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THE COMPANY Budget Hotels began life in 1983 with the first few Info Center boards located in Greyhound terminals, the Toronto Port Authority and the New York Port Authority. From there the company grew the number of locations steadily and added their online reservations capability in June of 1996. THE BUSINESS Budget Hotels focuses on the needs of the budget traveler. The Company is ideally positioned to become a major reservation destination site within the worldwide online travel market through two independent yet synergistic networks. (a) Hotel Reservation Centers, Budgethotels has traditionally earned revenue from selling advertising on its Reservation Centers to hotels and travel related services. These illuminated display boards are located under long term, exclusive agreements in major Greyhound, Amtrak, New York Port Authority and Via Rail terminals across North America. There are currently 86 such Reservation Centers in place. (see Map). The Company, to date, has sold advertising primarily through telemarketers. Annual revenues of $650,000 from these Centers represent only 20-25% of the potential advertising revenue. In order to increase this revenue stream the Company has recently developed an aggressive telemarketing strategy with a mandate to increase board occupancy to 100% (a 400% - 500% targeted increase) The second stage of the Company's aggressive new business plan completes Budgethotel's transformation from an advertising revenue based company to a wholesaler/retailer of budget accommodations online. This transformation holds the potential to increase revenues by five to ten fold on a per booking basis. (b) Online Travel Reservation The Company's online travel web site www.budgethotels.com, currently features over 500 hotels, motels, youth hostels and bed & breakfast locations in the USA and Canada. These are unique to Budget Hotels while an additional 40,000 properties are delivered through Affiliated Partners. Traffic on the web site is strong (averaging 1,000 unique visitors a day) without any marketing to date by the Company. Budgethotels is poised to significantly increase its online revenues and profitability through the current upgrading of its existing software and hardware and with the implementation of its aggressive new sales and marketing campaign. THE ONLINE TRAVEL MARKET The New York Times in their October 20, 2002 edition summarized the online travel market as follows: “…..more than 61 million households in the United States will book travel online this year according to Forrester Research….Forrester expects online hotel bookings to double over the next 4 years to $7.7 billion from $3.8 billion. Already travel is by far the No. 1 activity among internet consumers. According to ComScore Networks, travel related purchases accounted for about 43 percent of online consumer spending in the first half of this year. In some weeks more travel is purchased online than every other category combined.” The market for travel products and services is highly competitive with significantly larger companies such as Hotel.com (NASDAQ: ROOM) and Travelocity fighting for market share in the mainstream travel market. Budgethotels is, however, uniquely positioned through its exclusive Agreements with Amtrak and Greyhound to develop a highly profitable business focused on the Budget Traveler. The current economic environment, with more and more travelers choosing bus and train transportation, is an ideal time for Budgethotels to expand their Network and increase their marketing focus within the Budget Accommodation sector. As of August 31, 2003 there are 18,802,632 shares outstanding. | ||||||||||||
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