June 2004 HITEC 2004 In-Room Entertainment 1

June 2004 HITEC 2004 (In-Room Entertainment) 1

HITEC 2004 In-room Entertainment Nick Price CIO/CTO Mandarin Oriental Hotel Group June 2004 HITEC 2004 (In-Room Entertainment)

Agenda u MO Group u Key Customer/Technology Trends u Recent Projects u Closing thoughts June 2004 HITEC 2004 (In-Room Entertainment) 3

Mandarin Oriental Hotel Group (MOHG) u u u Mandarin Oriental is the award-winning owner and operator of some of the world’s most prestigious hotels and resorts The Group operates 20 luxury hotels in key business and leisure destinations, with a further five hotels under development in Chiang Mai, Thailand (opening late 2004); Hong Kong, Mexico (opening 2005); Tokyo and Boston (opening 2006) In total, Mandarin Oriental now operates, or has under development, 7, 700 rooms in thirteen countries with 12 hotels in Asia, nine in The Americas and four in Europe. u Current development totals US 1. 5 B. Growth target is 10, 000 rooms. u Headquartered in Hong Kong. June 2004 HITEC 2004 (In-Room Entertainment) 4

Key Customer Trends 1. Younger and more mobile 2. Communicate broadly (work, family, friends) using a variety of methods (phone, cell-phone, email, IM, fax) 3. Carry laptop, pda, digital camera, dv-cam, i-pod/mp 3 etc which they expect to connect up in the room quickly and easily 4. Stays are short with little time for rest and relaxation so personal time is precious 5. Want to stay ‘informed’ and ‘entertained’ 6. Spend on CE Technology is increasing June 2004 HITEC 2004 (In-Room Entertainment) 5

Key Technology Trends 1. Shift from CRT to LCD / Plasma / DLP projection 2. Transition from Analog to Digital broadcast 3. Digital 5/7 Channel Audio 4. Emergence of wired & wireless connectivity June 2004 HITEC 2004 (In-Room Entertainment) 6

TV Technology Evolution HD DLP Rear Projection TV 16 x 9 HD LCD TV 16 x 9 Plasma TV 16 x 9 Black & White CRT TV NTSC “Color” CRT TV 1960 1970 June 2004 Widescreen CRT TV ~ ~ ~ 2000 HD 16 x 9 CRT TV 2002 HITEC 2004 (In-Room Entertainment) 2003 2004 7

Analog to Digital Broadcast u Analog TV standards stable for last 40 years u u u Only advance was introduction of colour in 1970’s Analog broadcast ends in US - 2006 All broadcasters required to switch to Digital to free up Analog spectrum u The rest of the world will follow u We are entering a period of considerable change enabled by u u u Pent-up demand Rapid technological evolution Things will never be the same, or as simple, again June 2004 HITEC 2004 (In-Room Entertainment) 8

TV Resolution 1920 ATSC 1080 i 1280 ATSC 720 p u 1080 720 NTSC / PAL 480 500 Lower resolution NTSC/PAL pictures must be blown-up to fit 720 p or 1080 i HDTV displays u Analog CRT TV’s will always display analog TV pictures better than a digital TV u CRT TV’s produce better moving pictures than LCD/Plasma today. June 2004 HITEC 2004 (In-Room Entertainment) 9

MOHG Technology Strategy 1 Simple, 3 Improved 4 The need customer elegant informati for bold as the customer on decisions core facing sharing —to realise The informati on asset 2 systems —not technology for its own sake June 2004 HITEC 2004 (In-Room Entertainment) across the group and with partners a unique opportunity for generational change 10

Simple, elegant, customer-facing systems u In-room Entertainment Strategy u u u Implement high-quality branded products that compliment, not contradict, MOHG’s brand Deliver an experience equal-to, or better-than, at home Achieve a balance between a) b) c) u u Physical product that customers see and use Infrastructure that they don’t see Content Entertain for 30 minutes Allow guests to “connect up” their own devices both now and in the future u Improve the in-room audio experience u Assist guests to find out ‘what’s on’ u Allow for use at different levels u Achieve a “WOW” – I didn’t expect to see that in the hotel! June 2004 HITEC 2004 (In-Room Entertainment) 11

Quality technology Technologies that reflect the five-star values of the MOHG brand… June 2004 HITEC 2004 (In-Room Entertainment) 12

Quality technology not contradict them June 2004 HITEC 2004 (In-Room Entertainment) 13

Projects u Bangkok - Audio: Bose Lifestyle– 5 u London - Loewe TV and Neos Entertainment System u New York - Samsung LCD TV and Media Centre with GDI Entertainment System u D. C. - RCN FTG TV with 10 HDTV channels Samsung LCD + CRT TV’s and Media Centre with GDI Entertainment System - VOOM all digital FTG TV with 30 HDTV channels Planning for Landmark, Chiang Mai, Cancun, Singapore, Tokyo & MO Hong Kong June 2004 HITEC 2004 (In-Room Entertainment) 14

In-room Entertainment u Established a leadership position in the industry through innovation u Developed an integrated in-room entertainment concept (smart room) June 2004 HITEC 2004 (In-Room Entertainment) 15

In-room Entertainment June 2004 HITEC 2004 (In-Room Entertainment) 16

In-room Entertainment u u Established a leadership position in the industry Developed an integrated in-room entertainment concept (smart room) u u u Flat Screen Multi-Screen LCD TV in bathroom June 2004 HITEC 2004 (In-Room Entertainment) 17

In-room Entertainment June 2004 HITEC 2004 (In-Room Entertainment) 18

In-room Entertainment u u Established a leadership position in the industry Developed an integrated in-room entertainment concept (smart room) u u u Flat Screen Multi-Screen LCD TV in bathroom Single Remote Control Extensive Channel Line-up Electronic Programme Guide June 2004 HITEC 2004 (In-Room Entertainment) 19

In-room Entertainment June 2004 HITEC 2004 (In-Room Entertainment) 20

In-room Entertainment u u Established a leadership position in the industry Developed an integrated in-room entertainment concept (smart room) u u u Flat Screen Multi-Screen LCD TV in bathroom Single Remote Control Extensive Channel Line-up Electronic Programme Guide Unique Mandarin Content First hotel with true HDTV First hotel with Dolby virtual-surround sound Integrated CD / DVD player First hotel with multi-function aux-panel June 2004 HITEC 2004 (In-Room Entertainment) 21

S-Video Audio VGA Composite Video June 2004 HITEC 2004 (In-Room Entertainment) 22

In-room Entertainment u u Established a leadership position in the industry Developed an integrated in-room entertainment concept (smart room) u u u Flat Screen Multi-Screen LCD TV in bathroom Single Remote Control Extensive Channel Line-up Electronic Programme Guide Unique Mandarin Content First hotel with true HDTV First hotel with Dolby virtual-surround sound Integrated CD / DVD player First hotel with multi-function aux-panel Driven by customer preferences u u u Name Language Group Others. . Integrated Messaging June 2004 HITEC 2004 (In-Room Entertainment) 23

June 2004 HITEC 2004 (In-Room Entertainment) 24

June 2004 HITEC 2004 (In-Room Entertainment) 25

In-room Entertainment u u Established a leadership position in the industry Developed an integrated in-room entertainment concept (smart room) u u u Flat Screen Multi-Screen LCD TV in bathroom Single Remote Control Extensive Channel Line-up Electronic Programme Guide Unique Mandarin Content First hotel with true HDTV First hotel with Dolby virtual-surround sound Integrated CD / DVD player First hotel with multi-function aux-panel Driven by customer preferences u u u Name Language Group Others. . Integrated Messaging High Quality on-screen internet experience June 2004 HITEC 2004 (In-Room Entertainment) 26

In-room Entertainment June 2004 HITEC 2004 (In-Room Entertainment) 27

In-room entertainment - $$ u u Hotels own all CE equipment and networks Hotels pay per room/night fee for service and content, Vo. D server and STB’s u Hotels pay for FTG TV u Take rates are good and rising u u u ~$200 per occ room/month Free HD content out ‘sells’ paid SD content 4 to 1 Total spend for 250 room hotel is: u u Revenue $40 k per month @ 80% occ u u $1 million + $26 k per month Payback in 5 -6 years Hotel owns 5 -star asset which attracts incremental business June 2004 HITEC 2004 (In-Room Entertainment) 28

In-room entertainment - next steps u More, and more affordable, unique Mandarin Content u u More Audio u u More HD Channels + VOD Exploration of Adult HD Better exploitation of customer preferences u u Selection of stored content u HVAC integration u u Language sensitivity Music Choices Digital PVR u Ability to record favourite FTG TV, during, or possibly before, stay TM u Digital Radio / Web Radio u ‘Wave goodnight to the kids’ u Develop multi-supplier brand relationships June 2004 HITEC 2004 (In-Room Entertainment) 29

Closing Thoughts u u Digital change is with us and happening fast – understand exploit it. In-room CE equipment offers significant opportunity for innovation and brand differentiation. u You can differentiate through content too u FTG TV is the ‘main course’ u With 200+ TV channels, do I need Vo. D? u u June 2004 At 5% (or less), mainstream Vo. D take rates are low so why bother? Is Adult content ‘entertaining’? HITEC 2004 (In-Room Entertainment) 30

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