FOR IMMEDIATE RELEASE

Sherman, Connecticut, April 28, 1999 – The hotel industry has been late to the Internet game, but eventually the Web will change the face of hotel distribution, concludes a new report from PhoCusWright, Inc. titled Hotel And Hospitality: The Sleeping Giant Of Internet Travel? The third in a series of reports that examines travel eCommerce, Hotel and Hospitality offers recommendations for optimizing the use of the Internet to grow share and increase online bookings. PhoCusWright, Inc. is a leading strategy and research company for the online Internet travel marketplace.

PhoCusWright estimates Internet hotel sales will more than double to $1.1 billion in 1999 and reach almost $4.0 billion by 2001. In three years the Internet will represent 5.5% of all hotel bookings. Other important findings include:

• Most hotels expect the Internet to represent approximately 10% of total bookings within five years.
• Leading hotels that offer Internet bookings on their Web sites report that 82% of total reservations are made through those Web sites, compared to 18% through intermediaries such as TravelWeb.com, MSN Expedia and Hotel Reservations Network.
• Hotels represented about 13% of total travel eCommerce in 1998, including airline sites, car rental sites and online travel agencies.
• Leading hotel companies invested an average of $20 million in their Web site development in 1998.

"The Internet has been overlooked as a viable revenue opportunity for the hotel industry," said Philip C. Wolf, president and CEO of PhoCusWright. "Our report examines what hotel companies are doing and what they need to do to harness the power of this powerful and profitable channel," Wolf explained.

To prepare the report, PhoCusWright surveyed Internet executives at 16 leading hotel companies representing more than 50 hotel chain brands, 20,000 properties and approximately $40 billion in revenue.

"We found that about half of all Internet hotel reservations are sold by intermediaries and the other half by hotel Web sites," noted Lorraine Sileo, Vice President, Information Services. "We can expect to see a shift toward these ‘middlemen’ as more leisure travelers book online."

According to PhoCusWright, the growth of intermediaries will lead to more comparison shopping and price sensitivity on the part of consumers.

One such company that has taken the lead in developing strong Internet-based applications for the hotel industry is Pegasus Systems, Inc. More than 80% of the hotel companies interviewed by PhoCusWright link to Pegasus. "What's significant is that the lion's share of Web hotel bookings is booked through Pegasus, whether it be on a partner hotel Web site, MSN Expedia or Preview Travel, or its own TravelWeb.com," Sileo said.

Hotel and Hospitality: The Sleeping Giant of Internet Travel? is the third in a series of reports on Internet travel strategies produced by PhoCusWright Information Services. This report will be followed by Jumpstarting Internet Car Rentals and Airlines: Investing In The New Distribution Channel. For information, visit www.phocuswright.com/research.html

In addition to providing strategy and research services, PhoCusWright will host the first European online travel industry conference: PhoCusWright LIVEurope99, May 6-7 at Hotel Le Plaza in Brussels, Belgium. PhoCusWright LIVEurope99 will expand its focus to address Internet travel in Europe.

PhoCusWright, Inc. is a leading independent strategy and research company that helps its clients understand the online Internet travel marketplace and make competitively advantaged decisions. PhoCusWright equips, connects and motivates industry executives to advance their business with speed, confidence and clarity.

Subscription packages include intense, topical PhoCusWright Reports, the digital Insighter collection, strategy sessions, access to analysts, custom research and The PhoCusWright Yearbook. Additionally, LIVE and LIVEurope are the definitive forums for the online Internet travel marketplace.

CONTACT: