)


                                    Holiday Inn         Marriott         Courtyard

Source: IHG
HolidayInn-Analyst-07Dec04-MS-qal                                                    -21-
                                        2003 Room Revenues
                          Holiday Inn room revenue in 2003 exceeded what was
                          posted by Courtyard and was comparable to Marriott
                                                  2003 Rooms Revenue
                                                  (1 Year Comparables)



                                    Holiday Inn          Marriott        Courtyard

Source: D.K. Shifflet; IHG
HolidayInn-Analyst-07Dec04-MS-qal                                                    -22-
                                     The Experts Speak…

                                     “Marriott owns the
                                    business traveler...”

HolidayInn-Analyst-07Dec04-MS-qal                           -23-
                        Preferred Hotel for Business Travel

                 On an unaided basis, Holiday Inn compares favorably to
                 Marriott and Hilton when travelers were asked about their
                       hotel preference while traveling for business

                                            2004 National Business Travel Monitor

                            41%                           40%

                         Marriott                      Holiday Inn   Hilton         Courtyard

Source: YPB&R/Yankelovich Partners
                Source: YPB&R/Yankelovich
HolidayInn-Analyst-07Dec04-MS-qal           Partners                                            -24-
                        2003 Rooms Sold for Business
                                       Holiday Inn sold more rooms for business
                                         purposes than Marriott or Courtyard

                                              2003 Rooms Sold For Business
                                                   (1 Year Comparables)


                                    Holiday Inn         Marriott             Courtyard

Source: D.K. Shifflet; IHG
HolidayInn-Analyst-07Dec04-MS-qal                                                        -25-
                                    The Experts Speak…

                                    “Marriott owns the
                                    leisure traveler…”

HolidayInn-Analyst-07Dec04-MS-qal                        -26-
                 Preferred Hotel for Leisure Travel
                          On an unaided basis, Holiday Inn compares favorably
                         to Marriott and Hilton when travelers were asked about
                             their hotel preference while traveling for leisure
                                           2004 National Leisure Travel Monitor


                             Holiday Inn        Marriott           Hilton         Courtyard

Source: YPB&R/Yankelovich Partners
HolidayInn-Analyst-07Dec04-MS-qal                                                             -27-
       The leisure segment has become dominant, and
         will continue to be for the next five years…









                                    1993   1994   1995   1996    1997   1998   1999   2000   2001   2002   2003

                                                                Business       Leisure

Source: D.K. Shifflet & Assoc., LTD
HolidayInn-Analyst-07Dec04-MS-qal                                                                                 -28-
Debuting in Orlando 2005 – Nickelodeon
  chose Holiday Inn as their partner

HolidayInn-Analyst-07Dec04-MS-qal    -29-
                                   What price for loyalty?
                          Marriott’s customers are more price focused and
                                  less brand loyal than Holiday Inn

                           "The company that I buy travel from doesn't matter as much
                                           as getting the best price"
                                 (US Leisure hotel bookers who booked online)

                                                       46%      45%
                                                                           40%         40%

                     Courtyard                     Marriott   Fairfield   Comfort   Holiday Inn

Source: Forrester
                Source: YPB&B/Yankelovich
HolidayInn-Analyst-07Dec04-MS-qal           Partners                                              -30-
                                    Ok – so the Boomers love
                                         you – so what?

HolidayInn-Analyst-07Dec04-MS-qal                              -31-
                                    From Brand Week – April 14

                    “Holiday Inn is mentioned
                    11 times in rap songs and
                    is in the top 40 of brands
                     associated with rapper’s
                      ‘Bling Bling’ in lyrics.”

HolidayInn-Analyst-07Dec04-MS-qal                                -32-
        The Emerging Opportunity…Today’s
        Gen X: The Slackers Have Grown Up
        Born:     1965 – 1980
        Avg. Age: 30
        Members: Matt Damon, Michael Dell, Winona Ryder, Gwyneth

        Married and having kids: Majority are now married. 60% are
        parents. But while they’re having kids, they’re still watching MTV.

        Priorities shifting: Xers are forming households and building careers;
        being “cool” is losing importance (“need to be hip, cool, cutting
        edge” down 10 pts since 1996).

        Family-focused conservatives: 70% of Xer parents say they’ll do a
        better job raising kids than the generation before them. Xers married
        with children are considered by some experts as “the most conservative
        people in the US.”

        Time starved young professionals: Spend more on personal
        services that any other age group. One-stop shopping epitomizes
        these young families.

Source: American Demographics (July 2002), Yankelovich, 2001., Strauss & Howe.
HolidayInn-Analyst-07Dec04-MS-qal                                                -33-
                                                                 Generation X

                                      While Gen X comprises only 29% of the U.S.
                                    population over the age of 18, this generation is
                                     responsible for 33% of all rooms sold in 2003
                                                      Room Night Contribution by Generation
                                                               (US Room Nights)






                              1992         1993      1994    1995   1996   1997   1998   1999   2000   2001   2002   2003

                                                            GI      Silent        Boomers          Gen X
Source: D.K. Shifflet & Assoc., LTD
                Source: D..K.
HolidayInn-Analyst-07Dec04-MS-qal   Shifflet & Assoc. LTD                                                                   -34-
                            Emerging Professionals (Gen X) Only
                            Generation to Grow Business Travel

                                            Business Room Night Volume by Generations
                                               (US Business Room Nights in millions)

            251               258                   264   265     260
                                      253    249                          254   255    248
                                                                                                233             228
                                                                                159    157      159     159     161
            72             74        77      74            69
                                     62                           64      62     60             59
                           47                                                           55               55     54
            35                               69     71
            43                                                                                   9        7      5
                           37        37      36     34     29     29      28     25     23
          1992           1993       1994    1995   1996   1997   1998    1999   2000   2001     2002 2003F 2004F

                     Gen X (1965-1980)             Boomers (1946-1964)     Silent (1930-1945)        GI (Pre 1930)

HolidayInn-Analyst-07Dec04-MS-qal                                                                                     -35-
                                    The Experts Say...

                              “As boomers head into
                                retirement – so will
                                   Holiday Inn...”

HolidayInn-Analyst-07Dec04-MS-qal                        -36-
                                          2003 Gen X Penetration
                     On an unaided basis, Holiday Inn compares favorably to
                     Marriott and Hilton when travelers were asked about their
                           hotel preference while traveling for business
                                                        Gen X Mix by Brand

                                              31%              31%                        33%

                         Holiday Inn         Marriott          Hilton        Courtyard   Industry

Source: D.K. Shifflet
HolidayInn-Analyst-07Dec04-MS-qal                                                                   -37-
                                    The Experts Speak…

       Holiday Inn has done little to
    improve the customer service and
     product experience of the brand
       over the last several years…

HolidayInn-Analyst-07Dec04-MS-qal                        -38-
               In fact – we improved significantly
                                    American Customer Satisfaction Index Scores

                                    2004 Change vs
                                                             ACSI Score by year 1994-2004
                                    Score Baseline
   Hilton                            77     2.70%               Marriott Int’l
                                                       78                           Hilton Corp
   Marriott                          76    -5.00%
   Hyatt                             74    -2.60%      74                            Holiday Inn
   Holiday Inn 73                           5.80%      72
   Starwood                          73     0.00%      70
   Ramada                            67    -4.30%      68
                                                       66                             Ramada

   Average                           72    -4.00%      64
    Hotel                                                   94 95 96 97 98 99 00 01 02 03 04
HolidayInn-Analyst-07Dec04-MS-qal                                                              -39-
                       “Somewhere in these states, there is a young man
                             who is going to become very rich.

                   He is going to start a chain of small, clean, pleasant
                   hotels, standardized and nationally advertised, along
                        every important motor route in the country.

                    He is not going to waste money on gilt and onyx, but
                     he is going to have to have agreeable clerks, good
                      coffee, endurable mattresses and good lighting.”

                                                    Sinclair Lewis, Author
                                             Saturday Evening Post, 1920

HolidayInn-Analyst-07Dec04-MS-qal                                            -40-
       Holiday Inn Hotel, Duluth Georgia
HolidayInn-Analyst-07Dec04-MS-qal          -41-
                          Profile of a typical Holiday Inn

            •       Rooms:                   195 (prototype 140)
            •       ADR:                     $78
            •       Occupancy:               60%
            •       RevPAR:                  $48
            •       Rooms Revenue:           $2.5 - 3.5m
            •       Non Rooms Revenue %:     30 - 40%
            •       Total Revenue:           $3.2 - 4.5m
            •       Build cost/key:          $75k
            •       Location type:           Secondary
            •       Meeting space:           8,000 sq ft
            •       % franchised:            94%

HolidayInn-Analyst-07Dec04-MS-qal                                  -42-
                                    Who develops Holiday Inn?
       • Legacy Developers
                  – Began their careers with
                    Holiday Inn…
                  – Created their own family
                    businesses through
                    developing Holiday
                                                   • Emerging “Lords of
                  – Diversified their portfolios     Lodging”
                    with IHG and competing           – Younger, more ethnically
                    hotel brands…                      diversified than their
                  – Many have passed the             – Global appeal of the Holiday
                    legacy on to a child in the        Inn brand name is a primary
                    family                             selection driver
                                                     – Many start in limited service
                                                       mid-scale, and then trade up
                                                       to full service mid-scale…
                                                     – Most view HI as the
                                                       “pinnacle” of the American
                                                       Dream…they find
                                                       inclusiveness here.

HolidayInn-Analyst-07Dec04-MS-qal                                                      -43-
                                Why does an owner choose
                                      Holiday Inn?

       • Most well-known, best loved hotel
         brand in the world

       • Proven return on investment,
         evidenced by 53 years in the business

       • The powerhouse of the “IHG engine”

HolidayInn-Analyst-07Dec04-MS-qal                          -44-
                                    “The reports of my death
                                       have been greatly

                                         Mark Twain, Author

HolidayInn-Analyst-07Dec04-MS-qal                              -45-
                        Growth strategy of Holiday Inn
        Growth                      Focus
        Units                               Ubiquitous distribution so will see replacement
                                            of units moving forward rather than net growth

                                      √     Continuing to improve quality of estate and
                                            grow same store sales by reconnecting with
                                            brand heritage and rapid deployment of
                                            prototype into strategic market

HolidayInn-Analyst-07Dec04-MS-qal                                                             -46-
             Unit growth is not what Holiday Inn
                       is all about . . .
                                                                        Holiday Inn US vs Midscale with F&B Segment
                                                                              Growth in Available Room Nights
                                                                                    (Index = 100, CAGR with label)
                     Available Room Nights per annum (millions)



                                                                                                                            HI -1.9%
                                                                   90                                                    Midscale
                                                                                                                       w/F&B -2.2%

                                                                        2000     2001        2002            2003    2004

Source: STR
HolidayInn-Analyst-07Dec04-MS-qal                                                                                                      -47-
          . . . because it is already everywhere

                                     % of tracts in which brand is present

                              93%    94%


                      Holiday Inn    Best     Courtyard     Hilton     Marriott   Ramada
                                    Western               Garden Inn

Source: STR
HolidayInn-Analyst-07Dec04-MS-qal                                                          -48-

          •          Holiday Inn is undoubtedly the most consumer-
                     preferred brand in the hotel industry

          •          Holiday Inn is the cornerstone of IHG portfolio,
                     providing scale for all Enterprise Value programs

          •          Unit growth is limited because we are already
                     everywhere; growth for IHG will come from focus
                     on other profit levers

HolidayInn-Analyst-07Dec04-MS-qal                                        -49-

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