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A Diverse Customer Focused Web Strategy to Shift Buyer Behavior & Increase Stakeholder Value Assistant Vice President of E-Commerce Interval International Adjunct Professor Graduate Business School University of Miami William J. Brown

This Presentation Will Be Available Online Send a blank e-mail to: [email_address] Get immediate access to this presentation and others from many Internet executives Share your expertise with 400 students Recruit your E-Commerce team from graduating students

What We’ll Discuss Today: We will examine Interval’s historical approach to consumer-focused technologies We will look at what Interval has and is doing to shift buyer behavior We will examine some of Interval’s challenges and our next steps We will take a look at the use of the Internet in the timeshare industry

Timeshare: A Growing Industry Global Sales of Timeshare = $6.7 Billion up 5.6% compounded annually since 1994 4.99 million families own timeshare collectively own 7.4 million intervals or respective points-based equivalents Source: American Resort Development Association

Leisure Travelers Interested in Using the Internet Source: The YPB Yankelovich Partners 2000 National Leisure Travel Monitor * Denotes statistically significant difference from prior year 48* 43 Make car rental reservations 52* 46 Make airline reservations 52* 48 Make hotel reservations 64* 57 Get information and prices 2000 % 1999 % Leisure travelers who are interested in using the Internet or services such as Expedia or Travelocity to:

Online Distribution Growth Vacation/Tour/Cruise category is the fastest growing sector of online travel By comparison, Hotel Web site distribution will grow by just 218%; Airline Web sites by just 156% Source: 2000 PhocusWright eCommerce Survey 971% 750 70 Vacation/Tour/Cruise Change 2001 $m 1999 $m Distribution Channel

Interval International One of the world’s largest vacation exchange companies With 1,700 team members in more than 50 countries 1.2 million member families, comprising more than 4 million individuals A network of more than 1,850 affiliated vacation resorts Privately held Willis Stein (Venture Firm) Marriott, Hyatt, Carlson, Starwood hold equity positions

Web Initiatives Built on Solid Foundation Interval is a recognized leader in vacation travel services & exchange Interval has a scaleable organizational structure, which today manages: 1,250,000 members, living in over 60 countries Interval members own approximately 1,900,000 units of timeshare, much of which is not utilized for exchange

Interval’s Affluent, Web-Savvy Membership Average household income has risen 11 percent over the past two years, to almost $103,000 More than 33% have a household income above $100,000, compared with just 9.3% of U.S. population 80% have Internet access at home or work 70% use e-mail On average, spends 4.2 hours each week online Source: 1999 Simmons Proprietary Research Study

High Propensity to Purchase Online 33% use the Internet to shop for and purchase travel services 32% purchased airline tickets, hotel reservations, car rentals, or last-minute or preplanned vacation packages via the Internet 50% said they planned to purchase merchandise online in 2000 More than 20% would make their travel purchases online again Source: 1999 Simmons Proprietary Research Study

Interval’s Goals for the Web Provide a better user experience for our customers Transition business to self-service model Reduce costs Provide worldwide service, 24/7/365 Create new revenue streams by building on core competencies

Credit card order processing Website for product/service information Customer support via the Web Website for corporate information (www.interval-intl.com) Web access to order information Inference Engine Full Online Exchange Measuring Interval’s Web Progress Credit: Geoffrey Moore E-Commerce Escalator, adapted from “Living on the Internet” Core Context

Internet Enabled Core Business Functionality Getaways “ II-Savers” Membership Renewals Membership Upgrades Interval Preferred Exchange Queries Online Travel Exchange (more on that later …)

State of Convergence: Offline Competencies – Online Components Under development Packages (travel and/or amenities) Air/car/ground/hotels Amenity packages (e.g., Disney park tickets) Promotional program launched June 2000 MBNA Consumer Credit Card & Rewards Program Promotional program launched March 2000 Membership Upgrade Package Partnership with YouDecide.com (CFN) Insurance Fully Enabled, plus Web-only products such as II-Savers Getaways Enabled; Amadeus/ProLogic/Vendors Air/Car/Cruise/Hotels Under “highest-priority” development; implementation to begin 4 th Quarter 2000 Full Self-Service Vacation Exchange Status of Internet Offering Existing Member Products, available through traditional call center

Member Use Accelerating Nearly 100,000 unique Interval members visited IntervalWorld.com Between content and transaction pages, members are viewing more than 2.2 million pages each month Traffic growth of about 7% per month NOTE: IntervalWorld.com is a closed membership site exclusively for Interval members Site Traffic Internet Initiatives to Date

Online Getaway Sales: Approaching 35% of Total Getaways Sold 1999 2000 To Date August 12

Online Renewals Surging Membership renewals conducted through IntervalWorld.com

Online Member Inquiries (Self-Help, in-place of Call Center) Total, self-service exchange status inquiries since inception of functionality = 457,991 Savings in opportunity costs, based on average customer service cost of $6.75 per call = $3,091,439

How Are We Shifting Buyer Behavior?

IntevalWorld.com is a Members-only Web site Member content available in 11 languages, with international versions launching this Fall Clear Statement of Exclusive Value

Internet-Only Discounts Interval members can save up to $50 on each Getaway (additional, last-minute resort vacation) II-Savers: Very limited, least expensive specials on imminent burn space Preferred seating for Broadway Shows Coming soon : Discounts for online membership renewals & upgrades

Expanded Resort Directory & Tools Each resort listing will have up to 10 photographs of sample units (by size, amenities, etc.) Streaming video is being produced for 80 top destinations in partnership with Visual Data Corp. (we call this “ResortView”) Blueprints and floor plans for each property Local maps and event schedules

Cohesive, Unified Marketing Messages Cohesive marketing message: IntervalWorld.com is faster , easier to use , and offers exclusive savings Positioning to members that this can be a primary channel for conducting business with Interval Example of branding: Re-launch of member magazine as IntervalWorld Magazine , to reinforce value of Web site Every piece of Interval collateral and document delivered to our customers reinforces Internet brand

E-Mail Marketing Initiatives Early efforts have succeeded in creating opt-in lists of more than 100,000 Interval members Strategy is to significantly expand effort throughout remainder of Year 2000 and deliver diverse newsletters and communiqués Anticipate that these initiatives will assist in shifting buyer behavior to Web functionality and drive higher Internet revenues

Online Travel Interval members may search for fares or purchase airline tickets , hotel or car rental reservations, at Interval negotiated rates

Select Alliances Build on Demographics Example: Launching a private-label tee times booking service for members of Interval International Nearly 31% of Interval members golf while on vacation Alliance will also create a joint membership program to market to Interval members Other examples include real-time worldwide weather, street directions, maps, etc.

IntervalWorld Delivers Even More Value Through select affiliate programs, Interval creates compelling online-only services for our members Provides the platform for our members to purchase value-added products that reinforce our brands, many at negotiated discounts Amazon.com, Spa Finder, Schubert Theatre Group, YouDecide.com, Samsonite, and more

Internet Lead Generation Initiatives

Mass Market: Compelling Internet Opportunities 27 million people shopped for travel online in 1999 Double 1998’s total of 13.4 million Online travel shoppers now comprise more than 33% of the total online population These consumers spend $500 more per year than the general online user (typically spend $705 per transaction) More than 75% of online travel shoppers agree that brands are more important online than offline Online adults make an average of 3.3 online travel arrangements each year Source: Cyber Dialogue

Mass-Market Initiatives Interval Goals: Consumer lead generation for our partners New distribution channels for inventory New affinity membership programs

Interval’s Access to Resort Vacation Inventory Developers Estimated by AEG at 2.1 million units in 2000 Home Owners Associations (HOA) Existing Inventory Unsold weekly intervals Interval has potential access to 217,620 unsold units, just from its existing membership base Non-timeshare inventory Interval is a true inventory aggregator

Where are Timeshare Web sites today? Let’s take a look at the top companies by total annual sales revenue …

40% 87% 33% 40% 27% Source: Vacation Industry Review January/February 2000

A Few Conclusions Analysis suggests that there is a gap between endorsing the Web as an important channel and actual execution we’re acknowledging it’s an important channel, but not fulfilling it I believe timeshare companies are still trying to figure out why the Web matters to them Can’t actually sell a timeshare online – yet Web-site operators should do more to demonstrate value to existing owners and to the leads that they want to convert into new owners. For example, the Web is a perfect medium for mini-vacations and other promotions, but only a third of the resort vacation companies provided any such special offers.

Summary The vacation ownership niche is a vibrant, popular and growing segment of the global travel industry Interval has a clear strategy to: Deliver value to our customers & partners Shift consumer behavior from offline to online Create new revenue streams Leverage the Web to enter the mass-market Launch new vertical businesses using the Internet & Interval’s core competencies

Still, the Opportunities are Just Being Scratched As Robert Shaw once said “ So far we’re only putting lipstick on the pig.”

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