Adventure Travel DivisionAdventure Travel Division

Simon TobinSimon Tobin 17 September 200417 September 2004

The World of Adventure Travel

• Small group exploration

• All continents / 107 countries / 400 trips

• Responsible Tourism

The Market in UK

UK Worldwide Group Travel – Cultural, Activity & Adventure

Adventure Small Groups

(60,000*)

*ATOL Licenses – 01/09/03

Walking Activity Special Interest

Individuals & Groups Self Guided

(61,200*)

Worldwide Group Travel Cultural

& Comfort

(158 500*)

ExploreExodus

BalesCox & Kings

Noble CaledoniaVJV

Travel CollectionTravelsphere

The Adventure CompanyJourney Latin America

Guerba / Dragmoman / ImTrav

Discover the WorldHeadwaterInntravelHF HolidaysATGWaymark

Ramblers

Customer Profiles

• Grown up back packers

• Late starters

• First steppers

• Action men & women

• Serial Explorers

• Average age 46 … 55% female

The Business Model

• Small group packages• Land costs & Tour Leader & Air & Misc• Pricing = VFM• Gross margin 30%• Net margins 9%• Yield management drives profitability• Currency bought forward

Distribution

87% UK / IRL = EXUK

Flight inclusive

13% International GSA’s

= Land only

USA CAN AUS NZ

Sales Mix

UK Business95% Direct5% Agency

Direct business 20% via Web

20%

80%

Customer Services

•Sales & Reservations

•Support

•Flights/Tix

•CR

Organisation & Structure

Explore

Marketing

•Comms

•Services

•Distribution

•Internet

IT

•Network

•Systems and Development

Finance & Admin

•Financial

•Legal

•HR

Operations

•Product Development

•Overseas Ops

•Aviation

•120 Permanent Staff

•140 Tour Leaders & Local Leaders

Divisional Board

Simon Tobin (4)Mangaging Director (Sales & Marketing)

Ashley Toft (9)Customer Services

Director

Nick Anstead (10)Product

Development & Ops Director

Andreas Elia (7)General

Manager, RegalDive

Mike Tyler (3)Finance Director(Finance/IT/HR)

Derek Moore (24)Aviation Director

RegalDive - Product

• Red Sea Package Holidays– Diving, Liveaboards & Sun

• Worldwide Diving– Tailor made – to Caribbean, Maldives,

Indonesia, South Africa etc

• Special Groups & Flights Only

RegalDive - Business Model

• 80% Red Sea Charter 7 / 14 day rotations

• 15% Worldwide

• 5% Seat only / miscellaneous

• Conventional Tour Operator Financial Model– 20% Gross margins. 5% Net margins– Load factors / Fixed cost commitment

RegalDive - Organisation & Distribution

• Based in Cambridgeshire

• Technical Dive & overseas expertise

• Lean cost / overhead structure

• Direct sales 70%

• Agency / Specialist Dive 30%

Getting Through Difficult Times

• External factors post 9 / 11– SARS, Bali, Afghanistan, Iraq Wars, Kenya, Morocco

& etc

– Continue product development

• Improve & Change & Develop internal systems– Flexibility in air

– Internet & on-line capability

– Streamline business processes

• Clarify brand strategy

The Explore Rebrand Experience

• Rationalise brand hierarchy

• Master brand allows for segmentation

• Multi channel application

• Refresh and add style / design to enhance values and communication

From this

To this

Financial Performance Since 9 / 11

Turnover - Years 2001-2004

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

00/01 01/02 02/03 03/04

Tu

rno

ver

£'00

0

+14% 31.0m

32.6m 33.3m

(as at 7/9/04)

Financial Performance Since 9 / 11

PBIT for Financial Years 2001-2003*

0

500

1,000

1,500

2,000

2,500

3,000

00/01 01/02 02/03 03/04

PB

IT £

'000

3.4m2.4m

1.9m

*Before goodwill, impairment and exceptional costs

Financial Targets

• Strong top line sales growth

• Margins steady at 30% +

• Net margins in line with 2004

• 2005 sales currently 45% ahead – but Q4 (35% of annual total) bookings yet to start

Organisational Developments

• On-line booking launches

• Extend Web community development

• IT systems development plans for handling multi flight options

• Explore / RegalDive – air ticket synergies

• RegalDive goes on line

Strategic Challenges

• Operating in a changing world

• Aviation issues

• Competitive activity / Tour operating changing

• New markets – new channels

The Geo-Political Map

• Fundamentalism – Terrorism – Anti-Western

• Political instability – e.g. Bolivia, Katmandu

• New destinations vs conservation & Responsible Tourism

• Customer perception – FCO advice / media

• US / Allied Foreign Policy

Aviation

• Consolidation of Flight Carriers / Alliances

• Yield Management, allocation models

• Short haul / Low cost

• Fuel prices

• Air travel safety issues

New Markets / New Channels

• New customers – matching expectation– Plans for multi channel growth– New media / Rich media– 3 party alliances e.g. British Museum, National

Trust– Replace established above line with internet /

Web– Extend specialist agency links

Adventure Travel Division – The Future

• Increased appetite for adventure travel

• Geopolitical risks but a huge range of destinations and travellers will adapt

• Market leadership and loyal customer base

• Successful product and brand development programmes

• Continuing opportunities for profitable growth

Investor WorkshopInvestor Workshop

17 September 200417 September 2004